Shares of Tenet Healthcare Corp. rallied sharply Wednesday, climbing 16% to $224.03, following the release of its quarterly financial results and an optimistic long-term profit forecast.
Solid Quarterly Performance
The hospital operator reported net income of $371 million, or $4.22 per diluted share, for the fourth quarter, up from $318 million a year ago. Revenue reached $5.527 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $1.183 billion, with adjusted diluted earnings per share at $4.70.
Raised Long-Term Guidance
Management provided an enhanced outlook for 2026, projecting adjusted EBITDA in the range of $4.485 billion to $4.785 billion. Adjusted earnings per share are forecast between $16.19 and $18.47. CEO Saum Sutaria cited sustained demand for both acute care and ambulatory surgical services across the company's markets.
However, Chief Financial Officer Sun Park noted a significant challenge on the horizon. The expiration of enhanced Affordable Care Act exchange plan tax credits is expected to reduce 2026 adjusted EBITDA by approximately $250 million, primarily affecting the hospital segment. These plans represented about 7.5% of admissions and over 6.5% of consolidated revenue in the latest quarter.
Sector-Wide Gains
The positive sentiment extended across the hospital sector. HCA Healthcare advanced 5.9%, while Universal Health Services rose 8.6%. The broader Health Care Select Sector SPDR Fund edged up 0.5%.
Despite the raised guidance, the wide range of Tenet's 2026 forecast leaves room for potential volatility. Factors such as a steeper-than-anticipated decline in ACA exchange enrollment or pressure on supplemental Medicaid payments could negatively impact patient mix and margins. Investors are likely to monitor the quarter ending March 31 for early signals on exchange plan volumes and any revisions to the company's assumptions.
