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Tenet Healthcare (THC) Signs Multi-Year Deal with BCBSTX

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Tenet Healthcare Corporation (THC - Free Report) recently inked a deal with Blue Cross and Blue Shield of Texas (“BCBSTX”). Per the multi-year definitive agreement, patients enrolled with BCBSTX health insurance will have in-network access to Tenet Healthcare’s hospitals, employed physicians and outpatient centers across the state.

Investors have appreciated Tenet Healthcare’s inorganic growth efforts. Year to date, the stock has gained 25.6%, higher than 17.1% gained by the Zacks categorized Medical-Hospital industry. The stock also seems to be undervalued from certain aspects. Its Price to Sales ratio is pegged at 0.10, lower than the industry average of 0.73. The Price to Cash Flow ratio for Tenet Healthcare is 3.19, below the industry average of 5.47. Hence there is a possibility for the investors to facilitate the stock price ride high in the near future.

The company has been actively forming alliances in order to grow its verticals since 2010. In the last reported fourth quarter of 2016, Tenet Healthcare signed a three-year agreement to allow Centene members and its newly acquired unit – Health Net – access its services in 18 states. Lst quarter, Tenet Healthcare inked an agreement with UnitedHealth Group to renew and extend their relationship for four years.

Coming to the latest development, all the patients who own BCBSTX’s commercial and traditional PPO and HMO products will be able to benefit from the deal. The BCBSTX members covered under the agreement will also be entitled to avail the services of Tenet Healthcare’s most recent teaching hospitals and the Hospitals of Providence Transmountain Campus based in El Paso. Tenet Healthcare and BCBSTX will also have an accountable care arrangement covering more than 80,000 lives, served at a lower cost, increased efficiency and improved quality.

This agreement is likely to enhance opportunities for Tenet Healthcare as BCBSTX’s insured members are expected to contribute significantly to the company’s revenue base. Tenet Healthcare will also be able to boost its margin by serving the members with utmost efficiency.

Zacks Rank and Stocks to Consider

Tenet Healthcare presently carries Zacks Rank #5 (Strong Sell).

Better-ranked stocks from the medical sector include HCA Holdings, Inc. (HCA - Free Report) , Inogen Inc. (INGN - Free Report) and Avinger, Inc. (AVGR - Free Report) . While Inogen sports a Zacks Rank #1 (Strong Buy), the other two companies hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HCA Holdings delivered positive surprises in all of the last four quarters with an average beat of 10.16%.

Inogen posted positive surprises in three of the last four quarters with an average positive surprise of 49.08%.

Avinger delivered positive surprises in two of the last four quarters, the average beat being 4.35%.

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