Surgery Partners, Inc 10-Q for FY2026 Q3

Surgery Partners, Inc. (SGRY)

10-Q 2026-11-09 For: 2026-09-30

Added on November 09, 2026

About this 10-Q

Surgery Partners, Inc filed this 10-Q on November 9, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).

Surgery Partners amended its merger agreement, providing $25.00 per share in cash plus a potential ticking fee. Third-quarter revenue fell 0.8% to $815.3 million and Adjusted EBITDA declined 2.7% to $132.7 million. AI summary

Headline figures

Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $815.3M; down 0.8% from $821.5M a year earlier
Net loss: $21.1M; compared with a net loss of $22.7M a year earlier
Diluted EPS: -$0.16; compared with -$0.18 a year earlier

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Delaware						47-3620923
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

340 Seven Springs Way, Suite 600
Brentwood, Tennessee						37027
(Address of Principal Executive Offices)						(Zip Code)


Large accelerated filer ☒						Accelerated filer ☐
Non-accelerated filer ☐						Smaller reporting company ☐
						Emerging growth company ☐


		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	3
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

Signatures		33


	(Unaudited)

	September 30, 2026		December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	354.5	$	239.9
Accounts receivable	468.1		602.2
Inventories	77.5		96.6
Prepaid expenses	43.5		41.1
Other current assets	136.4		170.9
Total current assets	1,080.0		1,150.7
Property and equipment, net of accumulated depreciation of $579.7 and $651.2, respectively	840.6		1,153.4


Goodwill and other intangible assets, net	4,643.5		5,235.6
Investments in and advances to affiliates	225.4		234.0
Right-of-use operating lease assets	229.3		289.2

Other long-term assets	31.0		56.8
Total assets	$	7,049.8	$	8,119.7

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	140.7	$	208.7
Accrued payroll and benefits	70.5		64.9
Other current liabilities	230.9		242.6
Current maturities of long-term debt	56.5		99.3
Total current liabilities	498.6		615.5
Long-term debt, less current maturities	2,998.7		3,602.9
Right-of-use operating lease liabilities	224.4		279.9
Long-term deferred tax liabilities	52.4		53.4
Other long-term liabilities	19.0		41.2

Non-controlling interests—redeemable	356.8		395.5

Stockholders' equity:
Preferred stock, $0.01 par value; shares authorized - 20,310,000; shares issued or outstanding - none	—		—
Common stock, $0.01 par value; shares authorized - 300,000,000; shares issued and outstanding - 130,862,417 and 129,321,144, respectively	1.3		1.3
Additional paid-in capital	2,552.2		2,540.6
Accumulated other comprehensive income (loss)	(1.6)		(13.8)
Retained deficit	(887.3)		(815.2)
Total Surgery Partners, Inc. stockholders' equity	1,664.6		1,712.9
Non-controlling interests—non-redeemable	1,235.3		1,418.4
Total stockholders' equity	2,899.9		3,131.3
Total liabilities and stockholders' equity	$	7,049.8	$	8,119.7


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025

Revenues	$	815.3	$	821.5	$	2,475.1	$	2,423.7
Operating expenses:
Salaries and benefits	239.8		242.8		740.3		716.6
Supplies	214.1		208.9		661.1		639.7
Professional and medical fees	99.2		104.0		303.3		301.4
Lease expense	23.8		21.5		71.0		65.2
Other operating expenses	53.4		49.0		164.0		148.0
Cost of revenues	630.3		626.2		1,939.7		1,870.9
General and administrative expenses	40.6		22.4		116.2		94.5
Depreciation and amortization	39.6		39.5		117.4		116.1
Transaction and integration costs	22.6		12.6		56.6		55.4
Net (gain) loss on disposals, consolidations and deconsolidations	2.9		15.6		9.6		19.0
Equity in earnings of unconsolidated affiliates	(6.4)		(5.2)		(16.9)		(16.3)
Litigation settlements	0.4		5.1		2.9		7.3
Loss on debt extinguishment	3.7		1.3		3.7		1.3
Other income, net	(4.0)		(1.7)		(7.6)		(3.8)
	729.7		715.8		2,221.6		2,144.4
Operating income	85.6		105.7		253.5		279.3
Interest expense, net	(67.9)		(74.9)		(206.8)		(205.0)
Income (loss) before income taxes	17.7		30.8		46.7		74.3
Income tax (expense) benefit	(3.6)		(5.5)		(5.0)		(4.4)
Net income (loss)	14.1		25.3		41.7		69.9
Less: Net income attributable to non-controlling interests	(35.2)		(48.0)		(113.7)		(132.8)
Net income (loss) attributable to Surgery Partners, Inc.	$	(21.1)	$	(22.7)	$	(72.0)	$	(62.9)

