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Investing.com - Surgery Partners (NASDAQ:SGRY) stock rose after Benchmark reiterated its Buy rating and $35.00 price target following proposed rule changes from the Centers for Medicare & Medicaid Services (CMS).
CMS released the Ambulatory Surgical Center Proposed Rule after market close on Tuesday, which includes a 2.4% rate update for calendar year 2026, reflecting a 3.2% market basket increase offset by a 0.8% productivity adjustment.
The proposal outlines a three-year phase-out of the Inpatient Only (IPO) list, beginning with the removal of 285 procedures, primarily musculoskeletal (MSK), for calendar year 2026.
CMS also proposed revising the ASC Covered Procedures List by eliminating five general exclusion criteria, moving them to a new section as nonbinding physician considerations for patient safety, which would add 276 procedures to the ASC list.
Benchmark noted these changes should enhance ASC musculoskeletal procedure growth if finalized, which is significant as MSK procedures represent more than 50% of Surgery Partners’ net revenue. The company’s revenue growth remains strong at 13.5% over the last twelve months, with total revenue reaching $3.2 billion.
In other recent news, Surgery Partners has reaffirmed its financial guidance for 2025, projecting revenues between $3.30 billion and $3.45 billion, along with an Adjusted EBITDA ranging from $555 million to $565 million. This follows the company’s decision to end acquisition talks with Bain Capital, as the Special Committee of independent directors determined that the company’s prospects as an independent entity were more favorable. UBS has maintained its Buy rating on Surgery Partners, setting a price target of $34.00, which reflects the firm’s confidence in the company’s earnings potential despite the recent takeover rejection. Similarly, Cantor Fitzgerald reiterated an Overweight rating with a $36.00 price target, expressing confidence in the company’s outpatient volume and pricing expectations. Surgery Partners also held its annual meeting, where key proposals such as the election of Class I directors and the approval of the 2025 Omnibus Incentive Plan were passed. Additionally, the company plans to host an Investor Day in the second half of 2025 to discuss its strategy and industry outlook. Despite the conclusion of acquisition discussions, Bain Capital remains optimistic about Surgery Partners’ growth strategy and leadership.
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