Company Overview - Tenet Healthcare (THC) is expected to report a year-over-year decline in earnings and revenues for the quarter ended March 2025, with earnings projected at $3.12 per share, down 3.1%, and revenues at $5.17 billion, down 3.7% [3][4] - The earnings report is scheduled for release on April 29, 2025, and actual results that exceed expectations could lead to a stock price increase, while a miss could result in a decline [2][3] Earnings Estimates and Trends - The consensus EPS estimate has been revised 0.22% lower in the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for Tenet is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.72%, suggesting a likelihood of beating the consensus EPS estimate [10][11] Earnings Surprise History - Tenet has a history of exceeding consensus EPS estimates, having beaten expectations in the last four quarters, including a +17.41% surprise in the most recent quarter [12][13] Industry Context - In comparison, Universal Health Services (UHS), another player in the medical-hospital industry, is expected to post earnings of $4.36 per share, reflecting a year-over-year increase of +17.8%, with revenues projected at $4.14 billion, up 7.8% [17] - UHS has seen a 0.7% upward revision in its EPS estimate over the last 30 days, but currently has a negative Earnings ESP of -0.83%, making it difficult to predict a beat despite a Zacks Rank of 1 (Strong Buy) [18]

Group 1 - Tenet Healthcare Corporation (THC) is experiencing significant activity in the options market, particularly with the May 16, 2025 $80.00 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Analysts have mixed views on Tenet Healthcare, with three increasing their earnings estimates for the current quarter from $2.96 to $3.12 per share, while two have decreased their estimates [3] Group 2 - The high implied volatility surrounding Tenet Healthcare may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Core Viewpoint - Tenet Healthcare Corporation (THC) has shown significant stock performance, with a 26.9% increase over the past year, outperforming the industry and broader market indices [1] Financial Performance - Tenet Healthcare's market capitalization stands at $12.7 billion, with a closing stock price of $133.04 [1] - The company generated $1.1 billion in free cash flow over the trailing 12 months, with a price-to-free cash flow ratio of 11.43X, lower than the medical sector average of 21.57X, indicating strong financial stability [5] - Tenet Healthcare ended the fourth quarter with $3 billion in cash and cash equivalents, more than double its year-end 2023 balance, while long-term debt decreased by 12.1% to $13.1 billion [6] - The net debt-to-EBITDA ratio improved to 2.61X, significantly below its five-year median of 4.64X and the industry average of 3.29X [7] Growth Drivers - The company is focusing on expanding its ambulatory surgery centers through collaboration with United Surgical Partners International (USPI), which operates 518 ASCs and 25 surgical hospitals across 37 states [3] - Investments in AI-driven technologies aim to enhance clinical and administrative processes, reduce costs, and improve patient satisfaction [4] Valuation - Tenet Healthcare's forward price-to-earnings ratio is 10.72X, lower than its five-year median of 11.94X and the industry average of 12.34X, indicating it is relatively undervalued compared to peers [8] Earnings Estimates - The Zacks Consensus Estimate for 2025 adjusted earnings is $12.15 per share, with upward revisions in the past 30 days, and a projected 10.5% growth for 2026 [11]

Company Performance - Tenet Healthcare (THC) ended the recent trading session at $133.04, showing a +1.73% change from the previous day's closing price, outperforming the S&P 500's daily loss of 1.12% [1] - The stock has decreased by 2.82% over the past month, contributing to the Medical sector's loss of 2.99% and the S&P 500's loss of 2.91% [1] Earnings Forecast - The upcoming earnings report for Tenet Healthcare is anticipated to show an EPS of $3.11, reflecting a 3.42% decline compared to the same quarter last year [2] - The Zacks Consensus Estimate for revenue is projected at $5.17 billion, down 3.71% from the year-ago period [2] Annual Estimates - For the entire year, the Zacks Consensus Estimates forecast earnings of $12.12 per share and revenue of $20.84 billion, indicating changes of +2.02% and +0.85%, respectively, compared to the previous year [3] - Recent changes to analyst estimates for Tenet Healthcare indicate the dynamic nature of near-term business trends, with positive revisions suggesting analyst optimism regarding the company's business and profitability [3] Zacks Rank and Performance - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown that 1 stocks have generated an average annual return of +25% since 1988 [5] - Currently, Tenet Healthcare holds a Zacks Rank of 3 (Hold), with a 0.61% decline in the Zacks Consensus EPS estimate over the past month [5] Valuation Metrics - Tenet Healthcare's Forward P/E ratio is 10.8, which is a premium compared to the industry's average Forward P/E of 10.45 [6] - The company has a PEG ratio of 0.98, which is lower than the industry average PEG ratio of 1.07 [6] Industry Overview - The Medical - Hospital industry, part of the Medical sector, has a Zacks Industry Rank of 81, placing it in the top 33% of over 250 industries [7] - The Zacks Industry Rank measures the strength of industry groups by evaluating the average Zacks Rank of individual stocks, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Group 1 - Healthcare stocks are currently facing significant challenges, with many testing new 52-week lows [1] - Speculation regarding potential Medicaid cuts is exacerbating the difficulties within the healthcare sector [1] Group 2 - The article reflects a broader concern about the state of healthcare investments and the potential for undervalued opportunities [1]

