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Tenet Healthcare Corp THC Stock Quote

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Morningstar‘s Stock Analysis THC

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Tenet Shares Dive on Trimming of 2022 Outlook and Mounting Economic Pressures; No FVE Change

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Tenet turned in third-quarter operating results that were stronger than anticipated. However, given weak medical utilization trends, macroeconomic challenges, and ongoing labor pressures in healthcare services; management trimmed its 2022 outlook ranges, suggesting that the fourth quarter would be weaker than the market was anticipating. While investors may naturally be a bit skittish with the weak near-term outlook, we would highlight that Tenet's adjusted EBITDA guidance for 2022 has changed just 1% at the midpoint, for example. Considering the limited changes that management made to its 2022 outlook, the nearly 30% selloff in early trading appears extreme. While we have trimmed some of our near-term assumptions for 2022-23, we are maintaining our $95 fair value estimate and consider the shares significantly undervalued. While our moat rating remains none, Tenet's operations have improved substantially in recent years, and we expect ROICs to remain above capital costs for the foreseeable future.

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Company Profile THC

Business Description

Tenet Healthcare is a Dallas-based healthcare services organization. It operates a collection of hospitals (60 as of March 2022) and about 550 ambulatory surgery centers and other outpatient facilities across the U.S., primarily in the south. Through its Conifer segment, Tenet also provides revenue cycle management solutions. By adjusted EBITDA excluding grant income, hospitals accounted for about 55%, ambulatory services accounted for 35% and Conifer accounted for about 10% of Tenet in 2021.

14201 Dallas Parkway, Suite 1400
Dallas, TX, 75254
T +1 469 893-2200
Industry Medical Care Facilities
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 101,100

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