The strategy is aligned with Tenet’s focus on USPI to spur growth. USPI’s net operating revenues for the fourth quarter of 2023 were more than $1 billion, a 15.4% increase compared to the fourth quarter of 2022.
“Tenet is entering a new era with a greater proportion of our performance coming from our highly efficient ambulatory surgical business and a reduced debt profile,” CEO and Chair Saum Sutaria, MD, said in a Feb. 8 earnings call transcribed by Seeking Alpha. “We will have significant financial and capital flexibility to increase shareholder value over the long term.”
On March 29, Tenet finalized an agreement to sell two hospitals to Roseville, Calif.-based Adventist Health for $550 million, or after-tax proceeds of around $450 million. The two hospitals are Sierra Vista Regional Medical Center in San Luis Obispo and Twin Cities Community Hospital in Templeton.
Tenet also finalized the $975 million sale of four hospitals and two ASCs in Southern California to Orange, Calif.-based UCI Health. The hospitals are Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical Center and Placentia-Linda Hospital and the ASCs are Pacific Endoscopy & Surgery Center in Mountain Valley and Reagan Street Surgery Center in Los Alamitos.
California is not the only market in which Tenet is focusing on selling hospitals. In February, the company finalized the sale of three hospitals in South Carolina to Winston-Salem, N.C.-based Novant Health for $2.4 billion. The ASCs in the South Carolina markets, which are operated by USPI, will remain under Tenet’s ownership.
“The sales were completed at very attractive [earnings before interest, taxes, depreciation and amortization] multiples, evidencing the strength of our assets and the quality of care they provide in their communities,” Dr. Sutaria said on the Feb. 8 call. “Collectively, these transactions will substantially improve our leverage position.”
The sell-offs are driving momentum in Tenet’s stock, according to a Feb. 4 article published by Seeking Alpha. Tenet posted a 1.6% decline in full-year sales to $19.2 billion in 2023. However, these new deals are expected to bring in billions of dollars in sales to the company
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.