Financial Performance - Consolidated net operating revenues increased by $21 million, or 0.4%, in the three months ended June 30, 2024 compared to the same period in 2023[252]. - Total revenues for the company were $5.103 billion in the three months ended June 30, 2024, a slight increase of 0.4% from $5.082 billion in the same period of 2023[280]. - Net income available to common shareholders for diluted earnings per share was $2.64 for the three months ended June 30, 2024, compared to $1.15 for the same period in 2023[301]. - Income before income taxes for the three months ended June 30, 2024, was $587 million, up from $373 million in the same period of 2023, indicating a 57% increase[387]. - Adjusted EBITDA for the six months ended June 30, 2024, was $1.969 billion, compared to $1.675 billion for the same period in 2023, reflecting a 17.6% increase[391]. Admissions and Patient Services - Total admissions decreased by 8,128, or 6.1%, in the three months ended June 30, 2024 compared to the same period in 2023[251]. - Total admissions decreased by 6.1% to 124,626 in the three months ended June 30, 2024, compared to 132,754 in the same period of 2023[278]. - The average length of stay decreased to 5.00 days in the three months ended June 30, 2024, from 5.10 days in the same period of 2023[278]. - The company experienced a 20.0% increase in total consolidated cases in the Ambulatory Care segment, driven by acquired ASCs and same-facility case growth[279]. Revenue Segments - The decrease of $178 million, or 4.3%, in the Hospital Operations segment's net operating revenues for the three-month period in 2024 was primarily due to the sales of divested hospitals[252]. - Net operating revenues in the Ambulatory Care segment increased by $199 million, or 21.1%, in the three months ended June 30, 2024, compared to the same period in 2023[282]. - Total net operating revenues for Hospital Operations were $3,962 million for the three months ended June 30, 2024, compared to $4,140 million for the same period in 2023[303]. - Total net patient service revenues from continuing operations for the Hospital Operations segment were $518 million for the three months ended June 30, 2024, compared to $599 million for the same period in 2023, reflecting a decrease of 13.5%[324]. Operating Expenses - Salaries, wages, and benefits per adjusted admission increased by 0.5% to $8,263 in the three months ended June 30, 2024[254]. - Supplies per adjusted admission increased by 4.0% to $2,670 in the same period[254]. - Other operating expenses per adjusted admission increased by 7.3% to $4,290 in the three months ended June 30, 2024[256]. - Operating expenses for Hospital Operations decreased by 5.5% to $3.472 billion in the three months ended June 30, 2024, compared to $3.676 billion in the same period of 2023[283]. - Same-hospital salaries, wages, and benefits expense increased by $36 million, or 2.0%, in the three months ended June 30, 2024, while as a percentage of net operating revenues, it decreased by 270 basis points to 47.0%[364]. - Same-hospital supplies expense increased by $36 million, or 6.3%, in the three months ended June 30, 2024, driven by higher patient volumes[366]. - Other operating expenses increased by $76 million, or 8.5%, in the three months ended June 30, 2024, with malpractice and medical fees contributing significantly to the rise[367]. Cash Flow and Investments - Net cash provided by operating activities was $1.333 billion in the six months ended June 30, 2024, compared to $1.047 billion in the same period in 2023[257]. - Cash and cash equivalents increased to $2.880 billion at June 30, 2024, up from $2.481 billion at March 31, 2024[286]. - The company recorded net cash provided by investing activities of $3.134 billion during the six months ended June 30, 2024, compared to net cash used of $467 million in the same period of 2023[398]. - The company had $2.880 billion of cash and cash equivalents on hand at June 30, 2024, to fund operations and capital expenditures[396]. Acquisitions and Growth - The company acquired controlling ownership interests in 49 ambulatory surgery centers (ASCs) during the six months ended June 30, 2024[243]. - The company opened six de novo ASCs with noncontrolling ownership interests during the same period[243]. - The company made facility acquisitions totaling $500 million during the six months ended June 30, 2024, compared to $96 million in the same period of 2023[380]. - The company plans to invest $250 million annually in ambulatory business acquisitions and de novo facilities as part of its portfolio diversification strategy[394]. Shareholder Returns - The board of directors authorized a share repurchase program of up to $1.5 billion with no expiration date in July 2024[238]. - The company repurchased $548 million worth of common stock, acquiring 4,801 thousand shares at an average price of $114.19 per share in the six months ended June 30, 2024[276]. Restructuring and Legal Matters - The company incurred restructuring charges in the six months ended June 30, 2024, with potential for additional charges in the future[272]. - Restructuring charges for the six months ended June 30, 2024 totaled $32 million, compared to $31 million for the same period in 2023, with legal costs related to business sales being a significant component[356]. - Litigation and investigation costs amounted to $9 million for the six months ended June 30, 2024, down from $14 million in the same period of 2023[357]. Tax and Regulatory Matters - The company expects a $4 million decrease in unrecognized federal and state tax benefits in the next 12 months due to audit settlements and amended tax returns[333]. - The company amended its letter of credit facility to extend the maturity date to March 16, 2027, and replaced LIBOR with Term SOFR as the reference interest rate[326].

