Tenet Healthcare Corporation (THC) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call revealed strong financial performance with a 14% increase in net operating revenues and adjusted EBITDA, alongside a significant improvement in margins. The ongoing share repurchase program and a strong cash position further enhance investor confidence. Despite management's reluctance to update guidance and some unclear responses, the overall sentiment remains positive due to robust growth metrics and strategic actions like share repurchases and effective cost management.

Key Financial Performance

Net Operating Revenues $5.2 billion, a 14% increase over Q1 2024.

Consolidated Adjusted EBITDA $1.163 billion, a 14% increase over Q1 2024.

Adjusted EBITDA Margin 22.3%, a 320-basis point improvement over the prior year.

USPI Adjusted EBITDA $456 million, a 16% increase over Q1 2024.

Same-Facility Revenues Growth 6.8% growth in the first quarter.

Hospital Segment Adjusted EBITDA $707 million, a 12% increase over Q1 2024.

Same-Store Hospital Admissions Up 4.4%.

Revenue per Adjusted Admission Up 2.8% over the prior year.

Free Cash Flow $642 million in the first quarter.

Cash on Hand $3 billion as of March 31, 2025.

Net Debt to EBITDA Ratio 3.1 as of March 31, 2025.

Share Repurchases 2.6 million shares repurchased for $348 million.

Leverage Ratio 2.46 times EBITDA or 3.14 times EBITDA less NCI.

Consolidated Salary, Wages and Benefits 40.6% of net revenues, a 260-basis point improvement from prior year.

Consolidated Contract Labor Expense 2% of SWNB.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

New Centers: Added six new centers, including a strategic partnership with Choice Care Surgery Center in Midland, Texas, focusing on orthopedic surgery and urology.

Expanded L&D Department: Expanded the L&D department at Abrazo West Campus in Arizona to enhance care for women and families.

Same-Facility Revenue Growth: Same-facility revenues grew 6.8% in Q1 2025, driven by a 12% growth in total joint replacements in ASCs.

Hospital Admissions Growth: Same-store hospital admissions increased by 4.4% in Q1 2025.

Adjusted EBITDA Growth: Consolidated adjusted EBITDA of $1.163 billion, a 14% increase over Q1 2024.

Adjusted EBITDA Margin Improvement: Adjusted EBITDA margin improved to 22.3%, a 320-basis point increase from the prior year.

Cost Management: Consolidated salary, wages, and benefits were 40.6% of net revenues, a 260-basis point improvement from the prior year.

M&A Investment: Plans to invest approximately $250 million annually in M&A opportunities in the ambulatory space.

Share Repurchase Program: Repurchased 2.6 million shares for $348 million in Q1 2025, with plans for continued repurchases.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Healthcare Policy Uncertainty: The company is not altering its business strategy due to healthcare policy uncertainty that the industry is currently facing.

Tennessee Medicaid Programs: The outlook assumes $35 million of net revenues associated with the Tennessee supplemental Medicaid programs, which have not yet been fully approved.

Economic Stresses: The company has transformed its portfolio to be better positioned to handle economic stresses.

Competitive Pressures: The company sees its current valuation as disjointed relative to its growth prospects, indicating competitive pressures in the market.

Supply Chain Challenges: No specific supply chain challenges were mentioned, but the company emphasizes effective cost management.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Capital Deployment: Tenet plans to invest approximately $250 million annually towards M&A opportunities in the ambulatory space.

New Centers: Added six new centers, including a strategic partnership with Choice Care Surgery Center in Midland, Texas.

Share Repurchase: Repurchased 2.6 million shares for $348 million in Q1 2025 and plans to continue active share repurchases.

Growth Strategy: Focus on serving patients and delivering value with physician partners, with no alteration to business strategy despite healthcare policy uncertainty.

2025 Full-Year Guidance: No adjustments made to the full-year 2025 outlook; reaffirming initial guidance provided in February.

Free Cash Flow Expectations: Expected free cash flows in the range of $1.8 billion to $2.05 billion for 2025.

Adjusted EBITDA Expectations: Second quarter consolidated adjusted EBITDA expected to be in the range of 24% to 25% of full-year consolidated adjusted EBITDA.

Net Revenues from Medicaid Programs: Outlook assumes $35 million of net revenues from Tennessee supplemental Medicaid programs, pending approval.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Share Repurchase: Repurchased 2.6 million shares for $348 million in Q1 2025. Plans to continue active share repurchases in 2025.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Is there anything that you would kind of call out maybe the size of the $40 million of incremental Medicaid supplemental that you frame as potentially as an out-of-period item that we should think about bridging from Q1 to Q2?

