SGRY

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Surgery Partners has seen its share price fall sharply over the past few years, yet the stock currently screens as cheap on broad valuation checks. That contrast between prolonged share price weakness and an apparently attractive valuation setup is what investors now need to weigh. Over the past 5 years, Surgery Partners stock has declined 70.8%, which means long term holders have absorbed a heavy drawdown that may now be influencing sentiment around the valuation. Recent growth in higher acuity procedures can support revenue and profit expectations. However, a shift toward greater government reimbursement may pressure margins and limit how much value investors are willing to ascribe to future cash flows. The broader checks lean cheap, with Surgery Partners currently screening as undervalued across 6 of 6 valuation tests. This suggests the current price may imply cautious expectations. For investors, the debate is whether Surgery Partners is a value opportunity after a long drawdown or a stock that now reflects the risks in its earnings and cash flow profile. Find out why Surgery Partners' -43.0% return over the last year is lagging behind its peers. The P/S multiple is a useful metric for Surgery Partners because revenue remains a key reference point while earnings and margins are still being worked through. Surgery Partners trades on a P/S of 0.5x, which is well below the Healthcare industry average of 1.5x and also below the peer average of 1.6x. The fair P/S ratio implied by the model is 0.7x, so the current multiple sits at a discount even to this more tailored benchmark that factors in the company’s size, business mix and risk profile. Following the recent Q2 report, which confirmed guidance and highlighted growth in higher acuity procedures, the market is still pricing Surgery Partners at a low sales multiple relative to sector norms. For investors who expect the company to sustain its revenue base while managing payer mix pressures, that gap on the P/S line may stand out. On the preferred P/S multiple, Surgery Partners stock currently appears undervalued compared with both the modelled fair ratio and its Healthcare peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Surgery Partners are designed to connect that valuation puzzle to concrete assumptions about the company. Each one spells out what would need to happen to Surgery Partners' growth, margins and earnings for the stock to be worth materially more or less than today’s price, and presents its fair value as a thesis you can track over time on the Community page. One of the top community narratives on Surgery Partners: 42% undervalued Read one of the top narratives on Surgery Partners Do you think there's more to the story for Surgery Partners? Head over to our Community to see what others are saying! Surgery Partners screens as undervalued on the current market multiples, including sales based checks, which points to cautious expectations already embedded in the price. The key issue is whether the company can defend margins while dealing with a higher mix of government reimbursement and still support its revenue base. If execution on mix, costs and higher acuity growth holds up, the current discount could prove too pessimistic. If those pressures weigh more heavily on earnings and cash generation, the stock may simply be cheap for a reason. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SGRY. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Surgery Partners’ second quarter results were received positively by the market, with management highlighting that revenue and adjusted EBITDA came in ahead of expectations. CEO Eric Evans credited growth in higher-acuity surgical procedures—particularly in orthopedics, vascular, and spine—as a primary driver, despite overall surgical case volumes remaining flat. Management also pointed to the company’s ongoing focus on recruiting new physicians and maintaining strong relationships with clinical partners as factors supporting same-facility revenue growth. Additionally, a shift in payer mix toward more government reimbursement was anticipated and reflected in operating margin trends, which management described as an expected outcome of the evolving business mix. Is now the time to buy SGRY? Find out in our full research report (it’s free). Revenue: $848.9 million vs analyst estimates of $830.7 million (2.7% year-on-year growth, 2.2% beat) Adjusted EPS: $0.10 vs analyst estimates of $0.06 (59.6% beat) Adjusted EBITDA: $125.2 million vs analyst estimates of $123.6 million (14.7% margin, 1.3% beat) The company reconfirmed its revenue guidance for the full year of $3.4 billion at the midpoint EBITDA guidance for the full year is $530 million at the midpoint, in line with analyst expectations Operating Margin: 12%, down from 13.5% in the same quarter last year Sales Volumes were flat year on year (3.4% in the same quarter last year) Market Capitalization: $1.95 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Brian Tanquilut (Jefferies) asked about trends in broader surgical volumes and the sustainability of high-acuity procedure growth. CEO Eric Evans responded that while total case numbers are flat, high-acuity volumes continue to rise and are in line with expectations. Joanna Gajuk (Bank of America) probed the impact of payer mix dynamics and the flow of procedures into ambulatory centers as Medicare regulations evolve. COO Justin Oppenheimer explained that the payer mix shift was most pronounced in surgical hospitals and that new, more complex cases are increasingly being performed in ASCs. Matthew Gillmor (KeyBanc) questioned the Idaho Falls transaction structure and its implications for the company’s future financial profile. CFO David Doherty clarified that the sale includes all related operations in the market and will significantly reduce debt and capital requirements. Sarah James (Cantor Fitzgerald) asked whether commercial payer mix pressures were linked to physician turnover and if trends had stabilized. CEO Eric Evans stated that mix challenges from last year are moderating and that the underlying commercial position remains strong. Albert Rice (UBS) inquired about the cadence and scale of future acquisitions. Evans confirmed that while M&A activity was light in the first half due to the Idaho Falls focus, the pipeline remains robust and the long-term strategy for consolidation is unchanged. In the coming quarters, the StockStory team will be watching (1) the closing and subsequent financial impact of the Idaho Falls divestiture and management’s update to full-year guidance, (2) the pace and quality of new physician recruitment and integration, and (3) execution on new ambulatory facility development and selective M&A. Progress on cost control and payer mix management will also be important signals for operating leverage. Surgery Partners currently trades at $15.02, down from $15.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 8:30 a.m. ET Chief Financial Officer - David Doherty Chief Executive Officer - J. Eric Evans Chief Operating Officer - Justin Oppenheimer Operator: Greetings, welcome to Surgery Partners Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Dave Doherty, Chief Financial Officer. Thank you. You may begin. David Doherty: Good morning, and thank you for joining Surgery Partners' Second Quarter 2026 Earnings Call. I'm joined today by Eric Evans, our Chief Executive Officer; and Justin Oppenheimer, our Chief Operating Officer. During this call, we will make forward-looking statements. There are risk factors that could cause future results to be materially different from these statements as described in this morning's press release and in the reports we file with the SEC. The company does not undertake any duty to update these forward-looking statements. In addition, we will reference certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. We have reconciled these measures to the applicable GAAP measures in this morning's press release and in the supplemental materials posted to our Investor Relations website. With that, I will turn the call over to Eric Evans. Eric? J. Evans: Thank you, Dave, and good morning, everyone. Before discussing our quarterly results, I want to address a significant portfolio optimization milestone we announced last month. As we noted, we have signed definitive agreements in escrow for the sale of our interest in the Idaho Falls market, Mountain View Hospital and Idaho Falls Community Hospital to our partner, Intermountain Health. We have had a successful and long-standing partnership with Intermountain, not only in Idaho, but also in 15 ASCs across Utah and Montana that remain in our portfolio. The Idaho Falls facilities have built an exceptional reputation as preferred providers and leaders in delivering high-quality, affordable care for the Idaho Falls region. At the same time, they have evolved in ways that today extend well beyond our core short-stay surgical focus to include more traditional acute care services such as obstetrics, neonatology, pediatrics and other nonsurgical service lines. We are confident these facilities will continue to grow and serve the health care needs of this community with the strength of Intermountain's partnership. This pending transaction is the most impactful part of our strategic review process to date and represents the vast majority of planned portfolio optimization. Our objectives in this process were to further sharpen our focus on our core short-stay surgical facility portfolio to simplify our operations, drive growth and strengthen our balance sheet, and we believe we have been successful in achieving this. To help investors evaluate the company on a comparable basis, in the supplemental financial information we posted on our Investor Relations website this morning, we provide key financial and nonfinancial metrics about this market to help illustrate the change in our business mix, assuming this transaction closes. Dave will speak to the transaction financials in greater detail shortly. We believe this additional information will make it easier for investors to evaluate the growth profile, margin profile and capital structure of the company following the anticipated closing of the transaction. Upon closing, we will update our forward guidance. Turning now to our second quarter results. We delivered results that were ahead of our expectations for both revenue and adjusted EBITDA, giving us the confidence to reaffirm our full year guidance. Net revenue was approximately $849 million, up 2.7% year-over-year and adjusted EBITDA was approximately $125 million. Adjusted EBITDA margin was 14.7%. On a year-to-date basis, net revenue was approximately $1.66 billion, up 3.6% and adjusted EBITDA was approximately $228 million. As we have consistently reiterated, same facility revenue is