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Tenet Healthcare (THC) to Sell Hospitals to Refine Portfolio
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Tenet Healthcare Corporation (THC - Free Report) inked a definitive deal to divest its two hospitals, affiliated physician practices and related operations to the California-based nonprofit, integrated health system, Adventist Health. The hospitals, named Sierra Vista Regional Medical Center and Twin Cities Community Hospital, serve the communities of San Luis Obispo county, across which Adventist Health has a widespread presence.
Subject to customary regulatory approvals, clearances and closing conditions, the transaction is likely to conclude in the spring of 2024 and fetch after-tax proceeds of $450 million to Tenet Healthcare. A pre-tax book gain of $275 million is also expected to stem out of the transaction.
Conifer Health Solutions, presently a part of the Hospital Operations and Services unit of Tenet Healthcare as a result of the recent segment reorganization, entered into a deal to offer hospital and physician revenue cycle services to Adventist Health. By leveraging enhanced technologies and AI-driven workflows, Conifer will look forward to enhancing cash flows and boosting patient engagement for Adventist Health.
The recent move bears testament to Tenet Healthcare’s sincere efforts to optimize its hospitals and other healthcare facilities portfolio. THC resorts to divestitures of healthcare facilities, which it no longer considers core to its long-term growth and synergy strategies. These measures open avenues for the healthcare services provider to direct more capital on business areas that fetch higher returns and subsequently, boost profitability. They are also meant to improve cash flows and lower the debt level of the company.
Tenet Healthcare has remained quite active on the divestiture front so far this year. In February 2024, it entered into a definitive agreement for divesting its four hospitals and related operations, situated in Orange County and Los Angeles County, to UCI Health. The transaction is also likely to close in the spring of 2024 and provide after-tax proceeds of roughly $800 million to THC. The proceeds will be utilized to reduce the debt level of the company and subsequently, its interest expenses.
Additionally, on the same day of disclosing the divestiture deal with UCI Health, Tenet Healthcare concluded the divestiture of three South Carolina hospitals and related operations to Novant Health within the targeted timeline of the first quarter of 2024. Even after divesting the facilities to UCI Health and Novant, their operations will continue to benefit from comprehensive revenue cycle management services provided by Conifer. This, in turn, is expected to fetch higher revenues to the Hospital Operations and Services unit in the days ahead. Other revenues, which include revenues from revenue cycle management services, reported as part of the abovementioned segment improved 2.6% year over year in 2023.
Shares of Tenet Healthcare have jumped 58.2% in the past year compared with the industry’s 25.6% growth. THC currently carries a Zacks Rank #3 (Hold).
HCA Healthcare’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 9.78%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a 7.8% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 6.2% growth year over year. The consensus mark for HCA’s 2024 earnings has moved 0.6% north in the past seven days.
The bottom line of Addus HomeCare outpaced earnings estimates in each of the last four quarters, the average surprise being 9.52%. The Zacks Consensus Estimate for ADUS’ 2024 earnings indicates a 5.9% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 7.7% growth year over year. The consensus mark for ADUS’ 2024 earnings has moved 2.3% north in the past seven days.
DexCom’s earnings surpassed estimates in each of the last four quarters, the average surprise being 32.81%. The Zacks Consensus Estimate for DXCM’s 2024 earnings indicates a 14.5% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 19% growth year over year. The consensus mark for DXCM’s 2024 earnings has moved 1.8% north in the past 30 days.
The HCA Healthcare stock has rallied 27.8% in the past year. However, shares of Addus HomeCare and DexCom have declined 13.3% and 4.2%, respectively, in the same period.
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Tenet Healthcare (THC) to Sell Hospitals to Refine Portfolio
Tenet Healthcare Corporation (THC - Free Report) inked a definitive deal to divest its two hospitals, affiliated physician practices and related operations to the California-based nonprofit, integrated health system, Adventist Health. The hospitals, named Sierra Vista Regional Medical Center and Twin Cities Community Hospital, serve the communities of San Luis Obispo county, across which Adventist Health has a widespread presence.
Subject to customary regulatory approvals, clearances and closing conditions, the transaction is likely to conclude in the spring of 2024 and fetch after-tax proceeds of $450 million to Tenet Healthcare. A pre-tax book gain of $275 million is also expected to stem out of the transaction.
Conifer Health Solutions, presently a part of the Hospital Operations and Services unit of Tenet Healthcare as a result of the recent segment reorganization, entered into a deal to offer hospital and physician revenue cycle services to Adventist Health. By leveraging enhanced technologies and AI-driven workflows, Conifer will look forward to enhancing cash flows and boosting patient engagement for Adventist Health.
The recent move bears testament to Tenet Healthcare’s sincere efforts to optimize its hospitals and other healthcare facilities portfolio. THC resorts to divestitures of healthcare facilities, which it no longer considers core to its long-term growth and synergy strategies. These measures open avenues for the healthcare services provider to direct more capital on business areas that fetch higher returns and subsequently, boost profitability. They are also meant to improve cash flows and lower the debt level of the company.
Tenet Healthcare has remained quite active on the divestiture front so far this year. In February 2024, it entered into a definitive agreement for divesting its four hospitals and related operations, situated in Orange County and Los Angeles County, to UCI Health. The transaction is also likely to close in the spring of 2024 and provide after-tax proceeds of roughly $800 million to THC. The proceeds will be utilized to reduce the debt level of the company and subsequently, its interest expenses.
Additionally, on the same day of disclosing the divestiture deal with UCI Health, Tenet Healthcare concluded the divestiture of three South Carolina hospitals and related operations to Novant Health within the targeted timeline of the first quarter of 2024. Even after divesting the facilities to UCI Health and Novant, their operations will continue to benefit from comprehensive revenue cycle management services provided by Conifer. This, in turn, is expected to fetch higher revenues to the Hospital Operations and Services unit in the days ahead. Other revenues, which include revenues from revenue cycle management services, reported as part of the abovementioned segment improved 2.6% year over year in 2023.
Shares of Tenet Healthcare have jumped 58.2% in the past year compared with the industry’s 25.6% growth. THC currently carries a Zacks Rank #3 (Hold).
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Stocks to Consider
Some better-ranked stocks in the Medical space are HCA Healthcare, Inc. (HCA - Free Report) , Addus HomeCare Corporation (ADUS - Free Report) and DexCom, Inc. (DXCM - Free Report) . HCA Healthcare sports a Zacks Rank #1 (Strong Buy) at present, and Addus HomeCare and DexCom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCA Healthcare’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 9.78%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a 7.8% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 6.2% growth year over year. The consensus mark for HCA’s 2024 earnings has moved 0.6% north in the past seven days.
The bottom line of Addus HomeCare outpaced earnings estimates in each of the last four quarters, the average surprise being 9.52%. The Zacks Consensus Estimate for ADUS’ 2024 earnings indicates a 5.9% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 7.7% growth year over year. The consensus mark for ADUS’ 2024 earnings has moved 2.3% north in the past seven days.
DexCom’s earnings surpassed estimates in each of the last four quarters, the average surprise being 32.81%. The Zacks Consensus Estimate for DXCM’s 2024 earnings indicates a 14.5% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 19% growth year over year. The consensus mark for DXCM’s 2024 earnings has moved 1.8% north in the past 30 days.
The HCA Healthcare stock has rallied 27.8% in the past year. However, shares of Addus HomeCare and DexCom have declined 13.3% and 4.2%, respectively, in the same period.