Earnings call transcript: Tenet Healthcare beats Q3 2026 estimates, shares slip

Tenet Healthcare exceeded expectations for the third quarter of 2026, reporting adjusted earnings per share of $6.64 compared to analysts' estimate of $4.67, and revenue of $5.63 billion, surpassing the anticipated $5.49 billion. The company also increased its full-year adjusted EBITDA outlook to $5.05 billion to $5.2 billion. Despite the positive earnings report, Tenet's shares fell by 2.66%, trading at $261.35 in premarket trading.

This decline suggests that investors were analyzing the impact of one-time benefits and the sustainability of the company's outperformance. Adjusted EPS rose 80% year over year, while revenue increased by $140 million. Tenet raised its full-year 2026 adjusted EBITDA guidance and reported $1.1 billion in adjusted free cash flow for the quarter and $2.5 billion year-to-date.

The stock's valuation appears attractive, with a P/E ratio of 10.16 and a PEG ratio of 0.15. Management highlighted strong execution across hospital operations and the ambulatory surgery segment USPI, noting that core adjusted EBITDA grew 10% year-over-year, excluding $147 million in one-time items related to contract transitions.

USPI drove growth with a 9% increase in adjusted EBITDA and a 4.5% rise in same-facility revenues. Hospitals saw a 3.2% increase in adjusted admissions and an 11% rise in adjusted EBITDA, excluding contract transition benefits. Tenet continues to benefit from higher-acuity care, pricing strength, and operational efficiency. The company raised its full-year net operating revenue outlook to $22.05 billion to $22.45 billion and expects adjusted free cash flow to range from $1.925 billion to $2.155 billion.

Management expects USPI to maintain same-store revenue growth and margin expansion, while the hospital segment should benefit from continued performance.