one of the clearest indicators of the underlying performance of our platform because it captures case volume, acuity and rate. In the second quarter, same-facility net revenue increased 5% over last year with 4.8% related to rate, which reflects the continued benefit of our focus on higher acuity procedures. On a year-to-date basis, same-facility revenue increased 4.9% with same-facility cases increasing 0.8% and net revenue per case increasing 4%. We performed approximately 168,000 surgical cases in the second quarter driven by orthopedic and vascular procedures, reflecting the continued robust growth in both acuity and joint-related surgeries. Payer mix also contributed to quarterly performance. As expected, commercial mix moderated compared to the prior year period on both a quarterly and year-to-date basis, while government mix moved correspondingly higher. This dynamic was primarily isolated to our larger surgical hospitals and was consistent with the assumption embedded in our full year guidance. Importantly, we view this as expected revenue mix item rather than a change in the underlying patient demand environment. And our focus remains on driving acute clinical quality and appropriate reimbursement across the portfolio. Physician recruiting is another important contributor to that same facility growth profile. In the second quarter, 191 new physicians began using our facilities, bringing our year-to-date recruits to 330. The mix of new recruits continues to be broad-based across our specialties, including orthopedics, ophthalmology, GI, pain and other service lines and the initial revenue contribution from the 2026 cohort increased nearly 16% compared to last year's cohort. As we have discussed in prior periods, these recruiting cohorts compound over time as physicians build volumes in our facilities, and we believe our recruiting capabilities, physician relationships and differentiated operating platform remain key contributors to sustainable growth. Beyond same-facility performance, we are pursuing growth through targeted de novo development and M&A activity. At quarter end, we had 6 de novo facilities under construction and an additional 7 facilities in the pipeline. These projects are an important long-term growth opportunity and are anchored by high-quality health systems and physician groups in attractive markets. Our approach to M&A continues to be disciplined as we evaluate opportunities against their strategic fit, return and growth potential and impact on our balance sheet objectives. While we maintain and continue to pursue a strong pipeline of opportunities, we have completed an immaterial amount of acquisitions year-to-date. A significant focus this year has admittedly been on optimizing our existing portfolio, divesting assets that no longer align with our short-stay surgical strategic direction and sharpening our focus on core growth. While we do anticipate closing additional acquisitions before year-end, we will clearly not reach our $200 million average annual M&A investment target in 2026. That said, we remain confident that our M&A strategy is appropriate given how fragmented the ASC industry remains our unique position as the only scaled fully independent ASC management company and our track record of successful integrations and physician partner value creation that has and will continue to make us a partner of choice. That foundation, combined with a stronger portfolio and balance sheet keeps us well positioned as the right opportunities emerge. Before turning the call back to Dave, I want to thank our colleagues, physicians, partners and operators across the company. We are excited about our growth trajectory, the value of our physician partnerships and the significant long-term opportunity we have to expand access to high-quality, high-value surgical care provided in the optimal setting. The pending Idaho Falls transaction represents an important step on that journey, and our first half results reinforce our confidence in our full year outlook and long-term strategy. With that, I'll turn it to Dave. Dave? David Doherty: Thanks, Eric. As Eric mentioned, our second quarter net revenue was approximately $849 million, up 2.7% year-over-year. Adjusted EBITDA was approximately $125 million compared to approximately $129 million in the prior year period and in line with our expectations. Adjusted EBITDA margin was 14.7%. For the first half of the year, net revenue was approximately $1.66 billion, up 3.6% year-over-year and adjusted EBITDA was approximately $228 million, down 2.3% year-over-year. Year-to-date adjusted EBITDA margin was 13.7% compared to 14.5% in the prior year period. Looking at the quarter in more detail. Revenue growth was driven primarily by higher acuity cases, bringing strong net revenue per case partially offset by the anticipated increase in our government payer mix. Same facility revenue increased 5% in the quarter with case growth of 0.3% and net revenue per case growth of 4.8%. The year-to-date, same facility revenue has increased 4.9%, with cases increasing 0.8% and net revenue per case increasing 4%. Our commercial payer mix was approximately 49% of net revenue in the second quarter, approximately 350 basis points lower than last year, with a correspondingly higher mix of government payments driven by shifts within our larger surgical hospitals and case growth that skewed slightly towards higher government paid. Turning to expenses. Salaries and wages were approximately 29.8% of revenue in the second quarter, improving sequentially from 30.5% in the first quarter, though higher than 28.5% in the prior year quarter, due primarily to the change in payer mix we've noted. Supplies were 26.7% of revenue, also improving sequentially from 27.2% last quarter, though higher than 26.0% reported in the second quarter of 2025. Professional fees and medical-related expenses were 12.1% of revenue, improving from 12.5% sequentially and 12.4% in the prior year quarter. Other operating expenses were 6.1% of revenue compared to 7.3% in the first quarter and 6.7% in the prior year quarter. G&A expenses were 4.3% of revenue compared to 4.8% in the first quarter and 4.4% in the prior year quarter. Taken together, operating expenses improved meaningfully as a percentage of revenue compared to the first quarter, reflecting the expected seasonal step-up in revenue as well as continued operating discipline. Turning back to the balance sheet and cash flow. Interest payments were approximately $90 million in the second quarter compared to approximately $81 million in the prior year quarter. On a year-to-date basis, interest payments were approximately $134 million compared to approximately $126 million in the prior year period. Operating cash flow was approximately $59 million in the second quarter. We distributed $46 million to physician partners and had approximately $7 million of maintenance capital expenditures. On a year-to-date basis, operating cash flow was approximately $71 million. We anticipate improvement in working capital at our facilities during the remainder of the year, consistent with the seasonal nature of our business. At quarter end, cash flow was approximately $217 million. Revolver borrowings were approximately $75 million and available revolver capacity was approximately $618 million. Credit agreement net debt leverage was approximately 4.4x compared to 4.3x at the end of the first quarter and 4.1x in the prior year quarter. Balance sheet-based net debt to EBITDA was approximately 5.1x, consistent with the first quarter. Before discussing our outlook, I want to spend a few minutes reviewing the financial implications of the expected Idaho Falls transaction and how we believe investors should think about Surgery Partners following closing. This transaction represents the largest step in our portfolio optimization strategy, and it reinforces our commitment to streamlining the business, sharpening our focus on our core short-stay surgical platform improving the conversion of adjusted EBITDA to cash and supporting further deleveraging over time. I would like to spend some time elaborating on how this transaction streamlines our remaining business. The anticipated transaction is expected to simplify the go-forward portfolio in several important ways. In the supplemental information released today and included on our website, we help illustrate the changes to our business, excluding the Idaho Falls facilities. Excluding these facilities, we expect the company to have a clear ASC and short-stay surgical profile, a significantly lower Medicaid mix, no obstetrics and neonatology services, meaningfully smaller exposure to ICU beds and emergency department visits and a majority reduction of our nonsurgical admissions. The transaction is also expected to eliminate our inpatient pediatric business and retail and compounding pharmacy services and will decrease our exposure to Medicaid and other state-based reimbursement program changes. We are immensely proud of the growth of the Idaho Falls facilities and the comprehensive service we offered to its community. But as my comments illustrate the market has become more complex than the rest of our portfolio. Another distinguishing fact about this market compared to the rest of our portfolio is the capital intensity of these facilities. Over the past 3 years, average annual capital expenditures for these facilities have been approximately $17 million. and the Idaho Falls facilities represented approximately 32% of the company's total finance lease obligations. When combined, these factors demonstrate that the capital required to manage these facilities is meaningfully different from the rest of our portfolio and more closely aligned with what you would expect to see in traditional acute care settings. After factoring these capital-related items, the distributions we have received from Idaho Falls have represented less than 50% of the facility's adjusted EBITDA. This capital intensity was a significant factor in our portfolio optimization review and supports our view that these facilities are better positioned under ownership with resources and scale to support their continued long-term growth. Following the completion of this transaction, we believe the company will be easier to understand, more operationally focused and better aligned with the areas where we believe Surgery Partners has the strongest long-term growth opportunity. At closing, the total consideration we expect to receive is approximately $795 million of gross proceeds. From a transaction economics perspective, we recognize the transaction can be evaluated through multiple lenses. Based on the Idaho Falls facility's historical earnings contribution, the proceeds represent approximately 7x LTM adjusted EBITDA. However, we also believe it is important to evaluate the transaction based on the cash flow ultimately