TENET HEALTHCARE CORP

Tenet Healthcare Corporation is a diversified healthcare services company operating an expansive, nationwide care delivery network through direct and indirect subsidiaries, as well as downstream partnerships and joint ventures. The company's business is organized into two separate reporting segments: Hospital Operations and Services and Ambulatory Care. At December 31, 2025, the Hospital Operations segment was comprised of 50 acute care and specialty hospitals, a network of employed physicians, and 132 outpatient facilities, including urgent care centers, imaging centers, off-campus hospital emergency departments and micro-hospitals. The Ambulatory Care segment, through USPI Holding Company, Inc., held ownership interests in 533 ambulatory surgery centers and 26 surgical hospitals in 37 states at December 31, 2025.

The company believes its hospitals and outpatient facilities compete within local areas and regions on the basis of many factors, including quality of care, location and ease of access, the scope and breadth of services offered, reputation, and the caliber of the facilities, equipment and employees. Some competing healthcare facilities are owned by tax-supported government agencies, and many others are owned by not-for-profit organizations that may have financial advantages not available to Tenet's facilities, including support through endowments, charitable contributions and tax revenues, access to tax-exempt financing, exemptions from sales, property and income taxes, and discounted prescription drug pricing. In recent years, the number of freestanding specialty hospitals, surgery centers, EDs, imaging centers and UCCs in the geographic areas where Tenet operates has increased significantly, with some of these facilities being physician-owned. The company also faces competition from system-affiliated hospitals and healthcare companies, as well as health insurers and private equity companies seeking to acquire providers.

Tenet generates revenue primarily through patient care services provided at its hospitals and outpatient facilities, with net patient service revenues derived from a variety of sources including managed care payers, the federal Medicare program, state Medicaid programs, indemnity-based health insurance companies, and uninsured patients. For the year ended December 31, 2025, approximately 70%, or $9.696 billion ¹, of the company's net patient service revenues for the hospitals and related outpatient facilities in its Hospital Operations segment was attributable to managed care payers, including Medicare and Medicaid managed care programs. The company also generates revenue through revenue cycle management and value-based care services provided to hospitals, health systems, physician practices, employers and other clients through Conifer Health Solutions, LLC, and through management and administrative services revenues from the facilities USPI operates through management services contracts, usually computed as a percentage of each facility's net revenues.

The Hospital Operations segment's net operating revenues were $16.138 billion ² for the year ended December 31, 2025, compared to $16.141 billion ³ for the year ended December 31, 2024. For the year ended December 31, 2025, approximately 15% and 11% of the company's net patient service revenues for the hospitals and related outpatient facilities in its Hospital Operations segment were from the Medicare program and various state Medicaid programs, respectively, in each case excluding Medicare and Medicaid managed care programs. The segment also includes 132 outpatient centers at December 31, 2025, primarily freestanding UCCs, provider-based and freestanding imaging centers, off-campus hospital EDs and micro-hospitals, with approximately 74% of these outpatient centers located in Arizona and Texas. Additionally, the segment provides revenue cycle management and value-based care services to approximately 600 Tenet and non-Tenet hospitals and other clients nationwide, with Tenet and CommonSpirit Health facilities representing approximately 44% of these clients.

The Ambulatory Care segment's net operating revenues were $5.172 billion ⁴ for the year ended December 31, 2025, compared to $4.534 billion ⁵ for the year ended December 31, 2024. At December 31, 2025, USPI held ownership interests in 533 ASCs and 26 surgical hospitals in 37 states. USPI's facilities offer a range of procedures and service lines including orthopedics, total joint replacement, spinal and other musculoskeletal procedures, gastroenterology, pain management, otolaryngology, ophthalmology, and urology. During the year ended December 31, 2025, the company acquired controlling ownership interests in 27 ASCs and one surgical hospital, and a noncontrolling ownership interest in one additional ASC; during the same period, the company also increased its ownership interests in nine ASCs sufficient to consolidate them and opened six de novo ASCs.

