A strong third quarter has Tenet Healthcare again raising its 2025 guidance and planning an additional $150 million of capital expenditure investments within its hospital segment to fuel future organic growth, according to earnings results announced Tuesday morning.
The public for-profit beat analysts’ consensus estimates for the quarter via a combination of steady demand and volume growth, per-case revenue growth and a tight hold on expenditures such as labor, executives explained to analysts on Tuesday’s quarterly earnings call.
Both of the company’s segments performed well, though it was the acute hospital unit’s outperformance that fueled a $50 million raise to the 2025 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) outlook range’s midpoint—a bump that follows the summer’s $395 million guidance raise and brings Tenet to an expected 13% increase over 2024’s adjusted EBITDA.
Specifically, Tenet is estimating net operating revenues for the year to land between $21.15 billion and $21.35 billion, adjusted EBITDA to fall within $4.47 billion and $4.57 billion, and net income available to Tenet common stockholders between $13.3 billion and $14.0 billion ($14.66 to $15.37 per common share).
For the third quarter alone, Tenet reported $5.29 billion of net operating revenues, adjusted EBITDA of $1.1 billion, and adjusted diluted earnings per share of $3.70. Those topped analysts’ consensus estimates and reflected year-over-year gains of 3.2%, 12.4% and 26.3%, respectively.
“We continue to deliver consistent growth and have disciplined operations, which has translated into outstanding financial results,” CEO Saum Sutaria, M.D., said during Tuesday’s call. “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.”
Tenet’s share price had been lifted since Friday when two fellow for-profits shared their own strong quarters. Despite the performance and guidance range, Tenet’s stock was trading about 5% below its opening price as of Tuesday afternoon (and is back in line with its pricing prior to Friday).
Within United Surgical Partners International (USPI), the company’s high-growth, high-margin ambulatory segment, net operating revenues rose 11.9% year over year to $1.28 billion. On a same-facility, net patient service revenues grew by 8.3%, net patient service revenue per case grew by 6.1% and surgical case volume rose 2.1%.
The segment’s adjusted EBITDA rose 12.1%, which executives attributed to revenue increases, expense management and ongoing work to add more de novo and acquired centers. Sutaria highlighted the contribution of USPI’s ortho, spine and other high-acuity service lines as contributors to the same-facility volume growth, along with investments in robotics.
Analysts on the earnings call noted that Tenet’s updated guidance puts USPI on track for year-over-year growth just above 8%, a slowdown from prior years’ low- to mid-teens growth, which Sutaria shrugged off as dilutive proportional growth as the unit continues to increase in scale.
The CEO also acknowledged that USPI had already exceeded its anticipated budget for acquiring new centers.
“We're very careful about our diligence in maintaining our high bar for acquisitions. This year, we've found more opportunities,” he said. “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.”
As for the hospital segment, the quarter saw a 0.7% increase in net operating revenues despite divestitures. Same-store adjusted admission increased by 1.5% and same-hospital net patient service revenue per adjusted admission rose 5.9%, owing primarily to a favorable payer mix, increased Medicaid supplemental revenues and Tenet’s strategic focus on higher acuity services.
The segment’s adjusted EBITDA rose to $607 million, which executives attributed to the aforementioned per-case revenue increases and checked expenses that included a 160 basis point improvement on salary, wages and benefits as a portion of net revenues. The company also called out $148 million pretax funds received year to date for Medicaid supplemental revenues tied to prior years, $38 million of which landed in the third quarter.
As outlined in the revised guidance, Sutaria said the increased capital expenditure now planned for the hospital segment will support Tenet’s high-acuity strategy, which could include nationwide infrastructure upgrades covering cardiac care units, intensive care units, imaging, cath labs and surgical programs.
“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,” he said.
Though no longer its own reported business segment, Conifer Health Solutions, Tenet’s revenue cycle unit, earned plenty of shoutouts from executives during Tuesday’s earnings call. The group’s “continued improving and fantastic performance” has helped boost free cash flow and EBITDA, they said, and it’s expected to be able to drive patient eligibility and enrollment support amid confusion related to the Medicaid program and exchange plans.
On that topic, Sutaria said the company hasn’t baked any potential changes related to an exchange subsidy deal into its guidance, and it hasn’t yet seen any major changes in care-seeking behaviors related to the uncertainty. He reiterated that USPI’s business is shielded from any major changes compared to the hospital segment, but said that early signs point to an eventual deal between lawmakers.
“Much of what we’re hearing is that it may take time, but a compromise will be achieved, from our intelligence coming from Washington,” he told analysts. “We are just sort of patiently waiting to see what happens there.”
Tenet largely shied away from giving 2026 forecasts in light of exchanges uncertainty and pending applications for various increases in state-directed payments. Still, Sutaria acknowledged that “we see healthy patient demand that would support same-store volume growth and a stable operating environment supported by disciplined cost controls in 2026.” On the latter, executives said they don’t anticipate any “meaningful changes” to the labor market and that it should be able to mitigate tariff-based supply spending hits for sometime longer through selective contracting and purchasing.