Tenet Posts Q4 Results Above Expectations, Braces for $250M ACA Subsidy Fallout

Higher acuity and favorable payer mix positions Tenet for 2026, but the expiration of Affordable Care Act subsidies is projected to damper earnings.

Tenet Healthcare wrapped up 2025 with financial momentum as it reported a fourth quarter full of growth, but leadership warned that a major policy shift will weigh on results in the year ahead.

For the quarter, the Franklin, Tennessee-based for-profit saw net operating revenues of $5.53 billion and net income of $371 million, with both figures up year-over-year from $5.07 billion and $318 million, respectively. Tenet executives pointed to sustained demand for higher-acuity services and continued margin discipline across its hospital operations and ambulatory surgery platform.

During the company’s earnings call with investors, CFO Sun Park stated that leadership was “very pleased” with the performance and the results were “above our expectations.” Still, much of the forward-looking discussion centered on the expiration of enhanced Affordable Care Act (ACA) premium tax credits, which had boosted enrollment in exchange plans in recent years.

Tenet is forecasting a 20% drop in ACA enrollment this year as subsidies disappear, particularly in states where the organization has significant exposure like Arizona, Michigan, and California. Meanwhile, it’s assumed that 10% to 15% of people will switch to alternate coverage. Exchange admissions made up 7.5% of Tenet’s total admissions and over 6.5% of its total revenues in the fourth quarter.

Park quantified the expected impact of the expiration of enhanced subsidy support as approximately a $250 million hit to Tenet’s 2026 adjusted EBITDA, primarily in the hospital segment.

Other major health systems have also shared their own estimates of losses due to ACA subsidy lapses, including HCA Healthcare, which last month projected a $600 million to $900 million hit.

For Tenet, its 2026 guidance now sits between $21.5 billion and $22.3 billion for net operating revenues, between $2.61 billion and $2.84 billion for net income, and between $4.49 billion and $4.79 billion for adjusted EBITDA.

“Clearly, there are a wide range of potential outcomes here, and we will continue to monitor enrollment levels and effectuation rates,” Park said.

CEO Saum Sutaria signaled confidence that Tenet’s diversified portfolio will help cushion the blow. The company’s ambulatory surgery arm, United Surgical Partners International (USPI), has less exposure to exchange coverage and continues to benefit from procedural growth and higher-acuity cases migrating to outpatient settings.

USPI posted 5.5% same-facility revenue growth in the fourth quarter and an increase of 1.6% in same-facility case volumes. Executives said USPI remains central to Tenet’s growth strategy in 2026, with an annual M&A target of about $250 million to expand the platform through acquisitions and new partnerships.

Tenet also highlighted its continued portfolio evolution, including the completed transaction with CommonSpirit Health it announced earlier this month that allows it to regain full ownership of its revenue cycle management arm, Conifer Health Solutions. Under the agreement, CommonSpirit will pay roughly $1.9 billion in installments over the next three years and Conifer will pay about $540 million to redeem CommonSpirit’s 23.8 percent equity stake, retroactive to January 1, 2026, while continuing to provide revenue cycle services to CommonSpirit through the rest of this year.

For full-year 2025, Tenet finished with net operating revenues of $21.31 billion, compared to $20.67 billion in the prior year, and net income of $1.41 billion, down from $3.2 billion in 2024.