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 robust volume and revenue per case increases; hospital segment adjusted EBITDA grew 11% (24% ex-divestitures).

• Major divestitures in Alabama, South Carolina, and California generated $2.9 billion in pre-tax gains and improved the hospital portfolio's return profile.

• Free cash flow for Q3 was $829 million, supporting investments and share repurchases; cash on hand at quarter-end was $4.09 billion.

• Share repurchases totaled 5.6 million shares for $672 million year-to-date, with a new $1.5 billion program authorized.

Financial highlights

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

• Q3 2024 net income was $472 million (9.2% margin); diluted EPS was $4.89, adjusted diluted EPS $2.93.

• Free cash flow for Q3 2024 was $829 million, up from $327 million in Q3 2023.

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

• Net debt to adjusted EBITDA ratio improved to 2.22x at September 30, 2024.

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%.

• Capital expenditures for 2024 projected at $800–$900 million, focused on ambulatory expansion and hospital upgrades.

• Management expects to offset divested facility EBITDA and Medicaid adjustments in 2025 through volume growth, pricing, and efficiencies.