What changed in this filing

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Item 1. Financial Statements

2025-11-10 compared with 2025-08-05 · 116 added, 75 removed, 530 unchanged (26% of the section changed)

3 unchanged sentences

(Dollars in millions, except per share amounts)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current assets:

45 unchanged sentences

shares in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

10 unchanged sentences

Transaction and integration costs 12.6 29.4 55.4 66.1

Net (gain) loss on disposals, consolidations and deconsolidations ( 3.0 ) 5.3 3.4 6.8

Net loss on disposals, consolidations and deconsolidations

15.6 14.7 19.0 21.5

Equity in earnings of unconsolidated affiliates ( 5.2 ) ( 5.2 ) ( 16.3 ) ( 12.3 )

6 unchanged sentences

Income before income taxes 30.8 10.9 74.3 72.9

Income tax benefit (expense) 1.1 ( 4.9 ) 1.1 ( 9.3 )

Income tax expense

( 5.5 ) ( 4.5 ) ( 4.4 ) ( 13.8 )

Net income 25.3 6.4 69.9 59.1

13 unchanged sentences

(Unaudited, dollars in millions)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Net income $ 25.3 $ 6.4 $ 69.9 $ 59.1

Other comprehensive (loss) income, net of tax:

Other comprehensive loss, net of tax:

Derivative activity, net of tax of $ 0

( 1.1 ) ( 26.6 ) ( 19.2 ) ( 47.0 )

Comprehensive income 43.4 13.5 26.5 32.3

Comprehensive income (loss)

24.2 ( 20.2 ) 50.7 12.1

Comprehensive income attributable to non-controlling interests ( 48.0 ) ( 38.1 ) ( 132.8 ) ( 118.7 )

22 unchanged sentences

Balance as of June 30, 2025 128,210 $ 1.3 $ 2,537.8 $ ( 13.3 ) $ ( 777.5 ) $ 1,408.2 $ 3,156.5

Net (loss) income — — — — ( 22.7 ) 41.6 18.9

Equity-based compensation 807 — 6.2 — — — 6.2

Other comprehensive loss — — — ( 1.1 ) — — ( 1.1 )

Acquisition and disposal of shares of non-controlling interests, net — — ( 1.2 ) — — 3.7 2.5

Distributions to non-controlling interests—non-redeemable holders — — — — — ( 41.0 ) ( 41.0 )

Balance as of September 30, 2025 129,017 $ 1.3 $ 2,542.8 $ ( 14.4 ) $ ( 800.2 ) $ 1,412.5 $ 3,142.0

SURGERY PARTNERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, dollars in millions, shares in thousands)

Common Stock Additional

Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Deficit Non-Controlling Interests—

Non-Redeemable Total

Shares Amount

Balance as of December 31, 2023 126,594 $ 1.3 $ 2,497.6 $ 57.5 $ ( 569.2 ) $ 1,047.3 $ 3,034.5

7 unchanged sentences

Equity-based compensation 22 — 15.1 — — — 15.1

Other comprehensive income — — — ( 14.9 ) — — ( 14.9 )

Other comprehensive loss

— — — ( 14.9 ) — — ( 14.9 )

Acquisition and disposal of shares of non-controlling interests, net — — 0.4 — — 147.4 147.8

1 unchanged sentence

Balance as of June 30, 2024 127,124 $ 1.3 $ 2,511.1 $ 37.1 $ ( 597.1 ) $ 1,223.9 $ 3,176.3

Net (loss) income — — — — ( 31.7 ) 34.7 3.0

Equity-based compensation 4 — 7.0 — — — 7.0

Other comprehensive loss — — — ( 26.6 ) — — ( 26.6 )

Acquisition and disposal of shares of non-controlling interests, net — — ( 4.6 ) — — ( 11.7 ) ( 16.3 )

Distributions to non-controlling interests—non-redeemable holders — — — — — ( 31.5 ) ( 31.5 )

Balance as of September 30, 2024 127,128 $ 1.3 $ 2,513.5 $ 10.5 $ ( 628.8 ) $ 1,215.4 $ 3,111.9

See notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, dollars in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

28 unchanged sentences

Other financing activities 1.7 ( 9.1 )

Net cash provided by financing activities ( 32.4 ) 221.3

Net decrease in cash and cash equivalents ( 19.4 ) 17.6

Net cash (used in) provided by financing activities

( 116.5 ) 214.0

Net (decrease) increase in cash and cash equivalents

( 66.1 ) 25.9

Cash and cash equivalents at beginning of period 269.5 195.9

10 unchanged sentences

and its subsidiaries are referred to herein as "Surgery Partners," "we," "us," "our" or the "Company."

