Tenet Healthcare: Strong 2Q26 beat driven by fundamental outperformance; Macro uncertainties persist; Maintain Neutral

Research evidence excerpt

Tenet Healthcare: Strong 2Q26 beat driven by fundamental outperformance; Macro uncertainties persist; Maintain Neutral

ent estimates that this resulted in a ~$65mm

headwind to 2Q26 EBITDA. THC is responding to this by flexing its cost base and building

a baseline on which to grow margins. We note that exchanges only represented ~5.5% of

2Q26 revenue and that the company’s peers have seen similar unfavorability in exchange

revenue. Management has observed a proportionate conversion from exchange patient

volume into uninsured volume, and expects this trend to continue into 2H26. HCA noted that

it believes work requirements will have a more pronounced impact on expansion states (such

as Arizona and Michigan) than non-expansion states due to the focus on working adults. We

will continue to monitor the implementation of work requirements and the scale at which

continued exchange headwinds will impact different states. We note that HCA highlighted

the Gulf Coast, North Florida, and South Atlantic as regions with a significant amount of

HICS exposure and that have seen a material impact from the HICS exchange volume shift

(adjusted admissions decline in HICS by 25%-28% in 1H26).

S&P ratings upgrade to “BB” from “BB+.” As of 7/27, S&P upgraded THC to “BB” from

“BB-,” and updated outlook to “Stable” from “Positive.” The upgrade comes off the back of

increased revenue per adjusted admission, supplemental Medicaid funding, and ongoing

operating initiatives, as well as lower-than-expected leverage and strong FCF. Stable outlook

reflects S&P’s view that Tenet will balance operating performance and financial policies to

maintain current leverage, and that neither challenges from U.S. budget reconciliation nor the

expiration of the ACA subsidies will have a material impact.