Tenet Healthcare (NYSE:THC) raised its full-year 2026 financial outlook after reporting second-quarter results that exceeded its expectations, supported by hospital volume growth, higher-acuity services, expense-management efforts and continued strength in its ambulatory surgery business.
Second-quarter net operating revenues totaled $5.6 billion, while consolidated adjusted EBITDA rose 16.3% from a year earlier to $1.304 billion. Adjusted EBITDA margin was 23.2%, and adjusted diluted earnings per share increased 52% year over year to $6.12.
Guidance Raised for Revenue, EBITDA and Cash Flow
For 2026, Tenet increased its consolidated net operating revenue outlook to a range of $21.9 billion to $22.5 billion, representing a $300 million increase at the midpoint from its previous forecast. The company raised adjusted EBITDA guidance to $4.83 billion to $5.03 billion, a $295 million increase at the midpoint.
Management said the revised EBITDA outlook reflects roughly $100 million in fundamental outperformance during the first half and another $60 million from the expected continuation of those drivers in the second half. The company also cited contributions from ambulatory surgery acquisitions and supplemental Medicaid programs.
Adjusted free cash flow after noncontrolling interests is now projected at $1.825 billion to $2.055 billion, up $225 million at the midpoint. That outlook includes roughly $150 million of tax payments related to the Conifer transaction. Excluding those payments, the midpoint would be approximately $2.1 billion, Chief Financial Officer Sun Park said.
Hospital Segment Outperforms Despite Exchange Pressure
Tenet’s hospital segment generated $762 million in adjusted EBITDA, up 22% from the second quarter of 2025, with an 18% adjusted EBITDA margin. Same-hospital inpatient adjusted admissions increased 2.6%, while revenue per adjusted admission rose 3.3% year over year.
Park said the revenue-per-admission increase reflected the company’s acuity strategy and higher supplemental Medicaid revenue, partly offset by lower exchange volumes. The company recognized $92 million of favorable out-of-period supplemental Medicaid revenue tied to prior years, compared with $70 million in the prior-year quarter. Park said Tenet would have recorded a “clean beat” even without the incremental Medicaid revenue.
Exchange revenue declined 17% from the second quarter of 2025 and accounted for about 5.5% of consolidated revenue during the quarter. Exchange admissions fell about 13.5%, according to Park, resulting in an approximately $65 million revenue headwind.
Management said the exchange decline was most pronounced in Florida, Arizona, Michigan, South Carolina and Texas. Park said the company saw exchange patients shift to uninsured status at a rate that was “pretty much one-to-one,” with uninsured volume increasing proportionately in the second quarter.
Tenet expects the exchange-market trends seen in the second quarter to continue through the rest of 2026 and did not change its assumptions for the back half of the year. Sutaria said the company has been adjusting its cost base while maintaining investments in growth initiatives.
USPI Emphasizes Higher-Acuity Procedures
United Surgical Partners International, Tenet’s ambulatory surgery business, reported adjusted EBITDA of $542 million, an 8.8% increase from the prior-year quarter. Its adjusted EBITDA margin was 39%.
USPI same-facility systemwide revenue rose 5%, including a 6.3% increase in net revenue per case. Same-facility case volume declined 1.2%, which management attributed to its focus on higher-acuity care and the migration of lower-acuity procedures to office settings.
Sutaria highlighted 10% year-over-year same-store growth in total joint replacements at the company’s ambulatory surgery centers. He said USPI continues to expand into higher-acuity orthopedic procedures as well as urology, robotics, bariatrics and cardiovascular services. The company is also pursuing more complex procedures in established gastrointestinal and ophthalmology service lines.
Tenet now expects to spend more than $300 million on ambulatory surgery center mergers and acquisitions during 2026, reflecting transactions completed so far and its current pipeline of opportunities.
Cost Management and Capital Deployment
In response to analyst questions, Sutaria outlined several components of Tenet’s cost-management strategy. These include traditional productivity measures, renegotiating purchased-service contracts and supply standardization, as well as clinical operating improvements involving length of stay, emergency department service levels, hospital throughput and operating-room and catheterization-lab scheduling.
The company is also using automation, artificial intelligence and its global business center to improve productivity and automate certain functions across payment operations and support structures, Sutaria said.
Tenet generated $444 million in adjusted free cash flow during the second quarter and $1.422 billion year to date. As of June 30, it had $2.17 billion of cash on hand, no outstanding borrowings under its revolving credit facility and no significant debt maturities until late 2027.
The company repurchased 5.7 million shares for $1.04 billion during the second quarter. First-half share repurchases totaled nearly 7 million shares, costing $1.36 billion. Tenet’s board authorized a further $2 billion increase to its share repurchase program, and management said it expects to remain active in buybacks through the remainder of the year.
Tenet reported a leverage ratio of 2.33 times EBITDA as of June 30, or 2.9 times EBITDA excluding noncontrolling interests. Management said capital priorities include ambulatory surgery acquisitions, hospital investments focused on higher-acuity services, share repurchases and potential debt retirement or refinancing.
About Tenet Healthcare (NYSE:THC)
Tenet Healthcare Corporation (NYSE: THC) is a diversified American healthcare services company that owns and operates acute care hospitals and a broad range of outpatient facilities. Its portfolio includes general acute-care hospitals, specialty hospitals, ambulatory surgery centers, urgent care and diagnostic imaging centers, and other ancillary service locations. Tenet’s operations are oriented around delivering inpatient and outpatient clinical care across multiple medical specialties, with an emphasis on surgical services, emergency care, and advanced diagnostics.
In addition to facility-based care, Tenet provides integrated services designed to support clinical operations and improve patient access and care coordination.
