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Tenet Healthcare (THC)
NYSE:THC
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Tenet Healthcare
(NYSE:THC)72Outperform
Positive Factors
Financial Performance
The 4Q24 results showed strong fundamental performance with very good USPI growth and strong acute volumes, exceeding initial expectations by hundreds of millions of dollars.
Strategic Initiatives
THC has been on a transformational journey, divesting 19 hospitals and significantly reducing leverage to improve financial stability.
Negative Factors
Policy Risks
Potential reductions in Medicaid funding and changes in eligibility pose risks to THC's hospital operations, given its significant Medicaid hospital mix.
Tenet Healthcare (THC) vs. S&P 500 (SPY)
Market Cap
$11.67B
Dividend YieldN/A
Average Volume (3M)1.59M
Price to Earnings (P/E)3.8
Beta (1Y)1.45
Revenue Growth0.57%
EPS Growth440.71%
CountryUS
Employees106,500
SectorHealthcare
Sector Strength74
IndustryHealthcare Providers & Services
Share Statistics
EPS (TTM)32.23
Shares Outstanding95,121,000
10 Day Avg. Volume1,918,473
30 Day Avg. Volume1,587,375
Financial Highlights & Ratios
PEG Ratio0.00863
Price to Book (P/B)N/A
Price to Sales (P/S)0.56
Price to Cash Flow (P/CF)2.80
P/FCF Ratio3.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$170.50Price Target Upside38.99% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
Tenet Healthcare Business Overview & Revenue Model
Company DescriptionTenet Healthcare Corporation (THC) is a diversified healthcare services company headquartered in Dallas, Texas. It operates a network of hospitals, outpatient centers, and healthcare services across the United States. The company's core offerings include acute care hospitals, ambulatory surgery centers, and urgent care centers, providing a range of medical services from emergency care to specialized surgical procedures. Tenet Healthcare also manages healthcare facilities through its subsidiary, United Surgical Partners International (USPI), and offers healthcare management solutions through its Conifer Health Solutions segment.
How the Company Makes MoneyTenet Healthcare generates revenue through a combination of patient service revenues from its network of hospitals and outpatient centers, management fees from its surgical facilities, and business solutions services. The company earns income from providing medical services, surgeries, and treatments in its hospitals and ambulatory centers, and it receives payments from patients, insurance companies, and government programs such as Medicare and Medicaid. Tenet's subsidiary, USPI, contributes to earnings by managing surgical facilities, where it charges management fees and shares profits from joint venture partnerships with physicians and health systems. Additionally, Conifer Health Solutions provides revenue cycle management and value-based care services to healthcare providers, generating further revenue streams.
Tenet Healthcare Financial Statement Overview
Summary
Tenet Healthcare shows strong financial health with significant revenue growth and improved profitability. The balance sheet reflects reduced debt and better equity management, while consistent cash flow supports operational stability. However, fluctuations in EBITDA margins and free cash flow ratios indicate areas that require attention.Income Statement
Tenet Healthcare has shown a strong revenue growth trend, with revenues increasing from $17.64 billion in 2020 to $20.67 billion in 2024. The gross profit margin is solid, indicating good cost management, while the net profit margin shows a significant improvement in 2024, highlighting enhanced profitability. The EBIT margin also reflects strong operational efficiency. However, EBITDA margin saw a decrease, pointing to potential challenges in maintaining consistent earnings before interest, taxes, depreciation, and amortization.85
Very Positive
Balance Sheet
The balance sheet indicates a substantial reduction in total debt by 2024, improving the debt-to-equity ratio significantly. The return on equity (ROE) has improved, demonstrating effective utilization of shareholder's equity to generate profits. The equity ratio is still low, suggesting a higher reliance on liabilities but has improved over the years, indicating a positive trend towards strengthening equity.78
Positive
Cash Flow
Tenet Healthcare's cash flow from operations has been consistently positive, with a solid free cash flow growth in recent years. The operating cash flow to net income ratio is healthy, showcasing efficient cash generation relative to net income. However, free cash flow to net income ratio indicates some variability, suggesting potential challenges in maintaining consistent free cash flow relative to net income.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 20.66B | 20.55B | 19.17B | 19.48B | 17.64B | Gross Profit |
| 11.86B | 16.96B | 15.90B | 16.16B | 14.66B | EBIT |
| 5.96B | 2.51B | 2.33B | 2.87B | 1.99B | EBITDA |
| 6.89B | 3.39B | 3.33B | 3.42B | 2.43B | Net Income Common Stockholders |
| 3.20B | 611.00M | 1.00B | 1.48B | 768.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.02B | 1.23B | 858.00M | 2.36B | 2.45B | Total Assets |
| 28.94B | 28.31B | 27.16B | 27.58B | 27.11B | Total Debt |
| 92.00M | 16.21B | 15.08B | 15.65B | 15.72B | Net Debt |
| -2.93B | 14.98B | 14.22B | 13.28B | 13.27B | Total Liabilities |
| 20.39B | 22.80B | 22.55B | 23.32B | 24.22B | Stockholders Equity |
| 4.17B | 1.61B | 1.14B | 1.03B | 28.00M |
| Cash Flow | Free Cash Flow | |||
| 1.12B | 1.62B | 321.00M | 910.00M | 2.87B | Operating Cash Flow |
| 2.05B | 2.37B | 1.08B | 1.57B | 3.41B | Investing Cash Flow |
| 3.43B | -969.00M | -808.00M | -714.00M | -1.61B | Financing Cash Flow |
| -3.69B | -1.03B | -1.78B | -936.00M | 385.00M |
Tenet Healthcare Technical Analysis
Negative
122.67
Price Trends
132.60
Negative
142.06
Negative
144.16
Negative
Market Momentum
-2.71
Positive
35.68
Neutral
35.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For THC, the sentiment is Negative. The current price of 122.67 is below the 20-day moving average (MA) of 133.99, below the 50-day MA of 132.60, and below the 200-day MA of 144.16, indicating a bearish trend. The MACD of -2.71 indicates Positive momentum. The RSI at 35.68 is Neutral, neither overbought nor oversold. The STOCH value of 35.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for THC.
