Tenet Healthcare (THC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net operating revenues reached $5.12 billion, with consolidated adjusted EBITDA of $978 million, up 14.5%–15% year-over-year, and net income available to shareholders of $472 million, reflecting gains from major hospital divestitures.

• Ambulatory segment delivered 18.6%–19% adjusted EBITDA growth to $439 million, with strong volume and margin expansion; hospital segment adjusted EBITDA grew 11% to $539 million, with margin at 13.5%.

• Major divestitures in Alabama, South Carolina, and California generated $2.9 billion in pre-tax gains and improved portfolio returns and leverage.

• Free cash flow for Q3 2024 was $829 million, supporting investments and $124 million in share repurchases; $672 million spent on repurchases year-to-date.

• Leverage ratio improved to 2.22x EBITDA as of September 30, 2024, with $4.09–$4.1 billion cash on hand and no significant debt maturities until 2027.

Financial highlights

• Q3 2024 net operating revenues were $5.12 billion, up 1.1% year-over-year; adjusted EBITDA margin reached 19.1%, up from 16.9% in Q3 2023.

• Q3 2024 net income margin was 9.2%; diluted EPS was $4.89, and adjusted diluted EPS was $2.93.

• Free cash flow for Q3 2024 was $829 million; for the nine months ended September 30, 2024, it was $1.78 billion.

• Cash and cash equivalents at September 30, 2024, totaled $4.09 billion.

Outlook and guidance

• FY 2024 adjusted EBITDA guidance raised to $3.9–$4.0 billion, with net operating revenues expected at $20.6–$20.8 billion.

• FY 2024 free cash flow projected at $975 million to $1.225 billion, with adjusted free cash flow at $1.15–$1.35 billion.

• Ambulatory segment FY 2024 net revenue per surgical case expected to rise 6–7%; hospital admissions up 4–5%.

• Management expects to offset $187 million in 2025 EBITDA headwinds from divestitures and Medicaid payments through volume and pricing growth.