We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tenet (THC) Divests Six Hospitals, Sustains Divestiture Spree
Read MoreHide Full Article
Tenet Healthcare Corporation (THC - Free Report) recently closed the divestitures of six hospitals and related operations based in California. Out of the total, four facilities and their related operations are located in Orange County and Los Angeles County, and have been divested to the academic health system of Orange County, UCI Health.
An agreement for the sale of the facilities, named Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical and Placentia-Linda Hospital, was inked at the very beginning of February 2024 after receiving a nod from the University of California Board of Regents. The transaction was likely to conclude in the spring of 2024, subject to customary regulatory approvals, clearances and closing conditions, and the divestiture was completed within the targeted period.
Tenet Healthcare is expected to receive proceeds of roughly $975 million, or approximately $800 million after-tax, out of the abovementioned transaction. It will support THC in paying off its debts. The company grappled with a significant long-term debt burden of $14.9 billion as of Dec 31, 2023, and interest expenses increased 1.2% year over year in 2023, thereby affecting THC’s profit levels.
A pre-tax book gain of around $500 million is likely to stem out of the transaction, which in turn, may positively impact THC’s income tax expense for 2024.
The remaining two facilities, among the six divested California hospitals, are situated in San Luis Obispo County and are known as Sierra Vista Regional Medical Center and Twin Cities Community Hospital. These, along with their related operations, were sold to the integrated health system of California, Adventist Health. A deal for their divestiture was inked in February 2024, which was also likely to be completed in the spring of 2024, subject to customary regulatory approvals, clearances and closing conditions, and the recent announcement implies compliance with the targeted period. It is expected to fetch roughly $550 million, or $450 million after-tax, proceeds to Tenet Healthcare.
The recent move reflects the sustenance of the active divestiture spree that THC has embarked on since the beginning of 2024. In February 2024, THC sold three of its hospitals and related operations in South Carolina to Novant Health and subsequently received after-tax proceeds of approximately $1.750 billion. Similar to the four Orange County and Los Angeles County hospitals, the proceeds derived from the sale of the South Carolina hospitals will serve the purpose of lowering the debt level of the company.
Through such divestitures, Tenet Healthcare exits service lines and gets rid of healthcare facilities that are no longer core to the long-term growth and synergy strategies. In this manner, THC's portfolio of healthcare facilities is refined and a greater amount of capital can be steered toward growing the business in areas where THC enjoys a strong presence, as well as in areas that provide a higher return on investment.
Shares of Tenet Healthcare have surged 78.6% in the past year compared with the industry’s 28.4% growth. THC currently carries a Zacks Rank #3 (Hold).
Medpace’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.42%. The Zacks Consensus Estimate for MEDP’s 2024 earnings indicates a 18.6% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 15.6% growth year over year. The consensus mark for MEDP’s 2024 earnings has moved 4.8% north in the past 60 days.
The bottom line of Zimmer Biomet outpaced earnings estimates in three of the last four quarters and matched the mark once, the average surprise being 4.99%. The Zacks Consensus Estimate for ZBH’s 2024 earnings indicates a 6.9% improvement from the prior year’s reported figure while the consensus mark for revenues suggests 4.9% growth year over year. The consensus mark for ZBH’s 2024 earnings has moved 1.5% north in the past 60 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 15.8% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 19.2% growth year over year. The consensus mark for DXCM’s 2024 earnings has moved 2.9% north in the past 60 days.
Shares of Medpace, Zimmer Biomet and DexCom have rallied 104.3%, 0.3% and 18.7%, respectively, in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Tenet (THC) Divests Six Hospitals, Sustains Divestiture Spree
Tenet Healthcare Corporation (THC - Free Report) recently closed the divestitures of six hospitals and related operations based in California. Out of the total, four facilities and their related operations are located in Orange County and Los Angeles County, and have been divested to the academic health system of Orange County, UCI Health.
An agreement for the sale of the facilities, named Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical and Placentia-Linda Hospital, was inked at the very beginning of February 2024 after receiving a nod from the University of California Board of Regents. The transaction was likely to conclude in the spring of 2024, subject to customary regulatory approvals, clearances and closing conditions, and the divestiture was completed within the targeted period.
Tenet Healthcare is expected to receive proceeds of roughly $975 million, or approximately $800 million after-tax, out of the abovementioned transaction. It will support THC in paying off its debts. The company grappled with a significant long-term debt burden of $14.9 billion as of Dec 31, 2023, and interest expenses increased 1.2% year over year in 2023, thereby affecting THC’s profit levels.
A pre-tax book gain of around $500 million is likely to stem out of the transaction, which in turn, may positively impact THC’s income tax expense for 2024.
The remaining two facilities, among the six divested California hospitals, are situated in San Luis Obispo County and are known as Sierra Vista Regional Medical Center and Twin Cities Community Hospital. These, along with their related operations, were sold to the integrated health system of California, Adventist Health. A deal for their divestiture was inked in February 2024, which was also likely to be completed in the spring of 2024, subject to customary regulatory approvals, clearances and closing conditions, and the recent announcement implies compliance with the targeted period. It is expected to fetch roughly $550 million, or $450 million after-tax, proceeds to Tenet Healthcare.
The recent move reflects the sustenance of the active divestiture spree that THC has embarked on since the beginning of 2024. In February 2024, THC sold three of its hospitals and related operations in South Carolina to Novant Health and subsequently received after-tax proceeds of approximately $1.750 billion. Similar to the four Orange County and Los Angeles County hospitals, the proceeds derived from the sale of the South Carolina hospitals will serve the purpose of lowering the debt level of the company.
Through such divestitures, Tenet Healthcare exits service lines and gets rid of healthcare facilities that are no longer core to the long-term growth and synergy strategies. In this manner, THC's portfolio of healthcare facilities is refined and a greater amount of capital can be steered toward growing the business in areas where THC enjoys a strong presence, as well as in areas that provide a higher return on investment.
Shares of Tenet Healthcare have surged 78.6% in the past year compared with the industry’s 28.4% growth. THC currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the Medical space are Medpace Holdings, Inc. (MEDP - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and DexCom, Inc. (DXCM - Free Report) . While Medpace sports a Zacks Rank #1 (Strong Buy) at present, Zimmer Biomet and DexCom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.42%. The Zacks Consensus Estimate for MEDP’s 2024 earnings indicates a 18.6% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 15.6% growth year over year. The consensus mark for MEDP’s 2024 earnings has moved 4.8% north in the past 60 days.
The bottom line of Zimmer Biomet outpaced earnings estimates in three of the last four quarters and matched the mark once, the average surprise being 4.99%. The Zacks Consensus Estimate for ZBH’s 2024 earnings indicates a 6.9% improvement from the prior year’s reported figure while the consensus mark for revenues suggests 4.9% growth year over year. The consensus mark for ZBH’s 2024 earnings has moved 1.5% north in the past 60 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 15.8% improvement from the prior year’s reported figure, while the consensus mark for revenues suggests 19.2% growth year over year. The consensus mark for DXCM’s 2024 earnings has moved 2.9% north in the past 60 days.
Shares of Medpace, Zimmer Biomet and DexCom have rallied 104.3%, 0.3% and 18.7%, respectively, in the past year.