As of June 30, 2025, the Company owned or operated a portfolio of 162 surgical facilities, comprised of 143 ASCs and 19 surgical hospitals in 30 states.

As of September 30, 2025, the Company owned or operated a portfolio of 165 surgical facilities, comprised of 146 ASCs and 19 surgical hospitals in 30 states.

The Company owns these facilities in partnership with physicians and, in some cases, health care systems in the markets and communities it serves.

20 unchanged sentences

The following table presents a summary of revenues by service type as a percentage of total revenues:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

28 unchanged sentences

The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in millions):

Three Months Ended June 30,

Three Months Ended September 30,

Amount % Amount %

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

Nine Months Ended September 30,

Amount % Amount %

46 unchanged sentences

Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries.

A summary of the Company's acquisitions, disposals and deconsolidations for the six months ended June 30, 2025 is included in Note 2.

A summary of the Company's acquisitions, disposals and deconsolidations for the nine months ended September 30, 2025 is included in Note 2.

"Acquisitions, Disposals and Deconsolidations."

A summary of activity related to goodwill for the six months ended June 30, 2025 is as follows (in millions):

A summary of activity related to goodwill for the nine months ended September 30, 2025 is as follows (in millions):

Balance as of December 31, 2024 $ 5,068.0

1 unchanged sentence

Disposals ( 45.5 )

Balance as of June 30, 2025 $ 5,098.6

A detailed evaluation of potential impairment indicators was performed as of June 30, 2025, which specifically considered recent changes in interest rates, inflation risk and market volatility.

On the basis of available evidence as of June 30, 2025, no indicators of impairment were identified.

Balance as of September 30, 2025 $ 5,091.6

A detailed evaluation of potential impairment indicators was performed as of September 30, 2025, which specifically considered recent changes in interest rates, inflation risk and market volatility.

On the basis of available evidence as of September 30, 2025, no indicators of impairment were identified.

Future estimates of fair value could be adversely affected if the actual outcome of one or more of the Company's assumptions changes materially in the future, including a material decline in the Company’s stock price and the fair value of its long-term debt, lower than expected surgical case volumes, higher market interest rates or increased operating costs.

9 unchanged sentences

In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’ ownership, as applicable, if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility.

Management believes the likelihood of an event occurring that would trigger such purchases was remote as of June 30, 2025.

Management believes the likelihood of an event occurring that would trigger such purchases was remote as of September 30, 2025.

The non-controlling interests — redeemable are reported outside of stockholders' equity in the condensed consolidated balance sheets.

2 unchanged sentences

A summary of activity related to redeemable non-controlling interests is as follows (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Balance at beginning of period $ 438.8 $ 327.4

12 unchanged sentences

Carrying Amount Fair Value

September 30,

2025 December 31,

2024 June 30,

2024 September 30,

2025 December 31,

7 unchanged sentences

Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur.

As of June 30, 2025, the Company's consolidated VIEs consisted of nine surgical facilities and 28 physician practices.

The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, were $ 78.5 million and $ 87.0 million, respectively, and the total liabilities of the consolidated VIEs were $ 40.6 million and $ 55.0 million, respectively.

As of September 30, 2025, the Company's consolidated VIEs consisted of nine surgical facilities and 28 physician practices.

The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, were $ 85.3 million and $ 87.0 million, respectively, and the total liabilities of the consolidated VIEs were $ 41.5 million and $ 55.0 million, respectively.

Recent Accounting Pronouncements

6 unchanged sentences

Acquisitions, Disposals and Deconsolidations

During the six months ended June 30, 2025:

• The Company acquired a controlling interest in four surgical facilities and two physician practices for aggregate cash consideration of $ 48.0 million, net of cash acquired, and non-cash consideration of $ 2.3 million, which consisted of a non-controlling interest in one of the Company's existing surgical facilities.

During the nine months ended September 30, 2025:

• The Company acquired a controlling interest in four surgical facilities and five physician practices for aggregate cash consideration of $ 52.6 million, net of cash acquired, and non-cash consideration of $ 2.3 million, which consisted of a non-controlling interest in one of the Company's existing surgical facilities.

In connection with these acquisitions, the Company preliminarily recognized non-controlling interests of $ 28.6 million and goodwill of $ 78.6 million.

• The Company acquired a non-controlling interest in one surgical facility for aggregate cash consideration of $ 3.8 million.

