{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "SGRY",
  "name": "Surgery Partners, Inc.",
  "url": "https://frontierpicks.com/dossiers/SGRY/",
  "json_url": "https://frontierpicks.com/dossiers/SGRY.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a5",
    "n": 5
  },
  "current_thesis": "Surgery Partners' shares, at $26.58 on 12 November 2026, already price in more than HealthSpan Partners' $25.00 cash deal pays and are more likely to lag the S&P 500. Whether the rejected $28.00 bidder, reported to be UnitedHealth, returns with a binding offer decides it.",
  "invalidation_trigger": "A daily close above $29.33, about 10% over the 2026-11-11 close and above the $28.00 rival bid, which would show the shares leading the S&P 500; a signed merger agreement above $26.61 per share would also prove the call wrong.",
  "catalyst_date": "2027-03-01",
  "portfolio": null,
  "pick": null,
  "themes": [
    "m-and-a-special-situations"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "Surgery Partners, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001638833/000110465926124236/tm2629312d1_ex99-1.htm",
      "date": null
    },
    {
      "title": "Surgery Partners Is Said to Have Rejected UnitedHealth Bid",
      "url": "https://www.bloomberg.com/news/articles/2026-11-09/healthspan-s-bid-for-surgery-partners-increased-to-6-billion",
      "date": "2026-11-09"
    },
    {
      "title": "HealthSpan Partners ups Surgery Partners offer to $6B after rival bid",
      "url": "https://www.healthcaredive.com/news/healthspan-partners-ups-surgery-partners-offer-to-6b-after-rival-bid/874313/",
      "date": null
    },
    {
      "title": "Surgery Partners rejected UnitedHealth's $28-a-share bid: Bloomberg",
      "url": "https://www.beckershospitalreview.com/finance/surgery-partners-rejected-unitedhealths-28-a-share-bid-bloomberg/",
      "date": null
    },
    {
      "title": "Surgery Partners, Inc. - Form DEFA14A - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001638833/000110465926124243/tm2629312d1_ex99-1.htm",
      "date": null
    },
    {
      "title": "Surgery Partners, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001638833/000163883326000089/exhibit991q32026earningsre.htm",
      "date": null
    },
    {
      "title": "Surgery Partners, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001638833/000110465926118643/tm2628254d1_ex99-1.htm",
      "date": null
    },
    {
      "title": "SGRY Shareholder Notice: Surgery Partners $23.50 per Share Merger Under Investigation on Behalf of Shareholders",
      "url": "https://www.prnewswire.com/news-releases/sgry-shareholder-notice-surgery-partners-23-50-per-share-merger-under-investigation-on-behalf-of-shareholders-302926967.html",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "HealthSpan Partners raised its cash price for Surgery Partners to $25.00 per share from $23.50, an enterprise value of up to about $6.0 billion; closing is still expected in the first quarter of 2027.",
      "source": "Surgery Partners press release, Form 8-K exhibit 99.1",
      "as_of": "2026-11-09"
    },
    {
      "claim": "An unsolicited third-party proposal received on 2026-11-03 was updated to $28.00 per share in cash on 2026-11-08; the special committee unanimously found it not a Superior Proposal, citing timing, regulatory risk and missing contractual protections.",
      "source": "Surgery Partners press release, Form 8-K exhibit 99.1",
      "as_of": "2026-11-09"
    },
    {
      "claim": "Bloomberg reported that UnitedHealth Group made the $28.00-per-share bid, citing a person familiar with the matter; UnitedHealth declined to comment.",
      "source": "Bloomberg",
      "as_of": "2026-11-09"
    },
    {
      "claim": "Non-Bain holders accrue a ticking fee of 10% a year on $25.00 if approval is obtained but the deal has not closed by 2027-03-01, capped at $1.61 for a maximum of $26.61 at the 2027-10-23 outside date.",
      "source": "Surgery Partners press release, Form 8-K exhibit 99.1",
      "as_of": "2026-11-09"
    },
    {
      "claim": "The amended merger agreement raises the company termination fee to about $149.1 million from $108,986,842.",
      "source": "Surgery Partners Form 8-K and DEFA14A filings",
      "as_of": "2026-11-09"
    },
    {
      "claim": "Third-quarter 2026 revenue was $815.3 million against $821.5 million a year earlier; adjusted EPS was $0.16 against a $0.12 estimate.",
      "source": "Surgery Partners Q3 2026 10-Q and results release",
      "as_of": "2026-11-09"
    },
    {
      "claim": "RBC Capital (2026-11-10) and TD Cowen (2026-11-11) raised price targets to $25; Mizuho downgraded the shares to Neutral from Outperform with a $25 target on 2026-11-11.",
      "source": "Benzinga and fiscal.ai analyst reports",
      "as_of": "2026-11-11"
    },
    {
      "claim": "Director Teresa DeLuca bought 10,000 shares in the open market at $14.35 on 2026-08-18.",
      "source": "SEC Form 4 filed 2026-08-19",
      "as_of": "2026-08-18"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Healthcare",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-09",