accrued to Surgery Partners, given the meaningful facility level debt service and capital investment associated with these assets. On that basis, transaction proceeds represent approximately 17x the distributions we have received from the facilities on average over the past 3 years, which we believe better reflects the value realized for Surgery Partners shareholders. Net cash proceeds will be determined at closing as the final amount will be impacted by closing levels of indebtedness, cash and working capital. These proceeds will be used primarily to pay down debt. We expect this transaction to reduce the consolidated debt on our balance sheet, reducing our balance sheet leverage by approximately 0.3 turns. On a historical basis, excluding the Idaho Falls facility, the company would have generated revenue in the second quarter of approximately $660 million and adjusted EBITDA of approximately $98 million. For the first half of 2026, excluding Idaho Falls, revenue would have been roughly $1.29 billion and adjusted EBITDA would have been approximately $173 million. We believe these ex Idaho Falls metrics are important because they provide a better view of the future growth profile of the company, particularly as we continue to focus on higher acuity outpatient procedures, physician recruitment, de novo development, health system partnerships and disciplined capital allocation. Turning to our outlook. We are reaffirming our previously issued full year 2026 guidance for revenue of $3.35 billion to $3.45 billion and adjusted EBITDA of at least $530 million. This excludes any financial impact from the Idaho Falls transaction. As we've noted, the transaction has not yet closed and remains subject to customary closing conditions, including the requisite physician member and physician governing board approvals. Given this fact, we believe the cleanest approach is to reaffirm our existing guidance at this time and provide updated guidance as soon as the transaction closes, which we expect to occur in the near term. Following the anticipated closing of the Idaho Falls transaction, we expect to provide updated guidance, additional detail regarding the company's go-forward financial profile. We will continue to prioritize disciplined capital allocation with a focus on deleveraging high-return organic growth, de novo development and strategic acquisitions that fit our return threshold. In summary, we delivered second quarter results ahead of our expectations, continue to generate same facility revenue growth, reaffirmed our full year 2026 guidance in advance, a significant portfolio optimization transaction that we believe strengthens the go-forward profile of the business. We expect to provide updated guidance promptly following the closing of the Idaho Falls transaction. With that, I will turn the call back to the operator for questions. Operator? Operator: [Operator Instructions] Our first question is from Brian Tanquilut with Jefferies. Brian Tanquilut: Maybe, Eric, I'll start just on the core business. I mean it looks like volumes are holding up okay here. Really good rev per procedure performance Curious what you're seeing in the market. I know there's a lot of concern about broader surgical volumes. So if you can share with us kind of insights on that and how you're expecting the strategy with acute or higher acuity procedures continuing to progress? J. Evans: Appreciate the question. Yes, so we're really quite pleased with the, obviously, acuity growth in our volume. You can see it showing up. As we mentioned, in our prepared remarks, we're seeing strong acuity growth across total joints. I'd also say we're seeing it in spine in a big way within the MSK bucket and also in vascular procedures. So as far as we continue to point everyone towards that same-store net revenue growth number because it is really the right way to think about the business. Clearly, that total case number is a number that the industry typically has seen higher. We expect that it will be higher over time. But we are actively pursuing and obviously prioritizing high acuity procedures and feel quite good about the year so far, and it's basically very, very aligned with our expectations. Brian Tanquilut: Got it. And then maybe just to click on the Idaho Falls discussion here a little bit. As we think about the go-forward strategy, should we expect more divestitures or any other surgical hospitals that you would consider either partnering or maybe even divesting? And then, Dave, just any other color on tax liability leases and things like that, that we need to consider? Or is the $795 million the right kind of like net number? I know you already gave the impact on leverage. Just anything you can add to those discussions in Idaho Falls and go-forward strategy? J. Evans: Yes, I really appreciate the question, Brian. I think on the portfolio optimization, I would say this is by far and away, the biggest part of what we were planning to do. Obviously, the most impactful big size of the business. And as we show in our supplemental information, we posted had such a dramatic impact on kind of the simplification of our business, giving us a pure-play short-stay surgical company. I would say this, we -- I want to reiterate, we really, really like the surgical hospital business. We have a lot of great surgical hospitals that perform very well. They're very focused on driving high-value elective surgery cases. And in general, that's a business we are quite happy with. Now I would say, from an optimization standpoint, I would use the example last year, we did the partnership in Bryan, Texas with Baylor. I think you'll continue to see us do thoughtful partnerships that we think continue the goals we talked about with optimization, deleveraging expediting free cash flow growth and simplifying the business. But this is by far and away, the biggest part and step there. And so you shouldn't expect there's going to be specific reports beyond that. And Dave, I'll let you maybe dive in a little bit on this question. David Doherty: Yes, yes, sure. So first off, on the tax piece, Brian, were protected still even with this transaction with the state and federal NOLs that we carry into this transaction. So there will be no tax leakage on this transaction, and we're still protected on future earnings by some portion of the NOL. So there won't be a tax cash payer for the foreseeable future at this point. And on the transaction itself and the calculations on how you look at that, the $795 million total consideration that we'll receive as an organization, will be used partially to pay down debt on the balance sheet. So the net cash proceeds of those will be determined at the closing date after you look at the net indebtedness of the facility as well as working capital on a couple of other matters that sit inside there. In our financial supplement that we released this morning, you'll see that the Idaho Falls facilities themselves carry about 1/3 of the company's total noncorporate debt. So about $350 million of consolidated debt that sits on the books, about 3/4 of that is our proportionate share based on the ownership that we have out there. I hope that helps. Operator: Our next question is from Joanna Gajuk with Bank of America. Joanna Gajuk: So I guess in terms of the core business, if I may, first, on the payer mix, right, and you said it was anticipated that the government mix will increase. So just to clarify, so you're talking about the surgical hospital exposure not ASCs because my related question is, in the ASC side of things, have you seen kind of the inflow of some of the procedures because of the removal or the start of the process of removing the Medicare inpatient on the list? Is that something that you can also maybe flesh out in terms of the types of procedures you're seeing from that? J. Evans: Joanna, thanks for that question. I'm going to go ahead and turn this over to Justin to give some detail on what they're seeing in operations from a payer mix perspective. Justin Oppenheimer: Great. Thanks, Eric, and thanks, Joanna, for the question. Maybe first just on the payer mix. As mentioned during the opening remarks, the payer mix came in for the first 6 months of the year on plan. And that's something that we studied and prioritized going into the year. To your question though about ASCs versus hospitals, it was also mentioned, we saw a moderation in payer mix slightly more on the hospital side than on the ASC side. And then shifting to your second question, we have started seeing cases and continue to see cases that come off the inpatient-only list come into the ASCs. That's part of what's driving the acuity that we're seeing, especially more complex things in orthopedics, cardiovascular and spine, as Eric mentioned before. Joanna Gajuk: If I may follow up on that comment about hospitals, so the mix deterioration on the hospital side or surgical hospital side, is that related to some of the people losing insurance on exchanges or just something else because you made it sound like you had expected it. So that's why I just want to clarify like what exactly was happening with the pay mix in surgical hospitals. Justin Oppenheimer: Yes. It's largely just what we're all seeing in the industry is a shift in the basis in where they're being performed, which is also having an effect on revenue and payer mix. Just to clarify your comment about exchange and the HIX business, that's a relatively small and material part of our business. Our exposure to it is much, much smaller than what you see in broader acute care hospital operators, right? So we're a short-stay surgical facility provider. And because we don't have a lot of emergency departments or uninsured exposure, that really makes our risk much smaller. And I think we're even smaller now with the divestiture of Idaho Falls. J. Evans: Yes. Justin, just to tag on to that. I mean, just to reiterate the point, when you look at the transaction we just made, we have a very small emergency business today, which is part of the reason we have very little HIX exposure, over half of that goes away with the sale. And so we're clearly simplifying the business. On the payer mix side, you mentioned uninsured and HIX, I would just remind everyone that really isn't a risk for us. purely elective business. Our Medicaid business actually post the pending transaction would be less than 2%. And so we look at that going forward as risk that we would have in any kind of economic situation would simply be volume, we would not have exposure to uninsured or underpaying -- or underinsured patients. Operator: Our next question is from Matthew Gillmor with KeyBanc. Matthew Gillmor: Just two. First, quick confirmations on Idaho Falls. Just in terms of the mathematics in terms of the net proceeds, the way to think about it is the $795 million and then we deduct the finance lease and