The non-controlling interest was accounted for as an equity method investment and recorded as a component of investments in and advances to affiliates in the condensed consolidated balance sheets.

During the six months ended June 30, 2024:

• The Company acquired a non-controlling interest in three surgical facilities for aggregate cash consideration of $ 13.4 million.

These non-controlling interests were accounted for as equity method investments and recorded as a component of investments in and advances to affiliates in the condensed consolidated balance sheets.

During the nine months ended September 30, 2024:

• The Company acquired a controlling interest in six surgical facilities and several physician practices for aggregate cash consideration of $ 291.2 million, net of cash acquired, and non-cash consideration of $ 1.1 million, which consisted of a non-controlling interest in one of the Company's existing surgical facilities.

1 unchanged sentence

Disposals and Deconsolidations

During the six months ended June 30, 2025:

During the nine months ended September 30, 2025:

• The Company sold a portion of its interests in one surgical facility for net cash proceeds of $ 0.5 million.

As a result of the transaction, the Company no longer controlled the previously controlled surgical facility but retained a non-controlling interest, resulting in the deconsolidation of the previously consolidated entity.

This transaction resulted in a pre-tax net loss on deconsolidation of $ 2.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2025.

The net loss was determined based on the difference between the net cash proceeds plus the fair value of the Company’s retained interests in the entity and the carrying values of both the tangible and intangible assets and liabilities of the entity immediately prior to the transaction.

• The Company sold its controlling interests in two surgical facilities for aggregate net cash proceeds of $ 42.4 million.

In connection with the transactions, the Company recognized a pre-tax net gain of $ 6.0 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2025.

During the six months ended June 30, 2024:

During the nine months ended September 30, 2024:

• The Company disposed of its non-controlling interests in one surgical facility, which was previously accounted for as an equity method investment, for cash proceeds of $ 2.0 million.

In connection with this transaction, the Company recognized a pre-tax loss of $ 3.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2024.

• The Company sold a portion of its interests in one surgical facility for net cash proceeds of $ 2.5 million.

As a result of the transaction, the Company lost control of the previously controlled surgical facility but retains a non-controlling interest, resulting in the deconsolidation of the previously consolidated entity.

This transaction resulted in a pre-tax net gain on deconsolidation of $ 2.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2024.

This transaction resulted in a pretax net gain on deconsolidation of $ 2.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

The net gain was determined based on the difference between the net cash proceeds plus the fair value of the Company’s retained interests in the entity and the carrying values of both the tangible and intangible assets of the entity immediately prior to the transaction.

• The Company sold its interests in one surgical facility for a nominal amount of cash proceeds.

In connection with the sale, the Company recognized a pre-tax loss of $ 3.4 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

• The Company recognized a pre-tax loss of $ 10.0 million related to an equity investment previously held at cost, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

SURGERY PARTNERS, INC.

2 unchanged sentences

A summary of long-term debt follows (in millions):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Senior secured term loan (1)

8 unchanged sentences

Total long-term debt $ 3,460.6 $ 3,268.9

(1) Includes unamortized fair value discount of $ 1.4 million as of June 30, 2025 and December 31, 2024.

(1) Includes unamortized fair value discount of $ 1.3 million and $ 1.4 million as of September 30, 2025 and December 31, 2024, respectively.

Second Amendment to Credit Agreement

On August 13, 2025 (the “Amendment Effective Date”), SP Holdco I, Inc., a Delaware corporation (“Holdings”), Surgery Center Holdings, Inc., a Delaware corporation (the “Borrower”), each a wholly-owned subsidiary of the Company, and certain wholly-owned subsidiaries of the Borrower party thereto (the “Subsidiary Guarantors”), entered into a second amendment to credit agreement (the “Second Amendment”), with Jefferies Finance LLC, as fronting bank, the administrative agent and the collateral agent, and the other financial institutions party thereto, which amends that certain credit agreement, dated as of December 19, 2023, and amended on June 20, 2024, by and among Holdings, the Borrower, Jefferies Finance LLC, as administrative agent and collateral agent, and the other financial institutions party thereto from time to time (the “Credit Agreement”).

The Second Amendment provides for a new tranche of term loans under the Credit Agreement in an aggregate principal amount of $ 1,383 million (the “2025 Refinancing Term Loans”), which 2025 Refinancing Term Loans replace or refinance in full all of the existing term loans outstanding under the Credit Agreement (as in effect immediately prior to the Second Amendment), and (ii) refinance in full all of the existing revolving credit commitments and outstanding revolving loans under the Credit Agreement (as in effect immediately prior to the Second Amendment), all as further set forth in the Second Amendment.

