Surgery Partners’ Strategic Rejection: Why Independence Outweighed a $3.3B Buyout

The rejection comes amid Surgery Partners’ strong operational momentum, evidenced by first-quarter 2025 results showing 8.2% revenue growth to $776 million and 6.5% increase in surgical cases, with same-facility revenue rising 5.2% year-over-year[15]. Management’s reaffirmation of full-year 2025 guidance—projecting revenues of $3.3-$3.45 billion and adjusted EBITDA of $555-$565 million—signals confidence in the company’s standalone growth algorithm[12][15]. However, the market’s immediate reaction was punitive, with shares plunging 12-14% to near two-month lows, reflecting investor skepticism about the company’s ability to deliver on its growth narrative without Bain’s backing[10][14]. This valuation disconnect highlights the tension between Surgery Partners’ operational execution and Wall Street’s appetite for near-term certainty, setting the stage for the company’s upcoming Investor Day in late 2025 where management must convincingly articulate its “go-forward strategy” for unlocking value[1][12].

The Offer and Rejection Timeline

Bain’s Proposal: Structure and Strategic Context

Bain Capital’s non-binding proposal, dated January 27, 2025, offered to acquire all outstanding shares of Surgery Partners not already owned by Bain for $25.75 per share in cash, representing a 21.2% premium over the company’s January 26 closing price of $21.24[4][6]. The offer valued Surgery Partners at approximately $3.3 billion and came after Bain had steadily accumulated its 39.3% stake since initially investing in 2017 through a combination of direct equity purchases and the contribution of portfolio company National Surgical Healthcare[17]. This ownership structure created unique dynamics in the negotiation process, as any transaction would require approval by both a majority of the minority shareholders and a special committee of independent directors—dual conditions that Bain explicitly acknowledged in its proposal[6][12]. The timing of the bid coincided with Surgery Partners’ record-breaking 2024 financial performance, which saw the company achieve $3.1 billion in annual revenue and $508.2 million in adjusted EBITDA, positioning it at an inflection point in its growth trajectory[17].

Bain’s offer reflected private equity’s accelerating interest in outpatient care platforms, particularly those with scale in high-margin specialties like orthopedics and cardiovascular procedures. The $25.75-per-share price implied a valuation multiple of 12.7x projected 2025 EBITDA—a premium to the 11.76x median for historical ASC platform deals but arguably conservative given Surgery Partners’ projected 10-12% EBITDA CAGR versus peers’ 5% average[3][17]. Bain’s calculus likely incorporated several strategic advantages: Surgery Partners’ national footprint of 200+ facilities across 30 states; its leadership in the migration of musculoskeletal procedures to outpatient settings; and the anticipated regulatory tailwinds from CMS’s site-neutral payment policies[3][12][17]. The proposal emerged amid reported competitive interest from other strategic and financial suitors including TPG Inc. and UnitedHealth Group, suggesting Bain sought to preempt a potential bidding war[4][9].

The Board’s Deliberation and Decision Framework

Surgery Partners’ board of directors responded to Bain’s proposal by establishing a special committee of independent directors, chaired by Brent Turner, to evaluate the offer with assistance from independent financial and legal advisors[6][12]. This committee structure was essential given Bain’s significant ownership position and potential conflicts of interest. Over the ensuing five months, the committee conducted a comprehensive review of the proposal against the company’s standalone prospects, examining multiple dimensions of value creation including organic growth potential, M&A opportunities, operational efficiency initiatives, and industry tailwinds[11][12]. Critical to this analysis was benchmarking the $25.75-per-share offer against the company’s internal projections and third-party valuations, particularly given Surgery Partners’ strong start to 2025 with first-quarter revenue growth of 8.2% and same-facility case growth of 6.5%[15].

The committee’s ultimate determination, announced June 17, 2025, concluded that “Surgery Partners’ prospects to deliver long-term growth and value creation as an independent publicly traded company exceeded the value of the Proposal”[12]. This decision rested on three pillars: First, confidence in the company’s “proven joint venture model” and “strong M&A track record” to drive consolidation in the fragmented ASC market; second, belief in “favorable demographic and policy tailwinds” accelerating the shift to outpatient care; and third, conviction that the company’s “scaled platform” could deliver superior shareholder returns through public market appreciation rather than private ownership[11][12]. The board’s rejection reflects a strategic bet that Surgery Partners’ growth trajectory—particularly in high-acuity specialties and through de novo expansion—could generate value beyond what Bain’s premium offered, despite the near-term market skepticism that immediately followed the announcement[3][10].

Strategic Rationale for Independence

Growth Trajectory and Market Position

Surgery Partners’ decision to remain independent hinges fundamentally on its positioning within the rapidly expanding $400 billion outpatient surgery market, where demographic, regulatory, and economic forces converge to create substantial tailwinds. The company’s national footprint of 200+ facilities—including ambulatory surgery centers, surgical hospitals, and ancillary service lines—provides a scalable platform to capture the accelerating migration of procedures from inpatient to outpatient settings[12][17]. This transition is particularly pronounced in high-margin specialties like orthopedics, where Surgery Partners reported a 22% year-over-year increase in total joint procedures during Q1 2025, and cardiovascular services, which represent the next frontier for outpatient migration[3][15]. With over 11,500 ASCs nationwide operating in a highly fragmented market, Surgery Partners’ scale advantages in physician recruitment, payer contracting, and supply chain management create significant barriers to entry that the board believes can be better leveraged as a public company[3][17].

The company’s growth algorithm combines organic expansion through same-facility volume growth—which increased 6.5% year-over-year in Q1 2025—with strategic acquisitions and de novo development[15]. Surgery Partners has demonstrated consistent execution in its M&A strategy, deploying approximately $400 million annually in recent years to acquire ASCs at sub-8x EBITDA multiples while maintaining a robust pipeline of future targets[17]. Complementing this inorganic growth, the company’s de novo development program added eight new facilities in 2024 with ten more in development, targeting high-growth markets with favorable demographics and limited competition[3]. This dual-track expansion strategy is underpinned by Surgery Partners’ physician partnership model, which aligns incentives through joint venture structures that typically grant physicians 30-50% ownership in facilities, ensuring strong referral networks and clinical engagement[17]. The board’s rejection of Bain’s offer reflects confidence that this multifaceted growth engine can drive sustainable double-digit EBITDA growth, projected at 10-12% annually versus the industry average of 5%[3][17].

Operational Momentum and Expansion Strategy

Surgery Partners’ operational performance provides tangible evidence supporting the board’s confidence

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