The health system reported favorable second quarter results, but investor worries around reduced volumes and policy impacts remain.
As questions swirl around providers’ ability to overcome political and economic shifts, Tenet Healthcare increased its full-year forecast on the back of strong second quarter earnings.
The health system’s financial performance was driven by a focus on higher-acuity patients, improved payer mix, and same-store revenue growth. Still, Tenet leadership was evasive when pressed by investors on forward-facing concerns in an earnings call.
For the quarter, Tenet reported net operating revenue of $5.3 billion and net income of $288 million, both increases from the $5.1 billion and $259 million, respectively, recorded in 2024.
As a result, the hospital operator raised its 2025 outlook, saying it now expects net operating revenues between $20.95 billion and $21.25 billion on net income of $1.3 billion to $1.4 billion, up from its previous estimate of $20.6 billion to $21 billion on $1.1 billion to $1.2 billion in income.
Tenet’s ambulatory care segment, led by United Surgical Partners International, delivered $1.27 billion in operating revenue for an 11.3% increase over the same period last year, which the organization attributed to net revenue per case growth, acquisitions of facilities, and increased service lines.
Meanwhile, Tenet’s net patient revenue from the hospital segment reached $4 billion, marking an increase of 0.9% from last year as same-hospital admissions rose 1.6% and adjusted admissions ticked up 0.4%.
However, outpatient visits decreased 3.2%, emergency room visits (inpatient and outpatient) declined 4.7%, and hospital surgeries fell 1.7% year-over-year.
“I don’t think it’s worth making anything of one single quarter, especially when you have seasonal trends and quarter to quarter trends and ramp on and ramp off of respiratory illness and other things,” Tenet CEO Saum Sutaria said of the drop in volume on the call with investors. “I think this will play itself out over time. The underlying demand environment when you compare it to a multiyear basis still seems strong to me.”
When asked about the potential impact of recent policy changes, including cuts to exchange subsidies and Medicaid, Sutaria took a careful stance. He acknowledged that changes in state provider taxes and Medicaid funding included in the One Big Beautiful Bill Act could pose challenges, but added those impacts are several years away.
Sutaria noted ongoing efforts to push back on parts of the legislation, though future outcomes remain “an area of significant uncertainty.”
As part of the same exchange line, Sutaria emphasized Tenet’s focus on lobbying to renew Affordable Care Act marketplace subsidies. For the second quarter, the hospital operator reported a year-over-year jump of 23% in exchange admissions and an increase of 28% in revenues from the exchanges, CFO Sun Park told investors.
Sutaria stressed these subsidies are crucial for low-income and small-business populations, especially in red states, and are an important part of Tenet’s payer mix, calling them “a critical safety net” and saying preserving them is “the most important lobbying area right now.”
Tenet leadership reiterated that current operational strengths and advocacy efforts are intended to help offset policy changes that lie ahead.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Tenet Healthcare raised its full-year financial outlook following a second quarter in which it reported $5.3 billion in revenue and $288 million in net income.
Growth was driven by higher-acuity care, better payer mix, and strong ambulatory performance, though multiple hospital volume indicators declined.
Leadership avoided making predictions on policy impacts, while emphasizing lobbying efforts to preserve ACA subsidies amid looming legislative uncertainty.