0001638833-25-000136
SEC filingRevenue grew 8.3% YoY to $826.2M in Q2 2025, driven by same-facility volume and acquisitions; Adjusted EBITDA up 9.0%.
For the second quarter of 2025, Surgery Partners reported total revenues of $826.2 million, an 8.3% increase from $762.1 million in the same period of 2024. The growth was driven by a 5.1% increase in days-adjusted same-facility revenues, comprising a 3.4% rise in same-facility case volumes and a 1.6% increase in revenue per case, as well as contributions from recent acquisitions. Cost of revenues increased to $630.6 million (76.3% of revenues) from $582.9 million (76.5% of revenues), reflecting a slight improvement in gross margin to 23.7% from 23.5%. General and administrative expenses decreased to $36.1 million (4.4% of revenues) from $40.3 million (5.3% of revenues), indicating improved operating leverage. Depreciation and amortization rose to $40.3 million from $34.8 million, primarily due to acquisitions. Operating income increased to $111.7 million from $84.8 million, a 31.7% improvement. Net interest expense increased to $67.9 million from $51.5 million due to higher debt levels and interest rates. Income tax benefit of $1.1 million compared to an expense of $4.9 million in the prior year, resulting in an effective tax rate of -2.5%. Net income attributable to Surgery Partners improved to a loss of $2.5 million from a loss of $15.5 million. Adjusted EBITDA grew 9.0% to $129.0 million from $118.3 million, with margin expansion reflecting revenue growth and cost controls.
Surgery Partners operates a single reportable segment: Surgical Facilities. Patient service revenues, which constitute 97.3% of total revenues, increased 7.5% to $804.2 million. The growth was driven by same-facility performance (5.1% revenue increase) and acquisitions completed in the last twelve months. Same-facility case volumes grew 3.4% and revenue per case increased 1.6%. Other service revenues, primarily management fees from non-consolidated facilities, grew to $22.0 million from $14.0 million, reflecting expansion of the management platform. The payor mix shifted slightly: private insurance decreased to 51.8% from 53.2%, while government payors increased to 43.3% from 41.5%. Case mix remained stable, with orthopedics/pain management at 39.8%, ophthalmology 22.2%, gastrointestinal 24.8%, and general surgery 1.8%.
Management continues to focus on same-facility performance improvement, selective acquisitions, and new facility development. In Q2 2025, the company acquired controlling interests in four surgical facilities and two physician practices for $48.0 million net cash. Cash and cash equivalents were $250.1 million with $394.9 million available under the Revolver. The company believes cash flows from operations, available cash, and revolver capacity are adequate for near-term and long-term liquidity needs. The recently passed One Big Beautiful Bill Act (OBBBA) introduces changes to healthcare programs and tax laws, but management does not expect material impact on financial statements. No specific quantitative guidance was provided.
As of June 30, 2025, Surgery Partners held $250.1M in cash and cash equivalents, down from $269.5M at year-end 2024. Total assets stood at $7,954.8M, with goodwill and intangibles of $5,140.0M. Total debt was $3,575.2M, including $1,381.1M senior secured term loan, $298.0M drawn on the revolver, $800.0M senior unsecured notes, $225.9M notes payable, and $901.9M finance lease obligations. Stockholders' equity was $3,156.5M, with a retained deficit of $777.5M.
No material purchase commitments or off-balance-sheet obligations were disclosed in the notes. Professional, general, and workers' compensation claim liabilities totaled $23.8M, with expected insurance recoveries of $9.6M. Lease commitments are extensive, with total lease liabilities of $1,205.2M (operating $303.3M, finance $901.9M).
No share repurchases or dividends were reported. Net debt increased $204.9M during the six months ended June 30, 2025, driven by borrowings of $382.2M (primarily revolver draws for acquisitions) and repayments of $299.4M. Capital expenditures were $46.1M, with $45.2M allocated to Surgical Facilities.
The company operates a single reportable segment: Surgical Facilities, encompassing 162 surgical facilities (143 ASCs, 19 surgical hospitals) across 30 states. Segment revenue was $826.2M in Q2 2025 (up 8.4% YoY) and $1,602.2M for H1 2025. Adjusted EBITDA for the segment was $157.9M in Q2 and $289.9M in H1. No geographic breakdown is provided.
Operating cash flow (CFO) of $87.3M for H1 2025, down from $123.5M in the prior period, represents a 29% decline. Net income was $44.6M, so CFO exceeded net income by $42.7M, indicating reasonable cash conversion despite significant non-cash charges (depreciation $76.6M, stock compensation $14.4M). The primary drag was a $82.1M outflow from 'other operating assets and liabilities', likely reflecting working capital buildup or timing of payments. CapEx of $46.1M was stable (47.9M prior), yielding free cash flow (CFO minus CapEx) of $41.2M, down from $75.6M. Investing activities used $74.3M net, including $48.0M for acquisitions offset by $42.9M disposal proceeds. Financing activities consumed $32.4M, largely from $116.3M distributions to non-controlling interests offset by $382.2M debt borrowings and $299.4M debt repayments. Overall, cash flow quality is adequate but weakened by working capital absorption; capital returns to non-controlling holders are significant.