The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how hospital chains stocks fared in Q4, starting with Tenet Healthcare (NYSE: THC).
Hospital chains operate scale-driven businesses that rely on patient volumes, efficient operations, and favorable payer contracts to drive revenue and profitability. These organizations benefit from the essential nature of their services, which ensures consistent demand, particularly as populations age and chronic diseases become more prevalent. However, profitability can be pressured by rising labor costs, regulatory requirements, and the challenges of balancing care quality with cost efficiency. Dependence on government and private insurance reimbursements also introduces financial uncertainty. Looking ahead, hospital chains stand to benefit from tailwinds such as increasing healthcare utilization driven by an aging population that generally has higher incidents of disease. AI can also be a tailwind in areas such as predictive analytics for more personalized treatment and efficiency (intake, staffing, resourcing allocation). However, the sector faces potential headwinds such as labor shortages that could push up wages as well as substantial investments needs for digital infrastructure to support telehealth and electronic health records. Regulatory scrutiny, and reimbursement cuts are also looming topics that could further strain margins.
The 4 hospital chains stocks we track reported a mixed Q4. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.3% since the latest earnings results.
Tenet Healthcare (NYSE: THC)
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Tenet Healthcare reported revenues of $5.07 billion, down 5.7% year on year. This print fell short of analysts’ expectations by 2%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ full-year EPS guidance estimates.
"2024 was an outstanding year for Tenet characterized by robust revenue growth, efficient operations, high levels of patient satisfaction and clinical quality, and a portfolio transformation that drove substantial balance sheet deleveraging," said Saum Sutaria, M.D., Chairman and Chief Executive Officer of Tenet.
Tenet Healthcare delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. The stock is down 15.1% since reporting and currently trades at $117.81.
Is now the time to buy Tenet Healthcare? Access our full analysis of the earnings results here, it’s free.
Best Q4: Universal Health Services (NYSE: UHS)
With a network spanning 39 states and three countries, Universal Health Services (NYSE: UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.
Universal Health Services reported revenues of $4.11 billion, up 11.1% year on year, outperforming analysts’ expectations by 2.6%. The business had a very strong quarter with a solid beat of analysts’ full-year sales and EPS guidance estimates.
Universal Health Services pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 5.2% since reporting. It currently trades at $170.
Is now the time to buy Universal Health Services? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Acadia Healthcare (NASDAQ: ACHC)
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Acadia Healthcare reported revenues of $774.2 million, up 4.2% year on year, falling short of analysts’ expectations by 0.6%. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates and EBITDA guidance for next quarter missing analysts’ expectations.
As expected, the stock is down 28% since the results and currently trades at $28.99.
Read our full analysis of Acadia Healthcare’s results here.
HCA Healthcare (NYSE: HCA)
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
HCA Healthcare reported revenues of $18.29 billion, up 5.7% year on year. This print surpassed analysts’ expectations by 0.7%. Taking a step back, it was a mixed quarter as it also logged a narrow beat of analysts’ EPS estimates but same-store sales in line with analysts’ estimates.
The stock is down 1.1% since reporting and currently trades at $321.65.
Read our full, actionable report on HCA Healthcare here, it’s free.
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