Tenet Healthcare Co., Ltd. (THC – (Free Report) Recently agreed to sell three South Carolina hospitals and related operations to Novant Health, an integrated network of medical facilities. The deal with the private company could bring in about $2.4 billion in cash ($1.75 billion after taxes).
The agreement includes hospitals in Jasper, Beaufort and Charleston counties in South Carolina, as well as affiliated physician practices and related hospital operations. However, THC plans to maintain an outpatient facility operated by its subsidiary United Surgical Partners International.
Our hospitals and related businesses generated revenues of approximately $552 million for the year ended September 30, 2023. During this period, adjusted EBITDA on assets, excluding certain items, was approximately $150 million. THC expects the transaction to result in pre-tax book profits of approximately $1.6 billion.
The company plans to use the proceeds from this transaction to reduce debt. At the end of the third quarter, long-term debt, excluding portions due within one year, was $14.9 billion and short-term debt was $141 million. The transaction is expected to close in the first quarter of 2024.
As part of the agreement, Tenet subsidiary Conifer Health Solutions will enter into a 15-year extension to provide revenue cycle management services to three hospitals and related operations. The move highlights Tenet’s concerted efforts to restructure its portfolio and increase its financial flexibility. This sale is consistent with our focus on optimizing our asset mix and reducing our debt burden, with the aim of improving our overall financial health and operational efficiency.
In other news, the Federal Trade Commission has approved a lawsuit to block Tenet’s proposed $142.5 million sale of San Ramone Regional Medical Center to John Muir Health. Regulators have cited concerns about potential competition issues in the region that could lead to higher healthcare costs.
THC stock has increased 48% over the past year compared to the industry’s increase of 5.7%.
Zacks Rank and Key Picks
Tenet currently carries a Zacks Rank #3 (Hold).
Some of the top-ranked stocks in the broader healthcare space include: Enobis Co., Ltd. (Enobu – free report), Centene Co., Ltd. (CNC – free report) and Molina Healthcare Co., Ltd. (Ministry of Public Health – Free Report), each currently carrying a Zacks Rank #2 (Buy).You can view See the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Enovis’s current-year earnings implies an increase of 4.9% from the prior year’s reported figure. The consensus mark for revenue this year is expected to be $1.7 billion. ENOV has exceeded earnings estimates in each of the past four quarters, with an average surprise of 11%.
The Zacks Consensus Estimate for Centene’s 2023 earnings is calling for earnings of $6.64 per share, up 14.9% from the prior year. Over the past 30 days, there have been eight upward estimate revisions, but none in the opposite direction. His 2023 revenue consensus mark for CNC indicates year-over-year growth of 4.4%.
The Zacks Consensus Estimate for Molina Healthcare is pegged for 2023 bottom line earnings of $20.83 per share, implying year-over-year growth of 16.2%. The company beat earnings estimates in each of the past four quarters, with an average estimate of 7.5%. The consensus mark for MOH’s current fiscal year earnings is pointing to year-over-year growth of 4.3%.
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