Along with a net income of $1.3 billion in 2023, Dallas-based Tenet Healthcare saw ramped up merger and acquisition activity last year, including plans to continue the momentum in 2024.
"We anticipate continued strong growth in the ambulatory/surgery segment. 2023 was a very strong year, and it was across service lines," Saum Sutaria, MD, CEO of Tenet Healthcare, said during the company's Feb. 8 financial earnings call. "We had strength across the board. We had physician additions across the board. Total joint surgeries grew significantly in the fourth quarter."
Tenet saw net operating revenues for ambulatory care of $1.1 billion in the fourth quarter of 2023, up from $933 million over the same period in 2022. Its ambulatory net operating revenue for the year ended Dec. 31 was $3.9 billion, also up from $3.2 billion the previous year.
As part of that growth, Tenet added 30 ambulatory centers to its network through M&A and de novo last year. It also formed a joint venture with Tempe, Ariz.-based NextCare in December, which runs 56 urgent care locations across Arizona, according to Tenet's fourth-quarter earnings presentation.
Tenet also recently completed multiple hospital sales, including a $2.4 billion sale of three South Carolina hospitals to Winston-Salem, N.C.-based Novant Health, $1.75 billion post-tax, and signed a definitive agreement to sell four Orange County and Los Angeles County hospitals to UCI Health for around $975 million, or approximately $800 million post-tax. The transaction is expected to be complete this spring.
"The work we've done over the last five years to generate high-quality, well-performing, solid quality safety service hospitals with a higher-acuity procedure-based platform, can generate a premium," Dr. Sutaria said regarding the hospital sales. "It's a lot of work to get them into that position of not only having a high degree of profitability, but also having a quality service profile that's attractive from a starting standpoint. They're high-quality assets."
The proceeds from both hospital sales will support future leverage reduction, the presentation said.
Looking to 2024, Tenet plans to focus on "deleveraging its balance sheet through earnings growth and debt repayment," along with a baseline intention of $250 million per year in M&A and de novo investments.
"We remain opportunistic, but most importantly we remain committed to the portfolio that we have and running it at a high quality with solid earnings from that standpoint that we can deliver," Dr. Sutaria said. "We have demonstrated thoughtful divestiture activity in a way that remains consistent with our strategy and enhances not just our leverage position, but our belief and our ability to generate free cash flow going forward."