Surgery Partners, Inc. Annual Report: A Year of Robust Growth and Strategic Expansion (Fiscal Year Ended December 31, 2025)

Surgery Partners, Inc., a leading operator of surgical facilities, delivered robust financial results and significant strategic advancements in fiscal year 2025, solidifying its market position. The company, recognized for its established presence in public markets, actively drove growth by increasing patient volumes and executing targeted expansions.

Business Overview: Surgery Partners, Inc. provides surgical services, operating a diversified portfolio of surgical facilities, including ambulatory surgery centers (ASCs) and surgical hospitals. The company delivers high-quality, cost-effective surgical care across many specialties. Its integrated model emphasizes strong physician partnerships and operational efficiency, which enhances patient outcomes and experience.

Financial Performance: For the fiscal year ended December 31, 2025, Surgery Partners reported total revenue of $2.85 billion, a 14.5% increase year-over-year. Net income attributable to common stockholders reached $185 million, or $1.55 per diluted share, up from $120 million and $1.05 per diluted share in 2024. Adjusted EBITDA grew 18% to $450 million, demonstrating improved operational efficiencies and economies of scale. The company generated $210 million in operating cash flow, providing substantial liquidity for future investments and debt management.

Risk Factors: Despite its strong performance, the company identified several ongoing risks that could impact future results. These include:

• Government healthcare reimbursement policies: Potential changes, especially for Medicare and Medicaid services, could affect revenue streams.
• Physician and clinical staff recruitment and retention: This remains a critical challenge, with rising labor costs potentially impacting profitability.
• Competitive landscape for acquiring new facilities: Intense competition could affect expansion plans.
• Rising interest rates: Higher rates could increase debt financing costs. The company actively monitors these and other typical risks, such as regulatory compliance, cybersecurity threats, and potential litigation.

Management Discussion (MD&A Highlights): The company's impressive growth primarily stemmed from a 7% increase in same-facility system-wide revenue and the successful integration of five new surgical facilities acquired in 2025. These actions expanded its national network to over 150 facilities across 30 states. Key strategic initiatives included:

• Service Line Expansion: The company significantly invested in high-demand specialties like orthopedics, cardiology, and pain management, which collectively saw a 12% increase in case volumes.
• Physician Recruitment: Surgery Partners successfully onboarded over 200 new physicians, enhancing clinical capacity and patient access across its facilities.
• Technology Integration: The company rolled out a new patient management system across 30% of its facilities, aiming to improve patient experience and streamline operational workflows by the end of 2027. These initiatives highlight the company's commitment to organic growth, strategic acquisitions, and operational excellence.

Financial Health: Surgery Partners maintains a diversified capital structure, primarily using long-term debt to finance its operations and strategic acquisitions. Surgery Partners also accesses a revolving credit facility to support working capital needs and provide additional financial flexibility. Management actively monitors its debt profile and capital allocation strategies to maintain financial flexibility and support growth initiatives.

Future Outlook: Surgery Partners anticipates continued growth in 2026, projecting revenue between $3.1 billion and $3.25 billion and Adjusted EBITDA between $480 million and $500 million. The company plans to invest approximately $150 million in capital expenditures, primarily for facility upgrades and technology enhancements. It also targets 3-5 strategic acquisitions to expand its geographic footprint and service offerings. This outlook reflects confidence in the company's strategic initiatives and its ability to capitalize on favorable market trends in outpatient surgical care.

Competitive Position: Surgery Partners operates in a highly competitive healthcare services market, competing against other national and regional surgical facility operators, large hospital systems, and physician-owned practices. The company's competitive advantages include:

• An extensive network of facilities across 30 states.
• Strong physician partnerships.
• A focus on high-acuity surgical specialties.
• Operational expertise in managing outpatient and short-stay surgical centers. Its scale and integrated approach create economies of scale and efficient resource utilization. These factors contribute to its market leadership and ability to attract both patients and physicians. The company actively evaluates market opportunities and competitive dynamics to maintain and enhance its position.