Why Is Tenet (THC) Down 10.2% Since Last Earnings Report?

Core Viewpoint - Tenet Healthcare reported strong Q3 2024 earnings, with adjusted EPS of $2.93, exceeding estimates and more than doubling year-over-year, indicating robust operational performance despite recent stock underperformance [2][4]. Financial Performance - Adjusted net income reached $282 million, an increase of 84.3% year-over-year, surpassing management's expectations [4]. - Net operating revenues grew 1.1% year-over-year to $5.12 billion, exceeding management's guidance and consensus estimates [2][3]. - Adjusted EBITDA increased 14.5% year-over-year to $978 million, driven by improved same-hospital admissions and a favorable payer mix [5]. Segment Analysis - Hospital Operations and Services segment reported net operating revenues of $3.98 billion, down 3.4% year-over-year due to hospital divestitures, but same-hospital revenues improved by 6.1% [7]. - Ambulatory Care segment saw net operating revenues rise 21% year-over-year to $1.14 billion, attributed to facility buyouts and service line expansions [9]. Cost Management - Total operating costs decreased nearly 10% year-over-year to $4.1 billion, aided by lower salaries and higher net gains from facility sales [6]. Financial Position - As of September 30, 2024, Tenet had cash and cash equivalents of $4.1 billion, a significant increase from the previous year [12]. - Total assets rose to $29.4 billion, while long-term debt decreased by 14.2% to $12.8 billion [13]. Shareholder Returns - The company repurchased $124 million in common shares during Q3 [15]. Future Outlook - For Q4 2024, net operating revenues are projected between $5 billion and $5.2 billion, with adjusted EBITDA expected to range from $953 million to $1.05 billion [16]. - For the full year 2024, net operating revenues are forecasted between $20.6 billion and $20.8 billion, indicating a slight growth from 2023 [17]. Estimate Revisions - There has been an upward trend in earnings estimates, with a consensus shift of 7.47% in the past month [22][23]. Investment Sentiment - Tenet holds a Zacks Rank 1 (Strong Buy), reflecting positive investor sentiment and expectations for above-average returns in the coming months [25].