Why Is Hospital Chain Operator Tenet Healthcare Stock Soaring On Tuesday?

On Tuesday, Tenet Healthcare Corporation THC reported first-quarter sales of $5.37 billion, up around 7% year over year, beating the consensus of $5.15 billion. Tenet Healthcare operates hospitals and healthcare facilities.

“We have had an outstanding start to the year highlighted by strong growth in revenues, admissions, and profitability,” said Saum Sutaria, M.D., Chairman and Chief Executive Officer of Tenet. 

Adjusted EBITDA in first-quarter 2024 was $1.024 billion compared to $832 million a year ago, reflecting strong same-hospital admission growth, favorable payer mix, and improved contract labor costs, partially offset by higher medical fees. 

Ambulatory Care net operating revenues increased 9.9% to $995 million, driven by strong net revenue per case growth, acquisitions and opening of de novo facilities, and increased service lines.

Surgical business same-facility system-wide net patient service revenues increased 6.4%, with cases down 0.4% and net revenue per case up 6.8%. 

Hospital Operations and Services revenues increased 6.2% to $4.4 billion, primarily due to increased admissions, favorable payer mix, and improved pricing yield. This was partially offset by the impact of hospital sales in the first quarter of 2024.

Outlook: Tenet Healthcare raised its fiscal year 2024 revenues guidance to $20 billion—$20.4 billion, up from prior guidance of $19.9 billion—$20.3 billion and the consensus of $20.37 billion.

The guidance includes Hospital segment sales of $$15.85 billion-$16.1 billion and Ambulatory Segment sales guidance of $4.15 billion-$4.3 billion.

The company forecasts adjusted EPS of $8.37-$9.41 versus a consensus of $6.11.

The fiscal year 2024 adjusted EBITDA outlook is expected to be $3.5 billion to $3.7 billion, a $215 million increase.

Tenet Healthcare expects second-quarter revenue of $4.9 billion—$5.1 billion, versus the consensus of $4.98 billion. It sees adjusted EPS of $1.58-$1.98 , versus the consensus of $1.41.

Price Action: THC shares are up 9.97% at $109.08 at the last check Tuesday.