What the changes say
- Surgery Partners faces reimbursement pressures, rising patient co-pay collection risks, and expiring ACA subsidies driving uncompensated care.
- Intercompany loan balances rose to $44.2 million, and Bain Capital's ownership stake shifted to 38.6%.
What changed since the prior 10-K
New
- NewBusiness and Operational Risks
CMS to Medicare’s reimbursement policies; requirements for utilization review; and federal and state funding restrictions; any of which could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities
CMS reimbursement policies and utilization review requirements could adversely affect payments and cash flow timing.
- NewBusiness and Operational Risks
collect the accounts receivable of an acquired facility while we align the payors’ payment systems and accounts with our own systems. Finally, certain transactions can require licensure changes which, in turn, result in disruptions in payment for services
Acquiring surgical facilities brings unknown liabilities, integration strains, and licensing delays that disrupt payments.
- NewBusiness and Operational Risks
primary third-party payor has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and co-payments) remain outstanding
Uncollected patient deductibles and co-payments complicate billing and threaten receivables collectability.
- NewFinancial and Accounting Risks
Although most of our intercompany loans are secured by the assets of the partnership or LLC, the physicians and physician groups that own an interest in these partnerships and LLCs generally do not guarantee a pro rata amount of this debt or the other obligations of these partnerships and LLCs
Physicians and physician groups generally do not guarantee their pro-rata share of partnership or LLC debt.
- NewLegal and Regulatory Risks
We cannot predict the effect that changes in healthcare laws, regulations, policies and government programs may have on our business, financial condition or results of operations
Expiration of ACA marketplace subsidy premium caps could increase uninsured individuals and uncompensated care in 2026.
- NewLegal and Regulatory Risks
be inconsistent with applicable laws, we may be required to restructure or discontinue such programs, or be subject to other significant penalties
Post-payment audits by RACs, MICs, and state agencies create financial uncertainty and potential repayment liabilities.
Dropped
- DroppedBusiness and Operational Risks
could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities
- DroppedBusiness and Operational Risks
non-elective may be delayed or may not be performed if the patient cannot afford the procedure due to a lack of insurance or money to pay their portion of our facilities’ fee. It is difficult to predict the degree to which our business will continue to be impacted by economic conditions in the future
Government program payment timing and reimbursement risk details.
- DroppedBusiness and Operational Risks
temporary personnel. We also depend on the available labor pool of semi-skilled and unskilled workers in each of the markets in which we operate
- DroppedLegal and Regulatory Risks
We cannot predict the effect that health care reform and other changes in government programs may have on our business, financial condition or results of operations
- DroppedLegal and Regulatory Risks
complies fully with the Stark Law. We also believe that certain services provided by our managed physician network are covered by the Stark Law, but referrals for those services are exempt from the Stark Law under its "in-office ancillary services exception," among others
- DroppedLegal and Regulatory Risks
addition to RACs and MICs, the state Medicaid agencies and other contractors have increased their review activities. We are regularly subject to these external audits and we also perform both internal and third-party audits and monitoring
Non-elective procedure delays due to lack of insurance and local market competitive factors.
Reworded
- 88% rewrittenLegal and Regulatory Risks
If we fail to comply with physician self-referral laws as they are currently interpreted or may be interpreted in the future, or if other legislative restrictions are issued, we could incur substantial monetary penalties and a significant loss of revenue
Added specific references to surgical hospitals and managed physician network services under the Stark Law in-office ancillary services exception.
- 74% rewrittenBusiness and Operational Risks
Additionally, a significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition
Expanded on non-elective procedure delays from affordability issues and non-uniform local market payor mix shifts.
Was: A significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition
- 71% rewrittenFinancial and Accounting Risks
We make significant loans to, and are generally liable for debts and other obligations of, the partnerships and limited liability companies that own and operate some of our surgical facilities
Updated intercompany loan balances to $44.2 million as of December 31, 2025, and noted a zero balance on the global intercompany note.
