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Tenet Healthcare Corporation THC reported first-quarter 2025 adjusted earnings per share (EPS) of $4.36, which outpaced the Zacks Consensus Estimate by 40.2%. The bottom line climbed 35.4% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Net operating revenues of $5.2 billion slipped 2.7% year over year. The top line beat the consensus mark by 1.6%.
The company’s quarterly results were aided by strong same-hospital admissions, higher net revenue per case, a favorable payer mix and disciplined expense management efforts, which drove solid gains in adjusted net income and EBITDA. Growth in the Ambulatory Care segment was further supported by facility buyouts and expanded service lines. However, the upside was partly offset by a sharp rise in total operating costs. Additionally, the Hospital segment faced revenue pressure from divestitures. '
Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation Quote
Adjusted net income advanced 27.8% year over year to $414 million in the quarter under review.
Adjusted EBITDA was $1.2 billion, which improved 13.6% year over year and came higher than our estimate of $1 billion. The year-over-year increase came on the back of improved same-hospital admissions, solid ambulatory net revenue per case, favorable payer mix and prudent expense management efforts. Adjusted EBITDA margin improved 320 basis points (bps) year over year to 22.3%.
Total operating costs of $4.3 billion doubled year over year due to a significant reduction in net gains on sales, consolidation and deconsolidation of facilities.
Hospital Operations and Services: The segment’s net operating revenues fell 7.9% year over year to $4.03 billion in the first quarter due to the impact of the divestiture of hospitals in 2024. The metric beat the Zacks Consensus Estimate of $4.02 billion but missed our estimate of $4.2 billion. Nevertheless, on a same-hospital basis, net patient service revenues grew 5.8% year over year.
Adjusted EBITDA of $707 million rose 12.2% year over year, attributable to higher same-hospital admissions, increased revenue per adjusted admission, a favorable payer mix and prudent expense management efforts. The metric outpaced the consensus mark of $551.3 million and our estimate of $596.7 million. Adjusted EBITDA margin improved 310 bps year over year to 17.5%.
Ambulatory Care: The segment recorded net operating revenues of $1.2 billion in the quarter under review, which advanced 20% year over year and surpassed the Zacks Consensus Estimate of $1.1 billion and our estimate of $1 billion. The year-over-year increase resulted from improved net revenue per case growth, facility buyouts and expansion of service lines.
Adjusted EBITDA grew 15.7% year over year to $456 million, higher than the consensus mark of $437.3 million and our estimate of $420 million. However, the adjusted EBITDA margin of 38.2% deteriorated 140 bps year over year.
Tenet exited the first quarter with cash and cash equivalents of $3 billion, which dipped 0.7% from the 2024-end level.
Total assets of $29.2 billion inched up 1% from the figure at 2024-end.
Long-term debt, net of the current portion, amounted to $13.1 billion. The figure stayed relatively flat from the figure as of Dec. 31, 2024. The current portion of long-term debt totaled $88 million.
Total shareholders’ equity of $4.2 billion inched up 0.2% from the 2024-end level.
THC generated $815 million of net cash from operations in the quarter under review, which climbed 39.1% year over year. Free cash flows soared 85.5% year over year to $642 million.
THC bought back common shares worth $348 million in the first quarter of 2025. As of March 31, 2025, the company had a leftover share repurchase authorization of $1.03 billion.
THC expects second-quarter 2025 adjusted EBITDA to be 24-25% of its full-year 2025 adjusted EBITDA guided range.
Net operating revenues continue to be forecasted within $20.6-$21 billion. The midpoint of the guidance indicates 0.7% growth from the 2024 figure.
Net operating revenues of the Hospital segment are reiterated to be between $15.75 billion and $16 billion, the midpoint of which indicates a 1.6% decline from the 2024 figure. The metric at the Ambulatory Care unit continues to be expected between $4.85 billion and $5 billion, the midpoint of which implies 8.6% growth from the 2024 figure.
