Executive Summary

Q3 2025 was a clean beat and raise: revenue $5.289B (+3.2% y/y), adjusted EBITDA $1.099B (+12.4% y/y; 20.8% margin), and adjusted EPS $3.70 (+26.3% y/y), all above internal expectations, driven by strong same-store growth, higher acuity, favorable payer mix, and disciplined costs .
Guidance raised again: FY25 adjusted EBITDA to $4.47–$4.57B, net operating revenue to $21.15–$21.35B, capex to $875–$975M, and free cash flow to $2.275–$2.525B; free cash flow after NCI raised to $1.495–$1.695B .
Segment performance: USPI EBITDA $492M (+12.1% y/y; 38.6% margin) with same-facility revenues +8.3%, and Hospital EBITDA $607M (+12.6% y/y; 15.1% margin) with revenue/adjusted admission +5.9% y/y .
Cash generation and capital allocation remain catalysts: Q3 free cash flow $778M (YTD $2.163B); YTD buybacks of 7.8M shares ($1.188B). Post-quarter, Tenet priced $2.25B new notes to redeem 2027/2028 tranches, extending maturities and lowering coupon mix—a potential equity sentiment positive .
Management tone confident on 2025 delivery; 2026 planning assumes stable operating environment with watch items around ACA exchange subsidies and state-directed payments; USPI cited limited Medicaid/exchange exposure and strong M&A/de novo pipeline .

What Went Well and What Went Wrong

What Went Well

Broad-based beat with margin expansion: consolidated adjusted EBITDA up 12.4% y/y to $1.099B and margin to 20.8%, supported by same-store growth, acuity, payer mix, and cost controls. “We exceeded our expectations for revenue, adjusted EBITDA, and margins” .
USPI execution and mix: same-facility revenues +8.3%, revenue per case +6.1%, cases +2.1%; EBITDA $492M (+12.1% y/y), margin 38.6%. “USPI continues to excel… high-acuity procedures such as spine and orthopedics” .
Cash generation and deleveraging: Q3 FCF $778M; cash $2.98B; leverage 2.3x EBITDA; continued buybacks ($93M in Q3; $1.188B YTD). “We believe we have significant financial flexibility” .

What Went Wrong

Hospital volumes mixed: outpatient visits -1.5% y/y and ER visits -2.0% y/y; management flagged softer respiratory/infectious volumes impacting outpatient adjusted admissions contribution .
Medicaid supplemental normalization: Hospital segment recognized $38M prior-year Medicaid supplemental revenue; YTD out-of-period totals $148M—an item to normalize in bridging into 2026 .
Slight deceleration implied for USPI into Q4: management indicated Q4 USPI growth ~+8% y/y at midpoint vs low/mid-teens earlier; characterized as “just math” as pricing/scale laps—no change in demand commentary .

Financial Results

Consolidated Results (GAAP and Non-GAAP)

Metric	Q1 2025	Q2 2025	Q3 2025
Net operating revenues ($USD Billions)	$5.223	$5.271	$5.289
Adjusted EBITDA ($USD Billions)	$1.163	$1.121	$1.099
Adjusted EBITDA Margin (%)	22.3%	21.3%	20.8%
Diluted EPS (GAAP) ($)	$4.27	$3.14	$3.86
Adjusted Diluted EPS ($)	$4.36	$4.02	$3.70

Consensus vs Actual (S&P Global)

Metric	Q1 2025	Q2 2025	Q3 2025
Primary EPS Consensus Mean ($)	3.133	2.870	3.348
Adjusted Diluted EPS Actual ($)	4.36	4.02	3.70
Beat/(Miss) ($)	+1.23	+1.15	+0.35
Revenue Consensus Mean ($USD Billions)	5.142	5.162	5.248
Revenue Actual ($USD Billions)	5.223	5.271	5.289
Beat/(Miss) ($USD Billions)	+0.081	+0.109	+0.041
EBITDA Consensus Mean ($USD Billions)	0.995	0.992	1.028
Adjusted EBITDA Actual ($USD Billions)	1.163	1.121	1.099
Beat/(Miss) ($USD Billions)	+0.168	+0.129	+0.071
Values retrieved from S&P Global.