the other debt, and that gives us some sense for the net proceeds to you all. And then also, could you just confirm that the transaction includes some of the related operations in that market, not just the hospital facilities themselves? David Doherty: Yes. Yes, Matt. I can confirm both the way you're thinking about the cash proceeds is approximately correct. But just be careful when you're looking at the debt that we included in our financial supplement, which is the consolidated debt, all of that consolidated debt, of course, is going to come off of our balance sheet. But what will affect the net capital is it's just our proportionate share, which is roughly 3/4 of that amount. Of course, cash proceeds will also be impacted by the cash that sits on the books at the time of closing and as well as the working capital. So that's what makes it difficult for us to give you an accurate number on that net cash proceeds at this point. Those won't be known until the closing, of course. And this transaction, when it does close, does represent the entirety of the Idaho Falls market, including the ASCs, physician practices and other ancillary businesses that were owned by Mountain View Hospital. Matthew Gillmor: And then I thought I might ask about the ASC rate proposal for 2027. It seems sort of in line with what you normally expect, but MSK maybe got a little bit of a bigger bump. So I just thought I'd see if you had any perspective to share on how that proposal lined up with your general expectations. J. Evans: Matt, I guess we -- I would say we were very pleased with how the Medicare program continues to, I think, value the ASC space. We've said in the past, no matter whether it's a Democrat or Republican government, we've had broad support. And obviously, the reason for that is we create a ton of value. We're seeing that investment continue to happen. And I think that, yes, you're right. We like the fact that they're focusing on some of those really higher-acuity places where we create the most value. We expect that we'll continue to see strong support for the ASCs from the governing forward. And very pleased with the initial read and it was in line with what we expected. Operator: Our next question is from Benjamin Rossi with JPMorgan. Benjamin Rossi: Bringing some of the Idaho Hospital operating changes, you mentioned that Idaho Falls includes business lines like ED, ICU and some other noncore services. How should we think about the degree to which this divestiture reduces your exposure to acute care volatility and headwinds versus your core ambulatory short-stay model? And then on the expense side, how do you think the shift in service mix and payer mix will adjust to your consolidated expense profile on the remaining assets going forward? Do you think this will allow some cost release on maybe hospital-based areas like pro fees for emergency medicine or radiology? J. Evans: Yes, great question. So I would just start with saying that -- and this is somewhat highlighted in our supplemental documents, but it greatly simplifies our business and dramatically reduces our exposure to traditional acute care. As we point out in the documents, over about 3/4 of our total nonsurgical admissions are in this market. The majority of our ICU beds, really the -- this is probably by far and away, the market that's furthest from the pen as far as pure short-stay surgery. And what you're seeing even in the year, if you look at the way the market is laid out in the document, you can see it's really not growing, partially because of the pressures that you're seeing from things like Medicaid, some of the changes that are happening related to infusion on site of care, there's a lot of unique things there that only happen there. And so we definitely -- you can read into this that this takes away a lot of those things, we're not really in that business in traditional acute care, and it certainly reduces our exposure to those pressures moving forward, which is a significant positive, obviously, for the company. The second question, I'll let Dave give a little more color on. David Doherty: Yes. On the -- I think again, spot on the question, the expense profile of the company does change, predominantly on the pro fees and medical fees line item, as you would imagine, with some of these nonsurgical procedures and the high expense profile that sits there. So I think you'll see a noticeable change there. I think it will be more muted in the other aspects of our simplified P&L. But we'll provide that color when we've updated guidance ex Idaho Falls. J. Evans: Yes. I got a highlight, too. You see in the document that our cash conversion improves. This is a very capital-intensive market. And so it simplifies the business, improve cash conversion, reduces our exposure to some of those pressures. And so again, we feel like it accomplished those key objectives we set out for when we started a portfolio optimization. Benjamin Rossi: Super helpful. Just as a follow-up on maybe OR capacity and general throughput. Can you just comment on potential capacity constraints from things like OR staffing, anesthesia coverage or block availability that could potentially impact volumes in 3Q and 4Q? And then when you compare between the ASC surgical hospitals? Are there any noticeable differences in those OR dynamics? Justin Oppenheimer: Yes. Maybe I'll hop in and answer the second one first, which there are no notable dynamics differences between the surgical go in our ASCs on capacity they're really very similar acting facilities now in our first state business. In terms of constraints as we look at the back half of the year, you're not seeing any staffing issues or shortages. We are not seeing any anesthesia issues that are different than we've been talking about in the past, nothing to constrain capacity for sure. And then all of our facilities do still have some facility -- some capacity of room to grow. So no foreseen barriers from that standpoint. J. Evans: Yes. I might just remind you on capacity. We tend to -- as you guys know, we run a day -- weekday business. We have a kind of unlimited ability in the short run to open up evenings and weekends. You see us do that in Q4. And we are constantly assessing our facilities and trying to stay ahead of, and we do a pretty good job of this, adding capacity where we see the run rate increasing. And so Justin and his team look at that constantly. Luckily, the smaller facilities as you get away from facilities like Idaho Falls, the ability to pivot, add procedures, even move the facilities if required is obviously much easier and then the complexity of some of the large markets like Idaho Falls. Operator: Our next question is from Sarah James with Cantor Fitzgerald. Sarah James: I just wanted to circle back to the commercial mix pressure. Was any of this related to the physician churn that you brought up in 4Q with a little bit more Medicare mix away from commercial. Has that improved in those markets? I think you called it Market 3. And then being that this is mostly a large surgical hospital, can you confirm if it is or is not Idaho Falls that was causing this mix pressure. J. Evans: Yes. So thanks for the question. I would say we are -- certainly, there's some of last years' experience is in our guide, right, that's in moderating. And so we're lapping that as we go through the course of the year. So there is certainly part of that. And then again, in a given year, we watch very closely the mix of our new recruits. Sometimes for higher acuity reasons, it might start out being a little bit higher Medicare. We do watch that, and we have guided for that where it's applicable. But the underlying business mix, we feel really good about. We're still competing very well in the commercial space. Expect to continue to do that. And so I would say, yes, there's some of that's in there from last year's exposure, but it's been moderating as expected throughout the course of the year. And your second question was? David Doherty: Just whether it was Idaho Falls. J. Evans: Yes. So Idaho Falls as we pointed out, obviously has a payer mix that's a little bit different than the rest of the company. So again, if you look at our document, you'll see that Medicaid falls by over half for the company. Certainly, because of its ER exposure, its mix can vary differently from the company. But there were other surgical hospitals that had unique challenges last year that are all taken into account here, and we feel good about how they have recovered. In fact, those facilities are on track this year with what we expect and continue to be a big part of our portfolio going forward. Sarah James: Great. And last one, could you just refresh us on site neutrality exposure after the closing of Idaho Falls? J. Evans: Yes. So look, we think from a site anchor perspective, obviously, we want to be true to our ethos, which is we believe patients should be taken care of in the right site of care. Certainly, we become a less acute traditional acute kind of looking place when we only have -- when Idaho Falls goes away, we're basically pure play. From a site neutrality perspective, we continue to believe that where the government is heading and what needs to happen in the health care system aligns perfectly with what we're trying to do, getting patients at the right price, the right place at the right time. And so while there certainly will be transitions timing issues for that. We think in the long run, we're going to pick up additional business as it moves out of the traditional acute setting, given our large footprint, and that includes at our short-stay surgical hospitals, which are well positioned from a value perspective. So I continue to believe that the direction and the value position that payers and Medicare is taking aligns very, very well with where we want to take the business. Operator: Our next question is from Andrew Mok with Barclays. Andrew Mok: You called out SW&B as a percentage of revenue increasing due to payer mix. However, the expense itself was also up, I think, 7% year-over-year. Can you provide a little bit more color on the underlying drivers of that growth and how we should be thinking about wage inflation going forward? And related to that, as you continue to shift towards higher acuity procedures, does that typically require a more specialized and higher cost surgeon mix as well? J. Evans: Yes. Thanks for the question. On SW&B, we have not seen from a per unit cost or from a labor cost, any abnormal pressures. That's been well controlled. When we say payer mix, obviously, as we have a higher acuity, it definitely shows up in net revenue. But in some of those, obviously, longer procedures do require some additional labor, and that's showing up in the numbers. But underlying that, labor -- the labor market has recovered very nicely. We don't have any pressures there. We're