Tenet Healthcare Corporation

Tenet reported second-quarter 2026 net operating revenues of $5.6 billion, consolidated adjusted EBITDA of $1.304 billion, and adjusted EBITDA margin of 23.2%. Adjusted EBITDA grew 16.3% year over year, and adjusted diluted EPS increased 52% to $6.12. USPI adjusted EBITDA was $542 million, up 8.8%, with a 39% margin; hospital adjusted EBITDA was $762 million, up 22%, with an 18% margin. Same-facility system-wide revenues at USPI grew 5%, net revenue per case rose 6.3%, and same-facility case volumes were down 1.2%. In hospitals, same-hospital inpatient adjusted admissions rose 2.6% and revenue per adjusted admission increased 3.3% year over year. Exchange revenues declined 17% year over year and represented about 5.5% of consolidated net operating revenues; exchange admissions were down about 13.5%. Tenet recognized $92 million of favorable out-of-period supplemental Medicaid revenue in Q2 versus $70 million in Q2 2025. Adjusted free cash flow was $444 million in the quarter, and the company had $2.1 billion of cash on hand at June 30, 2026 with no borrowings outstanding under its line of credit. For 2026, Tenet raised consolidated net operating revenue guidance to $21.9 billion to $22.5 billion, adjusted EBITDA guidance to $4.83 billion to $5.03 billion, USPI adjusted EBITDA guidance to $2.16 billion to $2.22 billion, hospital adjusted EBITDA guidance to $2.67 billion to $2.81 billion, and adjusted free cash flow after NCI to $1.825 billion to $2.055 billion. The company expects about $140 million of supplemental Medicaid program contributions in 2026, including about $20 million in the second half, and said it now expects to exceed $300 million in full-year 2026 M&A spend. Q3 2026 consolidated adjusted EBITDA is expected to be 23% to 24% of full-year adjusted EBITDA at the midpoint, and Q3 USPI adjusted EBITDA is expected to be 24% to 25% of full-year USPI adjusted EBITDA at the midpoint.

Saumya Sutaria said the company is exceeding goals because core volumes, same-store revenue growth, and expense execution are all strong. He emphasized that Tenet planned early for cost savings and is now seeing benefits from productivity, clinical operations improvements, and technology/AI-driven automation. His tone was constructive and confident, especially around the second half of the year, the USPI pipeline, and the company’s ability to manage through exchange and Medicaid uncertainty.

Sun Park highlighted the quarter’s margin strength, saying adjusted EBITDA margin was 23.2% overall, 39% at USPI, and 18% in hospitals. He said the company generated $444 million of adjusted free cash flow in Q2 and ended the quarter with $2.1 billion of cash and no revolver borrowings, while leverage was 2.33x EBITDA or 2.9x EBITDA less NCI. He also detailed the 2026 outlook raise, including revenue of $21.9 billion to $22.5 billion, adjusted EBITDA of $4.83 billion to $5.03 billion, and adjusted free cash flow after NCI of $1.825 billion to $2.055 billion, with about $150 million of tax payments tied to the Conifer transaction included in free cash flow guidance. Capital deployment remained centered on USPI M&A, hospital growth investments, buybacks, and selective debt management; the board also authorized a $2 billion increase in repurchase capacity.

Analysts focused on the drivers of margin expansion, the exchange enrollment decline, hospital revenue per adjusted admission, ASC volume trends, and capital allocation. Management said margin gains came from traditional efficiency work, clinical operations improvements like length-of-stay and throughput, and technology/AI automation, while exchange declines were roughly in line with expectations and were being offset by cost actions and growth initiatives. On the Q&A around exchanges, Tenet said the revenue drop translated into a roughly $65 million headwind in Q2 and that uninsured volumes rose on a roughly one-for-one basis with exchange declines. On capital allocation, management said buybacks remain attractive at current valuations, USPI M&A will stay a priority, hospital builds are being approached more cautiously, and the balance sheet has no near-term maturity pressure.