In September 2025, the company opened the newly constructed, 54-bed Florida Coast Medical Center in Port St. Lucie, Florida. In November 2025, the company executed a new senior secured revolving credit facility and concurrently terminated its then-existing facility, and also finalized an amendment of its letter of credit facility. During the three months ended December 31, 2025, the company issued $1.500 billion ⁶ aggregate principal amount of its 5.500% senior secured notes due on November 15, 2032 and $750 million ⁷ aggregate principal amount of its 6.000% senior notes due on November 15, 2033, using the net proceeds together with cash on hand to redeem all $1.500 billion ⁸ aggregate principal amount outstanding of its 6.250% senior secured second lien notes due February 2027 and redeem $750 million ⁹ of the then $2.500 billion aggregate principal amount outstanding of its 6.125% senior notes due October 2028. In the year ended December 31, 2025, the company repurchased $1.386 billion ¹⁰ of its common stock pursuant to its share repurchase program, and at December 31, 2025, there was $1.490 billion ¹¹ available under this program for future repurchases. In January 2026, the company completed a strategic transaction with CommonSpirit Health that allowed it to return to full ownership of Conifer Health Solutions effective January 1, 2026, with CommonSpirit Health paying an aggregate amount equal to $1.900 billion ¹² in annual installments over the next three years.

Consolidated net operating revenues increased by $635 million ¹³, or 3.1%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, reaching $21.310 billion ¹⁴. Net income available to Tenet Healthcare Corporation common shareholders was $1.407 billion ¹⁵ for the year ended December 31, 2025, compared to $3.200 billion ¹⁶ for the prior year. Diluted earnings per share were $15.49 ¹⁷ for the year ended December 31, 2025, compared to $32.70 ¹⁸ for the year ended December 31, 2024. Net cash provided by operating activities was $3.540 billion ¹⁹ in the year ended December 31, 2025 compared to $2.047 billion ²⁰ in the year ended December 31, 2024.

The company continues to focus on opportunities to expand its Ambulatory Care segment through acquisitions, organic growth in physician relationships and service lines, construction of new outpatient centers and strategic partnerships. Management believes USPI's ASCs and surgical hospitals offer many advantages to patients and physicians, including greater affordability, predictability, flexibility and convenience, and due in part to advancements in surgical techniques, medical technology and anesthesia, as well as the lower cost structure and greater efficiencies attainable at a specialized outpatient site, the company believes the volume and complexity of surgical cases performed in an outpatient setting will continue to increase over time. Historically, the company's outpatient services have generated significantly higher margins than inpatient services.

The company remains committed to better positioning its hospitals and competing more effectively by focusing on driving performance through operational effectiveness, investing in its physician enterprise particularly its specialist network, enhancing patient and physician satisfaction, growing higher-demand clinical service lines, expanding patient and physician access, and optimizing its portfolio of assets. In September 2025, the company opened the newly constructed, 54-bed Florida Coast Medical Center in Port St. Lucie, Florida, which offers specialized services including advanced cardiac care, diagnostic services, an emergency care department, general surgery, neurosciences, orthopedics, robotics and urology. The company also continues to focus on improving the customer care experience by establishing networks of physicians and facilities that provide convenient access to services across the care continuum, expanding service lines aligned with growing community demand including a focus on aging and chronic disease patients, offering greater affordability and predictability, improving its culture of service, and offering health programs and educational materials tailored to meet the needs of the communities it serves.

The company continues to focus on growing patient volumes and effective cost management as a means to improve profitability, pursuing new opportunities to enhance efficiency including further integration of enterprise-wide centralized support functions, outsourcing additional functions unrelated to direct patient care, and reducing clinical contract variation. The company's business has been impacted by inflation and its effects on salaries, wages and benefits, as well as other costs, and while general inflation moderated somewhat during 2025, inflation specific to medical supply prices remained high due to current economic conditions and other factors. The company anticipates that its capital expenditures for the year ending December 31, 2026 will total approximately $700 million to $800 million ²¹, including $111 million ²² that was accrued as a liability at December 31, 2025.

The company continues to focus on operational discipline and adaptive cost management as it navigates the evolving healthcare landscape, with challenges including geopolitical dynamics, trade tensions, tariffs and export control rules that may continue to influence pricing and availability within global supply chains. The company's approach to improving profitability includes emphasis on higher-demand clinical service lines, focus on expanding its ambulatory care business, cultivation of its culture of service, and utilizing contracting strategies that create shared value with payers to help grow patient volumes over time.

In the year ended December 31, 2025, the company repurchased $1.386 billion ²³ of its common stock pursuant to its share repurchase program, and at December 31, 2025, there was $1.490 billion ²⁴ available under this program for future repurchases. The company's share repurchase program has no expiration date, does not obligate the company to acquire any particular amount of common stock, and may be suspended for periods or discontinued at any time. Capital expenditures were $1.010 billion ²⁵ in the year ended December 31, 2025, compared to $931 million ²⁶ in the year ended December 31, 2024. For the year ending December 31, 2026, the company expects annual interest payments to be approximately $750 million to $760 million ²⁷.

