01—Abstract
Summary
Summary of the 10-K filed February 18, 2025. Cited figures are marked; the original filing is the authoritative source.
Tenet Healthcare Corporation (THC) reported net operating revenues of $20.665 billiona for 2024, up $117 million, or 0.6%, from $20.548 billion in 2023.
Operating income rose to $5.956 billionb from $2.510 billion, driven primarily by $2.916 billion of net gains on sales, consolidation and deconsolidation of facilities, mainly from the sale of the Divested Hospitals (six California hospitals, three South Carolina hospitals and five Alabama hospitals). Net income available to Tenet common shareholders was $3.200 billion, compared with $611 million in 2023, and diluted earnings per share were $32.70 versus $5.71. Adjusted EBITDA, a non-GAAP measure, increased to $3.995 billion from $3.541 billion, and the filing states an Adjusted EBITDA margin of 19.3%, up from 17.2%.
The Hospital Operations segment's net operating revenues declined $552 millionc, or 3.3%, as reported, but rose $1.127 billion, or 8.1%, excluding the divested hospitals, which the company attributes to a more favorable payer mix, higher patient volumes and acuity, Medicaid supplemental revenue growth and negotiated commercial rate increases. The Ambulatory Care segment grew net operating revenues by $669 million, or 17.3%, driven by acquisitions and same-facility growth. Cash and cash equivalents ended the year at $3.019 billion, and net cash provided by operating activities was $2.047 billion, down from $2.374 billion.
Long-term debt was $13.173 billiond, and the filing reports a ratio of total long-term debt, net of cash, to Adjusted EBITDA of 2.54x. The company repurchased $672 million of common stock during 2024 and has $1.376 billion remaining under its $1.500 billion program authorized in July 2024. Investors should weigh the reported earnings boost, which depends heavily on one-time divestiture gains, against the underlying operating trends.
Risk factors highlighted include reliance on managed care payers (70% of Hospital Operations net patient service revenues), Medicaid funding pressures, labor costs and union activity, cybersecurity exposure following a 2022 incident, and the expiration at the end of 2025 of certain Affordable Care Act subsidy provisions. Deloitte & Touche LLP issued an unqualified opinion on the financial statements and on internal control over financial reporting, which excluded 41 ASCs acquired in March 2024.
02—Key points
Key Highlights
- Net operating revenues of $20.665 billion for 2024, up $117 million, or 0.6%, from $20.548 billion in 2023.
- Operating income of $5.956 billion versus $2.510 billion, including $2.916 billion of net gains on sales, consolidation and deconsolidation of facilities, primarily from the Divested Hospitals.
- Net income available to Tenet common shareholders of $3.200 billion ($32.70 diluted EPS) versus $611 million ($5.71) in 2023.
- Adjusted EBITDA of $3.995 billion, with an Adjusted EBITDA margin of 19.3% versus 17.2% in 2023.
- Net cash provided by operating activities of $2.047 billion, down from $2.374 billion; cash and cash equivalents of $3.019 billion at year-end.
- Long-term debt of $13.173 billion; ratio of long-term debt, net of cash, to Adjusted EBITDA of 2.54x.
- Ambulatory Care net operating revenues up $669 million, or 17.3%, and 49 hospitals operated at December 31, 2024 after divesting 14 hospitals during 2024; $672 million used for share repurchases with $1.376 billion remaining under the 2024 program.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 18, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $20.68B$20.56B | +0.5% |
| Operating Income | $5.96B$2.51B | +137.3% |
| Net Income | $3.20B$611.00M | +423.7% |
| EPS (Basic) | $33.02$6.01 | +449.4% |
| EPS (Diluted) | $32.70$5.71 | +472.7% |
| Shares Outstanding (Basic) | 96.90M101.64M | −4.7% |
| Shares Outstanding (Diluted) | 97.88M104.80M | −6.6% |
05—Questions
Frequently Asked Questions
How much of the 2024 earnings improvement came from one-time divestiture gains?
The filing reports $2.916 billion of net gains on sales, consolidation and deconsolidation of facilities in 2024, compared with $23 million in 2023. These gains, mainly from the sale of the Divested Hospitals, account for most of the increase in operating income from $2.510 billion to $5.956 billion.
How did the core hospital business perform after excluding divested facilities?
Excluding the sales of the Divested Hospitals, Hospital Operations net operating revenues increased $1.127 billion, or 8.1%, in 2024 compared with 2023. Management attributes this to a more favorable payer mix, higher patient volumes and acuity, growth in Medicaid supplemental revenue and negotiated commercial rate increases.
What is the company's exposure to managed care and government payers?
For 2024, approximately 70% of Hospital Operations net patient service revenues came from managed care payers, and the top 10 managed care payers generated 71% of managed care net patient service revenues. Medicare accounted for about 15% and Medicaid about 10% of net patient service revenues, excluding managed care programs.
Why did operating cash flow decline in 2024?
Net cash provided by operating activities fell to $2.047 billion from $2.374 billion. The filing cites income tax payments that were $1.028 billion higher in 2024, partly offset by lower interest payments of $31 million and other working capital timing. The filing notes $855 million of income tax payments arose from the Divested Hospital sales.
What are the main risks highlighted for future periods?
The filing highlights potential expiration of certain Affordable Care Act subsidy provisions at the end of 2025, pressure on Medicaid funding in several states, labor cost increases and union activity, continuing cybersecurity threats following a 2022 incident, and the risk that future acquisitions or divestitures may not perform as expected. It also notes the TEAM bundled payment model beginning January 1, 2026.
06—Continue