Surgery Partners (SGRY) Stock Forecast & Price Target

Surgery Partners is positioned for stronger fundamentals as the Idaho Falls divestiture simplifies the portfolio, removes 50% of total company Medicaid exposure to below 2%, cuts ICU beds by 50%, and should improve free cash flow conversion by about 3%. 2Q26 results reinforced the thesis, with revenue of $849 million (+3% y/y), adjusted EBITDA of $125 million, +4.8% revenue per case growth, and 191 new physicians added in the quarter, supporting same-facility growth and a higher-acuity mix. Long term, its 126 ASCs and 19 short-stay hospitals across 32 states give it a leading position in the underpenetrated $90 billion outpatient market, where margin expansion and mid-teens EBITDA growth are supported by site-of-care shifts and physician recruitment.

Surgery Partners is facing a negative outlook because mature fee-for-service providers continue to suffer from rising staffing costs, turnover, and reimbursement that generally lags, which compresses margins even as recent demand and patient volume recovery remains uncertain. The company’s highly leveraged balance sheet increases risk if clinical labor inflation accelerates or if volume and revenue growth fall short, especially since a recession would hurt elective outpatient ambulatory care. Although the transaction is expected to remove $280 million of debt and generate $500 million to $600 million of net cash proceeds for redeployment, the need for leverage relief highlights prior financial strain and the uneven cash conversion across the portfolio.