The 2025 Refinancing Term Loans mature on December 19, 2030 and the refinanced revolving credit commitments and refinanced revolving loans mature on December 19, 2028.

The 2025 Refinancing Loans shall bear interest at a rate per annum equal to (x) the forward-looking term rate based on Secured Overnight Financing Rate (“Term SOFR”) plus 2.50 % per annum or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5 % per annum and (iii) Term SOFR plus 1.00 % per annum (which shall not be less than 1.00 %)) plus 1.50 % per annum.

The 2025 Refinancing Term Loans amortize in equal quarterly installments of 0.25 % of the aggregate original principal amount of the 2025 Refinancing Term Loans (such amortization payments will commence on or around the last business day of the fiscal quarter ending September 30, 2025).

Voluntary prepayments of the 2025 Refinancing Term Loans are permitted, in whole or in part, with prior notice, without premium or penalty (except a 1.00 % call premium in the case of certain repricing events occurring prior to the sixth month anniversary of the Second Amendment Effective Date).

In connection with the Second Amendment, the Company recorded debt issuance costs and discount of $ 1.6 million, and a debt extinguishment loss of $ 1.3 million which is included in loss on debt extinguishment in the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2025.

The loss on debt extinguishment includes the partial write-off of unamortized debt issuance costs and discounts.

Revolving Credit Facility

As of June 30, 2025, the Company's availability on its $ 703.8 million senior secured revolving credit facility (the "Revolver") was $ 394.9 million (including letters of credit of $ 10.9 million).

The increase in outstanding borrowings on the Revolver compared to December 31, 2024 was primarily due to the timing of acquisitions.

As of September 30, 2025, the Company's availability on its $ 703.8 million senior secured revolving credit facility (the "Revolver") was $ 405.9 million (including letters of credit of $ 10.9 million).

The increase in outstanding borrowings on the Revolver compared to December 31, 2024 was primarily due to timing of acquisitions and changes in working capital.

The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices.

The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets.

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the condensed consolidated balance sheets (in millions):

Classification in Condensed Consolidated Balance Sheets June 30, 2025 December 31, 2024

Classification in Condensed Consolidated Balance Sheets September 30, 2025 December 31, 2024

Operating lease assets Right-of-use operating lease assets $ 275.7 $ 295.7

10 unchanged sentences

Total lease liabilities $ 1,216.5 $ 1,131.8

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the components of the Company's lease expense and their classification in the condensed consolidated statements of operations (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Operating lease costs $ 48.9 $ 50.1

6 unchanged sentences

The following table presents supplemental cash flow information (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Finance leases 24.4 40.8

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Derivatives and Hedging Activities

3 unchanged sentences

The key terms of interest rate swaps and interest rate caps outstanding are presented below:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Description Effective Date Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date

10 unchanged sentences

$ 1,379.0 $ 2,737.8

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company had three interest rate swaps designated in cash flow hedging relationships, which matured on March 31, 2025.

18 unchanged sentences

Over the next 12 months, the Company estimates that an additional $ 5.5 million will be reclassified as an increase to interest expense.

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Assets Liabilities Assets Liabilities

7 unchanged sentences

(1) Amounts were included in other current assets on the condensed consolidated balance sheets as of December 31, 2024.

(2) Amounts were included in other long-term liabilities on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.

(2) Amounts were included in other long-term liabilities on the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

(3) Amounts were included in other current liabilities on the condensed consolidated balance sheets as of December 31, 2024.

1 unchanged sentence

The following table presents the pre-tax effect of the interest rate swaps and caps on the Company's accumulated OCI and condensed consolidated statements of operations (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Location 2025 2024 2025 2024

Derivatives in cash flow hedging relationships

(Loss) gain recognized in OCI (effective portion) $ ( 2.8 ) $ ( 0.1 ) $ ( 8.4 ) $ 9.1

Loss recognized in OCI (effective portion)

$ ( 2.7 ) $ ( 11.8 ) $ ( 11.1 ) $ ( 2.7 )

Loss (gain) reclassified from accumulated OCI into income (effective portion) Interest expense, net 1.6 ( 14.8 ) ( 8.1 ) ( 44.3 )

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

2 unchanged sentences

shares in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

11 unchanged sentences

(1) The impact of potentially dilutive securities for all periods was not considered because the effect would be anti-dilutive.

For the six months ended June 30, 2025, the Company calculated its effective tax rate under a discrete-period approach based solely on its income from operations for the six months ended June 30, 2025.