Net income (loss) per share attributable to common stockholders:
Basic	$	(0.16)	$	(0.18)	$	(0.56)	$	(0.50)
Diluted (1)	$	(0.16)	$	(0.18)	$	(0.56)	$	(0.50)
Weighted average common shares outstanding:
Basic	128,865		127,206		128,688		126,932
Diluted (1)	128,865		127,206		128,688		126,932


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Non-Controlling Interests— Non-Redeemable		Total
	Shares	Amount
Balance as of December 31, 2025	129,321	$	1.3	$	2,540.6	$	(13.8)	$	(815.2)	$	1,418.4	$	3,131.3
Net income (loss)	—	—		—		—		(35.9)		34.2		(1.7)
Equity-based compensation	1,476	—		6.0		—		—		—		6.0
Other comprehensive income (loss)	—	—		—		3.3		—		—		3.3
Acquisition and disposal of shares of non-controlling interests, net	—	—		1.7		—		—		3.3		5.0
Distributions to non-controlling interests—non-redeemable holders	—	—		—		—		—		(46.0)		(46.0)
Balance as of March 31, 2026	130,797	$	1.3	$	2,548.3	$	(10.5)	$	(851.1)	$	1,409.9	$	3,097.9
Net income (loss)	—	—		—		—		(15.0)		43.5		28.5
Equity-based compensation	89	—		3.8		—		—		—		3.8
Other comprehensive income (loss)	—	—		—		1.6		—		—		1.6
Acquisition and disposal of shares of non-controlling interests, net	—	—		(7.7)		—		—		14.7		7.0
Distributions to non-controlling interests—non-redeemable holders	—	—		—		—		—		(37.1)		(37.1)
Balance as of June 30, 2026	130,886	$	1.3	$	2,544.4	$	(8.9)	$	(866.1)	$	1,431.0	$	3,101.7
Net income (loss)	—	—		—		—		(21.2)		37.0		15.8
Equity-based compensation	(24)	—		5.6		—		—		—		5.6
Other comprehensive income (loss)	—	—		—		7.3		—		—		7.3
Acquisition and disposal of shares of non-controlling interests, net	—	—		2.2		—		—		(189.2)		(187.0)
Distributions to non-controlling interests—non-redeemable holders	—	—		—		—		—		(43.5)		(43.5)
Balance as of September 30, 2026	130,862	$	1.3	$	2,552.2	$	(1.6)	$	(887.3)	$	1,235.3	$	2,899.9


Balance as of December 31, 2025	$	5,194.6
Acquisitions, including post acquisition adjustments	10.0
Disposals	(597.0)
Balance as of September 30, 2026	$	4,607.6


	Carrying Amount				Fair Value
	September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025

Senior secured term loan	$	1,082.8	$	1,374.4	$	1,084.2	$	1,379.6
7.250% senior unsecured notes due 2032	$	1,225.0	$	1,225.0	$	1,199.0	$	1,237.3


	September 30, 2026		December 31, 2025

Senior secured term loan (1)	$	1,082.8	$	1,374.4
Senior secured revolving credit facility	—		—
7.250% senior unsecured notes due 2032	1,225.0		1,225.0
Notes payable and other secured loans	131.6		199.3
Finance lease obligations	641.0		935.5
Less: unamortized debt issuance costs and discounts	(25.2)		(32.0)
Total debt	3,055.2		3,702.2
Less: current maturities	56.5		99.3
Total long-term debt	$	2,998.7	$	3,602.9


	Classification in Condensed Consolidated Balance Sheets	September 30, 2026		December 31, 2025

Assets:
Operating lease assets	Right-of-use operating lease assets	$	229.3	$	289.2
Finance lease assets	Property and equipment, net of accumulated depreciation	490.3		740.4
Total leased assets		$	719.6	$	1,029.6

Liabilities:
Operating lease liabilities:
Current	Other current liabilities	$	33.1	$	42.7
Long-term	Right-of-use operating lease liabilities	224.4		279.9
Total operating lease liabilities		257.5		322.6
Finance lease liabilities:
Current	Current maturities of long-term debt	24.7		39.0
Long-term	Long-term debt, less current maturities	616.3		896.5
Total finance lease liabilities		641.0		935.5
Total lease liabilities		$	898.5	$	1,258.1


		Three Months Ended September 30,				Nine Months Ended September 30,
	Location	2026		2025			2026		2025
Derivatives not designated as hedging instruments
(Gain) loss recognized in income	Other income, net	$	0.1	$	—		$	0.1	$	—
(Gain) loss reclassified from accumulated OCI into income (1)	Other income, net	0.3		—			0.3		—

