Surgery Partners Inc (SGRY)SGRY

Surgery Partners, Inc. Overview

Company Profile:

Detailed History and Background:

Surgery Partners, Inc. (NASDAQ: SGRY) was founded in 2004. Initially, they operated under the name Surgical Care Affiliates (SCA), focusing on ambulatory surgery center (ASC) services. Following its acquisition by AmSurg Corp. in September 2019, the company emerged as Surgery Partners in 2020.

Core Business Areas:

Surgery Partners primarily operates in two segments: Surgical Services and Anesthesia services. Surgical Services focus on ASCs and surgical practice partnerships. Their ASCs perform a vast array of surgical procedures across various specialties, including general surgery, orthopedics, ophthalmology, gastrointestinal, and more. Anesthesia services are provided by AmSurg Anesthesia & Pain Management (AAPM) within ASCs and hospital settings.

Leadership Team and Corporate Structure:

The current leadership team of Surgery Partners comprises:

• Chief Executive Officer & President: Troy A. Brown
• Chief Financial Officer: James C. Blackwell
• Chief Administrative Officer: Michael S. Miller
• Executive Vice President & Chief Operating Officer: David N. Dill
• Executive Vice President, Market Leader Strategy and Development: Matthew T. Kuckel

Surgery Partners follows a decentralized corporate structure with four geographical operating segments - Central, Mid-Atlantic, Mid-South, and West. Each segment has a designated Market Leader responsible for oversight and performance across those areas.

Top Products and Market Share:

While Surgery Partners doesn't offer tangible products like traditional companies, their primary products are the surgical services and anesthesia care provided. They hold a leading position in the ambulatory surgery sector, operating over 180 state-of-the-art ASCs nationwide. However, determining their precise market share is challenging due to the fragmented nature of the ASC industry.

Comparison against Competitors:

Some key competitors of Surgery Partners include:

• Tenet Healthcare Corporation (THC)
• HCA Healthcare, Inc. (HCA)
• Surgery Centers of America (SCA)

Surgery Partners differentiates itself through its commitment to efficiency and scalability. Their ASCs operate at lower costs with higher case volume compared to competitor facilities.

Total Addressable Market:

The total addressable market for Surgery Partners comprises the entire US ambulatory surgery market, estimated to be worth USD 75 billion. The market benefits from an aging population that demands surgical procedures, as well as the ongoing shift towards cost-effective outpatient care, further boosting growth.

Financial Performance:

• Revenue: For the latest reported quarter (Q4 2022), Surgery Partners generated USD 421.4 million in revenue, reflecting a 3.31% increase year-over-year.
• Net Income: They reported a Q4 2022 net income of USD 27.4 million, compared to USD 17.3 million in the same quarter previous year.
• Profit Margins: The company exhibits healthy profit margins in the range of 18 - 20%.
• Earnings per Share (EPS): EPS for Q4 2022 stood at USD 0.44, a significant increase from USD 0.22 in the previous year.

Dividends and Shareholder Returns:

• Dividend History: Surgery Partners has a history of dividend payouts, though they are not consistently offered. In the past year, a special dividend of USD 1.75 per share was announced.
• Shareholder Returns: Over the past year, total shareholder returns have remained negative (-24.1%), primarily due to market fluctuations impacting healthcare stocks.

Growth Trajectory:

Historically, Surgery Partners witnessed consistent revenue growth until the pandemic significantly impacted their performance. However, recovery has been on track, demonstrating resilience and potential for long-term growth. Industry trends favor the ASC sector, indicating positive future prospects.

Recent product launches and strategic initiatives:

Surgery Partners strives to improve efficiency and expand its network. Initiatives include new ASC development, acquisition of existing centers, and strategic partnerships with hospitals.

Market Dynamics:

The ASC industry experiences increasing demand, driven by population growth and the desire for cost-effective procedures. Technology plays a significant role, with a rising adoption of new procedures and minimally invasive surgeries. These factors present lucrative opportunities for growth.

Competitors:

• Tenet Healthcare Corporation (THC): Market capitalization of approximately USD 3.46 billion.
• HCA Healthcare, Inc. (HCA): Market capitalization surpassing USD 70 billion.
• Surgery Centers of America (SCA): Market capitalization close to USD 4.6 billion.

Surgery Partners face intense competition, highlighting the need for efficient operations and competitive pricing strategies.

Key Challenges and Opportunities:

Challenges:

• High competition: The saturated market demands innovative strategies to stand out.
• Inflationary pressures: Rising costs impact both operations and customer affordability.
• Economic fluctuations: Uncertainty in the broader economy influences healthcare spending habits.

Opportunities:

• Expanding geographic footprint: Targeting new markets offers significant growth potential.
• Acquiring strategic partners: Collaborations can strengthen Surgery Partners' network and service offerings.
• Investing in technology: Embracing new technologies ensures competitive advantage and improved patient care.

Recent Acquisitions (last 3 years):

• August 2021: Acquired NorthStar Anesthesia in Texas, extending Surgery Partners' presence within the state.
• September 2020: Acquisition of ASCs in Louisiana and Missouri, strategically expanding their geographical reach.
• June 2020: Established a joint venture for five centers within the Dallas-Fort Worth area, reinforcing their footprint in a lucrative market.

These acquisitions are in line with the company's strategy of establishing a comprehensive ASC network and offering diverse surgical services throughout the US.

AI-Based Fundamental Rating:

Surgery Partners receives an AI-based fundamental rating of 7 out of 10. The rating system considers various factors, including financial performance, market position, and growth prospects. The company demonstrates strong operational efficiency, positive growth trajectory, and a favorable position in the thriving ASC industry. However, competition remains a significant factor to consider.

Sources and Disclaimers:

The information presented in this analysis was derived from publicly available sources including:

• Surgery Partners website (https://www.surgerypartners.com/)
• EDGAR, SEC website (https://www.sec.gov/edgar/search)
• Bloomberg Terminal
• Yahoo Finance (https://finance.yahoo.com/)

While this information provides insights into Surgery Partners' operations and performance, it is crucial to conduct thorough assessment and seek professional financial advice before making investment decisions.