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Surgery Partners (NASDAQ: NASDAQ:SGRY), a major operator in the Ambulatory Surgery Center (ASC) industry, was initiated with a Sector Weight rating by KeyBanc.
The company, which stands as the fourth largest ASC operator in the United States behind USPI, UNH, and Amsurg, boasts over 200 locations across 33 states.
KeyBanc highlighted Surgery Partners' unique position as the only public pure-play in the ASC sector.
Surgery Partners is noted for its independence, as it is not owned by a health system or payer. This distinction is complemented by its diversified mix of procedures and centers, which contrasts with competitors that may have a single-specialty focus.
According to KeyBanc, these characteristics are strategic advantages that could enable Surgery Partners to thrive as a long-term consolidator within the fragmented ASC market.
The ASC industry is viewed as attractive due to the ongoing shift of medical procedures from hospital inpatient and hospital outpatient department (HOPD) settings to ASCs. This transition is particularly relevant for orthopedic and cardiovascular procedures. Surgery Partners' broad operational footprint and varied service offerings are seen as beneficial for capturing the increasing volume of these procedures moving to ASCs.
KeyBanc's assessment suggests that Surgery Partners is well-positioned to leverage industry trends and expand its market presence. The Sector Weight rating implies that the analyst believes the company's stock is expected to perform in line with the average returns of the sector over the next 12 months.
In other recent news, Surgery Partners, Inc. reported significant financial growth in its Q2 2024 results, with net revenue reaching $762 million, a 14.2% increase from the previous year, and adjusted EBITDA growing by 18% to $118.3 million.
The growth was bolstered by a nearly 4% rise in surgical case volume and a strategic focus on higher acuity procedures. The company reported earnings of $83 million and has deployed $280 million in capital for acquisitions and investments.
Surgery Partners also raised its 2024 net revenue outlook to over $3.075 billion and adjusted EBITDA to more than $508 million. The company is actively pursuing acquisition opportunities and sees potential for growth in total shoulder procedures. Despite a total net debt-to-EBITDA ratio of 3.8 times in Q2, the company has expressed its intent to reduce this leverage ratio over time.
InvestingPro Insights
To complement KeyBanc's analysis of Surgery Partners (NASDAQ:SGRY), recent data from InvestingPro offers additional context for investors. The company's market capitalization stands at $3.83 billion, reflecting its significant presence in the ASC market. Despite KeyBanc's neutral Sector Weight rating, InvestingPro Tips highlight that Surgery Partners has shown a strong return over the last three months, with price data confirming an 18.75% total return in this period.
This recent performance aligns with the company's strategic positioning in the growing ASC industry, as discussed in the article. Additionally, InvestingPro data shows a 14.16% quarterly revenue growth in Q2 2024, suggesting that Surgery Partners is capitalizing on the industry trends mentioned, particularly the shift of procedures to ASC settings.
An InvestingPro Tip indicates that analysts predict the company will be profitable this year, which could be a positive sign for investors considering the company's expansion potential in the fragmented ASC market. However, it's worth noting that Surgery Partners is not currently profitable over the last twelve months, with a P/E ratio of -113.21, highlighting the importance of future profitability expectations.
For readers interested in a deeper analysis, InvestingPro offers 8 additional tips for Surgery Partners, providing a more comprehensive view of the company's financial health and market position.
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