Executive Summary

Q2 2025 delivered solid growth: revenue up 8.4% to $826.2M and Adjusted EBITDA up 9.0% to $129.0M; same‑facility revenues grew 5.1% on 3.4% case growth and 1.6% rate growth .
Results beat S&P Global consensus: Revenue $826.2M vs $816.96M*, Adjusted EPS proxy (Primary EPS) $0.17 vs $0.135*, and EBITDA $161.6M vs $128.2M*; the company reaffirmed FY25 guidance of $3.30–$3.45B revenue and $555–$565M Adjusted EBITDA .
Management highlighted continued momentum in GI and MSK, notably total joint procedures up 26% YoY; portfolio optimization to accelerate deleveraging and cash flow generation is underway .
CFO flagged that EBITDA could land toward the lower end of guidance due to the cadence of M&A deployment ($66M YTD vs a $200M annual target), though discipline on deal quality remains the priority .

What Went Well and What Went Wrong

What Went Well

Volume-led growth in core specialties: consolidated facilities performed ~172,858 cases with strength in GI and MSK; total joint procedures grew 26% YoY, supporting higher acuity mix over time .
Margins expanded: Adjusted EBITDA margin reached 15.6% (+10 bps YoY), reflecting operating discipline and integration benefits from acquisitions and de novos .
Clear regulatory tailwinds: CMS proposed adding 276 procedures to the ASC list and phasing out inpatient‑only over three years, reinforcing site‑of‑care shifts favorable to ASCs; management views potential impact as positive and aligned with value‑based care trends .

Management quotes:

CEO: “We are proud to report strong growth in Adjusted EBITDA and revenue... positioned for continued growth in 2025 and beyond.”
CFO: “Our guidance implies continued margin expansion... and contributions from de novos we expect to open this year.”
CEO on robotics and acuity: “We have invested in 69 surgical robots... enabling increasingly more complex and higher acuity procedures.”

What Went Wrong

Interest expense headwind pressured operating cash flow (OCF): Q2 OCF was $81.3M, down modestly YoY due to higher cash interest payments after interest rate swaps expired; effective corporate rate rose ~140 bps sequentially .
M&A timing risk to FY EBITDA: only $66M deployed YTD (target $200M), implying lower mid‑year convention contribution and biasing EBITDA to lower end of guidance despite robust pipeline .
Professional and medical fees up YoY (12.4% of revenue vs 12.1%): largely attributable to 2024 acquisitions with associated physician practice costs; “other” OpEx variability tied to items like provider taxes .

Financial Results

Core financials vs prior periods

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$864.4	$776.0	$826.2
Diluted EPS (GAAP) ($)	$(0.86)	$(0.30)	$(0.02)
Adjusted EBITDA ($USD Millions)	$163.8	$103.9	$129.0
Adjusted EBITDA Margin (%)	18.9%	13.4%	15.6%
Same-Facility Revenue Growth (%)	5.6%	5.2%	5.1%
Same-Facility Case Growth (%)	5.1% (days-adjusted)	6.5% (days-adjusted)	3.4%

Operating KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Cases (Consolidated)	174,185	160,300	172,858
Revenue per Case ($)	$4,963	$4,841	$4,780
Cash from Operations ($USD Millions)	$111.4	$6.0	$81.3
Net Debt / EBITDA (Credit Agreement) (x)	3.7x	4.1x	4.1x
Cash & Equivalents ($USD Millions)	$269.5	$229.3	$250.1
Revolver Availability ($USD Millions)	$501.5	$388.9	$394.9

Estimates vs Actuals (Q2 2025)

Metric	Actual	Consensus	Surprise
Revenue ($USD)	$826.2M	$816.96M*	+$9.2M / +1.1%*
Primary EPS ($)	$0.17	$0.135*	+$0.035*
EBITDA ($USD)	$161.6M*	$128.18M*	+$33.4M*

Values with asterisk (*) retrieved from S&P Global.

Note: Company-reported Adjusted EBITDA was $129.0M; S&P Global’s “EBITDA” may reflect a different definition than company “Adjusted EBITDA” .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$3.30–$3.45B	$3.30–$3.45B	Maintained
Adjusted EBITDA	FY 2025	$555–$565M	$555–$565M; may bias to lower end given M&A timing	Maintained (lower-end bias)
Same-Facility Revenue Growth	FY 2025	At/above high end of ~6% target	Near high end of ~6% target	Maintained
Leverage Target	FY 2025 YE	~3x range	Upper‑3s by YE, path to ~3x thereafter	Maintained
M&A Deployment	FY 2025	≥$200M target	Target unchanged; weighted to 2H	Maintained (timing shift)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Robotics / Technology	68 robots; focus on enabling higher-acuity cases; physician recruiting strong	69 robots; continued push into complex ortho; total joints +26% YoY	Expanding platform and acuity
Supply Chain / Tariffs	Minimal exposure; HealthTrust contracts; visibility into origin and renewals	Reiterated minimal tariff risk; no material near/mid-term exposure	Stable, low risk
Regulatory (CMS, site neutrality)	Limited Medicaid/exchange exposure (<5%)	CMS adding 276 ASC procedures, phasing out inpatient‑only list; management constructive on site neutrality	Positive tailwinds
Revenue Cycle / DSO	Launch of multiyear standardization; DSO –2 days QoQ	DSO –3 days QoQ; continued front-end pre-auth improvements	Improving collections
M&A Cadence	2024: ~$400M and 8 de novos	2025 YTD: $66M; targeting ~$200M, weighted to 2H	Timing slower, pipeline robust
Portfolio Optimization	2024 divestitures in Q4; non-recurring costs	Actively evaluating partner/sale options to accelerate deleveraging and cash flow	Active initiative

