Surgery Partners, Inc: Shedding Idaho Falls, sharpening the bull ASC case

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Surgery Partners, Inc: Shedding Idaho Falls, sharpening the bull ASC case

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Surgery Partners, Inc

Shedding Idaho Falls, sharpening the bull

ASC case

Reiterate Rating: BUY | PO: 20.00 USD | Price: 16.05 USD

Deleveraging + ASC focus = re-rating; we raise PO 24 July 2026

SGRY announced a definitive agreement to sell its stake in two surgical hospitals in Equity

Idaho Falls to Intermountain Health, its hospital partner. The implied multiple of 1.7x

revenues is attractive and we expect it will be a deleveraging and multiple enhancing

Key Changes

event. In another positive, SGRY reiterated its full year guide (not adjusted for the asset

sale), which together with strong mix at THC’s ASCs underscores the shift of vols to (US$) Previous Current

ASCs. The asset sale will simplify the story by reducing the surgical hospital exposure Price Obj. 17.50 20.00

which was viewed negatively by the market while aiding leverage and cash flows. We

raise our PO to $20 on a higher multiple (11.5x 2026E EBITDA-NCI vs 10.8x prior) given JoannaResearchGajukAnalyst

the benefits of the deal. We reiterate Buy given the strong tailwinds for ASCs (shift to BofAS

+1 646 855 3961

low-cost settings) and lower exposure to policy headwinds vs acute hospitals. joanna.gajuk@bofa.com

Attractive multiple: 1.7x 2025 revs KevinResearchFischbeck,Analyst CFA

BofAS

As per AHD, combined revs of the 2 hospitals were $672m in 2025. The $1.15bn +1 646 855 5948

valuation implies a 1.7x rev multiple, better than hospital deals that Tenet (THC) did in kevin.fischbeck@bofa.com

2023-24 (1-1.6x revs) except the South Carolina deal (4x revs, 16x ebitda; 27% margin). Joaquin Arriagada Martinez

Research Analyst

Assuming EBITDA margins of 20% (in line with SGRY reported EBITDA margin of 20% BofAS