Surgery Partners: A Slight Dip in Enthusiasm

by

It has come to our attention – and, frankly, the attention of Irenic Capital Management, who seem to be making a rather pointed withdrawal – that enthusiasm for Surgery Partners (SGRY 0.58%) is, shall we say, experiencing a period of… recalibration. They’ve lopped off a considerable chunk of their holdings – 1,047,583 shares, representing roughly $19.25 million, judged by the arcane measurements of quarterly averages – leaving them with a mere sliver of their former conviction. A rounding error, as the Guild of Accountants likes to call it.1

What Happened, or, The Case of the Diminishing Stake

Irenic, it appears, has decided that Surgery Partners, while perfectly functional, isn’t quite the shimmering beacon of profitability they once believed. They’ve reduced their position to a mere 84,620 shares, which, in the grand scheme of things, is about the same number of gnomes one might find guarding a moderately successful cheese shop.2 This isn’t a collapse, mind you. More of a… graceful dismount. They’ve redistributed their affections, showering funds upon Integer, Shockwave, and Alkami, presumably because those entities possess a higher probability of defying the laws of thermodynamics and generating infinite returns.

Further Observations, or, The Curious Case of the Portfolio Re-Shuffle

  • This isn’t merely a trim; it’s a significant pruning. The remaining 0.09% of Irenic’s $1.49 billion portfolio suggests a strategic realignment, akin to a wizard deciding they’ve had quite enough of conjuring teacups and are now focusing on more… substantial illusions.
  • Speaking of affections, here’s where Irenic’s heart currently resides:
    • NYSE: ITGR: $99.11 million (13.7% of AUM)
    • NASDAQ: SHC: $67.00 million (9.3% of AUM)
    • NASDAQ: TBPH: $51.66 million (7.1% of AUM)
    • NASDAQ: ALKT: $48.60 million (6.7% of AUM)
    • NYSE: WK: $47.61 million (6.6% of AUM)
  • As of February 17, 2026, Surgery Partners shares were trading at $15.60 – a price that has, shall we say, embarked on a rather extended downward trajectory, plummeting nearly 40% over the past year. It’s underperforming the S&P 500 by a margin that would make even the most optimistic alchemist weep.

A Brief Overview, or, The Mechanics of Surgical Efficiency

Metric Value
Revenue (TTM) $3.29 billion
Net Income (TTM) ($171.40 million)
Market Capitalization $2.02 billion
Price (as of market close February 17, 2026) $15.60

The Business, Briefly Explained

  • Surgery Partners operates a network of ambulatory surgery centers and surgical hospitals, offering non-emergency procedures. Think of it as a slightly more efficient version of the medieval barber-surgeon, but with better lighting.
  • They generate revenue through facility fees and ancillary services – imaging, pharmacy, and the like. It’s a perfectly sound business model, assuming people continue to require surgical intervention.
  • They serve patients requiring outpatient care, targeting healthcare providers and payors. A complex ecosystem, really, best navigated with a detailed map and a healthy dose of skepticism.

Surgery Partners, in essence, is a provider of convenient surgical solutions. They aim to deliver cost-effective care outside of traditional hospital settings. A noble goal, certainly, though one fraught with the usual challenges of scalability and profitability.

What Does This Mean for Investors? Or, The Art of Reading Tea Leaves

Irenic’s decision isn’t necessarily a condemnation of Surgery Partners’ business. It’s a reassessment of risk and reward. The company isn’t imploding; revenue rose 6.6% in the third quarter, with same-facility revenues up 6.3%. Adjusted EBITDA climbed 6.1%, and revenue per case increased 2.8%. However, net debt to EBITDA sits around 4.2x, which, in a world where interest rates are stubbornly refusing to behave, is a cause for concern. The stock’s decline reflects this risk.

The question for long-term investors isn’t whether the outpatient model has potential – it does. It’s whether management can reduce leverage while maintaining growth. If they can, today’s valuation might prove conservative. If not, volatility will likely persist. It’s a simple equation, really. Debt amplifies both upside and downside. And in the grand scheme of things, a little caution never hurt anyone. Especially when dealing with the delicate art of surgical finance.3


1 The Guild of Accountants operates on a different plane of existence, where numbers have souls and spreadsheets are sacred texts.
2 Gnomes, as everyone knows, are notoriously difficult to count. They have a habit of blending into the woodwork.
3 Surgical finance is best practiced with a strong stomach and an even stronger accountant.

Read More

2026-02-23 23:13