Hospitals under pressure? This surgery-center chain is up 40.8% since April

Tenet Healthcare, a major hospital operator, has seen its stock rise by 40.8% since April, as a ProPicks AI strategy highlights its potential. The company manages over 500 surgery centers spread across 37 states, which are seeing increased demand for routine procedures. This shift is driving growth for Tenet as outpatient surgery centers offer higher margins than traditional hospital operations.

In Q3, USPI, Tenet's ambulatory surgery network, contributed over a quarter of the company's revenue and nearly half of its adjusted EBITDA. The company's adjusted earnings per share beat consensus by 42%, and management raised its guidance for the year. Tenet has been expanding its outpatient business, while also benefiting from higher margins in surgery centers.

Despite challenges like rising nursing wages and uneven patient admissions, the company's business model is improving. ProPicks AI's Healthcare Heroes strategy has also included other healthcare companies showing double-digit gains since entry. The stock trades at 12.3 times forward earnings, with a favorable EV/EBITDA and high free cash flow yield.

Management projects continued EBITDA growth, including a rebound from the recent loss of Conifer EBITDA contribution. The shares are rated a buy by 19 of 23 analysts.