Segment Breakdown

Segment	Metric	Q1 2025	Q2 2025	Q3 2025
USPI (Ambulatory)	Net operating revenues ($USD Billions)	$1.194	$1.270	$1.275
USPI (Ambulatory)	Adjusted EBITDA ($USD Millions)	$456	$498	$492
USPI (Ambulatory)	Adjusted EBITDA Margin (%)	38.2%	39.2%	38.6%
Hospital	Net operating revenues ($USD Billions)	$4.029	$4.001	$4.014
Hospital	Adjusted EBITDA ($USD Millions)	$707	$623	$607
Hospital	Adjusted EBITDA Margin (%)	17.5%	15.6%	15.1%

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
USPI same‑facility system‑wide net patient service revenues (y/y)	+6.8%	+7.7%	+8.3%
USPI revenue per case (y/y)	+9.1%	+8.3%	+6.1%
USPI case volumes (y/y)	-2.1%	-0.6%	+2.1%
Hospital admissions (y/y)	+4.4%	+1.6%	+1.5%
Hospital adjusted admissions (y/y)	+2.9%	+0.4%	+1.4%
Hospital revenue per adjusted admission (y/y)	+2.8%	+5.2%	+5.9%
Hospital outpatient visits (y/y)	+0.7%	-3.2%	-1.5%
Hospital ER visits (y/y)	+1.4%	-4.7%	-2.0%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net operating revenues ($USD Billions)	FY 2025	$20.95–$21.25	$21.15–$21.35	Raised
Adjusted EBITDA ($USD Billions)	FY 2025	$4.40–$4.54	$4.47–$4.57	Raised
Adjusted EBITDA margin (%)	FY 2025	21.0–21.4	21.1–21.4	Maintained/Minor raise at low end
Diluted EPS ($)	FY 2025	$14.05–$15.15	$14.66–$15.37	Raised
Adjusted diluted EPS ($)	FY 2025	$15.55–$16.21	$15.93–$16.26	Raised
Net cash provided by operating activities ($USD Billions)	FY 2025	$2.75–$3.10	$3.15–$3.50	Raised
Free cash flow ($USD Billions)	FY 2025	$2.025–$2.275	$2.275–$2.525	Raised
Adjusted free cash flow ($USD Billions)	FY 2025	$2.175–$2.375	$2.425–$2.625	Raised
Capital expenditures ($USD Millions)	FY 2025	$725–$825	$875–$975	Raised
NCI cash distributions ($USD Millions)	FY 2025	$780–$830	$780–$830	Maintained
USPI Adjusted EBITDA ($USD Billions)	FY 2025	$1.99–$2.05 (call)	$2.00–$2.04 (pr)	Slightly raised vs Q1 baseline
Hospital Adjusted EBITDA ($USD Billions)	FY 2025	$2.41–$2.49 (call)	$2.47–$2.53 (pr)	Raised

Earnings Call Themes & Trends

Topic	Q1 2025	Q2 2025	Q3 2025	Trend
ACA exchange exposure and subsidies	Exchange admissions +35%; ~7% consolidated revenues; advocacy for extension	Exchanges ~8% admissions, ~7% revenues; bridge to 2026 uncertain	Exchange admissions 8.4%; 7% revenues; no “rush”; confident in compromise potential	Stable presence; monitoring policy risk
Labor and cost management	SWB down 260 bps; contract labor ~2% of SWB; focus on recruiting/retention	SWB 41% of net revenues; contract labor 1.9%; continued discipline	SWB 41.7%; contract labor 1.9%; stable labor backdrop into 2026	Sustained efficiency
USPI high-acuity mix & pipeline	12% y/y total joints; service-line shifts; M&A baseline $250M	Same-facility +7.7%; revenue per case +8.3%; exceeding $250M M&A spend	Same-facility +8.3%; M&A/de novo robust; Q4 growth ~+8% y/y at midpoint	Strong execution; pacing normalizing
Conifer & cash collections (tech/AI)	Standardization, automation underpin collections; DSOs improving	Enhanced collections and working capital; deleveraging supports FCF	Conifer driving FCF after NCI raise; ramping staffing for exchange enrollment	Structural FCF tailwind
Medicaid supplemental/DPP	$40M out-of-period in Q1; normalization noted	~$350M in Q2; H1 run-rate ~$1.1–$1.2B normalized	$346M in Q3; $38M out-of-period; YTD $148M out-of-period to normalize	Material but normalizing
Tariffs/supply chain	Monitoring; GPO leverage via HealthTrust	Managed via sourcing optimization and GPO; manageable in 2025	Contract structure provides runway; nimble approach beyond 2025	Manageable near-term
Regulatory (CMS WISER, inpatient-only list)	Potential ASC opportunity; depends on clinical selection and reimbursement	Industry lobbying; site-of-service dynamics discussed	Preparing for prior auth process; potential ASC mix shift; inpatient-only list uncertain	Planning for procedural shifts

