Why Healthcare Service Provider Tenet Shares Are Up Today
Portfolio Pulse from Lekha Gupta
Tenet Healthcare Corp (THC) shares rose after announcing a deal to sell three hospitals and related operations in South Carolina to Novant Health for approximately $2.4 billion in cash. The sale is expected to yield about $1.750 billion in after-tax proceeds, which Tenet plans to use primarily for debt retirement. The included facilities generated revenues of around $552 million in the last 12 months. Tenet will also sign a new 15-year contract with Conifer Health Solutions for revenue cycle management services. The transaction is expected to close in Q1 2024, and Tenet anticipates a pre-tax book gain of about $1.6 billion. THC's Q3 net operating income was $101 million with an adjusted EPS of $1.44, surpassing the consensus of $1.20. THC shares are up 4.92% at $61.00 in premarket trading.
November 17, 2023 | 1:22 pm
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Tenet Healthcare Corp's stock rose after announcing the sale of three hospitals for $2.4 billion, with plans to use the proceeds for debt reduction and a new 15-year contract for revenue cycle management services.
The positive reaction in Tenet Healthcare Corp's stock price is likely due to the significant cash inflow from the sale, which will strengthen the company's balance sheet by reducing debt. The new contract with Conifer Health Solutions is also seen as a positive development, ensuring ongoing revenue from the sold facilities. The reported earnings beat in Q3 further supports the positive sentiment. However, the full impact will depend on the successful closure of the deal in Q1 2024 and the company's subsequent financial management.
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