Tenet Healthcare Corporation (THC) Earnings & Analysis

Latest quarter

Tenet reported Q2 FY2026 revenue of $5.6 billion, above the $5.4 billion consensus and up from $5.3 billion a year earlier. Adjusted earnings per share were $6.12, exceeding the $4.08 consensus; diluted earnings per share were $9.84, compared with $3.14 a year earlier.

In its filing, Tenet attributed hospital revenue growth primarily to higher patient volumes, partly offset by a less favorable payer mix. Total admissions rose 2.8%, while charity and uninsured admissions rose 19.2% from a year earlier.

The filing said ambulatory care revenue increased 9.3%, driven primarily by acquisitions, new facilities and purchases of controlling interests, partly offset by facility closures and sales. Same-facility revenue also contributed, helped by negotiated commercial rate increases, higher patient acuity and new service lines.

Tenet reported an operating margin of 26.7%, compared with 15.6% a year earlier. Free cash flow fell to $417.0 million from $743.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Saumya Sutaria said hospital volumes and same-facility revenue growth supported the quarter, alongside expense management initiatives. He said the hospital business benefited from growth initiatives and cost controls, partly offset by lower exchange enrollment. CFO Sun Park said hospital adjusted EBITDA rose 22% to $762 million, with an 18% margin in Q2.

Park said exchange revenue fell 17% from the prior-year quarter. Asked about the trend, he clarified that exchange admissions fell about 13.5% and said both measures were roughly in line with expectations. Park said Tenet was “roughly seeing a pretty consistent conversion from exchange patient volume into uninsured volume” and expected that pattern to continue in the second half.

Sutaria said Tenet had prepared for the exchange impact through productivity measures, purchase-service contract renegotiations and supply standardization. He also described work on hospital throughput, length of stay and operating-room scheduling, as well as automation and AI initiatives intended to improve productivity.

At USPI, Park said same-facility system-wide revenue rose 5%, with revenue per case up 6.3% and case volumes down 1.2%, reflecting the company’s focus on higher-acuity procedures. Asked about commercial pricing, he said rates had developed as expected and that commercial payer classes outside the exchanges were up in both volume and patient revenue.

On investment, Sutaria said Tenet planned to continue hospital growth projects but was “a bit more cautious on large scale hospital builds” until it better understood market conditions. He also said Tenet expected to exceed $300 million in full-year ambulatory acquisition spending.

Park said the quarter included $92 million of favorable supplemental Medicaid revenue related to prior years, compared with $70 million in the prior-year quarter. When asked about future Medicaid revenue growth, Sutaria declined to quantify it, saying he had not examined it in the way the question was framed. He also declined to guess at exchange enrollment in the following year before seeing results from the next two quarters.

Guidance

For FY2026, Park said Tenet raised its consolidated revenue outlook to $21.9 to $22.5 billion and its adjusted EBITDA outlook to $4.83 to $5.03 billion. He said the hospital adjusted EBITDA range rose to $2.67 to $2.81 billion.

Park also said Tenet increased its adjusted free cash flow outlook after noncontrolling interests to $1.825 to $2.055 billion. Sutaria said the company now expects to exceed $300 million in full-year ambulatory acquisition spending.