Management Commentary

“We had another quarter of strong performance where we exceeded our expectations for revenue, adjusted EBITDA, and margins… adjusted EBITDA margin of 20.8%, a 170 bps improvement over the prior year” — CEO Saum Sutaria .
“We are raising our full-year 2025 adjusted EBITDA outlook… we have now increased our adjusted EBITDA guidance by $445 million, or 11% at the midpoint from our initial guidance” — CEO .
“Our consolidated salary, wages, and benefits was 41.7% of net revenues… contract labor expense was 1.9% of consolidated SWV expenses” — CFO Sun Park .
“Exchange was 8.4% of our total admissions and 7% of our total consolidated revenues… no significant increase in Q3” — CFO .
“We are increasing our investments in capital expenditures in 2025… now expect to invest $875 to $975 million to fuel organic growth… focused on high-acuity strategy” — CEO .
“We generated $778 million of free cash flow in the third quarter… leverage ratio… 2.3x EBITDA” — CFO .

Q&A Highlights

USPI Q4 pacing: Midpoint implies ~+8% y/y, consistent with historical seasonal ramp; management framed deceleration as lapping/pricing scale, not demand weakness .
CapEx raise allocation: Focus on clinical infrastructure and high-acuity programs (cardiac, cath labs, robotics) beyond Port St. Lucie opening; demand supports increased investment .
Free cash flow sustainability: Continued EBITDA growth, Conifer collections, working capital, lower interest from deleveraging; aim to sustain improvements .
Exchange exposure: Q3 admissions 8.4% and revenues 7%; USPI exposure proportionally less than hospital; no pre-subsidy-expiration utilization rush seen .
Volume nuances: GI recovery bolstered USPI volumes; outpatient respiratory/infectious was softer, signaling later season start .
Medicaid supplemental: Q3 ~$346M total; $38M prior-year; YTD ~$1.02B with $148M out-of-period—largest normalization factor bridging into 2026 .

Estimates Context

Q3 2025: Adjusted EPS $3.70 vs consensus $3.35; revenue $5.289B vs $5.248B; EBITDA $1.099B vs $1.028B — broad beats across EPS, revenue, EBITDA driven by mix/acuity and cost control; expect upward revisions to FY25 FCF and margin profiles. Values retrieved from S&P Global.
Q2 and Q1 also beat consensus across EPS, revenue, and EBITDA, reinforcing multi-quarter estimate momentum. Values retrieved from S&P Global.

Key Takeaways for Investors

The beat-and-raise quarter supports a positive near-term setup; any pullback on perceived USPI Q4 pacing likely presents a buy-the-dip given unchanged demand narrative and strong cash conversion .
Hospital margin expansion is durable, with SWB efficiency, acuity/mix, and portfolio optimization continuing to offset outpatient softness; normalize Medicaid supplemental out-of-period items in models for 2026 bridges .
USPI’s high-acuity strategy and robust M&A/de novo pipeline remain core compounding drivers; limited Medicaid/exchange exposure mitigates policy headline risk .
FCF strength and deleveraging enable flexible capital allocation (capex, buybacks, debt refinancing). The $2.25B notes offering post-quarter improves maturity profile and interest mix — an equity-friendly execution .
Policy watch: ACA exchange subsidies and state-directed payments approvals could add volatility; management confidence on compromise tempers risk but warrants sensitivity analysis in 2026 outlooks .
Expect estimate revisions upward for FY25 EBITDA/FCF and potentially adjusted EPS; maintain attention to tariff dynamics and CMS WISER implementation for ASC operational impacts .
Non-GAAP lens: Remember the Q3 prior-year GAAP comparison benefited from a 2024 asset sale; adjusted figures are the cleaner comp set for trend assessment .

Notes: All document-based figures and statements cited above are from Tenet’s Q3 2025 press release and 8-K, and the Q3 earnings call transcript . Values retrieved from S&P Global for consensus and certain estimate comparisons.

TENET HEALTHCARE CORP (THC)·Q3 2025 Earnings Summary