Derivatives in cash flow hedging relationships
Gain (loss) recognized in OCI (effective portion)		$	5.5	$	(2.7)		$	7.6	$	(11.1)
Gain (loss) reclassified from accumulated OCI into income (effective portion)	Interest expense, net	1.5		1.6			4.3		(8.1)


	Twelve Months Ended September 30, 2026

Cash flows from operating activities	$	277.9
Plus (minus):
Non-cash interest expense, net	(10.0)
Non-cash lease expense	(39.0)
Deferred income taxes	(12.3)
Equity in earnings of unconsolidated affiliates, net of distributions received	0.4

Changes in operating assets and liabilities, net of acquisitions and divestitures	69.1
Income tax expense	18.6
Net income attributable to non-controlling interests	(157.7)
Interest expense, net	274.4
Transaction and integration costs	75.1
De novo start-up costs	5.6
Litigation settlements and other litigation costs	14.6
Undesignated derivative activity	0.4

Acquisitions and synergies (1)	(58.8)
Credit Agreement EBITDA	$	458.3


No.						Description

2.1*						Agreement and Plan of Merger, dated as of October 23, 2026, by and among Surgery Partners, Inc., Spyglass Topco, LLC, Spyglass Merger Subsidiary, Inc. and, solely for the limited purposes set forth therein, Bon Secours Mercy Health, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed October 26, 2026).
2.2						Amendment No. 1 to the Agreement and Plan of Merger, dated as of November 8, 2026, by and among the Company, Parent, Merger Subsidiary and Guarantor (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 9, 2026).
10.1*						Voting and Support Agreement, dated as of October 23, 2026, by and among Spyglass Topco, LLC, Surgery Partners, Inc. and the Reinvestment Stockholders party thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 26, 2026).
10.2						Securities Purchase Agreement by and among IHC Health Services , Inc ., Mountain View Hospital , LLC , SMBI Idaho , LLC, and Surgery Partners , I nc. dated September 14 , 20 26 .
10.3						Securities Purchase Agreement by and among IHC Health Services, Inc., Idaho Falls Community Hospital , LLC, SMBI Idaho, LLC, and Surgery Partners, Inc. dated September 14, 2026.
31.1						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Taxonomy Extension Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, formatted in Inline XBRL (included in Exhibit 101).
*						Certain schedules and exhibits have been omitted pursuant to Instruction 4 of Item 1.01 and in accordance with Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon its request.


		SURGERY PARTNERS, INC.

Date:	November 9, 2026	By:	/s/ David T. Doherty
			David T. Doherty
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)


Article I THE TRANSACTIONS			1
1.1 Purchase of the Purchased Securities			1
Article II CLOSING; PAYMENTS FOR SECURITIES			1
2.1 Closing			1
2.2 Deliveries at Closing			1
2.3 Estimated Closing Statement			3
2.4 Payments at the Closing			4
2.5 Post-Closing Purchase Consideration Adjustment			5
2.6 Payment of Additional Payments			6
Article III REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY			6
3.1 Organization			6
3.2 Power and Authority			7
3.3 Authorization of Governmental Authorities			7
3.4 No Conflicts			7
3.5 Capitalization of the Company			7
3.6 Subsidiaries			7
3.7 Financial Statements			7
3.8 Real Property			8
3.9 Absence of Certain Changes and Events			9
3.10 Taxes			10
3.11 Employees and Employee Benefits			12
3.12 Compliance with Laws; Permits			13
3.13 Legal Proceedings; Orders			13
3.14 No Undisclosed Liabilities			13
3.15 Contracts			13
3.16 Environmental Matters			16
3.17 Employment and Labor Matters			16
3.18 Intellectual Property			18
3.19 Healthcare Regulatory Compliance			18
3.20 Related Party Transactions			21
3.21 Insurance			22
3.22 Statutory Funds			22
3.23 Medical Staff Matters			22
3.24 Experimental Procedures			22
3.25 Inventory			23
3.26 Title to and Condition of Assets			23
3.27 Payors and Suppliers			23
3.28 Cybersecurity and Privacy			23
3.29 Bank Accounts			24


	Three Months Ended September 30,
	2026				2025
	Amount		%		Amount		%
Patient service revenues:
Private insurance	$	379.6	47.6	%	$	404.3	50.6	%
Government	380.3		47.7	%	347.5		43.5	%
Self-pay	15.3		1.9	%	25.5		3.2	%
Other (1)	22.8		2.8	%	21.2		2.7	%
Total patient service revenues	798.0		100.0	%	798.5		100.0	%
Other service revenues	17.3				23.0
Total revenues	$	815.3			$	821.5


