Surgery Partners - $SGRY - Earnings Analysis: Consistent revenue and Adjusted EBITDA growth.

Business Model

Surgery Partners generates revenue primarily through its network of surgical facilities, including ambulatory surgery centers and surgical hospitals, by providing surgical and related ancillary care services. The company focuses on high-quality, cost-effective solutions for patients and physicians.

Revenue Sources

• Surgical procedures performed at ambulatory surgery centers (ASCs).
• Surgical procedures performed at surgical hospitals.
• Related ancillary services.
• Management and administrative service fees derived from non-consolidated facilities accounted for under the equity method and management of surgical facilities in which it does not own an interest.

Income Statement Analysis

• Revenue increased by 17.5% due to an increase in cases and revenue per case.
• Operating income increased by 25.44% compared to the same period in the prior year.
• The net loss attributable to Surgery Partners, Inc. was $(108.5) million compared to net income of $46.7 million for the same period in the prior year. This includes a non-cash valuation allowance against deferred tax assets.

Balance Sheet Analysis

• Total assets increased by 14.74% YOY, indicating business expansion.
• Total liabilities increased by 21.06% YOY due to debt and other obligations.
• Total stockholders' equity increased by 5.34% YOY, reflecting the net effect of earnings and other equity transactions. Subtracting Total assets from Total stockholders' equity gives Total Liabilities, which increased YOY.

Cash Flow Analysis

• Net cash provided by operating activities increased significantly, driven by operational growth and working capital improvements.
• Net cash used in investing activities increased due to purchases of property, equipment, and acquisitions.
• Net cash provided by financing activities increased, reflecting changes in debt and equity financing.
• Cash and cash equivalents increased, indicating a stronger financial position.

Capital Allocation

Surgery Partners is focused on strategic acquisitions, de novo facilities, and service line expansions, particularly in high-growth areas like orthopedics and spine. The company is also committed to returning value to shareholders through distributions to physician partners.

Management Commentary

We are pleased to report another year of mid-teens growth, while continuing to expand margin.

Our 2024 results are a continuation of the Company's consistent and predictable organic growth, with same-facility revenue growth of 8.0%.

We enter 2025 with a liquidity position of over $770 million, which enhances our confidence and ability to continue to fund accretive M&A without the need to access the capital markets.

The net loss attributable to Surgery Partners, Inc. for the fourth quarter of 2024 includes a non-cash valuation allowance against our deferred tax assets as a result of a technical accounting requirement.

Overall Sentiment: Positive, with confidence in continued growth and strategic initiatives.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.