Narrow business focus in operating Ambulatory Surgical Centers and surgical hospitals. Operates in highly competitive and fragmented industry. Moderate reimbursement risk. Leverage above 7x area over the next 12 months. Funds from operations (FFO) to debt of less than 10%. Aggressive financial policy. S&P Global Ratings' outlook on Surgery Partners Inc. is stable, reflecting the expectation for stable reimbursement, some organic revenue growth, margin expansion as a result of cost reductions, and moderate discretionary cash flow in 2017. We could lower the rating if Surgery Partners fails to sustain its margins and does not generate positive discretionary cash flows. This scenario may materialize if the company fails to successfully integrate recently acquired operations or is hurt by significant reimbursement cuts.