not seeing the need for any kind of premium labor. We continue to be a preferred site of care. And our expectation is that's going to continue to be a driver of our operating leverage moving forward. When it comes to the higher acuity stuff, you're correct. They can be -- they can certainly have higher implant costs, but the reality of it is on a per minute basis, how we think about the business per minute earnings, adjusted EBITDA, a little lower margin, but higher overall earnings growth, a place we're very, very excited to grow and certainly have been focusing on. Andrew Mok: Great. And maybe just a follow-up on the commercial mix. I think in the back half of '25, you shared some of the deliberate actions you were taking to address commercial mix. I understand that, that number is still moving negatively through the second quarter, but can you update us on the initiatives that you took and progress there? J. Evans: Yes. Specifically with the markets that we called out last year, we've been very, very focused on partnering with our physicians to ensure we're positioning that marketplace to compete and hopefully take commercial market share. given our value position, again, we feel like we are very well positioned against traditional acute care players in the service lines we're in. And in all 3 of the markets we called out, we have action plans moving. We have -- we are on pace or ahead of pace with where we expected to be for the year. And so those steps include a tighter partnership all the way through the referral chain, making sure we are actively managing what's happening in the marketplace. We had a couple of those pressures last year, but feel really good about our commercial position. Again, this business is highly commercial. When you look at our base, all elective while there will naturally be some government growth just based on the aging of the population, we continue to expect that we are going to maintain and grow commercial share moving forward. Operator: Our next question is from A.J. Rice with UBS. Albert Rice: I know you mentioned in the prepared remarks that you've obviously been focused on this transaction, and therefore, your pursuit of incremental acquisitions has sort of moderated at this point. How quick can you get that pipeline back up and running? What does any pipeline look like at this point? And thoughts on being able to get back to a normal year of acquisitions in 2027. J. Evans: A.J., I appreciate the question. Yes, so a great question. Obviously, we've had an immaterial amount of transactions this year, which is a little bit abnormal for us, although even last year, we tended -- we very weighted to the fourth quarter. We still have an active pipeline we're managing. We feel good about our position in the industry. As you know, still highly fragmented across this 6,500-plus Medicare license ASCs, and there's a bunch that aren't medical license. And we feel like given our position as the last independent scaled player in the industry, we're really well positioned to continue to be a consolidator in that. We do expect before the end of the year, we'll get some deals done. But we've acknowledged it's not going to be at the $200 million level. Bigger picture to your point, we have no change in our belief or our opportunity in M&A investment going forward. So we -- that hasn't changed. Obviously, again, M&A can be fickle on timing. We're going to be extremely, extremely disciplined which is what we've done throughout, which often means that platform multiples aren't going to be something we have to pay because we do find great opportunities on smaller opportunities that we can quickly integrate into our company. And we think those -- we know those continue to exist in the marketplace and are excited about that. I'd also mention just reiterate our de novo focus that -- those tend to be highly MSK. We have 6 underway, 7 in the pipeline that we're very excited about. Those all take time. But again, that's a part of our broader M&A strategy to ensure we're delivering shareholders the most cost-effective use of capital as we grow our business. Albert Rice: I know you've talked about cost efficiency programs, some as technology investments, some as other initiatives. And I think you've highlighted opportunities around anesthesia costs, purchase standardization, operating room utilization and staffing efficiency. I know you've touched on some of that on some of the previous questions, but anything more to highlight on initiatives there and progress you're making? J. Evans: Yes. I appreciate the question. And we are very, very focused on cost management, our opportunities to continue to maintain and grow our margin. And that's one reason I'm super excited to have Justin Oppenheimer onboard as our COO. I'll let Justin give you a little bit more flavor there, and you're going to hear a lot more about that over the coming quarters because it remains a big, big focus for us. Justin Oppenheimer: Sure. Thanks, Eric. Yes. So cost management discipline is definitely one of our key strategic pillars as an operating unit this year. Maybe just to add a little bit of detail I'd say, 3 key levers we're going after labor supplies and then eliminating other systematic inefficiencies that are across our business. And we're starting to see the results of those. I think -- if you look at our SW&B or supplies or G&A, all of those are going down as a percent of revenue from Q1 to Q2, and there's certainly more to unlock there and continues to be a priority of the team. Operator: Our next question is from Whit Mayo with Leerink Partners. Benjamin Mayo: I haven't heard you guys talk about physician recruiting and the contribution year-to-date from the new physicians. Anything to share any numbers around that might be helpful. J. Evans: Sure. Whit. I'll go back -- I'll start with kind of what we shared in the opening remarks. We've added 191 physicians in Q2. really strong number. We feel quite good about our physician recruitment. In that cohort, their net revenue is up 16% versus the cohort last year. So as you know, last year was a year where the net was more of a pressure point than it's been in the past. We're quite excited about where the recruiting sits year-to-date and the focus and renewed kind of push we've had around making sure we're well positioned there when it comes to physician transition. So it's been a big focus for us. Year-to-date, we are at or above where we expect to be in that number, and we'll continue to keep you guys updated throughout the year. Benjamin Mayo: Okay. Great. And did you share how much MSK or joints were up year-over-year in the quarter on a same-store basis? J. Evans: No, here's what I would say on the actual overall volume. We -- when you look at our net revenue growth, there's a few things I would point to. First of all, it's not just total joints. And total joints continues to be an outsized grower for us. It's a big opportunity for us. You know it's been a double-digit opportunity for a long time, continues to do that. On top of that, though, we would emphasize that we're seeing really nice double-digit growth in other places. -- our cardiology, particularly in the vascular space is growing quite nicely, and spine really is starting to move out of hospitals. There was a question earlier about the inpatient outpatient or inpatient only list. I do think as some of those complex cases become eligible in our space, you're seeing technology allow them to come in. So look, joints has a long way to go. As you guys know, the majority of those are still done in a traditional acute care setting. We expect to continue to see that drive outsized growth. But I would also broaden that out to say our acuity is growing in several places, notably in spine and also notably in cardiovascular cases. Operator: Our next question is from Brian Hendrix with RBC Capital Markets. Benjamin Hendrix: This is Ben Hendrix. Just a quick question Idaho Falls, the roughly 1/4 of those acute type facilities maybe nonsurgical EV, et cetera, that are continuing in the portfolio. I want to get an idea of how much of those are either congruent with or complementary to your remaining surgical hospitals. Is there a place for those within those capabilities? Or should we think about that remaining one quarter as fair game for continued portfolio optimization in the future. J. Evans: Yes, it's a great question, Ben. I would say that, that 1 quarter is not all that concentrated. We're certainly going to still be, as I mentioned, we're going to be opportunistic if there are opportunities to simplify the business. When you think about what's left there, our surgical hospitals in general, even the ones that do have ER, see so very few in kind of any one location, you're down to a de minimis number as far as the impact on our business. Actually, well over 90% -- over 95% of our business is now outpatient -- or is now a short-stay surgical cases. So you think about the kind of the mix of the business has changed post pending sale. So while that number there still is some left, it's really not necessarily all that concentrated. We're going to continue, again, to look for opportunistic opportunities I would point to the Bryan, Texas example as a way we could do that. But the biggest step in our portfolio optimization was this transaction. Dave, you want to add anything? David Doherty: Yes. Maybe just a quick reminder. The emergency room as a referral pattern really only applies to the Idaho Falls market. In many of the surgical hospitals that we do have an ED. They're largely because state requirements are there. And we're more of the diversionary ED than we are the referral pattern. Most of the referral pattern in the rest of the business surgical hospitals are going to look very much like an ASC, where it comes from the independent physician office who also has an ownership interest in the surgical hospital. Benjamin Hendrix: Just a follow-up to a prior question. You mentioned seeing double-digit growth in the cardiac space and other outside of MSK. Is this signaling maybe there's a pickup in more greater adoption of cardiac activity? I knew that was a slower burn than the ortho stuff. So just wanted to see if maybe there's something that's happening where we were seeing more pickup in ASC cardio. J. Evans: Yes, I appreciate the question. I would say it's more vascular-based is where most of the growth is. While we have some cardio growth, it's a small end. And I think our story there remains the same that -- we've got a long runway in orthopedics. I think when in and if that ever starts to slow down, certainly, cardiology presents a tremendous opportunity for cost savings, but it will be a very slow burn, as you mentioned, just because of the structural things within states, the high level of employment, where we're really seeing progress is on the