The Company's effective tax rate was ( 2.5 )% for the six months ended June 30, 2025.

For the six months ended June 30, 2025, the effective tax rate differed from the U.S.

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2025, the Company calculated its effective tax rate under a discrete-period approach based solely on its income from operations for the nine months ended September 30, 2025.

The Company's effective tax rate was 5.9 % for the nine months ended September 30, 2025.

For the nine months ended September 30, 2025, the effective tax rate differed from the U.S.

federal statutory rate of 21% primarily due to earnings attributable to non-controlling interests, an increase in the Company’s valuation allowance attributable to interest expense limitations, and a permanent difference between the book and tax gain on the divestiture of partnership interests.

For the six months ended June 30, 2024, the Company estimated its effective tax rate under the annual effective tax rate approach.

The Company’s effective tax rate was 15.0 % for the six months ended June 30, 2024.

For the six months ended June 30, 2024, the effective tax rate differed from the U.S.

For the nine months ended September 30, 2024, the Company estimated its effective tax rate under the annual effective tax rate approach.

The Company’s effective tax rate was 18.9 % for the nine months ended September 30, 2024.

For the nine months ended September 30, 2024, the effective tax rate differed from the U.S.

federal statutory rate of 21% primarily due to earnings attributable to non-controlling interests, an increase in the Company’s valuation allowance attributable to interest expense limitations, state tax expense, and a discrete tax expense of $ 0.6 million related to the vesting of restricted stock awards.

Based upon the application of interim accounting guidance, the tax rate as a percentage of net income after income attributable to non-controlling interests will vary based upon the relative net income from period to period.

As of June 30, 2025 and December 31, 2024, the Company was in a cumulative three-year pre-tax loss position, which was considered significant negative evidence that could not be overcome by objective and verifiable positive evidence.

As of September 30, 2025 and December 31, 2024, the Company was in a cumulative three-year pre-tax loss position, which was considered significant negative evidence that could not be overcome by objective and verifiable positive evidence.

Based on the weight of available evidence, the Company concluded that it was more likely than not that a portion of its net deferred tax assets will not be realized.

Therefore, in accordance with ASC 740-10-30, the Company recorded a full valuation allowance, net of future reversing deferred tax liabilities, on its deferred tax assets to reflect the net realizable value as of the balance sheet dates.

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Current Liabilities

A summary of other current liabilities was as follows (in millions):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Right-of-use operating lease liabilities $ 41.3 $ 41.0

12 unchanged sentences

The Company is not aware of any such proceedings that are reasonably possible to have a material adverse effect on the Company's business, financial position, results of operations or liquidity.

Total professional, general and workers' compensation claim liabilities as of June 30, 2025 and December 31, 2024 were $ 23.8 million and $ 19.2 million, respectively.

Expected insurance recoveries of $ 9.6 million as of both June 30, 2025 and December 31, 2024 are included as a component of other current assets and other long-term assets in the condensed consolidated balance sheets.

Total professional, general and workers' compensation claim liabilities as of September 30, 2025 and December 31, 2024 were $ 23.0 million and $ 19.2 million, respectively.

Expected insurance recoveries of $ 9.6 million as of both September 30, 2025 and December 31, 2024 are included as a component of other current assets and other long-term assets in the condensed consolidated balance sheets.

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting

6 unchanged sentences

The Company defines its segments on the basis of the way in which its internally reported financial information is regularly reviewed by the CODM to assess performance and allocate resources.

During the three and six months ended June 30, 2025, the operating segment previously defined as "Ancillary services" was included with Surgical Facilities based on changes in the operational management of our multi-specialty physician practices.

During the three and nine months ended September 30, 2025, the operating segment previously defined as "Ancillary services" was included with Surgical Facilities based on changes in the operational management of our multi-specialty physician practices.

Accordingly, the Company has recast segment disclosures previously reported to conform to current year presentation.

2 unchanged sentences

The following segment information, including significant segment expenses, is presented in millions:

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

20 unchanged sentences

(1) Other segment items includes equity in earnings of unconsolidated affiliates, net income attributable to non-controlling interests and other expenses, net.

Three Months Ended June 30, Six Months Ended June 30,

SURGERY PARTNERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

3 unchanged sentences

Total depreciation and amortization expense $ 39.5 $ 50.2 $ 116.1 $ 118.7

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Surgical Facilities

2 unchanged sentences

Total assets $ 7,946.6 $ 7,890.0

Six Months Ended June 30,

Nine Months Ended September 30,

Cash purchases of property and equipment:

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements