Strong Q3 Performance Drives Confidence
Tenet Healthcare has once again elevated its 2025 financial guidance following exceptional third-quarter results, while simultaneously announcing an additional $150 million in capital expenditure investments within its hospital segment. The public for-profit healthcare giant revealed these developments during its Tuesday morning earnings announcement, signaling robust momentum across its business operations.
The company’s impressive performance beat Wall Street analysts’ consensus estimates across multiple key metrics, driven by a powerful combination of factors. Steady demand and volume growth, enhanced per-case revenue generation, and stringent expenditure management—particularly in labor costs—created a perfect storm of profitability, as executives detailed during Tuesday’s quarterly earnings call.
Financial Highlights and Analyst Expectations
For the third quarter specifically, Tenet Healthcare reported $5.29 billion in net operating revenues, accompanied by adjusted EBITDA of $1.1 billion and adjusted diluted earnings per share of $3.70. These figures not only surpassed analyst projections but also represented impressive year-over-year gains of 3.2%, 12.4%, and 26.3%, respectively.
The performance prompted Tenet to raise its full-year 2025 outlook once again. The company now estimates net operating revenues between $21.15 billion and $21.35 billion, with adjusted EBITDA projected to fall within the $4.47 billion to $4.57 billion range. Net income available to Tenet common stockholders is expected between $13.3 billion and $14.0 billion, translating to $14.66 to $15.37 per common share.
This latest guidance adjustment represents a $50 million increase to the 2025 adjusted EBITDA outlook range’s midpoint—following a substantial $395 million guidance raise during the summer. Combined, these revisions position Tenet for an anticipated 13% increase over 2024’s adjusted EBITBA, demonstrating remarkable growth trajectory despite challenging healthcare market conditions.
Hospital Segment Outperformance
While both of Tenet’s business segments delivered strong results, it was the acute hospital unit’s exceptional performance that primarily fueled the latest guidance increase. The hospital segment achieved impressive metrics despite ongoing divestitures, with same-store adjusted admissions increasing by 1.5% and same-hospital net patient service revenue per adjusted admission rising 5.9%.
The segment’s adjusted EBITDA climbed to $607 million, attributed to enhanced per-case revenue and disciplined expense management. Notably, the company achieved a 160 basis point improvement in salary, wages, and benefits as a percentage of net revenues—a significant accomplishment in today’s competitive labor market.
CEO Saum Sutaria, M.D., emphasized the company’s operational excellence during the earnings call, stating: “We continue to deliver consistent growth and have disciplined operations, which has translated into outstanding financial results. We are confident in our ability to deliver on our increased outlook for 2025 as we continue to provide high-quality care for our patients.”
Strategic Capital Investments Announced
The $150 million additional capital expenditure planned for the hospital segment will directly support Tenet’s high-acuity strategic focus. These investments may include nationwide infrastructure upgrades encompassing cardiac care units, intensive care units, advanced imaging facilities, catheterization laboratories, and enhanced surgical programs.
Sutaria explained the timing of these investments: “As we reviewed them through this business planning cycle, we felt it was a good time, given the demand that we continued to see through the third quarter, to go ahead and make those investments and raise our guidance.”
The hospital segment also benefited from $148 million in pretax funds received year-to-date for Medicaid supplemental revenues tied to prior years, with $38 million landing in the third quarter alone. This favorable payer mix, combined with increased Medicaid supplemental revenues and strategic emphasis on higher acuity services, drove the impressive per-admission revenue growth.
USPI Ambulatory Growth Continues
United Surgical Partners International (USPI), Tenet’s high-growth, high-margin ambulatory segment, continued its upward trajectory with net operating revenues rising 11.9% year-over-year to $1.28 billion. This performance underscores the segment’s critical role in Tenet’s overall growth strategy.
Same-Facility Revenue and Volume Growth
On a same-facility basis, USPI demonstrated balanced growth across multiple metrics. Net patient service revenues grew by 8.3%, while net patient service revenue per case increased 6.1%. Surgical case volume expanded by 2.1%, contributing to the segment’s comprehensive advancement.
The segment’s adjusted EBITBA rose 12.1%, which executives attributed to revenue increases, effective expense management, and ongoing efforts to add more de novo and acquired surgical centers. Sutaria specifically highlighted ortho, spine, and other high-acuity service lines as key contributors to same-facility volume growth, along with strategic investments in robotic surgery capabilities.
Analysts noted that Tenet’s updated guidance positions USPI for year-over-year growth just above 8%—a slight moderation from prior years’ low- to mid-teens growth rates. However, Sutaria characterized this as proportional dilutive growth as the unit continues expanding in scale, rather than any fundamental slowdown in demand.
Notably, USPI exceeded its anticipated budget for acquiring new centers this year. “We’re very careful about our diligence in maintaining our high bar for acquisitions. This year, we’ve found more opportunities,” Sutaria explained. “The kind of cash flow that USPI generates, we can fund those increases. Obviously, having these additional assets on board is positive for the organization going into the following year, and we also continue to see more opportunity in the fourth quarter.”
Conifer Health Solutions Contribution
Though no longer reported as a separate business segment, Conifer Health Solutions—Tenet’s revenue cycle management unit—received considerable recognition during the earnings call. Executives praised the group’s “continued improving and fantastic performance,” noting its positive impact on free cash flow and EBITDA.
Conifer is expected to play an increasingly important role in driving patient eligibility and enrollment support, particularly amid ongoing confusion related to Medicaid programs and insurance exchange plans. This capability could prove especially valuable as healthcare policy uncertainties continue into 2026.
Looking Ahead to 2026
Regarding exchange subsidies and potential policy changes, Sutaria acknowledged that the company hasn’t incorporated any anticipated modifications into its current guidance. He noted that early intelligence suggests lawmakers will eventually reach a compromise, though timing remains uncertain.
“Much of what we’re hearing is that it may take time, but a compromise will be achieved, from our intelligence coming from Washington,” Sutaria told analysts. “We are just sort of patiently waiting to see what happens there.”
He emphasized that USPI’s business model provides insulation from major exchange-related changes compared to the hospital segment, offering stability amid policy uncertainty.
Market Conditions and Future Outlook
While Tenet largely avoided providing specific 2026 forecasts given exchange uncertainties and pending applications for state-directed payment increases, Sutaria offered cautiously optimistic commentary. “We see healthy patient demand that would support same-store volume growth and a stable operating environment supported by disciplined cost controls in 2026,” he stated.
Executives indicated they don’t anticipate “meaningful changes” to the labor market and expressed confidence in the company’s ability to mitigate potential tariff-based supply cost increases through selective contracting and strategic purchasing for the foreseeable future.
Despite strong results and raised guidance, Tenet’s stock price was trading approximately 5% below its opening price as of Tuesday afternoon, returning to levels seen prior to Friday’s market movement sparked by positive earnings from fellow for-profit healthcare companies.
The combination of strong operational performance, strategic capital allocation, and disciplined financial management positions Tenet Healthcare favorably as it closes out 2025 and prepares for the opportunities and challenges ahead in 2026.
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