Shares of Tenet Healthcare Corporation THC have rallied 59.7% in the past year compared with the industry’s 11% increase. The Medical sector has declined 4.7% while the S&P 500 composite index has risen 25.4% in the said time frame. With a market capitalization of $7.7 billion, the average volume of shares traded in the last three months was 1.7 million.
Expanding patient volumes, resumption of elective procedures, strategic buyouts and a notable financial position continue to drive Tenet Healthcare.
This diversified healthcare services company, carrying a current Zacks Rank #3 (Hold), boasts an impressive track record of beating estimates in each of the trailing four quarters, the average surprise being 27.76%.
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Can THC Retain the Momentum?
The Zacks Consensus Estimate for 2023 earnings is pegged at $5.86 per share, which has witnessed one upward estimate revision in the past 30 days against none in the opposite direction. The estimate has moved 0.3% upward during this period. The consensus mark for revenues is $20.4 billion, which indicates an improvement of 6.4% from the year-ago figure.
The top line of Tenet Healthcare continues to be aided by growing patient volumes reflected in the form of year-over-year increases of 3.3% and 1.3%, respectively, observed in adjusted admissions and emergency room visits of the Hospital segment during the first nine months of 2023.
The resumption of elective procedures, which had been earlier delayed to treat a humongous COVID-patient base, may fetch higher revenues for THC’s extensive network of surgery centers in the days ahead. Same-facility surgical cases grew 6.1% year over year in the first nine months of 2023. Tenet Healthcare’s subsidiary USPI had interests in 457 ambulatory surgery centers (ASCs) and 24 surgical hospitals across 35 states as of Sep 30, 2023.
Management anticipates overall net operating revenues between $20.3 billion and $20.5 billion for 2023, the mid-point of which indicates an increase of 6.4% from the 2022 figure.
Tenet Healthcare pursues a growth strategy in the form of building new outpatient centers as well as entering into acquisitions and strategic partnerships. It purchased controlling ownership interests in 14 ASCs and inaugurated eight de novo ASCs during the first nine months of 2023.
Such initiatives aim to enhance capabilities, expand the care delivery network and bolster the geographical presence of THC. As of Sep 30, 2023, its care network comprised 61 acute care and specialty hospitals coupled with 107 outpatient facilities. To make use of automation to ease and upgrade the payroll processes and subsequently streamline the workload of the human resource department, THC teamed up with Oracle Fusion Cloud Human Capital this September.
A solid financial position backed by an expanding cash balance and robust cash-generating abilities remain a commendable feature for Tenet Healthcare. It generated operating cash flows of $1.6 billion in the first nine months of 2023, which more than doubled from the prior-year comparable period. However, a massive debt burden poses a cause of concern since it induces an increase in interest expenses. Nevertheless, THC undertakes divestitures, proceeds from which are used to repay debts, and hence, the healthcare services provider can leverage its financial strength to pursue business investments.
The company’s leverage ratio has been on an improving trend for almost four years now. THC’s total debt to total capital of 83.9% at the third-quarter end remained below the industry’s figure of 94.1%.
Tenet Healthcare boasts an impressive VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Stocks to Consider
Some better-ranked stocks in the Medical space are Amphastar Pharmaceuticals, Inc. AMPH, Medpace Holdings, Inc. MEDP and Integer Holdings Corporation ITGR. While Amphastar Pharmaceuticals currently sports a Zacks Rank #1 (Strong Buy), Medpace and Integer carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphastar Pharmaceuticals earnings surpassed estimates in each of the last four quarters, the average surprise being 52.06%. The Zacks Consensus Estimate for AMPH’s 2023 earnings indicates a surge of 62.9% from the prior-year tally. The consensus mark for revenues suggests an improvement of 28.4% from the year-ago actual. The consensus mark for AMPH’s 2023 earnings has moved 0.3% north in the past 30 days.
The bottom line of Medpace beat estimates in each of the trailing four quarters, the average beat being 14.62%. The Zacks Consensus Estimate for MEDP’s 2023 earnings indicates a rise of 18.8% from the year-ago figure. The consensus mark for revenues suggests an improvement of 29.4% from the prior-year tally. The consensus mark for MEDP’s 2023 earnings has moved 1.6% north in the past 60 days.
Integer’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 11.98%. The Zacks Consensus Estimate for ITGR’s 2023 earnings indicates an improvement of 18.6% from the year-ago actual. The consensus mark for revenues suggests 14.9% growth from the year-ago actual. The consensus mark for ITGR’s 2023 earnings has moved 2% north in the past 60 days.
Shares of Amphastar Pharmaceuticals, Medpace and Integer have gained 114.6%, 49.6% and 45.8%, respectively, in the past year.
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Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
Amphastar Pharmaceuticals, Inc. (AMPH) : Free Stock Analysis Report
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
Medpace Holdings, Inc. (MEDP) : Free Stock Analysis Report
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