Management Commentary

Strategic posture: “Actively evaluating portfolio optimization opportunities to expedite leverage reduction, accelerate cash flow generation and provide increased flexibility to self‑fund our growth algorithm” — Eric Evans, CEO .
Guidance tone: “Our guidance implies continued margin expansion... as well as the integration benefits from recent acquisitions and contributions from de novos we expect to open this year” — Dave Doherty, CFO .
Regulatory view: “CMS proposed adding 276 procedures to the ASC covered list… underscores our advantageous position as a leading owner and operator of short‑stay surgical facilities” — Eric Evans .
Capital deployment: “We continue to target deploying $200M in acquisitions this year… weighted toward the back half” — Eric Evans .
Liquidity and leverage: “Total net debt to EBITDA… 4.1x; leverage before NCI 4.7x. We continue to have high conviction that our leverage will decrease” — Dave Doherty .

Q&A Highlights

M&A cadence and guidance: Management reiterated the $200M annual target but noted slower 1H pace; EBITDA guidance may land toward the lower end due to timing rather than fundamentals .
De novo economics: 3‑year ramp to full run rate; minority (often unconsolidated) positions with revenue via management fees and equity earnings; higher‑acuity focus enables better initial rates .
Portfolio optimization: Exploring selective sales/partnerships (including with health systems) to accelerate deleveraging and cash conversion; hospitals may be natural co‑owners in some markets .
Revenue cycle: DSO improved three days sequentially; standardized rev‑cycle processes and proactive front‑end work reducing denials and improving cash conversion .
Interest expense headwind: Swap expiry and biannual note payments lifted cash interest by ~$23M versus prior year; effective rate ~7.4% in Q2; caps limit floating element to 5% .

Estimates Context

Q2 2025 beats vs consensus: Revenue $826.2M vs $816.96M*, Primary EPS $0.17 vs $0.135*, EBITDA $161.6M vs $128.18M* — all beats; revenue +1.1% vs estimates, EPS +$0.035, EBITDA +$33.4M*. Values retrieved from S&P Global.
Forward quarters: Q3 2025 consensus revenue ~$821.0M*, EPS ~$0.1605*, EBITDA ~$136.2M*; Q4 2025 consensus revenue ~$872.4M*, EPS ~$0.302*, EBITDA ~$170.1M*. Values retrieved from S&P Global.
Implications: Expectations may need to rise modestly for near‑term EPS and revenue, while modeling Adjusted EBITDA should reconcile SPGI EBITDA definitions to company adjustments to avoid overestimating margins .
Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Durable volume momentum with improving mix: GI and MSK growth, plus expanding total joints and robotics footprint, supports sustained same‑facility growth near the high end of ~6% for 2025 .
Guidance intact; watch the M&A timing: Reaffirmed FY25 revenue/Adj. EBITDA ranges; cadence of deals implies lower‑end bias without changing long‑term trajectory; discipline trumps speed .
Cash conversion and leverage path: Rev‑cycle standardization is lowering DSO and improving OCF despite interest headwinds; management targets leverage “in the 3s” by YE with portfolio actions as accelerants .
Regulatory catalysts: CMS moves to expand ASC‑eligible procedures and phase out inpatient‑only list should incrementally add addressable volume; site neutrality seen as immaterial to slightly positive .
Actionable near term: Bias models to balanced volume/rate in 2H, incorporate higher interest cash outflows, Hold EBITDA in guidance range’s lower half pending M&A timing; upside if acquisitions close earlier .
Medium term: Portfolio optimization, de novo ramp, and disciplined M&A integration support margin expansion and deleveraging while avoiding capital market dependence over the next five years .

Citations: 8-K press release and exhibits ; Q2 2025 earnings call transcript ; Q1 2025 8-K ; Q1 2025 press release ; Q4 2024 8-K ; Jul 18, 2025 press release . Values with asterisk (*) retrieved from S&P Global.

Surgery Partners, Inc. (SGRY)·Q2 2025 Earnings Summary