Tenet Healthcare Risk Analysis
Tenet Healthcare disclosed 23 risk factors in its most recent earnings report. Tenet Healthcare reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tenet Healthcare Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $11.39B | 10.42 | 16.92% | 0.46% | 10.82% | 65.64% | |
72 Outperform | $11.67B | 3.81 | 76.72% | ― | 0.57% | 440.71% | |
66 Neutral | $2.35B | 10.98 | 12.73% | 2.75% | -0.63% | -13.10% | |
65 Neutral | $77.50B | 14.18 | -230.22% | 0.85% | 8.67% | 15.32% | |
61 Neutral | $2.79B | 10.54 | 8.32% | ― | 7.69% | ― | |
52 Neutral | $418.16M | ― | 39.18% | ― | 1.16% | -278.41% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
THC
Tenet Healthcare
122.67
25.33
26.02%
ACHC
Acadia Healthcare
30.46
-54.26
-64.05%
CYH
Community Health
3.03
0.24
8.60%
HCA
HCA Healthcare
312.05
-8.84
-2.75%
SEM
Select Medical
17.67
2.72
18.19%
UHS
Universal Health
173.30
-1.94
-1.11%
Tenet Healthcare Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -11.64% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Neutral
Tenet Healthcare demonstrated strong financial performance and strategic growth in 2024, particularly in its USPI segment and through share repurchases. However, challenges such as the impact of hospital divestitures and non-recurring Medicaid payments present potential headwinds. Overall, the company's results and outlook suggest a balanced approach to managing growth and operational efficiency.Highlights
Strong Financial Performance
Tenet Healthcare reported operating revenues of $20.7 billion and consolidated adjusted EBITDA of $4 billion for 2024, representing a 13% growth over 2023.
Improved EBITDA Margin
Full-year adjusted EBITDA margin improved by over 200 basis points to 19.3% compared to the previous year.
USPI Segment Growth
USPI generated $1.81 billion in adjusted EBITDA in 2024, marking a 17% growth over 2023, with adjusted EBITDA margins of 42.1%.
Hospital Segment Performance
Despite the sale of 14 hospitals, the Hospital segment achieved $2.185 billion of adjusted EBITDA in 2024, a 9% increase over the prior year.
Significant Share Repurchase
Tenet returned capital to shareholders by repurchasing approximately 14% of its outstanding shares for $1.12 billion since the fourth quarter of 2022.
Deleveraged Balance Sheet
Year-end leverage ratio improved to 2.5x EBITDA, supported by hospital divestitures and strong operational performance.
Lowlights
Hospital Divestitures
The sale of 14 hospitals resulted in a reduction of $114 million in adjusted EBITDA from facilities that will not recur in 2025.
Supplemental Medicaid Payment Challenges
Tenet received $74 million in out-of-period supplemental Medicaid payments in 2024, which will not recur in 2025, indicating potential future revenue pressures.
Supply Cost Increase
Supply costs increased to 18.3% of revenue, reflecting higher acuity procedures but posing a challenge to cost management.
Company Guidance
During Tenet Healthcare's fourth-quarter 2024 earnings call, the company provided guidance for 2025, projecting full-year adjusted EBITDA between $3.975 billion and $4.175 billion, indicating a 7% growth at the midpoint on a normalized basis. Specifically, they anticipate USPI's adjusted EBITDA growth of approximately 8.5%, driven by 3% to 6% same-facility revenue growth, and the addition of 10 to 12 de novo centers. The Hospital segment is expected to see a 5.7% growth in adjusted EBITDA, with 2% to 3% growth in adjusted admissions. The company also plans to invest around $250 million annually in ambulatory M&A. Tenet aims for net operating revenues between $20.6 billion and $21.0 billion for the year, reflecting robust operational efficiencies and disciplined cost management. Additionally, they expect to have substantial free cash flow, projected between $1.8 billion and $2.05 billion, after capital expenditures of $700 million to $800 million.Tenet Healthcare Corporate Events
Executive/Board Changes
Tenet Healthcare Updates CEO Compensation Agreement
Neutral
Jan 24, 2025
On January 23, 2025, Tenet Healthcare Corporation entered into an amended employment agreement with its CEO, Saumya Sutaria. The agreement outlines his compensation, including a base salary of $1.5 million and an annual incentive plan, as well as stock incentives valued at $18 million. The contract includes provisions for termination benefits and performance-based vesting of stock units, impacting the company’s leadership stability and aligning executive interests with long-term performance goals.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.