              "restated": null,
              "value_musd": 815.3,
              "yoy_pct": -0.8
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-10",
              "restated": null,
              "value_musd": 848.9,
              "yoy_pct": 2.7
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "value_musd": 810.9,
              "yoy_pct": 4.5
            },
            {
              "end": "2025-12-31",
              "filed": "2026-03-02",
              "restated": null,
              "value_musd": 885,
              "yoy_pct": 2.4
            },
            {
              "end": "2025-09-30",
              "filed": "2025-11-10",
              "restated": null,
              "value_musd": 821.5,
              "yoy_pct": 6.6
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-05",
              "restated": null,
              "value_musd": 826.2,
              "yoy_pct": 8.4
            }
          ]
        },
        "gross_margin": {
          "status": "not reported"
        },
        "operating_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-09",
              "restated": null,
              "pct": 10.5
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-10",
              "restated": null,
              "pct": 12
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "pct": 8.1
            },
            {
              "end": "2025-12-31",
              "filed": "2026-03-02",
              "restated": null,
              "pct": 12.5
            },
            {
              "end": "2025-09-30",
              "filed": "2025-11-10",
              "restated": null,
              "pct": 12.9
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-05",
              "restated": null,
              "pct": 13.5
            }
          ]
        },
        "pretax_income": {
          "status": "not reported"
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "four_quarters_end": "2026-09-30",
          "value_musd": -21.1,
          "four_quarters_musd": -87
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": 277.9
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": 75.1
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": 202.8
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "base_end": "2025-09-30",
          "pct": 1.3
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 354.5
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 3055.2,
          "composition": "long-term debt and finance leases"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": -2700.7
        },
        "deferred_revenue": {
          "status": "not reported"
        },
        "backlog": {
          "status": "not reported"
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 468.1
        },
        "inventory": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 77.5
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 1664.6
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "value_musd": 3527.2
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "value_musd": 6227.9
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "multiple": 1.9
        },
        "ev_ebit": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "multiple": 17.1
        },
        "pe": {
          "status": "not meaningful"
        },
        "pb": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "multiple": 2.1
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-11-02",
          "basis_filed": "2026-11-09",
          "pct": 5.7
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 10.95,
      "days_to_cover": 10.3,
      "change_pct": -0.1
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 143500,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 143500,
          "sold_usd": 1284057.65,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nSurgery Partners' shares are more likely to lag the S&P 500 over the next three months. The price already sits above the $25.00 cash that HealthSpan Partners' signed deal pays, so the remaining upside depends on a rival bid that the board has rejected. Whether that bidder, reported by Bloomberg to be UnitedHealth Group at $28.00, comes back with a binding offer decides the case.\n\nThe shares closed at $26.58 on 2026-11-12. That is $1.58 above the amended $25.00 HealthSpan price and just under the $26.61 most that holders could receive if the deal runs to its 2027-10-23 outside date with the full ticking fee. If the rival bid fades, the shares have room to fall back toward $25.00. If the contest continues, the gain to $28.00 is about 5% from the 2026-11-12 close.\n\nThe rating is Low because the shares price in more than the signed deal pays before 2027-03-01, and the only route above it runs through a bid the special committee unanimously found not to be a \"Superior Proposal\" on 2026-11-09. The analysts who updated after the 2026-11-09 report all set their targets at the $25.00 deal price.\n\n## Bull Case\n\n- **A higher bid already exists.** The company's 2026-11-09 filings show an unsolicited third party proposed $28.00 per share in cash on 2026-11-08, after a first approach on 2026-11-03. That is $3.00 above the signed HealthSpan price.