vascular side think about vascular EP, CRM, those kind of places where less cath lab intensive, at least initially. But again, over time, we certainly see the opportunity in cardiology being bigger than that. Operator: Our final question comes from Ryan Langston with TD Cowen. Ryan Langston: Can you give us a sense on the case growth and revenue per case growth split between ambulatory and surgical hospitals? Anything interesting to call out in terms of trends between the two? J. Evans: No. I think what I'd say is those businesses are all in one segment because they do look so similar. I don't think there's anything that I would call out that's made significantly different in those businesses or where a trend has been different. That's especially true now that we've -- we're in the process of letting go of Idaho Falls, which clearly did have a little bit of a different approach with the community hospital attached to it. But big picture, what we love about our go-forward portfolio is that it's focused on the fast-growth short-stay surgery space. And in many -- in almost all cases, it looks very similar across the entire platform. Ryan Langston: Just I was -- on the physician recruiting details, I appreciate all the context there. Can you remind us how long it typically takes a physician to get up and running like at a normal run rate at your centers? J. Evans: Of course. Yes. So typically, we've talked about this in the past that physician recruit will double their business in year 2, which kind of makes sense if you think of a midyear conversion. But there certainly is a period of time where that physician is coming in, getting to know the facility, getting more comfortable with our clinical capabilities before they bring their whole book. But again, that typically doubles in the second year of a cohort, and we see tremendous double-digit growth in that third year. So there is a multiyear growth opportunity there. I think it depends on the type of physician and maybe the level of acuity just how long it takes them to get comfortable in this setting, especially if they have not been in our ambulatory setting before, but we see rapid progress over that first couple of years. With that, I think that was our last question today. I want to thank you again for joining us for today's call, and have a great rest of the day. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation. Before you buy stock in Surgery Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Surgery Partners wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Surgery Partners (SGRY) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Surgery Partners, Inc.? Here are five stocks we like better. Surgery Partners exceeded its internal Q2 expectations, reporting revenue of approximately $849 million, up 2.7% year over year, while adjusted EBITDA totaled about $125 million. Same-facility revenue grew 5%, driven primarily by pricing, higher-acuity procedures and a 4.8% increase in revenue per case. The planned sale of the Idaho Falls operations to Intermountain Health is expected to generate approximately $795 million in gross proceeds, which Surgery Partners intends to use mainly to repay debt and reduce leverage by about 0.3 turns. The divestiture would make more than 95% of the company’s remaining business outpatient or short-stay surgical care. The company reaffirmed 2026 guidance for revenue of $3.35 billion to $3.45 billion and adjusted EBITDA of at least $530 million, excluding the Idaho Falls transaction. Physician recruitment and facility development remain active, but management said 2026 M&A investment will fall short of its previously targeted $200 million average. Here’s Why Surgery Partners Could Be the Next Hot Takeover Surgery Partners (NASDAQ:SGRY) reported second-quarter 2026 revenue and adjusted EBITDA above its internal expectations, while reaffirming its full-year outlook ahead of the anticipated sale of its Idaho Falls market operations to Intermountain Health. The company reported net revenue of approximately $849 million for the quarter, up 2.7% from a year earlier. Adjusted EBITDA was approximately $125 million, compared with approximately $129 million in the prior-year quarter, and adjusted EBITDA margin was 14.7%. → MarketBeat Week in Review – 08/03 - 08/07 Surgery Partners feeling no pinch from macroeconomic weakness For the first half, net revenue rose 3.6% to approximately $1.66 billion, while adjusted EBITDA declined 2.3% to approximately $228 million. Year-to-date adjusted EBITDA margin was 13.7%, compared with 14.5% in the prior-year period. Chief Executive Officer Eric Evans said second-quarter same-facility net revenue increased 5% from the prior year, including 4.8% growth from rate. Same-facility case volume increased 0.3% during the quarter, while net revenue per case increased 4.8%. → Quantum Earnings Week: Winners and Losers Are Finally Emerging Surgical Centers, Med-Tech Stocks Up On Pent-Up Surgical Demand The company performed about 168,000 surgical cases in the quarter. Evans cited orthopedic and vascular procedures as contributors to growth, and said the company continued to see higher-acuity activity in total joints, spine and vascular services. For the first half, same-facility revenue rose 4.9%, reflecting a 0.8% increase in cases and 4% growth in net revenue per case. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Commercial payer mix represented about 49% of second-quarter net revenue, down approximately 350 basis points from the prior-year period. Chief Financial Officer Dave Doherty said the decline was accompanied by a corresponding increase in government payments, driven by shifts at larger surgical hospitals and case growth that skewed somewhat toward government pay. Management characterized the payer-mix shift as anticipated and said it was reflected in the company’s full-year guidance. Chief Operating Officer Justin Oppenheimer said the moderation was somewhat greater at surgical hospitals than at ambulatory surgery centers. The company also said exposure to exchange coverage was relatively small and that its Medicaid mix is expected to fall further following the Idaho Falls transaction. Surgery Partners said 191 new physicians began using its facilities in the second quarter, bringing year-to-date recruits to 330. New physicians represented a range of specialties, including orthopedics, ophthalmology, gastrointestinal care and pain management. Evans said revenue from the 2026 recruiting cohort was nearly 16% higher than revenue from the prior-year cohort. The company said recruited physicians generally build volume over multiple years, with a typical recruit doubling business in the second year as they become more established at a facility. The company had six de novo facilities under construction at quarter-end and another seven in its pipeline. Management said these projects are supported by health systems and physician groups in selected markets. While Surgery Partners continues to pursue acquisitions, Evans said the company completed an immaterial amount of M&A activity year-to-date and will not meet its previously discussed $200 million average annual M&A investment target in 2026. Management said it still expects to complete additional acquisitions before year-end and views the fragmented ASC industry as a continuing consolidation opportunity. The company has signed definitive agreements in escrow to sell its interests in Mountain View Hospital and Idaho Falls Community Hospital, along with the broader Idaho Falls market operations, to partner Intermountain Health. The transaction remains subject to customary closing conditions, including physician member and physician governing board approvals. Evans said the Idaho Falls facilities have expanded beyond Surgery Partners’ core short-stay surgical focus to include obstetrics, neonatology, pediatrics and other nonsurgical services. The sale includes the market’s ambulatory surgery centers, physician practices and ancillary businesses owned by Mountain View Hospital. Doherty said Surgery Partners expects to receive approximately $795 million in gross consideration at closing. Final net cash proceeds will depend on indebtedness, cash and working-capital levels at closing. The company expects to use proceeds primarily to repay debt, reducing balance-sheet leverage by approximately 0.3 turns. The Idaho Falls facilities represented about one-third of the company’s non-corporate debt and approximately 32% of total finance lease obligations, according to Doherty. Average annual capital expenditures for the facilities were approximately $17 million over the past three years. Although the gross consideration equates to about seven times the facilities’ trailing 12-month adjusted EBITDA, Doherty said it equates to roughly 17 times the average distributions received by Surgery Partners over the past three years. Excluding Idaho Falls, Surgery Partners said it would have generated approximately $660 million in second-quarter revenue and $98 million in adjusted EBITDA. For the first half, revenue excluding the facilities would have been about $1.29 billion and adjusted EBITDA about $173 million. Management said the divestiture would reduce exposure to Medicaid, emergency department activity, intensive care beds, nonsurgical admissions, inpatient pediatrics, retail pharmacy and compounding pharmacy operations. Doherty said the remaining company would have a more concentrated ASC and short-stay surgical profile, while Evans said more than 95% of the go-forward business would be outpatient or short-stay surgical cases. Salaries and wages were 29.8% of revenue in the quarter, improving from 30.5% in the first quarter but exceeding 28.5% a year earlier. Supplies represented 26.7% of revenue, while professional fees and medical-related expenses were 12.1% of revenue. Management cited seasonal revenue improvement and operating discipline for sequential expense-rate improvements. Operating cash flow totaled approximately $59 million in the second quarter. Surgery Partners distributed $46 million to physician partners and spent approximately $7 million on maintenance capital expenditures. Cash was approximately $217 million at quarter-end, with $75 million in revolver borrowings and approximately $618 million in available revolver capacity. The company’s credit agreement net debt leverage was approximately 4.4 times at quarter-end, compared with 4.3 times at the end of the first quarter. Balance-sheet base net debt to EBITDA was approximately 5.1 times, consistent with the prior quarter. Surgery Partners reaffirmed its 2026 guidance for revenue of $3.35 billion to $3.45 billion and adjusted EBITDA of at least $530 million. The outlook excludes any impact from the Idaho Falls transaction. Management said it expects to update guidance after the transaction closes. Surgery Partners, Inc operates as a healthcare services provider specializing in the management and ownership of ambulatory surgery centers, surgical hospitals and multispecialty rehabilitation hospitals across the United States. Through its network of facilities, the company coordinates and delivers a broad range of outpatient surgical procedures in specialties such as orthopedics, ophthalmology, otolaryngology, gastroenterology, pain management and general surgery. Its integrated platform offers ancillary services including on-site imaging, laboratory testing, infusion therapy and physical, occupational and speech rehabilitation. Since its establishment in 2010 and subsequent public listing in 2015, Surgery Partners has focused on strategic partnerships with physicians and health systems to expand access to cost-effective outpatient care. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Surgery Partners Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Surgery Partners (SGRY) came out with quarterly earnings of $0.1 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +400.00%. A quarter ago, it was expected that this surgical facilities operator would post a loss of $0.15 per share when it actually produced a loss of $0.03, delivering a surprise of +80%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Surgery Partners, which belongs to the Zacks Medical Services industry, posted revenues of $848.9 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.62%. This compares to year-ago revenues of $826.2 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Surgery Partners shares have added about 0.5% since the beginning of the year versus the S&P 500's gain of 13.3%. While Surgery Partners has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Surgery Partners was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #1 (Strong Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.06 on $851.78 million in revenues for the coming quarter and $0.36 on $3.41 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical Services is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Auna S.A. (AUNA), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 18. This company is expected to post quarterly earnings of $0.26 per share in its upcoming report, which represents a year-over-year change of -21.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Auna S.A.'s revenues are expected to be $350.52 million, up 13.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Surgery Partners, Inc. (SGRY) : Free Stock Analysis Report Auna S.A. (AUNA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Looking back on outpatient & specialty care stocks’ Q1 earnings, we examine this quarter’s best and worst performers, including Surgery Partners (NASDAQ:SGRY) and its peers. The outpatient and specialty care industry delivers targeted medical services in non-hospital settings that are often cost-effective compared to inpatient alternatives. This means that they are more desired as rising healthcare costs and ways to combat them become more and more top-of-mind. Outpatient and specialty care providers boast revenue streams that are stable due to the recurring nature of treatment for chronic conditions and long-term patient relationships. However, their reliance on government reimbursement programs like Medicare means stroke-of-the-pen risk. Additionally, scaling a network of facilities can be capital-intensive with uneven return profiles amid competition from integrated healthcare systems. Looking ahead, the industry is positioned to grow as demand for outpatient services expands, driven by aging populations, a rising prevalence of chronic diseases, and a shift toward value-based care models. Tailwinds include advancements in medical technology that support more complex procedures in outpatient settings and the increasing focus on preventive care, which can be aided by data and AI. However, headwinds such as reimbursement rate cuts, labor shortages, and the financial strain of digitization may temper growth. The 7 outpatient & specialty care stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 5.9% above. Luckily, outpatient & specialty care stocks have performed well with share prices up 50.3% on average since the latest earnings results. With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ:SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals. Surgery Partners reported revenues of $810.9 million, up 4.5% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a strong quarter for the company with a beat of analysts’ EPS estimates. Eric Evans, Chief Executive Officer, stated, “We are encouraged by our solid start to 2026, with same store revenue growth of 4.4% in line with our Q1 and long-term growth expectations. As we continue to navigate near-term market dynamics, our cost management discipline and continued execution on physician recruitment position us well to meet or exceed our 2026 plan. Our portfolio optimization efforts also remain critical to our long-term strategy as we take steps to better align with our core short-stay surgical operating model. Looking ahead, we are confident in our ability to return to our growth algorithm through capitalizing on market opportunities, driving operational excellence, and thoughtful capital deployment.” Surgery Partners delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 2.5% since reporting and currently trades at $14.56. Is now the time to buy Surgery Partners? Access our full analysis of the earnings results here, it’s free. Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements. agilon health reported revenues of $1.42 billion, down 7.3% year on year, outperforming analysts’ expectations by 3.2%. The business had a stunning quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates. agilon health delivered the highest guidance raise and highest full-year guidance raise among its peers. On a dimmer note, the company lost 85,000 customers and ended up with a total of 426,000. The market seems happy with the results as the stock is up 309% since reporting. It currently trades at $113.87. Is now the time to buy agilon health? Access our full analysis of the earnings results here, it’s free. With a nationwide footprint spanning 671 clinics across 42 states, U.S. Physical Therapy (NYSE:USPH) operates a network of outpatient physical therapy clinics and provides industrial injury prevention services to employers across the United States. U.S. Physical Therapy reported revenues of $198.3 million, up 7.9% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates. U.S. Physical Therapy delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 14% since the results and currently trades at $63.36. Read our full analysis of U.S. Physical Therapy’s results here. With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE:SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States. Select Medical reported revenues of $1.42 billion, up 5% year on year. This number surpassed analysts’ expectations by 0.9%. However, it was a slower quarter as it logged a significant miss of analysts’ EPS estimates and full-year EPS guidance in line with analysts’ estimates. The stock is flat since reporting and currently trades at $16.54. Read our full, actionable report on Select Medical here, it’s free. With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ:LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states. LifeStance Health Group reported revenues of $403.5 million, up 21.2% year on year. This print topped analysts’ expectations by 4.2%. Overall, it was an exceptional quarter as it also logged EBITDA and revenue guidance for next quarter exceeding analysts’ expectations. LifeStance Health Group pulled off the biggest analyst estimate beat and fastest revenue growth, but had the weakest guidance update among its peers. The stock is up 23.4% since reporting and currently trades at $9.09. Read our full, actionable report on LifeStance Health Group here, it’s free. Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure? These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. 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Surgery Partners’ first quarter saw revenue growth above Wall Street expectations, with management attributing performance to stability across its surgical facilities and initial recovery in previously pressured hospital markets. CEO Eric Evans highlighted ongoing improvements in operational consistency and the company’s focus on higher-acuity procedures. The company also navigated short-term headwinds from weather-related disruptions in lower-acuity markets, which tempered overall case volume. Evans emphasized the strategic benefit of recent investments in surgical robotics and the continued expansion of musculoskeletal (MSK) services as key factors supporting the quarter’s results. Is now the time to buy SGRY? Find out in our full research report (it’s free). Revenue: $810.9 million vs analyst estimates of $798.3 million (4.5% year-on-year growth, 1.6% beat) Adjusted EPS: -$0.03 vs analyst estimates of -$0.14 (77.8% beat) Adjusted EBITDA: $102.3 million vs analyst estimates of $99.76 million (12.6% margin, 2.5% beat) The company reconfirmed its revenue guidance for the full year of $3.4 billion at the midpoint EBITDA guidance for the full year is $530 million at the midpoint, in line with analyst expectations Operating Margin: 8.1%, in line with the same quarter last year Sales Volumes were flat year on year (6.5% in the same quarter last year) Market Capitalization: $1.79 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Brian Tanquilut (Jefferies) asked COO Justin Oppenheimer about operational priorities and areas for efficiency gains. Oppenheimer highlighted a focus on organic growth through physician recruitment and hardwiring cost management at the facility level. Matthew Gillmor (KeyBanc Capital Markets) requested more detail on recovery in three previously challenged hospital markets and payer mix trends. CEO Eric Evans said pressures had moderated and new leadership teams were making progress, but complete recovery would take time. Benjamin Hendrix (RBC Capital Markets) inquired about weather-related case deferrals and the potential for recovery in later quarters. Evans replied some deferred cases might return, but most volume loss was unlikely to be fully recaptured due to capacity constraints. Joanna Gajuk (Bank of America) asked about the timeline and objectives for portfolio optimization. Evans explained that divesting non-core hospital assets would improve leverage and free cash flow, with a major transaction targeted for mid-2026. A.J. Rice (UBS) questioned the pace and visibility of M&A spending, given a slow start to the year. Evans acknowledged the timing is unpredictable but affirmed the company’s long-term commitment to being an active consolidator in the ASC sector. In the coming quarters, our analysts will monitor (1) the pace and productivity of new physician onboarding and their impact on case volume, (2) successful execution and timing of portfolio optimization or asset divestitures, and (3) sustained progress in cost containment to protect margins against persistent provider tax and payer mix pressures. Additional attention will be given to the ramp-up of new de novo centers and the potential for increased M&A activity later in the year. Surgery Partners currently trades at $13.79, down from $14.20 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