A:No, there's nothing else. I mean we're just not addressing guidance this early in the year. We recognize the fundamental outperformance.

Q:Can you just talk about the pipeline of potential acquisitions and just your confidence of being able to deploy the $250 million in investment?

A:The pipeline looks good. $250 is always kind of a goal range that we put. Obviously, we have been spending on average, a lot more than that, almost double that.

Q:Can you provide some color in the acuity, the payer mix, what drove that revenue per adjusted admission?

A:We saw continued acuity strength, as well as a strong payer mix. We saw a 35% increase in exchange admissions.

Q:How much more room do you think you can actually improve that labor performance?

A:Our strategy was to reduce contract labor and have our full-time employees that provide good care.

Q:Is there anything else special going on in the quarter regarding SWB?

A:We're not really updating guidance, right? The more we diversify the business into the ambulatory side, that helps in terms of the USPI component.

Q:Is that leverage due to uncompensated care, which looks to be down this quarter despite revenues going up?

A:The uncompensated care piece is not same store, right? I mean, remember, we divested a bunch of assets.

Q:How persistent do you think this rate momentum is over the next couple of years?

A:Projecting out over the next couple of years on ASC rates is a little bit tough.

Q:Can you give us a sense for how that market has evolved over the last five years or so in terms of eligible population or penetration of total seniors?

A:There's still a lot of HOPD work that goes on there that isn't really due to comorbidities or other sorts of things.

Q:Do you think there is any type of like front-loading of volumes if people are worried that they may lose their jobs?

A:I don't know that there's anything I could point to affirmatively say that people are trying to utilize their coverage out of a fear of losing it.

Q:Do you have any additional context on framing there and maybe how much of your supply spend would be off-contract or direct from manufacturers?

A:We don't have any commentary to add, I mean, the numbers that you have heard are -- in terms of the supply spend base, the location of where it's coming from the pharmaceuticals' points, all the same no different.

Q:Are there contingency plans that you make at this point?

A:We're not moving that up to priority number one, two or three right now, because we still believe that our operating platform can receive and accept all patients that need care.

Q:Do you think there's additional room for margin expansion there on the acute care side?

A:We always operate with a mindset that there's margin expansion potential.

Q:Review of Unclear Management Responses

A:Management appeared to avoid giving a direct answer regarding the specifics of the $40 million Medicaid supplemental item and its implications for Q1 to Q2. Additionally, there was a lack of clarity on the exact number of beds opened for capacity expansion, as well as the specifics of supply spend and procurement differences between ambulatory and hospital settings.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

THC Transcript

Tenet Healthcare Corporation (THC) Q3 2025 Earnings Call Transcript

Positive10-28

The earnings call reflects a positive outlook with raised guidance for EBITDA and revenues, strong free cash flow, and a solid leverage ratio. Share repurchases and strategic capital allocation further enhance shareholder value. Despite some deceleration in USPI growth, management's confidence in handling demand and inflationary pressures suggests stability. The Q&A insights reinforce the company's growth strategies and operational efficiencies, supporting a positive sentiment.

Tenet Healthcare Corporation (THC) Presents At Wells Fargo 20th Annual Healthcare Conference 2025 Transcript

Neutral9-3

Tenet Healthcare Corporation (THC) Q2 2025 Earnings Call Transcript

Positive7-23

The earnings call summary indicates strong financial performance with high cash reserves, active share repurchases, and a low leverage ratio. The Q&A section highlights positive impacts from proposed rules, strong public exchange volumes, and management's effective handling of challenges. Despite some unclear responses, the overall sentiment is positive due to strategic partnerships, growth in key service lines, and effective cost management. The reaffirmation of 2025 guidance and no significant negative trends suggest a positive outlook, likely resulting in a 2% to 8% stock price increase over the next two weeks.

Tenet Healthcare at BofA Conference: Strategic Growth and Stability

Neutral5-13

THC Slides

Tenet Healthcare Q3 2025 slides: strong EBITDA growth despite market headwinds

2025-10-28

THC Report

TENET HEALTHCARE CORP 10-K

10-K

2025-02-18

TENET HEALTHCARE CORP 10-Q

10-Q

2024-07-30

TENET HEALTHCARE CORP 10-Q

10-Q

2024-04-30

TENET HEALTHCARE CORP 10-K

10-K

2024-02-16

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.