Surgery Partners, Inc. (SGRY): A Bull Case Theory

We came across a bullish thesis on Surgery Partners, Inc. on Valueinvestorsclub.com by Shoe. In this article, we will summarize the bulls’ thesis on SGRY. Surgery Partners, Inc.’s share was trading at $22.47 as of July 14th. SGRY’s trailing and forward P/E were 2.69k and 35.59 respectively according to Yahoo Finance.

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An operating room with a doctor monitoring a patient’s vital signs during surgery with a medical device.

Surgery Partners (SGRY), a major player in the ambulatory surgery center (ASC) space, presents a compelling special situation investment driven by a high-probability takeout by Bain Capital, which already owns 39% of the company. After a failed sale process in 2024 and a non-binding $25.75 per share offer from Bain in January 2025, the odds favor a full acquisition.

Despite the stock fading from initial highs due to market volatility and macro fears, fundamentals remain intact: ASCs are a secularly advantaged model  lower-cost, efficient care delivery and favorable patient outcomes. Surgery Partners, as the last pure-play public ASC, enjoys mid-teens EBITDA CAGR through a mix of organic growth and M&A, with solid strategic positioning in orthopedics and cardiology.

Valuation upside is real; historical EV/EBITDA multiples for similar takeouts (UNH/SCAI, THC/USPI) support the view that Bain may need to bump its bid. Given prior trades above the bid and historical data showing bumps in ~95% of minority buyouts, a revised offer around $28 isn’t far-fetched. The stock trades near technical support, and downside is cushioned at $18.5–$19.25. Jefferies and Nomura estimate Bain could still achieve >17% IRR with a takeout at $30, suggesting room for competitive interest or a strategic rerating.

Recent Bain transactions worth $2B underscore its capacity to execute despite tightened credit markets. With a likely resolution in the coming weeks, possibly aligned with the unusual Monday earnings schedule, a successful deal could yield 12–23% upside. Meanwhile, Surgery Partners’ ASC platform continues to benefit from favorable healthcare trends and operational improvements.

Previously, we covered a bullish thesis on Tenet Healthcare Corporation (THC) by BlackSwanInvestor in December 2024, highlighting its debt reduction and growth in Ambulatory Care. The stock has appreciated by ~38% since, driven by execution in its ASC strategy. Shoe shares a similar thesis but emphasizes Surgery Partners’ pure-play ASC positioning and potential near-term buyout by Bain Capital.

Surgery Partners, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held SGRY at the end of the first quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of SGRY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SGRY and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.