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Dive Brief:

  • Tenet Healthcare raised its 2025 financial guidance on Tuesday after releasing second-quarter earnings that showed year-over-year growth in revenue and adjusted earnings before interest, taxes, depreciation and amortization.
  • The hospital operator now expects between $20.95 billion and $21.25 billion in revenue for 2025 on net income of $1.3 billion to $1.4 billion. Previously, Tenet projected $20.6 billion to $21 billion in revenue and $1.1 billion to $1.2 billion in income.
  • Still, Tenet declined to answer questions on a Tuesday morning call with investors about the future financial impacts from the recently enacted “One Big Beautiful Bill” and potentially expiring Affordable Care Act exchange premium tax credits. Tenet’s stock declined about 15% by market close on Tuesday.

Dive Insight:

Tenet attributed its earnings results to same-store revenue growth, operating efficiencies and its high-acuity service line strategy.

The operator’s ambulatory surgery business, United Surgical Partners International, grew same-store net patient revenues by 7.7%, logging $2.1 billion in same-store systemwide patient revenues. Tenet expects to continue growing USPI through acquisitions, and executives said they expect to exceed a previously set target of $250 million spent on M&A in 2025.

Tenet’s acute hospital portfolio grew adjusted EBITDA by 25% year over year to $623 million. Hospital revenues of $4 billion include a $79 million pre-tax boost from Medicaid supplemental payment revenues in Tennessee related to a prior period. 

Broadly, the operator tamped down on operating expenses in the quarter, with salaries, wages and benefits spending dropping slightly year over year. Executives said contract labor expense made up 1.9% of consolidated labor expenses.

However, the operator decreased its expectations for adjusted admissions in its hospital segment, after Tenet reported softer volumes in the second quarter.

Executives attributed the decrease in the quarter to seasonal changes and its continued focus on high-acuity service lines that treat complex patients requiring more specialized care. Adjusted admissions grew by 0.4% in its hospital segment, while outpatient visits, emergency room visits and hospital surgeries all declined.

“I think this will play itself out over time,” CEO Saum Sutaria said on the earnings call. “The underlying demand environment, when you compare it to a multi-year basis, still seems strong to me.”

Looking forward, executives declined to answer questions on the call with investors about how significant changes to healthcare policy — including $1 trillion in healthcare cuts, cuts to provider taxes and payments, and changes in enrollment and subsidies for the ACA exchanges — could impact the provider in 2026 and beyond.

Medicaid state-directed payments are one area of potential impact. The GOP megabill, which was signed by President Donald Trump earlier this month, restricts the payments, which allow states to make supplemental payments for services covered in Medicaid managed care contracts.

Impacts to larger operators like Tenet could be significant. In 2025, Tenet expects to record about $1.1 billion to $1.2 billion in supplemental payments. In the second quarter alone, the operator recorded about $350 million in supplemental payments.

Other changes to the ACA exchanges could impact the provider, including the potential expiration of subsidies. The subsidies, enacted in 2021, provide financial assistance for those buying coverage on the exchanges and are slated to expire at the end of the year unless lawmakers renew them. If allowed to lapse, 3.8 million people are expected to become uninsured each year on average from 2026 through 2034.

Volumes from patients on the exchanges represent about 8% of Tenet’s hospital admissions. In the second quarter, the operator reported an increase in exchange admissions of 23% and a 28% rise in revenues from exchanges year over year, CFO Sun Park said on the call with investors.

Sutaria said Tenet is focused on “helping stakeholders realize again how important the exchanges are for families that utilize them.”

“I think the work is ongoing in that area. I think it’s important, and I think it’s important to more than just our industry,” the CEO said.

Tenet’s stock dropped about 15% after the call. In a Tuesday note, analysts from Jefferies said the decline was probably driven by investors’ focus on policy impacts, executives’ reluctance to provide insight into 2026 and Tenet’s reduced volume guidance. Still, “we remain bullish on [Tenet],” Jefferies analysts said.