Contrasting Surgery Partners (NASDAQ:SGRY) and Quorum Health Corporation (QHC)

Surgery Partners (NASDAQ: SGRY) and Quorum Health Corporation (NYSE:QHC) are both small-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

39.4% of Surgery Partners shares are owned by institutional investors. Comparatively, 87.9% of Quorum Health Corporation shares are owned by institutional investors. 7.5% of Surgery Partners shares are owned by insiders. Comparatively, 4.7% of Quorum Health Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Surgery Partners and Quorum Health Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Surgery Partners $1.13 billion 0.48 $231.08 million $0.15 73.50
Quorum Health Corporation $2.12 billion 0.06 $93.09 million N/A N/A

Surgery Partners has higher revenue, but lower earnings than Quorum Health Corporation.

Profitability

This table compares Surgery Partners and Quorum Health Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Surgery Partners 0.63% 6.02% 0.81%
Quorum Health Corporation -7.13% -61.90% -6.46%

Risk & Volatility

Surgery Partners has a beta of 1.71, suggesting that its share price is 71% more volatile than the S&P 500. Comparatively, Quorum Health Corporation has a beta of 9.5, suggesting that its share price is 850% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Surgery Partners and Quorum Health Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Surgery Partners 1 1 4 0 2.50
Quorum Health Corporation 1 4 0 0 1.80

Surgery Partners currently has a consensus target price of $20.40, indicating a potential upside of 85.03%. Quorum Health Corporation has a consensus target price of $4.60, indicating a potential upside of 19.48%. Given Surgery Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Surgery Partners is more favorable than Quorum Health Corporation.

Summary

Surgery Partners beats Quorum Health Corporation on 9 of the 12 factors compared between the two stocks.

Surgery Partners Company Profile

Surgery Partners, Inc. is a healthcare services company. The Company operates in three lines of business across the United States: Surgical Facility Services, Ancillary Services and Optical Services. The Company’s Surgical Facility Services segment consists of the operation of ambulatory surgery centers (ASCs) and surgical hospitals, which include its anesthesia services. The Company’s surgical facilities primarily provide non-emergency surgical procedures across a range of specialties, which include gastrointestinal (GI), general surgery, ophthalmology, orthopedics and pain management. The Company’s Ancillary Services segment consists of a diagnostic laboratory, a specialty pharmacy and multi-specialty physician practices. The Company’s physician practices include its owned and operated physician practices pursuant to long-term management service agreements. The Company’s Optical Services segment consists of an optical laboratory, an optical products group purchasing organization.

Quorum Health Corporation Company Profile

Quorum Health Corporation is an operator and manager of general acute care hospitals and outpatient services in the United States. The Company operates in two segments: Hospital operations, which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services, and hospital management advisory and consulting services, which includes Quorum Health Resources, LLC (QHR). It operates QHR, which is a hospital management advisory and consulting services that provides services to non-affiliated general acute care hospitals. Its hospitals and its affiliated businesses offer services, such as general acute care, emergency room, general and specialty surgery and rehabilitation services. On April 1, 2016, Community Health Systems, Inc. announced that its board of directors has approved the distribution to its stockholders of 100% of the common stock of a new, independent publicly traded company, Quorum Health Corporation.

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