Overperformances across each side of Tenet Healthcare’s business have allowed the company to escape Affordable Care Act health insurance exchange-related hits that buried its for-profit peers.
In second-quarter earnings numbers released late Thursday and discussed during a Friday call, the hospital and ambulatory surgery center (ASC) operator touted substantial same-store revenue growth and earnings that “well exceed the high end” of its guidance range.
The performance also topped Wall Street’s consensus estimates for the quarter with revenues of $5.62 billion, a roughly $180 million beat; net income of $826 million ($9.84 per diluted share); adjusted EBITDA of $1.3 billion; and adjusted diluted earnings per share of $6.12, a beat of $1.86.
Each of these also handily outpaced Tenet’s numbers from Q2 2025, and along with a strong first quarter prompted executives to boost 2026 guidance on “the fundamental strength in our businesses and our expectations for continued growth into the second half of the year,” CEO Saum Sutaria, M.D., told analysts.
Tenet now expects revenues to land around $300 million higher, and for adjusted EBITDA around $295 million higher. The latter reflects $97 million of “fundamental outperformance” in the first half of the year and another $58 million expected in the back half, plus $140 million more in supplemental Medicaid revenue.
“We are operating in a dynamic environment characterized by payer mix shifts and insurance enrollment uncertainty in both the exchanges and Medicaid,” Sutaria said Friday. “Despite these challenges, the growth and expense initiatives that we had planned and have implemented and continue to focus on enabled us to deliver a clean quarter. We are optimistic about the rest of the year.”
Executives described those expense initiatives and other margin-improvement efforts as a blend of efforts across different domains within the organization—efficiency and productivity strategies, clinical operation efforts such as length of stay management, and technology-driven gains focused on automation and AI.
Tenet wasn’t fully immune from issues on the exchanges, which executives acknowledged has increased in impact from Q1 to Q2. Revenues from these patients dropped 17% year over year in the second quarter and volumes were down about 13.5%, which comprised a $65 million headwind “roughly in line with our expectations,” Sutaria said. He echoed commentary from other health system leaders that the diminished volumes are converting “into uninsured on a pretty much one-to-one basis,” and that each of these trends is expected to continue through the end of the year.
Still, those impacts were outpaced by the rest of Tenet’s business. The hospital segment posted a same-facility inpatient adjusted admission increase of 2.6%, and notably a revenue per adjusted admission gain of 3.3%, “reflecting the work we do to grow acuity as well as an increase in supplemental Medicaid revenues, partially offset by the impact of reduced exchange volumes,” Sun Park, Tenet's chief financial officer, said during the earnings call.
Included in the quarter was $92 million of out-of-period Medicaid revenues tied to prior periods, which Park noted was not included in Tenet’s initial guidance for the year.
“I would note that we had a clean beat in the quarter even without these incremental Medicaid revenues,” he added.
Within United Surgical Partners International, the high-margin ambulatory care unit which as of the quarter’s close holds ownership interests in 538 ASCs and 26 surgical hospitals, same-facility revenues grew 5%, net revenue per case increased 6.3% and same-facility case volume dipped 1.2%, “reflecting our high acuity focus,” Park said.
“Additionally, based on the ambulatory surgical acquisitions that we have made so far this year and the robust pipeline of deals that we see ahead, we now expect to exceed $300 million in full year M&A spend in 2026,” Sutaria said of the company’s ongoing effort to grow its ambulatory business.
Tenet’s for-profit peers have proven to be more heavily affected by turmoil on the exchanges. Both Community Health Systems and HCA Healthcare have reported higher uninsured volumes than they’d predicted earlier this year, leading each company to revise their full-year guidance downward in anticipation of continued payer mix pressure.
Investors are rewarding Tenet for bucking the quarter’s trend, with its shares trading more than 20% above open as of midday Friday. The company also shared word of a newly authorized $2 billion share repurchase program, pushing share prices higher.