The healthcare industry remains subject to significant legislative and regulatory uncertainty, and changes in federal and state healthcare laws, regulations, funding policies or reimbursement practices, especially those involving reductions to government payment rates or access to insurance coverage, could have a material impact on the company's future revenues and expenses. The One Big Beautiful Bill Act enacted significant changes to the federal tax code and U.S. healthcare policy, coverage and reimbursement systems, and while the most consequential healthcare provisions are not scheduled to take effect until 2027 and thereafter, the OBBBA introduces new limitations and eligibility requirements that are expected to materially impact Medicaid funding (including supplemental payments) and enrollment, as well as the health insurance marketplace. The company cannot estimate the OBBBA's impact nor predict the timing of that impact on its future business, financial condition or results of operations, but may experience decreased payments (including supplemental payments) from Medicare, Medicaid and other government programs, as well as delays in the timing of payments to its facilities.

Certain provisions of the Affordable Care Act that lengthened the enrollment period, expanded income eligibility, and provided enhanced premium tax credits to eligible individuals purchasing coverage through state and federal health insurance marketplaces expired at the end of 2025, resulting in significant increases in health insurance premiums. Such increases have led to decreases in enrollment and insurance coverage, and are expected to cause a corresponding rise in the uninsured or a shift of individuals from commercial coverage to government program coverage or other more limited coverage alternatives beginning in 2026, which could result in decreased patient volumes, reduced revenues and an increase in uncompensated care. The company also faces risks from potential reductions to Medicaid payments, changes and reductions to Medicaid supplemental payment programs, and payment delays due to the OBBBA's legislative and forthcoming regulatory changes, as well as federal government denials or delayed approvals of state waiver applications or extension requests.

The company's business is subject to significant risks, including its ability to enter into, maintain and renew managed care contractual arrangements on competitive terms, as for the year ended December 31, 2025, approximately 70%, or $9.696 billion ²⁸, of net patient service revenues for the hospitals and related outpatient facilities in its Hospital Operations segment was attributable to managed care payers, and the top 10 managed care payers generated 69% ²⁹ of managed care net patient service revenues. Changes to healthcare laws and regulations, including the One Big Beautiful Bill Act and the expiration of enhanced premium tax credits, could materially impact the company, as the Congressional Budget Office anticipates that millions of individuals could lose health insurance between now and 2034. The company's labor costs have been and may continue to be adversely affected by competition for staffing and labor union activity, with approximately 20% ³⁰ of employees in the Hospital Operations segment represented by labor unions at December 31, 2025. The company's level of indebtedness could adversely affect its ability to raise additional capital, as at December 31, 2025, the company had approximately $13.171 billion ³¹ of total long-term debt, and during 2025, interest expense was $821 million ³² and represented 23% ³³ of the company's $3.508 billion ³⁴ of operating income. The company is subject to operational cybersecurity risks, having experienced a cybersecurity incident in April 2022 that disrupted a subset of hospital operations and involved the exfiltration of certain confidential company and patient information.

Management's message emphasizes that in 2025, the company continued to strengthen its organization and expand the care it provides while remaining committed to quality, safety and operational excellence. The company enhanced access to higher-acuity services in its communities, advanced ambulatory surgery care, invested in state-of-the-art technology and facilities, and welcomed new team members and physician partners. Key strategic priorities emphasized for the period ahead include expanding the Ambulatory Care segment through acquisitions, organic growth, construction of new outpatient centers and strategic partnerships; driving growth in the Hospital Operations segment by focusing on operational effectiveness, investing in the physician enterprise, enhancing patient and physician satisfaction, growing higher-demand clinical service lines, expanding patient and physician access, and optimizing the portfolio of assets; improving the customer care experience; improving profitability through growing patient volumes and effective cost management; and managing the company's capital structure, as demonstrated by the November 2025 execution of a new senior secured revolving credit facility and the issuance of $1.500 billion ³⁵ aggregate principal amount of 5.500% senior secured notes due 2032 and $750 million ³⁶ aggregate principal amount of 6.000% senior notes due 2033, with proceeds used to redeem $1.500 billion ³⁷ of 6.250% senior secured second lien notes due 2027 and $750 million ³⁸ of 6.125% senior notes due 2028.