Surgery Partners, Inc. — financial distress indicators
Financial-health summary
Surgery Partners, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 37/100). The main indicators are market-implied default probability >20%, losses in each of the last 3 years and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 29% and the market-implied (Merton) default probability is 32.2%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default 0.46 σ → PD 32%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Total debt is 10.3× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (1.86).
📰 Recent news scan
- Surgery Partners, 10x Genomics, QuidelOrtho, Zimmer Biomet, and Tandem Diabetes Stocks Trade Down, What You Need To KnowYahoo Finance · 2026-09-23
- Surgery Partners (SGRY): Buy, Sell, or Hold Post Q2 Earnings?Yahoo Finance · 2026-09-23
- Surgery Partners (SGRY) Soars 15.7%: Is Further Upside Left in the Stock?Yahoo Finance · 2026-09-23
- Surgery Partners Director Teresa DeLuca Buys 11,250 SharesYahoo Finance · 2026-09-03
- Surgery Partners (SGRY) Q2 2026 Earnings Call TranscriptYahoo Finance · 2026-08-17
- Surgery Partners (SGRY) Q2 Earnings: What To ExpectYahoo Finance · 2026-08-11
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Surgery Partners, Inc.'s financial-health indicators show?
As of 2026-10-08, Surgery Partners, Inc.'s public financial data places it in the 'Watch' band with a distress score of 37/100, driven by market-implied default probability >20%, losses in each of the last 3 years and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Surgery Partners, Inc.'s financial distress score?
37/100 ('Watch'). Ohlson O-score -0.87 (model 1-year failure probability 29%). Merton distance-to-default 0.46 σ (model default probability 32.2%).
What works in Surgery Partners, Inc.'s favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (1.86).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.