Valuation and Financial Performance - Tenet Healthcare Corporation (THC) is currently trading at a forward price-to-earnings (P/E) ratio of 10.78X, which is lower than its five-year median of 11.94X and the industry average of 12.05X, indicating it is relatively undervalued compared to peers like HCA Healthcare, Inc. (12.60X) and Encompass Health Corporation (20.60X) [1] - The company generated $1.1 billion in free cash flow over the past 12 months, with a price-to-free cash flow (P/FCF) ratio of 11.21X, significantly below the broader medical sector's average of 22.75X, suggesting financial stability and efficient capital management [2] - Tenet's stock has increased by more than 40% in the past year, outperforming both the industry average and the S&P 500 Index [4] Earnings and Growth Drivers - In its latest quarterly report, Tenet posted adjusted earnings per share (EPS) of $3.44, exceeding the Zacks Consensus Estimate by 17.4% and outperforming management's projected range of $2.69-$3.31, driven by higher same-hospital admissions and a favorable payer mix [6] - The company forecasts adjusted EBITDA for 2025 to be between $3.975 billion and $4.175 billion, indicating a 2% year-over-year growth, with an adjusted EBITDA margin expected in the range of 19.3-19.9% [8] - The Zacks Consensus Estimate for 2025 adjusted earnings is currently pegged at $11.84 per share, with five upward estimate revisions in the past 30 days, and the consensus for 2026 EPS indicates 13.6% further growth [11] Debt Management and Financial Position - Tenet ended the fourth quarter with $3 billion in cash and cash equivalents, more than double its 2023 year-end balance, while long-term debt declined 12.1% to $13.1 billion [7] - The net debt-to-EBITDA ratio has improved to 2.61X, well below its five-year median of 4.64X and the industry average of 3.24X [8] Strategic Initiatives - Tenet is focusing on expanding its ambulatory surgery centers (ASCs) through a partnership with United Surgical Partners International (USPI), which held stakes in 518 ASCs and 25 surgical hospitals across 37 states by the end of the fourth quarter [9] - The company is investing in AI-driven technologies to streamline clinical and administrative processes, aiming to reduce costs and improve patient satisfaction [10] Market Outlook - The stock is currently trading below Wall Street's average price target of $174.83, implying a 32.7% upside from current levels [15] - Improving labor market conditions and higher patient admissions are expected to provide additional support for the stock's growth [17]

