Dive Brief
Tenet Healthcare Increases Financial Forecast
Tenet Healthcare has raised its full-year financial outlook following strong third-quarter results, demonstrating year-over-year growth in both revenue and adjusted earnings. This marks the second consecutive quarter that Tenet has adjusted its financial forecast upward, reflecting better-than-expected performance. The hospital operator now anticipates revenue between $21.2 billion and $21.4 billion for 2025. Additionally, Tenet is increasing its capital expenditure budget for the year by $150 million, bringing the total to a range of $875 million to $975 million.
CEO Saum Sutaria indicated during a Tuesday morning investor call that the additional funds will support organic growth within the hospital division and investments in high-acuity service lines, including cardiac care, intensive care, and advanced imaging.
Dive Insight
Strong Third Quarter Performance
In the third quarter, Tenet reported net operating revenues of $5.3 billion, surpassing Wall Street expectations and reflecting a 3.2% increase over the previous year. The health system credited its earnings performance to widespread same-store revenue growth, ongoing operational efficiency initiatives, and returns from its high-acuity service line strategy, which enhances services for complex patients requiring specialized care.
The operator’s acute hospital portfolio achieved net revenue of $4 billion during the quarter, benefiting from a $38 million increase from Medicaid supplemental payment revenues from previous years. Tenet’s ambulatory business, United Surgical Partners International (USPI), generated $1.3 billion, with both segments experiencing increased patient volumes. Acute hospital volumes saw modest growth, with same-store adjusted admissions rising by 1.5% year-over-year. Sutaria expressed confidence in the sustained demand for Tenet’s high-acuity offerings, which prompted the decision to raise the capital expenditure budget.
Sutaria stated, “We felt it was a good time, given the demand that we continued to see through the third quarter, to go ahead and make those investments and raise our guidance.” Additionally, surgical volumes in USPI facilities increased by 2.1% year-over-year. Tenet’s 2025 forecast suggests that USPI will experience volume growth of over 8% year-over-year, a slowdown compared to previous years, where growth was in the low- to mid-teens. Nevertheless, Sutaria is optimistic about strong service demand and hinted at potential acquisition opportunities in the fourth quarter.
Uncertainties with Government Policies
Executives acknowledged facing uncertainties due to the ongoing government shutdown in Washington. However, Sutaria remains hopeful that lawmakers will reach a consensus on healthcare policy. He noted that Tenet, like many peers in the industry, is awaiting further developments regarding negotiations around enhanced Affordable Care Act (ACA) subsidies, which are set to expire without Congressional action.
The stalemate between Democrats and Republicans over the future of these subsidies, initially introduced during the COVID-19 pandemic, poses significant risks. Without an extension, millions may lose insurance coverage as premiums rise, potentially leading to billions in revenue losses for providers. Sutaria commented, “Much of what we’re hearing is that it may take time, but a compromise will be achieved, from our intelligence coming from Washington. We are just sort of patiently waiting to see what happens there.”
Tenet is particularly sensitive to ACA-related pressures; during the third quarter, 8.4% of total hospital admissions and 7% of total consolidated revenues were derived from exchange patients, according to CFO Sun Park. However, Sutaria noted that USPI is generally less vulnerable to exchange and Medicaid fluctuations—facing $1 trillion in cuts—compared to the acute hospital division.