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Group 1: HCA Healthcare, Inc. - HCA Healthcare, Inc. exceeded consensus earnings estimates by 10.66% last quarter, with expected earnings of $21.37 per share on revenue of $69.35 billion for the current fiscal year [1] Group 2: Tenet Healthcare (THC) - Tenet Healthcare's shares have increased by 7.1% over the past month, reaching a new 52-week high of $151, and have gained 92.3% since the beginning of the year [2] - Tenet has consistently outperformed earnings estimates, reporting EPS of $2.31 against a consensus estimate of $1.89 in its last earnings report [3] - For the current fiscal year, Tenet is projected to have earnings of $8.87 per share on revenues of $20.25 billion, reflecting a 27.08% increase in EPS but a -1.46% decrease in revenues [4] - The following fiscal year, Tenet is expected to earn $8.81 per share on $21.12 billion in revenues, indicating a year-over-year change of -0.75% in EPS and a 4.32% increase in revenues [4] - Tenet has a Value Score of A, a Growth Score of C, and a Momentum Score of A, resulting in a VGM Score of A [7] - The stock trades at 16.4X current fiscal year EPS estimates, slightly above the peer industry average of 16.2X, and has a trailing cash flow multiple of 9X compared to the peer group's average of 10.3X [8] - Tenet holds a Zacks Rank of 1 (Strong Buy) due to rising earnings estimates, indicating potential for further gains [9] Group 3: Industry Comparison - The Medical - Hospital industry is performing well, with HCA Healthcare also holding a Zacks Rank of 1 (Strong Buy) and strong value and growth scores [10] - HCA shares have gained 1% over the past month, trading at a forward P/E of 16.09X and a P/CF of 11X, indicating a favorable position within the industry [11]

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Core Insights - Tenet Healthcare's stock has reached a two-decade high due to strong earnings growth and an improved revenue outlook [1] - The company reported second-quarter adjusted EPS of $2.31 and net operating revenue of $5.1 billion, both exceeding forecasts [1] - Tenet's full-year operating revenue guidance has been raised to between $20.6 billion and $21.0 billion [1] Financial Performance - Adjusted EBITDA increased by $102 million to $945 million [1] - Net operating revenue for the ambulatory segment rose by 21.1% to $1.14 billion, driven by higher patient services spending [1] - Hospital segment revenue decreased by 4.3% to $3.96 billion, attributed to a reduction in facilities, despite an increase in admissions [1] Market Reaction - Shares of Tenet rose nearly 5% in a single day, contributing to a year-to-date increase of over 90% [1] - The stock is currently at levels last seen in 2002 [1] - Tenet is the second hospital provider this week to report strong numbers, following HCA Healthcare [1]

HCA Healthcare reported second-quarter adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year. The top line outpaced the consensus mark by 2.2%. Same-facility equivalent admissions increased 5.2% year over year while same-facility admissions grew 5.8% year over year. Same-facility revenue per equivalent admission rose 4.4% year over year. Same-facility inpatient surgeries ...