Hospital Operations - As of December 31, 2024, the Hospital Operations segment included 49 acute care and specialty hospitals, 135 outpatient facilities, and a joint venture in revenue cycle management with Conifer Health Solutions, LLC[12] - In 2024, the company opened a new 92-bed hospital in San Antonio and acquired a majority interest in a 36-bed rehabilitation hospital in El Paso[13] - The company sold six hospitals in California and three in South Carolina in 2024 to refine its portfolio and improve profitability[14] - The total number of licensed beds across all hospitals was 12,435 as of December 31, 2024[19] - Approximately 72% of the outpatient centers were located in Arizona and Texas, which may enhance operational efficiencies but also increase risk exposure[22] - The company owned over 650 physician practices and was affiliated with nearly 1,135 physicians as of December 31, 2024[34] - The Ambulatory Care segment held ownership interests in 518 ambulatory surgery centers and 25 surgical hospitals across 37 states as of December 31, 2024[26] - The company is focusing on expanding its ambulatory care business and improving accessibility at outpatient centers to address competitive challenges[56] Workforce and Labor Challenges - The company faced challenges in recruiting and retaining physicians due to a shortage in certain high-demand specialties[35] - Approximately 32% of the company's employees are nurses, with 21% of employees in the Hospital Operations segment represented by labor unions[36][45] - The company is experiencing shortages of advanced practice providers and critical-care nurses, leading to increased labor costs and reliance on higher-cost contract labor[42][44] - The company has made significant investments in education and training for newly licensed medical support personnel to streamline onboarding and reduce training expenses[44] - The company is actively engaging in community healthcare programs to increase access to healthcare careers and improve workforce recruitment[44] Financial Performance - Net operating revenues for 2024 reached $20,665 million, a 0.57% increase from $20,548 million in 2023[451] - Operating income significantly improved to $5,956 million in 2024, compared to $2,510 million in 2023, marking a 137.5% increase[451] - Net income available to Tenet Healthcare Corporation common shareholders surged to $3,200 million in 2024, up from $611 million in 2023, representing a 423.5% increase[451] - Basic earnings per share rose to $33.02 in 2024, compared to $6.01 in 2023, reflecting a 450.8% increase[451] - Total comprehensive net income for 2024 was $4,065 million, compared to $1,311 million in 2023, indicating a 210.5% increase[454] - The company reported a decrease in salaries, wages, and benefits to $8,801 million in 2024 from $9,146 million in 2023, a reduction of 3.8%[451] - Interest expense decreased to $826 million in 2024 from $901 million in 2023, a decline of 8.3%[451] - Net income for the year ended December 31, 2024, was $4,064 million, a significant increase from $1,311 million in 2023 and $1,001 million in 2022, reflecting a year-over-year growth of 210%[460] Regulatory and Compliance Issues - The company is subject to extensive government regulations, which may require adjustments to facilities and services to ensure compliance[59][60] - Compliance with HIPAA regulations is mandatory, with potential civil penalties for violations, which could increase liability risks[76] - The company operates under various federal and state antitrust laws, with heightened scrutiny from the FTC on healthcare transactions that may affect local patient service options[84] - The healthcare industry is subject to civil and criminal enforcement efforts, which could lead to penalties and affect the company's operations[70] - The company regularly enters into financial arrangements with physicians, ensuring compliance with anti-kickback and fraud laws[68] Investments and Capital Management - The company expects to complete construction of a new medical campus in Port St. Lucie, including a 54-bed surgical hospital, by late 2025[13] - Total assets increased to $28,936 million as of December 31, 2024, compared to $28,312 million in 2023, reflecting a growth of 2.2%[449] - Cash and cash equivalents rose significantly to $3,019 million in 2024, up from $1,228 million in 2023, marking an increase of 145.5%[449] - Shareholders' equity increased to $4,171 million in 2024, compared to $1,608 million in 2023, representing a growth of 159.5%[449] - The company has reserves for incurred but not reported claims, based on modeled estimates of losses and related expenses[98] Revenue Streams and Patient Care - The company reported net patient service revenues primarily from Medicare, Medicaid, managed care, and uninsured patients, reflecting the diverse revenue streams in its operations[472] - The company recognized grant income of $10 million in 2024, down from $16 million in 2023 and $194 million in 2022, showing a declining trend in grant income[468] - Total estimated costs for caring for uninsured and charity patients amounted to $617 million in 2024, compared to $609 million in 2023[525] - Revenue recognized from revenue cycle management services totaled $58 million in 2024, down from $71 million in 2023[527] Share Repurchase and Equity Management - The 2022 share repurchase program authorized up to $1.000 billion, with 5.889 million shares repurchased at an average price of $42.45[516] - The 2024 share repurchase program authorized up to $1.500 billion with no expiration date, allowing for flexible repurchases based on market conditions[518][519] - Total number of shares purchased under the 2024 share repurchase program reached 795,000 shares at an average price of $155.95 per share, with a remaining maximum dollar value of $1,376 million available for repurchase[520]

