Tenet Healthcare (NYSE: NYSE:THC) reported robust Q3 2023 results, with net operating revenues of $5.1 billion and consolidated adjusted EBITDA of $854 million, a margin of nearly 17%. The healthcare services company also raised its full-year 2023 adjusted EBITDA guidance to a range of $3.365 billion to $3.465 billion. The company's leverage ratio was 4.08 times EBITDA at the end of the quarter, and it reported having over $1 billion of cash on hand.
Key takeaways from the earnings call include:
- Strong performance from the USPI segment, which generated $370 million of adjusted EBITDA, a 16% growth compared to the same quarter in 2022.
- The hospital segment generated $401 million of adjusted EBITDA, benefiting from strong patient acuity levels and increased access to higher-acuity services.
- The Conifer business also delivered strong margins and high-quality services.
- The company's priorities for capital deployment include USPI expansion and investments in the growth of high-acuity services.
- The company expects free cash flow for 2023 to be in the range of $1.125 billion to $1.350 billion.
- Tenet Healthcare has a robust acquisition and de novo development pipeline.
During the earnings call, Saum Sutaria, CEO of Tenet Healthcare, clarified that the 103 new service lines added year-to-date does not include de novos or expansions of services in existing centers. The focus is on adding higher-acuity services, particularly orthopedics, to existing centers or multi-specialty centers without orthopedics. Sutaria also mentioned a positive M&A environment and raised assessment processes.
In terms of future growth, Sutaria expressed confidence in both M&A and de novo opportunities, especially in orthopedics. Sutaria also discussed the company's efforts to restructure and consolidate physician service contracts to improve efficiency and work with better partners. The company is also investing in technology for scheduling and efficiency, particularly in high-acuity areas like surgical and cath lab procedures.
The call also included recognition and gratitude for the CFO, Daniel Cancelmi, who is leaving the company. He announced that it would be his last earnings call and expressed gratitude to the company's employees and caregivers.
Tenet Healthcare is still evaluating its assumptions for 2024 but expects organic volume growth, increased patient acuity, and contributions from M&A and de novo development centers. The company anticipates some headwinds in 2024 from the termination of COVID-related government funding programs and new regulations but believes earnings growth opportunities will offset these. The company feels well-positioned for recovery in healthcare services.
InvestingPro Insights
In light of Tenet Healthcare's robust Q3 2023 results and optimistic future growth plans, InvestingPro offers valuable insights. Two key InvestingPro Tips for Tenet Healthcare investors to consider are: Management's aggressive share buyback strategy, which can indicate the company's confidence in its future growth, and the accelerating revenue growth, which aligns with the company's strong Q3 2023 results and optimistic projections for 2024.
In terms of InvestingPro Data, a few metrics stand out. Tenet Healthcare's market cap is $5410M USD, suggesting a substantial presence in the industry. The company's P/E ratio is 11.17, which may indicate it is currently undervalued. Additionally, the company's revenue for the last twelve months as of Q2 2023 stands at $20.11B USD, reinforcing the revenue growth indicated in the InvestingPro Tips.
InvestingPro's platform offers a wealth of additional tips and data for investors seeking to make informed decisions. For access to a broader range of insights, consider subscribing to InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.