	Nine Months Ended September 30,
	2026				2025
	Amount		%		Amount		%
Patient service revenues:
Private insurance	$	1,179.9	48.8	%	$	1,217.5	51.6	%
Government	1,118.4		46.3	%	1,021.1		43.2	%
Self-pay	58.0		2.4	%	67.5		2.9	%
Other (1)	59.9		2.5	%	55.0		2.3	%
Total patient service revenues	2,416.2		100.0	%	2,361.1		100.0	%
Other service revenues	58.9				62.6
Total revenues	$	2,475.1			$	2,423.7


	Nine Months Ended September 30,
	2026		2025
Cash purchases of property and equipment:
Surgical Facilities	$	54.7	$	65.0
All other	7.6		0.9
Total cash purchases of property and equipment	$	62.3	$	65.9


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025

Orthopedics and pain management	39.9	%	40.7	%	40.4	%	40.3	%
Ophthalmology	21.6	%	21.9	%	21.0	%	22.0	%
Gastrointestinal	23.0	%	24.6	%	23.4	%	24.6	%
General surgery	1.9	%	1.7	%	1.9	%	1.9	%
Other	13.6	%	11.1	%	13.3	%	11.2	%
Total	100.0	%	100.0	%	100.0	%	100.0	%


3.30 Brokers and Finders			24
Article IV REPRESENTATIONS AND WARRANTIES REGARDING SELLER			24
4.1 Organization			25
4.2 Power and Authority			25
4.3 Title to Purchased Securities			25
4.4 Authorization of Governmental Authorities			25
4.5 No Conflicts			25
4.6 Litigation			25
4.7 Brokers or Finders			25
Article V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER			25
5.1 Organization			25
5.2 Power and Authority			25
5.3 Authorization of Governmental Authorities			26
5.4 No Conflicts			26
5.5 Litigation			26
5.6 Brokers or Finders			26
5.7 Investment Representations			26
5.8 Sufficiency of Funds; Solvency			27
5.9 R&W Policy			27
Article VI ADDITIONAL AGREEMENTS			27
6.1 Conduct of Business			27
6.2 Regulatory and Third-Party Approvals			29
6.3 Confidentiality			31
6.4 Publicity			31
6.5 Employee Related Matters			31
6.6 Director and Officer Indemnification and Insurance			32
6.7 Pre-Closing Period Access			33
6.8 Preservation of Records			34
6.9 Financing Activities			34
6.10 Further Assurances			34
6.11 Release			34
6.12 Transition Services Agreement; System Contracts			35
6.13 R&W Policy			35
6.14 Seller Guarantees			36
6.15 Exclusivity			36
6.16 Non-Competition; Non-Solicitation			37
6.17 Medical Staff			38
6.18 Cost Reports			39
6.19 Signature Cards			39
6.20 Limitation on Upper Payment Limit Proceeds Obligations			39
6.21 Surgery Partners Guarantee			39
Article VII CONDITIONS TO CLOSING			39


7.1 Conditions to Obligations of Each Party			39
7.2 Conditions to Obligations of Purchaser			40
7.3 Conditions to Obligations of the Seller			40
7.4 Conditions to Obligations of the Company			41
7.5 Frustration of Closing Conditions			41
Article VIII CERTAIN TAX MATTERS			41
8.1 Tax Matters			41
Article IX SURVIVAL; INDEMNIFICATION			43
9.1 Survival			43
9.2 Seller Indemnification Obligations			43
9.3 Purchaser’s Indemnification Obligations			43
9.4 Limits on Indemnification			43
9.5 Calculation of Losses			43
9.6 Notice of Loss; Third-Party Claims			44
9.7 Payment of Claims			45
9.8 Exclusive Remedy			45
9.9 R&W Policy Subrogation			46
9.10 No Recourse; Covenant Not to Sue			46
Article X TERMINATION			46
10.1 Termination Events			46
10.2 Effect of Termination			48
Article XI MISCELLANEOUS			48
11.1 Defined Terms			48
11.2 Notices			62
11.3 Titles; References; Construction; Timing			63
11.4 Made Available			64
11.5 Disclosure Schedules			64
11.6 Entire Agreement; Mutual Drafting			64
11.7 No Other Representations or Warranties			64
11.8 Assignment			65
11.9 Amendment			65
11.10 Waiver			65
11.11 Severability			65
11.12 Governing Law			65
11.13 Waiver of Trial by Jury			65
11.14 Consent to Jurisdiction			65
11.15 Specific Performance			66
11.16 Cumulative Remedies			66
11.17 Expenses			66
11.18 Waiver of Conflicts; Privilege.			66
11.19 Time of the Essence			67


By:			/s/ David T. Doherty David T. Doherty Executive Vice President and Chief Financial Officer