Strong performance across its hospital and ambulatory businesses during the third quarter led Tenet Healthcare to raise its 2026 earnings guidance by 4%, with executives asserting that the core strength of operations will yield continued earnings growth in 2027 despite policy headwinds.
The for-profit this week reported $5.63 billion in net operating revenues for the quarter, not counting $646 million in contract termination revenue tied to its divorce with CommonSpirit Health that was recognized during the quarter. The tally was 6.5% above the same period last year and above the $5.47 billion consensus estimate, per Zacks Investment Research.
The bigger standouts were its $6.64 adjusted earnings per share, well above the prior year’s $3.70 earnings per share and more than 40% above the consensus estimate of $4.60 per share. Further, executives highlighted third-quarter adjusted EBITDA of $1.36 billion (about 16% above the street, per Stephens), about 10% year-over-year growth when excluding $147 million in one-time items stemming from the shifting timing of its CommonSpirit contract winddown.
Based on those results, the health system boosted 2026 adjusted EBITDA guidance by $195 million, building on the prior increase issued during the summer. CEO Saum Sutaria, M.D., told analysts during a Thursday morning call that the change “is supported by our continued expectations for strong fundamental performance as well as the one-time items in the back half of the year. Notably, over 40% of our total guidance increase for this year is from fundamental outperformance.”
For the quarter, executives generally described rising hospital activity and continued expense reductions that outpaced industry-wide weak surgical volumes and payer mix challenges.
Specifically, same-hospital admissions rose 2.8% year over year, adjusted admissions rose 3.2% and hospital surgeries dipped 1.1%. Net hospital revenues rose 6.1% year over year while revenue per adjusted admission rose a narrower 0.2%, as “continued pricing strength” and volumes outpaced 18% declines in exchange admissions and revenues, executives said.
Adjusted EBITDA for the hospitals business grew from last year’s $607 million to $818 million (including the $147 million one-time items). The segment also recognized $32 million more in favorable pre-tax impact tied to supplemental Medicaid payments compared to the prior year, or $356 million in total.
In Tenet’s high-margin ambulatory segment, same-facility net patient service revenues rose 4.5% year over year despite a 1.5% drop in same-facility cases. Same-facility net revenue per case rose 6.1%, which executives said reflects the company’s ongoing strategic push to capture high-acuity patients. Adjusted EBITDA rose 9.1% year over year to $537 million.
On surgical numbers, which have been a sore spot for systems over the last few months, Sutaria said the company was pleased that both sides of the business were performing “generally consistent or better than we’re seeing in the general industry. … I would not say this is a gangbusters surgical environment right now.”
The ambulatory surgery market in particular has been heating up as health systems look to flesh out their networks and meet the calls for care in lower-cost settings. Sutaria, in response to an analyst question, acknowledged this week’s news that Bon Secours Mercy Health would be acquiring Surgery Partners in a $5.7 billion deal. Taken alongside the summer’s $3.9 billion AmSurg close by Ascension, he said that Tenet’s platform remains the standout for differentiated earnings growth. What’s more, the “attractive valuation of our equity, relative to what are some reasonable valuations of … ASC-hospital combination platforms” gives the company additional reason to repurchase its shares, he said.
“Look, in terms of the two recent ASC acquisitions, you know, I personally extended my congratulations to both new owners,” he said. This is an important part of the market and we have a lot of work to do together from an advocacy perspective in order to support and build the growing interest in ambulatory surgery, maintain high quality and safety, and also ensure that regulators understand the benefits that this portion of the surgical sector is providing to the cost of healthcare going forward. And so I look forward to those collaborations with those leaders.”
On concerns of dealmaking competition, Sutaria noted that the company was “very successful” in new ASC acquisitions during the quarter and that “the vast majority of which were not competitive processes, but came exclusively to [us] in those processes.”
As for next year, executives said Tenet is expected to grow its overall EBITDA. That’s after excluding the impacts of the CommonSpirit contract termination, and taking into account “the current known regulatory frameworks” such as those outlining Medicaid work requirements and supplemental payments.
Tenet’s stock was trading about 1% below the day’s open as of early afternoon. Its report comes after other large for-profits like HCA Healthcare and Universal Health Services outlined persistent payer mix and surgery concerns as well as tepid early guidance for 2027.