Tenet Healthcare Corporation THC reported fourth-quarter 2024 adjusted earnings per share (EPS) of $3.44, which surpassed the Zacks Consensus Estimate by 17.4% and management’s expected range of $2.69-$3.31. The bottom line increased 28.4% year over year. 

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Net operating revenues declined 5.7% year over year to $5.1 billion, which met management’s guided range of $5-$5.2 billion. The top line missed the consensus mark by 1.8%.

The strong quarterly earnings benefited from higher same-hospital admissions, a favorable payer mix and increased Medicaid supplemental revenues. The results also benefited from reduced operating expenses, facility buyouts and service line expansions in the Ambulatory Care unit. However, the positives were partly offset by the impact of divestiture of hospitals that impacted revenues of the Hospital unit. 

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation Quote

THC’s Q4 Performance

Adjusted net income was $330 million, which increased 16.6% year over year and exceeded management’s expected range of $258-$318 million.

Adjusted EBITDA increased 3.6% year over year to $1.05 billion, which surpassed our estimate of $1.01 billion. The year-over-year growth can be attributed to improved same-hospital admissions, solid ambulatory net revenue per case growth, favorable payer mix and higher Medicaid supplemental revenues in Michigan. Adjusted EBITDA margin of 20.7% improved 190 basis points (bps) year over year.

Total operating costs declined 8.2% year over year to $4.3 billion due to lower salaries, wages and benefits, supplies, other net operating expenses and depreciation and amortization.

Segmental Details

Hospital Operations and Services: The segment recorded net operating revenues of $3.81 billion, which fell 11.4% year over year due to the impact of the divestiture of hospitals in 2024. The metric fell short of the Zacks Consensus Estimate of $4 billion and our estimate of $4.1 billion. Nevertheless, on a same-hospital basis, net patient service revenues improved 0.6% year over year.

Adjusted EBITDA declined 5.5% year over year to $518 million due to hospital divestitures and a favorable adjustment of the Medicaid supplemental revenue program in the fourth quarter of 2023, partially offset by higher same-hospital admissions, improved revenue per adjusted admission, a favorable payer mix and higher supplemental revenues in Michigan. The metric surpassed the consensus mark of $493.8 million and our estimate of $502 million. Adjusted EBITDA margin of 13.6% improved 90 bps year over year. 

Ambulatory Care: The segment’s net operating revenues climbed 16.9% year over year to $1.3 billion. The metric beat the Zacks Consensus Estimate and our estimate of $1.1 billion. The year-over-year increase resulted from improved net revenue per case growth, facility buyouts and expansion of service lines. 

Adjusted EBITDA of $530 million rose 14.2% year over year, beating the consensus mark of $505.2 million and our estimate of $510.7 million. However, the adjusted EBITDA margin deteriorated 100 bps year over year to 42.1%.

THC’s Financial Position (as of Dec. 31, 2024)

Tenet Healthcare exited the fourth quarter with cash and cash equivalents of $3 billion, which increased more than two-fold from the 2023-end figure. 

Total assets of $28.9 billion increased 2.2% from the figure at 2023-end. 

Long-term debt, net of the current portion, amounted to $13.1 billion, down 12.1% from the figure as of Dec. 31, 2023. The current portion of long-term debt totaled $92 million.

Total shareholders’ equity of $4.2 billion more than doubled from the figure at 2023-end.   

Net cash used in operating activities totaled $331 million in the quarter, which deteriorated significantly year over year. The negative free cash flow of $661 million deteriorated from the positive free cash flow of $616 million in the year-ago period.

THC’s Share Repurchase Update

THC bought back common shares worth $672 million in 2024. As of Dec. 31, 2024, the remaining share repurchase capacity stood at $1.38 billion.

Full-Year Update

Net operating revenues rose 0.6% year over year to $20.7 billion in 2024. Adjusted diluted earnings per share rose 70.2% year over year to $11.88 in 2024.

Tenet’s Outlook

1Q25

THC expects first-quarter 2025 adjusted EBITDA to be 24-25% of their full-year 2025 adjusted EBITDA guidance range.