Financial Data and Key Metrics Changes - Tenet Healthcare reported operating revenues of $20.7 billion and consolidated adjusted EBITDA of $4 billion for 2024, representing a 13% growth over 2023 [8][21] - The full-year adjusted EBITDA margin improved by over 200 basis points to 19.3% compared to the prior year [9] - Fourth quarter adjusted EBITDA was $1.048 billion, with an adjusted EBITDA margin of 20.7%, up almost 200 basis points from Q4 2023 [21] Business Line Data and Key Metrics Changes - USPI generated $1.81 billion in adjusted EBITDA for 2024, a 17% increase over 2023, with adjusted EBITDA margins of 42.1% [10][22] - Same-facility revenues for USPI grew by 8.6%, driven by high acuity levels and favorable payer mix [22] - The Hospital segment generated $2.185 billion in adjusted EBITDA, a 9% increase over the prior year, despite the sale of 14 hospitals [12][21] Market Data and Key Metrics Changes - Same-facility revenues grew by 7.8% in 2024, significantly above long-term goals, with high acuity volume growth highlighted by a 19% increase in total joint replacements [11] - Same-store hospital admissions increased by 4.7%, reflecting strong utilization [12] - The company anticipates same-hospital admissions growth of 2% to 3% and adjusted admissions growth of 2% to 3% for 2025 [31] Company Strategy and Development Direction - Tenet is focused on expanding its portfolio through M&A and de novo development, planning to invest approximately $250 million annually in the ambulatory space [16][34] - The company aims to enhance its operational efficiency and profitability by shifting towards higher acuity procedures and expanding its service offerings [19][78] - Tenet plans to be active in share repurchases, particularly at current valuation multiples, reflecting a commitment to returning capital to shareholders [14][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong volume environment continuing into 2025, supported by favorable demographics and a robust coverage environment [48] - The company is prepared for potential regulatory changes and believes its operational discipline will allow it to navigate these challenges effectively [19][56] - Tenet's guidance for 2025 projects adjusted EBITDA growth of 7% at the midpoint, with expectations of continued strength in same-store volumes and effective pricing [30] Other Important Information - The company generated $1.1 billion in free cash flow for 2024, with a year-end leverage ratio of 2.5x EBITDA, reflecting significant balance sheet improvement [25][26] - Tenet repurchased 5.6 million shares for $672 million in 2024, indicating a strong commitment to shareholder returns [26] Q&A Session Summary Question: Cash flow guidance and leverage targets - Management highlighted improvements in free cash flow generation and expressed comfort with current leverage levels, indicating plans for share repurchases [41][42] Question: Volume environment expectations - Management anticipates a strong volume environment continuing into 2025, with no significant changes observed in demand patterns [48] Question: Medicaid and political risk management - Management emphasized operational discipline and understanding of business economics to navigate potential regulatory changes, particularly in the Medicaid space [53][56] Question: ASC case mix and acuity - Management clarified that high acuity work, particularly in orthopedics, is driving revenue growth despite stable case mix percentages [61] Question: Guidance assumptions for supplemental payments and exchanges - Management expects consistent Medicaid supplemental payments year-over-year and positive growth from exchange populations [67] Question: Supply dynamics and cost management - Management indicated that supply costs as a percentage of revenue may increase slightly due to the acuity strategy but expect overall balance in 2025 [71] Question: Same-store revenue guidance rationale - Management explained that the guidance reflects long-term growth averages, despite recent higher growth rates, and emphasizes a shift towards higher acuity procedures [76][79] Question: Managed care contracting and denial activity - Management reported ongoing commercial rate increases and high visibility into contracting for 2025, with a focus on reducing denial rates [85][86] Question: Hospital capacity and market-level growth - Management noted that the majority of expected growth is driven by market demand, with some contributions from increased capacity [90] Question: Competitive landscape for ASC transactions - Management stated that the competitive landscape remains stable, with a focus on de novo development as a key growth strategy [130]

Tenet Healthcare (THC) came out with quarterly earnings of $3.44 per share, beating the Zacks Consensus Estimate of $2.93 per share. This compares to earnings of $2.68 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 17.41%. A quarter ago, it was expected that this hospital operator would post earnings of $2.33 per share when it actually produced earnings of $2.93, delivering a surprise of 25.75%.Over the last four quarters, th ...

Tenet's results for fourth quarter 2024 versus fourth quarter 2023 are as follows: Exhibit 99.1 Tenet Reports Strong Fourth Quarter and FY 2024 Results; Provides 2025 Financial Outlook DALLAS — February 12, 2025 — Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended December 31, 2024. "2024 was an outstanding year for Tenet characterized by robust revenue growth, efficient operations, high levels of patient satisfaction and clinical quality, and a portfolio tran ...