Why Surgery Partners Stock Plummeted on Monday
Key Points
It missed on the top line and whiffed significantly on analyst estimates in its third quarter.
The company did manage to grow its revenue by almost 7% year over year.
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Surgery Partners (NASDAQ: SGRY) had a crushingly bad day on the stock market Monday. Investors eagerly traded out of the specialty healthcare company's shares, following the latest quarterly earnings release. Ultimately the stock fell by nearly 25% in value, a dynamic sharply contrasted by the S&P 500 index's growth of 1.5%.
Revenue up, adjusted profitability down
For its third quarter, Surgery Partners booked revenue of $821.5 million, a healthy year-over-year improvement of almost 7%. Net income not according to generally accepted accounting principles (GAAP), however, was another story. This crucial metric fell by 31% to $16.5 million, or $0.13 per share.
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That meant a pair of misses for Surgery Partners, as analysts tracking the stock were collectively modeling a slightly higher revenue figure of nearly $821.9 million, and a significantly meatier non-GAAP (adjusted) earnings number of $0.21 per share.
In its earnings release, the company attributed its top-line growth to the robustness of orthopedic procedures. However, it did have to contend with challenges in what it described as "volume and payer mix trends."
Guidance missed, too
Compounding the double whiff on trailing results, Surgery Partners came up short with full-year revenue guidance. The company expects to earn just under $3.28 billion to $3.30 billion for the entirety of 2025, but the analyst consensus is slightly more than $3.35 billion.
Meanwhile, management is modeling earnings before interest, taxes, depreciation, and amortization (EBITDA) of $535 million to $540 million.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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