Tenet Earnings: Continued Deleveraging Enhances Balance Sheet for Portfolio Transformation

No-moat Tenet Healthcare posted robust first-quarter results thanks to favorable medical utilization trends and effective cost controls. We are maintaining our $104 fair value estimate, as the company continues to optimize its portfolio through hospital divestitures and ambulatory care expansions. With recent deleveraging efforts, Tenet has significantly improved its balance sheet quality, which puts the company closer to its goal of operating 575-600 ambulatory facilities by the end of 2025. Currently, we view Tenet’s shares as fairly valued.