Surgery Partners reported $3.3 billion in 2025 revenue and $526 million in adjusted EBITDA, but adjusted EBITDA fell roughly $11 million short of its revised Q3 guidance, in a a March 4 earnings call transcribed by Seeking Alpha, management attributing most of the shortfall to issues in three surgical hospital markets.
“The impacts were isolated to our surgical hospitals, and our earnings shortfall was concentrated in just three surgical hospital markets,” CEO and Director Eric Evans said on the call. “These markets had a combination of softer-than-expected case growth, payer mix shifts and anesthesia dynamics that created outsized pressure.”
Here are five things to know:
1. Management said the miss wasn’t broad-based across the ASC portfolio.
Mr. Evans said performance issues were largely confined to surgical hospitals, and even there, centered on three markets where multiple pressures hit at once (volume softness, payer mix shifts and cost pressures).
2. Surgical hospitals didn’t get their typical Q4 seasonal “lift.”
Mr. Evans said surgical hospitals tend to show more pronounced seasonal patterns than ASCs and that the usual fourth-quarter uplift didn’t appear this year.
“Our surgical hospitals is where we saw the most pressure on payer mix,” he said. “And that makes sense because honestly, our ASCs don’t have the same level of seasonality. And so as we head into the fourth quarter, you typically see a pretty big uptick in the national — or in the surgical hospitals.”
3. Executives emphasized ASC stability while reaffirming the long-term ASC growth thesis.
Leadership said the ASC business tracked consistently with historical trends and positioned the long-term outlook around continued migration to higher-acuity procedures.
“We believe that our approach is based on measured assumptions. Importantly, we remain optimistic in the structural tailwinds underpinning long-term ASC market growth, and we believe we remain well positioned to continue to drive that shift to higher acuity procedures to capture long-term momentum in the market,” he said. “ASC business was very much in line with history.”
4. The three underperforming surgical hospital markets had different drivers.
According to Mr. Evans, the three markets where surgical hospitals fell short had different dynamics:
- Market 1: Competitors limited Medicare Advantage access and focused more on commercial patients; Surgery Partners said it was “flat-footed” and is now working to win back commercial volume, including in higher-acuity areas like spine.
- Market 2: Volume growth was strong, but skewed heavily toward government patients, pressuring profitability and requiring cost and staffing adjustments.
- Market 3: A more rural market where a small number of physician disruptions had an outsized impact, particularly in key service lines such as cardiology.
5. Portfolio optimization is targeted, not an exit from surgical hospitals.
Even while discussing strategic pruning, Mr. Evans said the company still views surgical hospitals as important to the model, and described optimization as selective and value-driven.
“We continue to advance our portfolio optimization efforts, which are focused on a small number of our larger surgical hospitals that fall outside of our core short-stay surgical strategy,” Mr. Evans said. “These efforts, some of which are in active negotiations, are intended to be incremental and disciplined, and any actions we ultimately take will be guided by value creation rather than timing.”