2025

Net operating revenues are forecasted to be between $20.6 billion and $21 billion. The midpoint of the guidance indicates 0.7% growth from the 2024 figure.

Net operating revenues of the Hospital segment are presently anticipated to be between $15.75 billion and $16 billion. The midpoint of the guidance indicates a 1.6% decline from the 2024 figure. The metric at the Ambulatory Care unit is likely to be between $4.85 billion and $5 billion. The midpoint of the guidance indicates 8.6% growth from the 2024 figure.

Adjusted EBITDA is estimated to be in the range of $3.975-$4.175 billion. The midpoint of the guidance indicates 2% growth from the 2024 figure. Adjusted EBITDA margin is expected to be in the 19.3-19.9% range.

Adjusted net income is presently projected to lie between $1.115 billion and $1.220 billion. Adjusted EPS is anticipated to be in the range of $11.74-$12.84. The mid-point of the outlook implies a 3.5% rise from the 2024 figure. Interest expense is estimated to be between $795 million and $805 million.

Net cash provided by operating activities is expected to be between $2.5 billion and $2.85 billion. Free cash flow is estimated to lie between $1.8 billion and $2.05 billion. Capital expenditures are projected to be in the range of $700-$800 million.

THC’s Zacks Rank

Tenet Healthcare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported fourth-quarter 2024 results so far, the bottom-line results of Centene Corporation CNC, HCA Healthcare, Inc. HCA and Elevance Health, Inc. ELV beat the respective Zacks Consensus Estimate.

Centene reported fourth-quarter 2024 adjusted EPS of 80 cents, which outpaced the Zacks Consensus Estimate by 63.3%. Moreover, the bottom line rose 77.8% year over year. Revenues were $40.8 billion, which increased 3.4% year over year. The top line surpassed the consensus mark by 4.8%. Revenues from Medicaid dipped 1% year over year to $20.8 billion, while Medicare revenues grew 4% year over year to $5.5 billion. Additionally, commercial revenues of $8.7 billion climbed 18% year over year.

Centene's premiums amounted to $35.5 billion, rising 3.8% year over year. Service revenues decreased 29.7% year over year to $777 million. As of Dec. 31, 2024, total membership was 28.6 million, which grew 4.1% year over year. Centene’s HBR deteriorated 10 basis points year over year to 89.6%. Adjusted net earnings of $404 million rose 68.3% year over year.  Adjusted SG&A expense ratio of 8.9% improved 80 basis points year over year. 

HCA Healthcare’s fourth-quarter 2024 adjusted EPS of $6.22 outpaced the Zacks Consensus Estimate by 4.2%. The bottom line advanced 5.4% year over year. Revenues rose 5.7% year over year to $18.3 billion. The top line beat the consensus mark by 1.1% Same-facility equivalent admissions improved 3.1% year over year in the fourth quarter while same-facility admissions advanced 3% year over year. 

Same-facility revenue per equivalent admission grew 2.9% year over year.  Same-facility inpatient surgeries increased 2.8% year over year. Same-facility outpatient surgeries dipped 1.3% year over year. Additionally, same-facility emergency room visits rose 2.4% year over year in the fourth quarter.  Adjusted EBITDA of $3.7 billion improved 2.6% year over year. HCA Healthcare operated 190 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Dec. 31, 2024.

Elevance Health reported fourth-quarter 2024 adjusted EPS of $3.84, which surpassed the Zacks Consensus Estimate by 1.1%. However, the bottom line deteriorated 31.7% year over year. Operating revenues of $45 billion rose 6% year over year. Moreover, the top line beat the consensus mark by a whisker. Medical membership of Elevance Health was around 45.7 million as of Dec. 31, 2024, which slipped 2% year over year. 

Premiums increased 3.2% year over year to $36.2 billion. Product revenues of $6.7 billion increased 24.5% year over year. In the Health Benefits segment, operating revenues totaled $37.6 billion, which increased 3% year over year. Operating gain declined 75% year over year to $0.2 billion. The Carelon segment’s operating revenues amounted to $14.7 billion, which rose 19% year over year. The unit’s operating gain of $0.6 billion remained stable year over year.

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