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This audio is auto-generated. Please let us know if you have feedback<\/a>.<\/p>\n Dive Brief:<\/p>\n Dive Insight:<\/p>\n Tenet attributed its earnings results to same-store revenue growth, operating efficiencies and its high-acuity service line strategy.<\/p>\n The operator\u2019s 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<\/a> in 2025.<\/p>\n Tenet\u2019s acute hospital portfolio grew adjusted EBITDA by 25% year over year to $623 <\/strong>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.\u00a0<\/p>\n 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.<\/p>\n However, the operator decreased its expectations for adjusted admissions in its hospital segment, after Tenet reported softer volumes in the second quarter.<\/p>\n 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.<\/p>\n \u201cI think this will play itself out over time,\u201d CEO Saum Sutaria said on the earnings call. \u201cThe underlying demand environment, when you compare it to a multi-year basis, still seems strong to me.\u201d<\/p>\n Looking forward, executives declined to answer questions on the call with investors about how significant changes to healthcare policy \u2014 including $1 trillion in healthcare cuts, cuts to provider taxes and payments, and changes in enrollment and subsidies for the ACA exchanges \u2014 could impact the provider in 2026 and beyond.<\/p>\n Medicaid state-directed payments are one area of potential impact. The GOP megabill, which was signed by President Donald Trump earlier this month<\/a>,\u00a0restricts the payments, which allow states to make supplemental payments for services covered in Medicaid managed care contracts.<\/p>\n 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.<\/p>\n Other changes to the ACA exchanges could impact the provider, including the potential expiration of subsidies<\/a>. 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<\/a> on average from 2026 through 2034.<\/p>\n Volumes from patients on the exchanges represent about 8% of Tenet\u2019s 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,\u00a0CFO Sun Park said on the call with investors.<\/p>\n Sutaria said Tenet is focused on \u201chelping stakeholders realize again how important the exchanges are for families that utilize them.\u201d<\/p>\n \u201cI think the work is ongoing in that area. I think it\u2019s important, and I think it\u2019s important to more than just our industry,\u201d the CEO said.<\/p>\n Tenet\u2019s stock dropped about 15% after the call. In a Tuesday note, analysts from Jefferies said the decline was probably driven by investors\u2019 focus on policy impacts, executives\u2019 reluctance to provide insight into 2026 and Tenet\u2019s reduced volume guidance. Still, \u201cwe remain bullish on [Tenet],\u201d Jefferies analysts said.<\/p>\n","protected":false},"excerpt":{"rendered":"Listen to the article 5 min This audio is auto-generated. 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