Surgery Partners Inc. Common Stock (SGRY) fair value

ACCE thesis

Surgery Partners runs ambulatory surgery centers and hospitals across the US, with a physician-owned model that ties its surgeons to its facilities, which is what keeps case volumes flowing. Its moat is local: a large share of its sites are the only or dominant outpatient surgical option in their markets, and that density is hard to replicate. The near-term story is margin repair, since a 13.7% operating margin on 2.7% revenue growth is thin for a business of this kind and any improvement in case mix or payer contracts flows through quickly. The stock trades at 18.9 times forward earnings, which only makes sense if management can convert that top-line stability into better profitability, and a 2.3% ROE says it hasn't yet. The score of 39/100 and absence from any major index mean the market is not paying for that repair, so the question for the PM is whether the margin trajectory in the next few reporting periods justifies a deeper look.