Adjusted EBITDA is reaffirmed to stay in the range of $3.975-$4.175 billion. The midpoint of the guidance indicates 2% growth from the 2024 figure. Adjusted EBITDA margin continues to be estimated in the 19.3-19.9% range.
Adjusted net income continues to be projected between $1.115 billion and $1.220 billion. Adjusted EPS is presently anticipated within $11.99-$13.12, up from the earlier range of $11.74-$12.84. The mid-point of the revised outlook implies a 5.7% rise from the 2024 figure. Interest expense continues to be estimated between $795 million and $805 million.
Net cash provided by operating activities continues to be expected between $2.5 billion and $2.85 billion. Free cash flow is reiterated to remain between $1.8 billion and $2.05 billion. Capital expenditures continue to be projected in the range of $700-$800 million.
Tenet Healthcare currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of the Medical sector players that have reported first-quarter 2025 results so far, the bottom-line results of Elevance Health, Inc. ELV, Centene Corporation CNC and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate.
Elevance Health reported first-quarter 2025 adjusted EPS of $11.97, which surpassed the Zacks Consensus Estimate by 6.8%. The bottom line increased 10.5% year over year. Operating revenues of $48.8 billion rose 15.4% year over year. Moreover, the top line beat the consensus mark by 6%. Medical membership of Elevance Health was around 45.8 million as of March 31, 2025, which slipped 0.5% year over year. Premiums increased 14.5% year over year to $40.9 billion.
Product revenues of $5.8 billion increased 29.1% year over year. Net investment income rose 26.9% year over year to $590 million. The adjusted operating margin deteriorated 70 bps year over year to 6.7%. The operating expense ratio improved 70 bps year over year to 10.9%. The benefit expense ratio of 86.4% deteriorated 80 bps year over year. In the Health Benefits segment, operating revenues totaled $41.4 billion, which increased 11.2% year over year. Operating gains declined 3.1% year over year to $2.22 billion.
Centene’s first-quarter 2025 adjusted EPS of $2.90 surpassed the Zacks Consensus Estimate by 22.9%. Moreover, the bottom line climbed 28% year over year. Revenues advanced 15.4% year over year to $46.6 billion. The top line beat the consensus mark by 7.2%. Revenues from Medicaid grew 4% year over year to $22.3 billion, while Medicare revenues of $8.8 billion soared 48% year over year in the quarter under review. Meanwhile, commercial revenues improved 31% year over year to $10.1 billion.
Centene's premiums totaled $41.7 billion, which advanced 17.4% year over year. Service revenues of $777 million decreased 3.8% year over year in the first quarter. Investment and other income dropped 29.9% year over year to $382 million. Total membership was 27.9 million as of March 31, 2025, which dipped 1.7% year over year. Centene’s health benefits ratio (HBR) of 87.5% deteriorated 40 bps year over year in the quarter under review. Adjusted net earnings improved 18.7% year over year to $1.4 billion.
HCA Healthcare reported first-quarter 2025 adjusted EPS of $6.45, which outpaced the Zacks Consensus Estimate of $5.77. The bottom line advanced 20.3% year over year. Revenues rose 5.7% year over year to $18.3 billion. The top line beat the consensus mark by 0.1%. Same-facility equivalent admissions improved 2.6% year over year in the first quarter, while same-facility admissions advanced 2.8% year over year. Same-facility revenue per equivalent admission grew 2.9% year over year.
Same-facility inpatient surgeries increased 0.2% year over year. Same-facility outpatient surgeries dipped 2.1% year over year. Additionally, same-facility emergency room visits rose 4% year over year in the first quarter. Adjusted EBITDA of $3.7 billion increased from the year-ago figure of $3.4 billion. HCA Healthcare operated 192 hospitals and roughly 2,500 ambulatory sites of care across 20 states and the United Kingdom as of March 31, 2025.
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This article originally published on Zacks Investment Research (zacks.com).
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