Tenet's Strong Q3 2024 Results: A Closer Look

Tenet Healthcare Corporation (NYSE: THC) reported robust financial results for the third quarter of 2024, reflecting a significant turnaround from the previous year. The company's net income available to common shareholders surged to $472 million, or $4.89 per diluted share, compared to $101 million, or $0.94 per diluted share, in Q3 2023. This substantial increase can be attributed to a combination of strong operational performance and strategic divestments.

Tenet's adjusted EBITDA also saw a notable improvement, climbing 14.5% year-over-year to $978 million. This growth was driven by various factors, including strong same-hospital admissions growth, increased net revenue per case in ambulatory care, favorable payer mix, and higher Medicaid supplemental revenues in Michigan. Additionally, the sale of Brookwood Baptist Health contributed to a pre-tax gain of $348 million, further boosting the company's bottom line.



The company's Ambulatory Care segment, led by United Surgical Partners International (USPI), also performed exceptionally well. Revenues reached $1,139 million, a 20.4% increase from the previous year, with same-facility system-wide net patient service revenues climbing 9.2% to $1,895 million. Adjusted EBITDA surged 18.6% year-over-year to $439 million, reflecting the segment's strong operational performance and growth potential.

Tenet's debt reduction and improved net debt to Adjusted EBITDA ratio further contributed to its strong Q3 2024 performance. The company reduced its net debt by approximately $1.5 billion year-over-year, driven by strong cash flows from operating activities and free cash flow generation. This reduction led to a significant decrease in the net debt to Adjusted EBITDA ratio, from 3.89x at the end of 2023 to 2.22x by the end of Q3 2024.



Tenet's focus on generating robust free cash flow also played a significant role in its Q3 2024 results and outlook. The company reported free cash flow of $1.777 billion for the nine months ended September 30, 2024, a 76.7% increase from the same period in 2023. This surge in free cash flow can be attributed to Tenet's strategic portfolio transformation and disciplined operations, driving a 14.5% increase in consolidated adjusted EBITDA to $978 million.

In light of these impressive results, Tenet raised its FY 2024 adjusted EBITDA outlook to a range of $3.9 billion to $4.0 billion, demonstrating the company's commitment to generating value for shareholders through strategic cash flow management.

As Tenet continues to execute its portfolio transformation strategy, investors should remain focused on the company's ability to generate robust free cash flow and drive operational excellence. With strong performance in both its core businesses and strategic divestments, Tenet is well-positioned to deliver enhanced value to its patients, physician partners, and shareholders.