Surgery Partners reported Q1 net revenue of approximately $811 million and adjusted EBITDA of about $102 million, with same‑facility revenue up 4.4% while same‑facility case growth was 0.6% (partly weather‑related); management emphasized strength in higher‑acuity musculoskeletal procedures (total joints +14.6%) and recruited roughly 140 physicians. Management reiterated full‑year 2026 guidance of revenue of $3.35–$3.45 billion and adjusted EBITDA of at least $530 million, while operating cash flow rose to about $12 million and net leverage remained around 4.3x (GAAP net debt/EBITDA ~5.1x), with plans to drive gradual deleveraging. Adjusted EBITDA margin was seasonally lower at 12.6%, and the company flagged near‑term cost headwinds from reestablishing incentive compensation and new provider taxes—estimated at roughly a $8 million full‑year impact with about $11 million of provider tax expense recorded in the quarter. Interested in Surgery Partners, Inc.? Here are five stocks we like better. Here’s Why Surgery Partners Could Be the Next Hot Takeover Surgery Partners (NASDAQ:SGRY) executives said first-quarter results were broadly in line with internal expectations, as the outpatient surgery operator saw improving stability across its portfolio and early signs of recovery in areas that were pressured late in 2025. On the company’s first quarter 2026 earnings call, Chief Executive Officer Eric Evans said Surgery Partners entered 2026 with “a select number of clearly identified and addressable headwinds,” particularly in a small subset of surgical hospital markets. Management’s focus has been on restoring operating consistency, supporting physician transitions, and positioning the business for sustainable growth. → Roblox Stock Slides to New Low as Safety Changes Weigh on Outlook Surgery Partners feeling no pinch from macroeconomic weakness Evans reported first-quarter net revenue of approximately $811 million, same-facility revenue growth of 4.4%, and adjusted EBITDA of about $102 million. Same-facility case growth was 0.6%, which Evans described as modest and below the company’s long-term algorithm, primarily due to temporary weather-related disruption early in the quarter that affected “several higher volume but lower acuity markets.” Chief Financial Officer Dave Doherty estimated the weather impact reduced case growth by roughly 40 basis points. Evans added that the disruption skewed toward lower-acuity procedures such as GI and ophthalmology and did not materially affect higher-acuity parts of the portfolio. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Surgical Centers, Med-Tech Stocks Up On Pent-Up Surgical Demand Management emphasized the company’s focus on higher-acuity procedures and said same-facility net revenue is the preferred metric for assessing growth because it reflects case volume, acuity shifts, and rate improvements. Evans highlighted strength in musculoskeletal procedures, noting total joints performed in Surgery Partners’ ambulatory surgery centers increased 14.6% year over year. Evans also pointed to ongoing physician recruiting as a key growth driver. The company recruited approximately 140 physicians during the quarter, concentrated in orthopedics, ophthalmology, gastroenterology, and other priority specialties. Evans said recruiting typically is “back-end loaded” during the year, but called first-quarter additions in line with expectations and noted the recruited physicians were “by doctor higher net revenue in total than last year’s recruiting class.” → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries De novo development also remained a focus. Evans said the company opened one de novo facility in the first quarter, bringing total de novo openings to nine over the trailing 12 months. He later added that Surgery Partners expects five de novos to open later in 2026, with seven more in the pipeline, and described these projects as heavily weighted toward musculoskeletal services. Surgery Partners posted an adjusted EBITDA margin of 12.6%, which Evans said is consistent with the seasonally lower first quarter. Doherty said supply expense was approximately 27.2% of net revenue and salaries, wages, and benefits were about 30.5% of revenue, both improving modestly year over year. Professional and medical fees and G&A were broadly in line with the prior year. Other operating expenses were 7.3% of revenue, which Doherty said was higher year over year, reflecting provider taxes. Evans said the company partially offset “one-time pressures related to reestablishing incentive compensation, increased provider taxes, and tariff pressures.” Doherty cautioned that reestablishing bonus compensation is expected to begin showing up in the second quarter and more significantly in the third quarter, putting some pressure on the salaries and benefits line as it returns “more [to] a return to normal.” On payer mix, Evans said Surgery Partners experienced “modest payer mix pressure” in the first quarter, but the trend is moderating compared with the second half of 2025. In response to a question from Barclays, Evans said commercial mix was “about 50%” in the quarter and indicated the company remains focused on recovering and growing commercial market share while also reducing expenses to improve Medicare case profitability. Evans also provided an update on three surgical hospital markets discussed on the company’s fourth-quarter call, saying pressures have moderated and that new leadership teams are in place. He said the markets were “in line with where we expected them to be” and emphasized work on commercial competitiveness and managing the timing of physician transitions. Operating cash flow in the quarter was approximately $12 million, up from $6 million in the prior-year period, which Doherty attributed to improved underlying performance, typical first-quarter seasonality, and working capital timing. Day sales outstanding were about 66 days, consistent with both the fourth quarter of 2025 and the first quarter of 2025. Doherty said improving DSO is the “single largest lever” to unlock incremental cash flow at the facility level and said the company expects progress over the course of the year. Interest expense increased about $7 million year over year, reflecting higher rates after the company’s interest rate swap expired. Doherty said the headwind was partly offset by credit facility base-rate reductions executed in 2025 and improved working capital performance. He also said the swap-related interest pressure would not persist in the second quarter. Capital expenditures included $9 million of maintenance spending, largely tied to equipment refreshes, IT, and routine facility investments. Doherty said Surgery Partners also made $58 million of distributions to physician partners, consistent with historical patterns. Net leverage under the company’s credit agreement was approximately 4.3 times, consistent with the fourth quarter, while GAAP net debt to adjusted EBITDA was approximately 5.1 times. Doherty said management expects to drive gradual deleveraging over time, supported by earnings growth and portfolio optimization. On provider taxes and related items, Doherty said the combined pressure from a Medicaid rate reduction in one state and provider taxes introduced in two new states is estimated at around $8 million for the full year, with the impact somewhat front-loaded. In a later exchange, management said provider tax expense within other operating expenses was about $11 million at a gross level in the quarter, noting that a large majority of the year-over-year increase in other operating expenses was tied to provider taxes. Surgery Partners deployed approximately $4 million of capital on acquisitions in the first quarter. Doherty said the company estimates those acquisitions will contribute about $7 million of revenue in 2026 based on internal development reporting. Evans said the company continues to target deploying about $200 million annually but reiterated that M&A is not included in 2026 guidance because timing can be unpredictable. He characterized any acquisitions as “pure upside to guidance.” Evans also said the company is advancing its portfolio optimization initiative, focused on a small number of larger surgical hospital markets with broader services than the company’s core short-stay strategy. He said the company is in “advanced discussions” on one key opportunity and continues to target an announcement in mid-2026, while stressing discipline on valuation and shareholder accretion. Evans added the company intends to hold an investor day later in 2026, tied to having a meaningful portfolio optimization update. Doherty reiterated full-year 2026 guidance for revenue of $3.35 billion to $3.45 billion and adjusted EBITDA of at least $530 million. For the second quarter, the company expects revenue to represent 24% to 24.5% of the annual target and adjusted EBITDA to be 23% to 23.5%. Evans said the second-quarter outlook reflects “prudent guidance” early in the year and reiterated confidence in the full-year forecast. The call also marked the first earnings call appearance for Chief Operating Officer Justin Oppenheimer, who joined the company in January. Oppenheimer said he has spent significant time in Surgery Partners’ markets and described a strong culture and an execution focus, citing organic growth and operational excellence as central themes. Surgery Partners, Inc operates as a healthcare services provider specializing in the management and ownership of ambulatory surgery centers, surgical hospitals and multispecialty rehabilitation hospitals across the United States. Through its network of facilities, the company coordinates and delivers a broad range of outpatient surgical procedures in specialties such as orthopedics, ophthalmology, otolaryngology, gastroenterology, pain management and general surgery. Its integrated platform offers ancillary services including on-site imaging, laboratory testing, infusion therapy and physical, occupational and speech rehabilitation. Since its establishment in 2010 and subsequent public listing in 2015, Surgery Partners has focused on strategic partnerships with physicians and health systems to expand access to cost-effective outpatient care. The article "Surgery Partners Q1 Earnings Call Highlights" was originally published by MarketBeat.