- 59% rewrittenBusiness and Operational Risks
Competition for physicians and clinical personnel, including nurses, shortages of qualified personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows
Added a specific mention of contracting for more expensive temporary personnel to address clinical staff shortages.
- 56% rewrittenBusiness and Operational Risks
Growth of patient receivables or deterioration in the ability to collect on these accounts, due to changes in economic conditions or otherwise, could have a material adverse effect on our business, prospects, results of operations and financial condition
Added specific discussion regarding collection risks relating to outstanding patient responsibility amounts and deductibles.
- 39% rewrittenLegal and Regulatory Risks
Our largest stockholder has significant influence over us, including influence over decisions that require the approval of stockholders, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control
Updated Bain Capital ownership percentage to approximately 38.6% as of December 31, 2025.
- 37% rewrittenBusiness and Operational Risks
We depend on payments from third-party payors, including government health care programs and private insurance organizations. If these payments are reduced or eliminated, our revenue and profitability could be materially and adversely affected
Updated government payor revenue contribution to 43% in 2025, compared to 41% in 2024 and 42% in 2023.
- 34% rewrittenFinancial and Accounting Risks
We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability
Updated federal NOL carryforwards to $532.4 million, state NOLs to $657.1 million, and expiring federal NOLs to $424.6 million.
- 30% rewrittenLegal and Regulatory Risks
An allegation or determination that we have violated the law could have a material adverse effect on our business, prospects, results of operations and financial condition
- 28% rewrittenFinancial and Accounting Risks
Despite our current indebtedness levels, we and our subsidiaries may still be able to incur more debt, which could further exacerbate the risks associated with our leverage
- 26% rewrittenBusiness and Operational Risks
Our ability to provide medical services at our facilities would be impaired and our revenue reduced if we are not able to maintain good relationships with affiliated physicians who utilize our surgical facilities
- 22% rewrittenBusiness and Operational Risks
Our surgical facilities are sensitive to regulatory, economic and other conditions in the states where they are located
- 21% rewrittenFinancial and Accounting Risks
We have a history of net losses and may not achieve or sustain profitability in the future
All 43 risk factors
Headings as the filing states them, in filing order.
Business and Operational Risks
- 01We depend on payments from third-party payors, including government health care programs and private insurance organizations. If these payments are reduced or eliminated, our revenue and profitability could be materially and adversely affected37% rewritten
- 02CMS to Medicare’s reimbursement policies; requirements for utilization review; and federal and state funding restrictions; any of which could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilitiesNew
- 03If we are unable to negotiate and enter into favorable contracts or maintain satisfactory relationships and renew existing contracts on favorable terms with private insurance payors, our revenue and profitability may decrease
- 04Significant changes in our payor mix or surgical case mix resulting from fluctuations in the types of cases performed at our facilities could have a material adverse effect on our business, prospects, results of operations and financial condition
- 05Additionally, a significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition74% rewritten
- 06Our ability to provide medical services at our facilities would be impaired and our revenue reduced if we are not able to maintain good relationships with affiliated physicians who utilize our surgical facilities26% rewritten
- 07collect the accounts receivable of an acquired facility while we align the payors’ payment systems and accounts with our own systems. Finally, certain transactions can require licensure changes which, in turn, result in disruptions in payment for servicesNew
- 08Shortages of surgery-related products, equipment and medical supplies and quality control issues with such products, equipment and medical supplies could disrupt our operations and adversely affect our case volume, surgical case mix and profitability
- 09We face competition from other health care facilities and providers
- 10Competition for physicians and clinical personnel, including nurses, shortages of qualified personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows59% rewritten
- 11Our surgical facilities are sensitive to regulatory, economic and other conditions in the states where they are located22% rewritten
- 12Certain of our partnership and operating agreements contain provisions giving rights to our partners and other members that may be adverse to our interests
- 13We may have a special legal responsibility to the holders of ownership interests in the entities through which we own our facilities, which may conflict with, and prevent us from acting solely in, our own best interests or the interests of our stockholders
- 14Growth of patient receivables or deterioration in the ability to collect on these accounts, due to changes in economic conditions or otherwise, could have a material adverse effect on our business, prospects, results of operations and financial condition56% rewritten
- 15primary third-party payor has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and co-payments) remain outstandingNew
- 16If we are unable to integrate and operate our information systems effectively or implement new systems and processes, our operations could be disrupted
- 17A pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business
Financial and Accounting Risks
- 18We have a history of net losses and may not achieve or sustain profitability in the future21% rewritten
- 19To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations may adversely affect our business, financial condition and results of operations
- 20Restrictive covenants in our debt instruments may adversely affect us
- 21Despite our current indebtedness levels, we and our subsidiaries may still be able to incur more debt, which could further exacerbate the risks associated with our leverage28% rewritten
- 22We are a holding company with no operations of our own
- 23We make significant loans to, and are generally liable for debts and other obligations of, the partnerships and limited liability companies that own and operate some of our surgical facilities71% rewritten
- 24Although most of our intercompany loans are secured by the assets of the partnership or LLC, the physicians and physician groups that own an interest in these partnerships and LLCs generally do not guarantee a pro rata amount of this debt or the other obligations of these partnerships and LLCsNew
- 25Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly
- 26We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability34% rewritten
Cybersecurity and Data Risks
- 27Cybersecurity attacks or intrusions could adversely impact our businesses
- 28Our use and disclosure of personally identifiable information, including health information, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm
Legal and Regulatory Risks
- 29We cannot predict the effect that changes in healthcare laws, regulations, policies and government programs may have on our business, financial condition or results of operationsNew
- 30If we fail to comply with or otherwise incur liabilities under the numerous federal and state laws and regulations relating to the operation of our facilities, we could incur significant penalties or other costs or be required to make significant changes to our operations
- 31If regulations change, we may be obligated to purchase some or all of the ownership of our physician partners or renegotiate some of our partnership and operating agreements with our physician partners and management agreements with surgical facilities
- 32If we fail to comply with physician self-referral laws as they are currently interpreted or may be interpreted in the future, or if other legislative restrictions are issued, we could incur substantial monetary penalties and a significant loss of revenue88% rewritten
- 33Federal law restricts the ability of our surgical hospitals to expand capacity
- 34Companies within the health care industry, including us, continue to be the subject of federal and state audits and investigations, including actions for false and other improper claims
- 35An allegation or determination that we have violated the law could have a material adverse effect on our business, prospects, results of operations and financial condition30% rewritten
- 36be inconsistent with applicable laws, we may be required to restructure or discontinue such programs, or be subject to other significant penaltiesNew
- 37We may become involved in litigation which could negatively impact the value of our business
- 38If we become subject to large malpractice or other legal claims, we could be required to pay significant damages, which may not be covered by insurance
- 39Failure to comply with Medicare’s conditions for coverage and conditions of participation may result in loss of program payment or other governmental sanctions
- 40Our facilities could face decreased Medicare payments if they fail to report and meet various quality metrics
- 41State efforts to regulate the construction, acquisition or expansion of health care facilities could prevent us from acquiring additional surgical facilities, renovating our existing facilities or expanding the breadth of services we offer
- 42Our largest stockholder has significant influence over us, including influence over decisions that require the approval of stockholders, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control39% rewritten
- 43Provisions in our charter documents and Delaware law may deter takeover efforts that could be beneficial to stockholder value
Other Surgery Partners 10-Ks
- FY2024 10-K risk factors43 risks
The company faces heavy concentration risk in Idaho and high reliance on government and private payors. Substantial debt and net operating losses create severe financial pressures. Strict healthcare regulations and compliance demands threaten operations and revenues.
Filed Mar 07, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.