Company Reports

Tenet reported second-quarter results that included 7% revenue growth, 16% growth in adjusted EBITDA, and 52% adjusted EPS growth to $6.12 (above FactSet consensus of $4.26). Management also increased its 2026 outlook.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that had previously saddled the company with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its asset portfolio through divestitures of underperforming hospitals, and undertaken a restructuring effort. Operationally, Tenet continues to expand its high-acuity service lines in its outpatient surgery centers, improve operating efficiency inside and outside its healthcare facilities, and increase its focus on service quality. All these factors appear to be positively influencing returns on invested capital at Tenet, which now regularly exceed the weighted average cost of capital. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, which should offer greater growth opportunities than its acute hospital operations in the long run.

Tenet Healthcare's first-quarter financial results included 3% revenue growth and 11% adjusted earnings per share growth. Management maintained its 2026 guidance. The shares were down 3% in April 30 intraday trading.

Tenet turned in fourth-quarter results that included 9% revenue, 13% adjusted EBITDA, and 37% adjusted EPS growth to $16.78, materially exceeding previous expectations, including EPS of $15.93-$16.26. Tenet's guidance for 2026 includes continued profit and cash flow growth, too, at the midpoint.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that had previously saddled it with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its asset portfolio through divestitures of underperforming hospitals, and undertaken a restructuring effort. Operationally, Tenet continues to expand its high-acuity service lines in its outpatient surgery centers, improve operating efficiency inside and outside its healthcare facilities, and increase its focus on service quality. All these factors appear to be positively influencing returns on invested capital at Tenet, which now regularly exceed the weighted average cost of capital. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, which offers higher margins and greater growth opportunities than its acute hospital operations.

On Nov. 9, the US Senate agreed to terms that would reopen the US federal government after a record shutdown period. However, the solution did not include a plan to extend federal subsidies on the individual exchanges.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that left it with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its portfolio of assets through divestitures of underperforming hospitals, and undergone a restructuring effort. Operationally, Tenet also continues expanding its high-acuity service lines in its outpatient surgery centers, improving operating efficiencies inside and outside its healthcare facilities, and increasing focus on service quality. All these factors appear to be positively influencing returns on invested capital at Tenet, which now regularly operates with ROICs moderately over the weighted average cost of capital. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, which represents a higher margin and higher growth opportunity for the organization than its acute hospital operations.

Tenet turned in third-quarter results that included 3% revenue growth, 12% adjusted EBITDA growth, and 26% adjusted EPS growth. Management also increased its profit guidance by 1% for 2025, including a $50 million increase on adjusted EBITDA at the midpoint.

Tenet Healthcare's second-quarter results outperformed management's profit goals, and the company raised its profit guidance for 2025, including adjusted EBITDA by about 10% and adjusted earnings per share by over 25%. The shares declined 5% after the July 22 call, though.

On May 11 and 12, Republicans revealed updated regulatory stances that included plans to lower drug prices and pull back on Medicaid spending by about $715 billion over the next 10 years versus $880 billion expected previously.

Tenet's first quarter included a slight decline in revenue after recent hospital divestitures, but adjusted EBITDA and EPS grew 14% and 35%, respectively, year over year. Also, Tenet largely maintained its 2025 outlook on an operating basis.

Over the past week, tariff-related news has created significant volatility in the US market, including in medical services-related firms like managed care organizations, caregivers, and medical suppliers.

As part of our ongoing analysis, we have reviewed Tenet Healthcare's competitive positioning and long-term potential cash flows.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that left it with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its portfolio of assets through divestitures of underperforming hospitals, and undergone a restructuring effort. Operationally, Tenet has been expanding its high-acuity service lines in its outpatient surgery centers, improving operating efficiencies inside and outside its healthcare facilities, and increasing focus on service quality. All these factors appear to be positively influencing returns on invested capital at Tenet, which now regularly operates with ROICs moderately over the weighted average cost of capital. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, which represents a higher margin and higher growth opportunity for the organization than its acute hospital operations.

Despite recent divestitures that are constraining top- and bottom-line growth, Tenet Healthcare turned in 13% adjusted EBITDA growth for 2024 on roughly flat sales. For 2025, Tenet gave guidance for roughly flat to up to 5% adjusted EBITDA growth and about flat to up to 9% earnings per share growth.

No-moat Tenet Healthcare’s third-quarter results once again exceeded our expectations. We are raising our fair value estimate to $140 per share from $128 due to a slightly higher margin outlook for its hospital and ambulatory care operations. Even after this fair value estimate change, we view shares as moderately overvalued at recent prices, which rose substantially after these results.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that left it with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its portfolio of assets through divestitures of hospitals, and undergone a restructuring effort. Operationally, Tenet has been expanding its high-acuity service lines in outpatient settings, improving operating efficiencies both inside and outside its healthcare facilities, and increasing focus on service quality. All these factors appear to be positively influencing ROICs at Tenet, which began exceeding its weighted average cost of capital in 2017 by our calculations for the first time since The Vanguard Group acquisition in 2013. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, and we believe Tenet is on track to reach its goal of opening 575-600 ambulatory surgery centers by the end of 2025.

No-moat Tenet Healthcare posted strong second-quarter results above our expectations. We are raising our fair value estimate to $128 per share from $104 due to an increased near-term outlook based on robust medical utilization trends and expanded higher-acuity offerings. Despite the 23% fair value estimate increase, we still view Tenet’s shares as slightly overvalued.

Since late 2017, Tenet Healthcare has undergone a massive turnaround effort in the wake of an acquisition strategy that left it with operating inefficiencies and a debt-heavy balance sheet. In recent years, Tenet’s new leadership has improved governance practices, pruned its portfolio of assets through divestitures of hospitals, and undergone a restructuring effort. Operationally, Tenet has been expanding its high-acuity service lines in outpatient settings, improving operating efficiencies both inside and outside its healthcare facilities, and increasing focus on service quality. All these factors appear to be positively influencing ROICs at Tenet, which began exceeding its weighted average cost of capital in 2017 by our calculations for the first time since The Vanguard Group acquisition in 2013. We applaud those trends. We also like the firm's increasing focus on the high-margin ambulatory surgery business, and we believe Tenet is on track to reach its goal of opening 575-600 ambulatory surgery centers by the end of 2025.

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.