Tenet Healthcare Stock Plummets 5.34% Despite Record EBITDA and 335th-Ranked $360M Trading Volume

Market Snapshot

On October 28, 2025, Tenet Healthcare (THC) fell 5.34%, marking a significant decline despite reporting robust third-quarter financial results. The stock’s trading volume reached $0.36 billion, ranking it 335th in market activity for the day. The company’s non-GAAP earnings per share (EPS) of $3.70 surpassed estimates by $0.35, while revenue rose 3.3% year-over-year to $5.29 billion. Consolidated adjusted EBITDA hit $1.099 billion, a 12.4% increase, with a 20.8% margin. Tenet raised its 2025 EBITDA guidance to $4.47–$4.57 billion, reflecting confidence in its operational performance. However, the stock’s sharp intraday drop suggests broader market pressures or valuation concerns may be influencing investor sentiment.

Key Drivers

Earnings Outperformance and Operational Strength

Tenet’s third-quarter performance exceeded expectations across key metrics. The company reported adjusted EPS of $3.70, up 26.3% from $2.93 in the prior-year period, driven by disciplined cost management and strong revenue growth. Revenue increased to $5.29 billion, surpassing estimates by $40 million, with a 3.3% year-over-year rise. Consolidated adjusted EBITDA surged 12.4% to $1.099 billion, with a margin of 20.8%. The ambulatory care segment, operated through United Surgical Partners International (USPI), delivered 12.1% EBITDA growth to $492 million, supported by same-facility revenue expansion and strategic acquisitions. These results prompted Tenet to raise its full-year EBITDA guidance by $50 million, signaling optimism about sustained momentum in its core businesses.

Strategic Expansion and High-Margin Growth

USPI’s performance underscored Tenet’s long-term growth strategy. The ambulatory segment achieved a 38.6% adjusted EBITDA margin in Q3, with same-facility revenue growth of 8.3% and the addition of 13 new facilities. This segment has historically driven consistent mid-teens EBITDA growth and high margins, contributing to 40% of Tenet’s total adjusted EBITDA. The company’s focus on high-acuity services and clinical quality—evidenced by a 96.6% patient experience score—has strengthened USPI’s competitive positioning. Additionally, Tenet’s free cash flow generation improved, with $2.163 billion generated in the first nine months of 2025, up from $1.777 billion in the same period in 2024. These factors highlight the company’s ability to convert operational efficiency into capital returns for shareholders.

Market Sentiment and Analyst Outlook

Despite the earnings beat, Tenet’s stock declined 5.37% post-announcement, reflecting broader market dynamics rather than company-specific issues. Analysts noted that the Zacks Rank for the stock was #3 (Hold), indicating mixed revisions in earnings estimates. While the company has outperformed the S&P 500 by 71.3% year-to-date, investors remain cautious about valuation metrics and insider activity. For instance, Tenet’s shares have been held by a concentrated ownership base, with insider transactions occasionally influencing short-term volatility. Additionally, the healthcare sector’s top 16% Zacks Industry Rank suggests strong fundamentals, but near-term performance may hinge on management’s guidance during earnings calls and the sustainability of same-facility growth.

Guidance and Future Outlook

Tenet’s raised 2025 guidance underscores confidence in its strategic execution. The company now expects $4.47–$4.57 billion in adjusted EBITDA, up from its initial $3.975–$4.175 billion range, and $1.495–$1.695 billion in free cash flow, exceeding previous projections by $250 million. These updates reflect the success of Tenet’s focus on high-margin ambulatory services and disciplined capital allocation, including $93 million in share repurchases in Q3 alone. However, challenges remain, such as the impact of prior-year gains from asset sales, which reduced the net income available to shareholders to $342 million in Q3 2025 compared to $472 million in Q3 2024. Investors will closely watch how these factors interact with macroeconomic conditions and healthcare industry trends in the coming quarters.

Conclusion

Tenet’s third-quarter results highlight a mix of operational excellence and strategic clarity, particularly in its ambulatory segment. The company’s ability to exceed earnings and revenue expectations, coupled with margin expansion and guidance upgrades, positions it as a resilient player in the healthcare sector. Yet, the post-earnings stock decline and mixed analyst sentiment suggest that investors are balancing optimism about growth with prudence regarding valuation and market-wide uncertainties. As Tenet continues to execute on its high-acuity strategy and capital deployment, its ability to maintain momentum in a competitive landscape will be critical to long-term shareholder value.