Tenet Healthcare profit jumps, raises outlook on strong cash flow

Tenet Healthcare’s first quarter showed a company leaning harder on cash flow, ambulatory surgery and tight cost control to protect margins. Net income available to common shareholders jumped to $702 million, or $8.01 a diluted share, from $406 million, or $4.27 a share, a year earlier, while net operating revenues rose to $5.368 billion from $5.223 billion.

The Dallas-based hospital operator kept its adjusted EBITDA outlook for 2026 at $4.485 billion to $4.785 billion after producing $1.162 billion in adjusted EBITDA for the quarter, essentially flat from $1.163 billion a year earlier. The margin was 21.6%. Adjusted diluted earnings per share increased 10.6% to $4.82. Operating cash flow more than doubled to $1.641 billion, from $815 million, and adjusted free cash flow climbed to $978 million from $678 million.

The quarter was flattered by items tied to CommonSpirit Health, including about $40 million of favorable non-recurring pre-tax impact from previously deferred revenue and $413 million of revenue tied to an early contract conclusion. Tenet had also booked a $40 million favorable pre-tax Medicaid supplemental revenue effect in the prior-year quarter that did not recur. Even with those swings, the company said same-facility revenue growth and expense discipline were partly offset by an unfavorable payer mix from lower exchange admissions.

The clearest growth engine remained outpatient care. Tenet said the hospital segment generated $678 million of adjusted EBITDA, while United Surgical Partners International produced $484 million, up 6.1% from a year earlier and equal to 22% of full-year guidance. The company ended 2025 with ownership interests in 533 ambulatory surgery centers and 26 surgical hospitals, compared with 50 acute care and specialty hospitals across eight states, underscoring how central same-day procedures have become to its strategy.

Chief Executive Saum Sutaria said the company continued to support physician partners while pursuing a high-acuity strategy and growth through acquisitions. In the quarter, Tenet bought seven ambulatory surgery centers for $125 million and opened three de novo centers, putting half of its targeted annual spend into the books early. That expansion matters beyond Tenet’s own earnings: outpatient care can be less capital-intensive than traditional hospital services, but it also tends to intensify consolidation in local markets as larger systems absorb more referral volume and negotiating power.

Tenet’s CommonSpirit transaction, announced Feb. 2, added another layer to the shift. CommonSpirit agreed to pay about $1.9 billion to Tenet over three years, plus a separate $540 million redemption payment tied to its 23.8% stake in Conifer Health Solutions, with Conifer continuing to support CommonSpirit through the end of 2026. After winter storms and vendor cyberattack uncertainty disrupted some operations, Tenet still emerged with enough cash and margin momentum to hold guidance, a sign the company sees its mix of hospitals, ambulatory centers and services businesses as resilient even in a volatile health-care market.