Financial Data and Key Metrics - Q2 2024 net operating revenues were $5.1 billion, with consolidated adjusted EBITDA of $945 million, representing a 12% YoY growth [8] - Adjusted EBITDA margin was 18.5% in Q2 2024 [8] - USPI adjusted EBITDA grew 21% YoY to $447 million in Q2 2024 [8] - Same-facility revenues grew 7.1% YoY in Q2 2024 [8] - Hospital segment adjusted EBITDA grew 5.3% YoY, with margins up 120 basis points to 12.6% [15] - Same-hospital inpatient admissions increased 5.2%, and revenue per adjusted admission grew 5.7% in Q2 2024 [15] - Free cash flow in Q2 2024 was $602 million, with $2.9 billion in cash on hand as of June 30, 2024 [44] Business Line Performance - USPI added 11 new centers in Q2 2024, including a partnership with Florida Orthopedic Institute [9] - USPI has nearly 25 centers in syndication stages or under construction [9] - Orthopedic volumes were strong, with total joint replacements in ASCs up 23% YoY [35] - Urology and GI procedures also showed ongoing growth [35] - Hospital segment adjusted EBITDA was $498 million in Q2 2024, with same-store hospital admissions growing 5.2% [36] Market Performance - The company is expanding its network, including a new hospital in Westover Hills near San Antonio, which will focus on procedural services [10] - The new hospital is in a geography growing at six times the national average [10] - USPI's same-facility system-wide revenues grew 7.1% YoY, with net revenue per case up 6.8% [42] Strategic Direction and Industry Competition - The company is prioritizing capital investments to grow USPI through M&A and hospital growth opportunities [21] - Investments are being made in higher acuity service offerings and AI-enabled technologies to enhance clinical and administrative efficiency [39] - The company has retired $2.1 billion of debt in 2024, focusing on deleveraging the balance sheet [39] - A new $1.5 billion share repurchase program has been authorized [13] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong same-store revenues, high patient acuity, favorable payer mix, and effective cost controls as drivers of Q2 performance [14] - The company raised its full-year 2024 adjusted EBITDA guidance to $3.825 billion to $3.975 billion, an increase of $300 million [37] - USPI's 2024 adjusted EBITDA is expected to be $1.75 billion to $1.81 billion, a $100 million increase over prior expectations [19] - Q3 2024 consolidated adjusted EBITDA is expected to be $900 million to $950 million [20] Other Important Information - The company received a $30 million favorable adjustment from additional Medicaid supplemental revenues in Texas [16] - Contract labor expense was 2.6% of salary, wages, and benefits (SWB) in Q2 2024, down from 4.3% in Q2 2023 [43] - The company repurchased 2 million shares for $270 million in Q2 2024 [44] Q&A Session Summary Question: ASC revenue per case and surgical case volume drivers [23] - The increase in net revenue per case is driven by higher acuity and mix, particularly in orthopedics, cardiac, urology, and robotics [51] Question: Supplemental payment programs and opportunities [26] - Six hospital markets currently participate in supplemental programs, with potential for expansion in other states [53] - Michigan recently enhanced its HRA program, improving reimbursement rates [53] Question: Hospital segment performance and capacity expansion [29] - Q2 performance was strong due to strong volumes, capacity expansion, and effective cost control [29] - Capacity expansion is selective, focusing on markets lagging in COVID recovery [57] Question: Volume outlook for hospitals and USPI [65] - Inpatient admissions are expected to grow 3% to 4% in 2024, driven by a favorable utilization environment [95] - USPI volume guidance was adjusted due to strong comps from the previous year, but revenue per case remains strong [94] Question: Exchange-based coverage and margins [96] - Exchange-based coverage accounts for 6.5% of hospital revenues, with margins comparable to commercial payers [96][97] Question: ASC volume growth and service line trends [106] - Urology is in early stages of growth, with potential for multi-year tailwinds as robotic procedures move to ASCs [106] - Ophthalmology is strong, while pain procedures are being diversified to include higher acuity services [106][108] Question: USPI facility mix and hospital partnerships [110] - USPI has a disciplined integration process for new acquisitions, with 30% to 40% of centers in partnership with external hospitals [113] Question: Managed care pricing and contract negotiations [124] - Contract negotiations have normalized, with discussions focused on catching up to inflationary pressures [124] Question: Inpatient surgical growth vs. outpatient surgical decline [127] - Inpatient surgical growth is driven by acuity, while outpatient surgical decline is influenced by the shift to freestanding ASCs [128] Question: Hospital capacity and margin impact [137] - New capacity additions are margin accretive, with early phases potentially using contract labor before transitioning to permanent staff [148] Question: Occupancy levels and capacity utilization [150] - The company is focused on improving capacity utilization, with a measured approach to service line participation [140][141]

Core Insights - Tenet Healthcare reported revenue of $5.1 billion for the quarter ended June 2024, reflecting a year-over-year increase of 0.4% and surpassing the Zacks Consensus Estimate of $4.98 billion by 2.49% [5][1] - The company achieved an EPS of $2.31, significantly higher than the previous year's $1.44, resulting in an EPS surprise of 22.22% compared to the consensus estimate of $1.89 [5][1] Revenue Breakdown - Net Operating revenues totaled $5.10 billion, exceeding the three-analyst average estimate of $4.96 billion [3] - Ambulatory Care revenues were reported at $1.14 billion, surpassing the average estimate of $1.05 billion, with a year-over-year growth of 21.1% [3] - Hospital Operations and other revenues reached $3.96 billion, slightly above the average estimate of $3.91 billion, with a year-over-year increase of 1% [3] Earnings Metrics - Equity in earnings of unconsolidated affiliates was reported at $61 million, exceeding the average estimate of $53.96 million [3] - Adjusted EBITDA for Hospital Operations and other was $498 million, compared to the average estimate of $466.58 million [3] - Adjusted EBITDA for Ambulatory Care was $447 million, surpassing the average estimate of $383.64 million [3] Stock Performance - Tenet's shares have returned +2.8% over the past month, outperforming the Zacks S&P 500 composite's +1.8% change [4] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [4]

Tenet Healthcare (THC) came out with quarterly earnings of $2.31 per share, beating the Zacks Consensus Estimate of $1.89 per share. This compares to earnings of $1.44 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 22.22%. A quarter ago, it was expected that this hospital operator would post earnings of $1.45 per share when it actually produced earnings of $3.22, delivering a surprise of 122.07%. Over the last four quarters, ...