Hospital Operator Tenet Healthcare Exceeds Earnings Expectations, Announces Share Buyback Of $1.5B

On Wednesday, 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.

“Our results through the second quarter, which have significantly exceeded our expectations, have been driven by volume and revenue growth as well as sustained fundamentally strong operating performance,” said Saum Sutaria, Chairman and CEO.

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Adjusted EBITDA in the second quarter of 2024 was $945 million compared to $843 million a year ago, reflecting strong same-hospital admission growth, strong ambulatory net revenue per case growth, favorable payer mix, and improved contract labor costs, partially offset by higher medical fees and the impact of hospital divestitures.

The company’s board of directors has authorized a $1.5 billion share repurchase program.

Ambulatory Care net operating revenues increased 21.1% year-over-year to $1.14 billion, driven by strong net revenue per case growth, facility acquisitions, and increased service lines.

Surgical business same-facility system-wide net patient service revenues increased 7.1%, with cases up 0.2% and net revenue per case up 6.8%. Net revenue per case growth was driven by higher acuity associated with a favorable case mix and a favorable payer mix.

Hospital Operations and Services revenues declined 4.3% to $3.96 billion, primarily due to the impact of hospital divestitures in first quarter 2024, partially offset by strong same hospital admissions growth, favorable payer mix, and improved pricing yield.

Outlook: Tenet Healthcare raised its fiscal year 2024 revenues guidance to $20.6 billion—$21 billion, up from prior guidance of $20 billion—$20.4 billion and the consensus of $20.49 billion.

The guidance includes Hospital segment sales of $16.28 billion—$16.53 and Ambulatory Segment sales of $4.33 billion—$4.48 billion versus prior guidance of $15.85 billion—$16.1 billion and $4.15 billion—$4.3 billion, respectively.

The company forecasts adjusted EPS of $10.41-$11.12 compared to prior guidance of $8.37-$9.41 and consensus of $8.98.

Tenet Healthcare expects a third-quarter adjusted EPS of $2.16-$2.58 and revenues of $5 billion—$5.1 billion, respectively, versus the consensus of $1.67 and $4.89 billion, respectively.

Price Action: THC stock is up 5.28% at $146 at last check Wednesday.

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