Dive Brief:
- Tenet Healthcare beat Wall Street expectations for revenue in the fourth quarter of 2023 on continued cost control measures and sustained demand for services, particularly in its ambulatory care unit, executives said during an earnings call on Thursday.
- CEO Saum Sutaria told investors that Tenet was entering a “new era” in which a higher proportion of its performance was generated by its ambulatory surgical business. Same-facility revenue for ambulatory services grew 9.2% during 2023, above Tenet’s long-term goal of 4% to 6% top line growth.
- The Dallas-based for-profit will continue a careful watch on its debt levels, executives said. The company has recently taken steps to reduce its leverage, last week finalizing the sale of three hospitals to Novant Health and announcing the sale of four additional hospitals to UCI Health.
Dive Insight:
The health system’s portfolio includes ambulatory service centers operated by United Surgical Partners International, acute care and specialty hospitals, imaging centers, ancillary outpatient facilities, micro-hospitals and physician practices.
The for-profit reported a net income of $244 million for the fourth quarter on an operating revenue of $5.4 billion. Tenet reported $20.5 billion in operating revenue for the full fiscal year and $611 million in net income.
Sutaria nodded to demand for services at hospitals and ambulatory care sites in his remarks to investors. Hospital admissions rose 1% and same-facility system-wide surgical cases rose 3.9% during the fourth quarter. However, hospital outpatient visits, including outpatient emergency room visits, and emergency room visits declined during the fourth quarter, falling 2.2% and 3.3%, respectively.
The provider plans to grow its successful USPI business unit in the coming years. Tenet has more than 30 ambulatory centers in development already, and executives said the company will invest $350 million of capital annually to further grow the USPI business.
The provider will also consider ways to “retire or refinance” its debt in 2024, according to Sutaria. Tenet’s debt levels have stayed relatively flat over the past two years, but its cash on hand has dipped since the onset of the pandemic.
Tenet took steps toward reducing its leverage this winter, pursuing strategic sales with nonprofit health systems.
The company expects to bring in between $19.9 billion and $20.3 billion in operating revenue for fiscal year 2024, with $5 billion to $5.2 billion generated during the first quarter.