\n- **Minority holders control the vote.** Approval requires a majority of votes cast by disinterested shareholders, according to the company's 2026-10-26 merger filings. The roughly 39% stake held by Bain Capital affiliates does not count toward that test.\n- **The buyer has already raised once.** HealthSpan, an affiliate of Bon Secours Mercy Health, raised its price to $25.00 from $23.50 on 2026-11-09, 14 days after signing. The company puts the amended deal at up to about $6.0 billion including debt.\n- **A ticking fee pays for delay.** If holders approve but the deal has not closed by 2027-03-01, non-Bain holders accrue 10% a year on $25.00, capped at $1.61, for a maximum of $26.61, per the 2026-11-09 press release.\n- **Profit per share rose.** Third-quarter adjusted earnings were $0.16 per share against a $0.12 estimate and $0.13 a year earlier, Benzinga reported on 2026-11-09.\n\n## Bear Case\n\n- **The board backs the lower offer.** The special committee reaffirmed its recommendation of the $25.00 HealthSpan merger on 2026-11-09. It cited a materially longer path to closing, greater regulatory risk and missing contractual protections in the $28.00 proposal.\n- **Antitrust risk weighs on the rival.** News reports on 2026-11-10, including Becker's Hospital Review, noted that UnitedHealth's Optum unit already owns a large surgery-center network. UnitedHealth declined to comment on the Bloomberg report.\n- **Analysts anchor at $25.00.** RBC Capital raised its target to $25 on 2026-11-10 with a Sector Perform rating. TD Cowen raised its target to $25 with a Hold on 2026-11-11, and Mizuho cut its rating to Neutral from Outperform with a $25 target the same day.\n- **Breaking the deal costs more.** The amendment raised the termination fee owed to HealthSpan in specified circumstances to about $149.1 million from $108,986,842, according to the company's 2026-11-09 filings.\n- **Bain is committed to HealthSpan.** Bain affiliates signed a voting and support agreement for the HealthSpan merger and will roll their shares into the buyer, per the 2026-10-26 filings.\n- **The standalone business is soft.** Third-quarter revenue was $815.3 million against $821.5 million a year earlier, per the 10-Q filed 2026-11-09, and below the $825.6 million estimate Benzinga cited. The company withdrew guidance and held no earnings call.\n\n## Setup & Price Structure\n\nThe shares closed at $23.20 on 2026-11-06 and jumped to $26.45 on 2026-11-09, the day both bids became public. They then held in a narrow range: $26.73 on 2026-11-10, $26.66 on 2026-11-11 and $26.58 on 2026-11-12. The 52-week intraday high is $27.23, set on 2026-11-09, and the last close is 2.4% below it.\n\nThe shares are up 76.8% over three months from the $15.03 close of 2026-08-14. The 50-day moving average is $17.04 and the 200-day is $15.03 as of 2026-11-12; both are far below the price because the deal reset the stock in one step, so neither says much about the next move. The 52-week closing low was $11.49 on 2026-03-27.\n\nFour deal prices set the levels that matter: $23.50 (the original offer), $25.00 (the amended offer), $26.61 (the amended offer plus the full ticking fee) and $28.00 (the rival bid). Since 2026-11-09 the shares have sat close to $26.61, which prices in either a long, fee-earning delay or some chance of a higher bid. A director, Teresa DeLuca, bought 10,000 shares at $14.35 on 2026-08-18, according to her SEC Form 4, before any deal was announced.\n\n## Catalyst Calendar\n\n- **~2026-11-30 (est.):** Preliminary proxy statement and Schedule 13E-3 filing. Discloses the sale process, the rival bidder's terms and the fairness opinions, which shape whether disinterested holders accept $25.00.\n- **2027-03-01:** Ticking-fee start date if holders have approved but the deal has not closed. From this date, non-Bain holders accrue 10% a year on $25.00, up to $26.61 in total, which supports the price during a regulatory delay.\n- **~2027-03-31 (est.):** Expected closing of the HealthSpan merger, first quarter of 2027. Completion pays $25.00 in cash plus any accrued ticking fee and ends public trading; a signed higher rival deal would replace it.\n\n## What Would Change Our Mind\n\nA daily close above $29.33, about 10% over the 2026-11-11 close and above the $28.00 rival bid, which would show the shares leading the S&P 500; a signed merger agreement above $26.61 per share would also prove the call wrong.\n\n## Correlation Notes\n\nThe shares trade on deal events rather than on hospital and surgical-services stocks or the S&P 500. Their main outside link is the rival bidder: news on UnitedHealth's acquisition appetite, its balance sheet or antitrust scrutiny of Optum bears directly on whether the $28.00 proposal survives.\n\nThe other merger and special-situation names in the group, such as SLN, ULBI, BRZE and EVGO, move on their own transactions. Surgery Partners' 2026-11-09 move came from its own bidding contest, so the group's direction carries little weight for it.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T23:07:34+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}