We feel now is a pretty good time to analyse Surgery Partners, Inc.'s (NASDAQ:SGRY) business as it appears the company may be on the cusp of a considerable accomplishment. Surgery Partners, Inc., through its subsidiaries, owns and operates a network of surgical facilities and ancillary services in the United States. The US$3.9b market-cap company’s loss lessened since it announced a US$156m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$135m, as it approaches breakeven. Many investors are wondering about the rate at which Surgery Partners will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 7 of the American Healthcare analysts is that Surgery Partners is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$44m in 2022. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 106% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Surgery Partners' upcoming projects, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Surgery Partners currently has a debt-to-equity ratio of 144%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Surgery Partners, so if you are interested in understanding the company at a deeper level, take a look at Surgery Partners' company page on Simply Wall St. We've also put together a list of essential factors you should further research:
- Historical Track Record: What has Surgery Partners' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Surgery Partners' board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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