Surgery Partners (SGRY +3%) is experiencing a rise in stock price after a strong close to FY24. The company, known for its surgery centers, reported a significant EPS upside in Q4 following a previous miss in Q3. Revenue increased by 17.5% year-over-year to $864.4 million, surpassing analyst expectations.
- SGRY surpassed $3 billion in annual revenue for the first time in 2024, reaching $3.11 billion, a 13.5% increase. This growth was driven by strong organic results, improvements in case volume and rates, and recent acquisitions. The company projects FY25 revenue of $3.30-3.45 billion, aligning with expectations.
- Key operating metrics were robust, with same-facility revenue up 5.6% in Q4, improving from 4.2% in Q3. The company performed over 174,000 surgical cases in Q4, a 14% year-over-year increase, totaling nearly 657,000 cases for the year, up 8.4%. Revenue per case rose to $4,963 from $4,800 last year.
- SGRY collaborates with top surgeons across its 161 facilities, focusing on high-quality care and high-acuity procedures. The company offers a cost-efficient environment preferred by payers, emphasizing procedures that do not require overnight hospital stays.
- Growth through acquisitions is key for SGRY. In 2024, it completed numerous acquisitions, including complex ones, and assumed management of four ASPs, leading to higher costs. SGRY expects these costs to decrease significantly in 2025.
- The stock has been volatile, dropping after a Q3 miss but rising in January when Bain Capital proposed acquiring SGRY for $25.75 per share. SGRY formed a special committee to evaluate this proposal and values Bain as a partner.
Overall, Surgery Partners delivered a strong Q4 rebound after a Q3 setback. Despite the positive report and guidance, the stock's long-term performance has been lackluster, trading mostly sideways or down over the past two years. Bain Capital may see potential for improvement by taking the company private.
