Surgery Partners’ first quarter saw revenue growth above Wall Street expectations, with management attributing performance to stability across its surgical facilities and initial recovery in previously pressured hospital markets. CEO Eric Evans highlighted ongoing improvements in operational consistency and the company’s focus on higher-acuity procedures. The company also navigated short-term headwinds from weather-related disruptions in lower-acuity markets, which tempered overall case volume. Evans emphasized the strategic benefit of recent investments in surgical robotics and the continued expansion of musculoskeletal (MSK) services as key factors supporting the quarter’s results.
Is now the time to buy SGRY? Find out in our full research report (it’s free for active Edge members).
Surgery Partners (SGRY) Q1 CY2026 Highlights:
- Revenue: $810.9 million vs analyst estimates of $798.3 million (4.5% year-on-year growth, 1.6% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of -$0.14 (77.8% beat)
- Adjusted EBITDA: $102.3 million vs analyst estimates of $99.76 million (12.6% margin, 2.5% beat)
- The company reconfirmed its revenue guidance for the full year of $3.4 billion at the midpoint
- EBITDA guidance for the full year is $530 million at the midpoint, in line with analyst expectations
- Operating Margin: 8.1%, in line with the same quarter last year
- Sales Volumes were flat year on year (6.5% in the same quarter last year)
- Market Capitalization: $1.79 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Surgery Partners’s Q1 Earnings Call
- Brian Tanquilut (Jefferies) asked COO Justin Oppenheimer about operational priorities and areas for efficiency gains. Oppenheimer highlighted a focus on organic growth through physician recruitment and hardwiring cost management at the facility level.
- Matthew Gillmor (KeyBanc Capital Markets) requested more detail on recovery in three previously challenged hospital markets and payer mix trends. CEO Eric Evans said pressures had moderated and new leadership teams were making progress, but complete recovery would take time.
- Benjamin Hendrix (RBC Capital Markets) inquired about weather-related case deferrals and the potential for recovery in later quarters. Evans replied some deferred cases might return, but most volume loss was unlikely to be fully recaptured due to capacity constraints.
- Joanna Gajuk (Bank of America) asked about the timeline and objectives for portfolio optimization. Evans explained that divesting non-core hospital assets would improve leverage and free cash flow, with a major transaction targeted for mid-2026.
- A.J. Rice (UBS) questioned the pace and visibility of M&A spending, given a slow start to the year. Evans acknowledged the timing is unpredictable but affirmed the company’s long-term commitment to being an active consolidator in the ASC sector.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace and productivity of new physician onboarding and their impact on case volume, (2) successful execution and timing of portfolio optimization or asset divestitures, and (3) sustained progress in cost containment to protect margins against persistent provider tax and payer mix pressures. Additional attention will be given to the ramp-up of new de novo centers and the potential for increased M&A activity later in the year.
Surgery Partners currently trades at $13.79, down from $14.20 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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