- Dallas-based hospital operator Tenet will continue its strategy of acquiring ambulatory surgery centers to drive long-term growth and plans to buy 30 more facilities from SurgCenter Development this year, the company said Tuesday. That's in addition to 16 it has purchased so far this year, executives said on an earnings call Tuesday.
- Tenet and its subsidiary United Surgical Partners International last year completed a $1.1 billion acquisition of SCD, giving it an ownership stake in 86 surgery centers and related support services. That deal also gave USPI exclusivity on developing a minimum of 50 new centers with SCD during a five-year period.
- Jefferies analysts wrote in a note on Tenet's earnings Tuesday that "the increasing contribution from the higher growth, higher multiple ASC segment should translate to margin and multiple expansion going forward."
While Tenet is a legacy hospital operator, a key part of its long-term strategy is investing in and building out its ambulatory surgery business as regulatory and reimbursement changes and patient preference continue to fuel the migration of certain procedures away from hospitals.
"We've deployed over two and a half billion dollars in capital investment at USPI since December of 2020, scaling USPI to be the leading ambulatory surgery platform," CEO Saum Sutaria said on the call.
Tenet currently has ownership in about 440 ASCs and surgical hospitals, a spokesperson said in an emailed statement.
Tenet said in 2020 it expected ambulatory earnings to account for almost half of the company's overall earnings in 2021, though that's now expected to happen by the end of 2023, Executive Chairman Ron Rittenmeyer said on the call.
So far, Tenet's strategy is showing signs of paying off.
Ambulatory revenue climbed 31% for the full year from 2020, the company reported Tuesday. In the fourth quarter, ambulatory revenue gained 14% from the year-earlier period to $742 million.
Tenet's full-year net income more than doubled to $915 million from $339 million at the end of 2020, the company said.
Its fourth quarter revenue fell about 40% from a year earlier to $250 million. For the full year, revenues of nearly $4.9 billion remained little changed compared to the end of 2020.
At Tenet's hospitals, overall admissions declined by early 4% in the fourth quarter from a year earlier, while emergency room visits increased 16% and outpatient visits rose about 9%.
At its ASCs, same-facility system wide surgical cases advanced 4.4% in the fourth quarter from the year-earlier period and gained about 16% for the full year.
Tenet and USPI first signed the $1.1 billion deal with SCD in 2020 to acquire more than 40 ambulatory surgery centers.
The SCD transaction, which was completed last year, then handed Tenet 86 more ASCs. Sutaria said Tuesday that "quite a few" are less than a year old with some still under development.
Tenet currently owns 95% of USPI, according to the company's earnings release.