- Tenet Healthcare is looking into strategic business options, including a possible sale, The Wall Street Journal reported. The company is working with investment banks to explore options and set up meetings with potential purchasers, according to people familiar with the matter, WSJ reported.
- The for-profit chain is facing activist-investor pressure as Camber Capital purchased 5.7 million shares of Tenet in August, giving them a 5.7% stake in the Dallas-based health system.
- The company has experience a shake-up both at an executive and board level. CEO Trevor Fetter announced he will step down in March, and two board members recently resigned citing "irreconcilable differences regarding significant matters impacting Tenet and its stakeholders."
With Tenet is in need of a financial upswing, it will be interesting to see who might purchase the company if a deal is made.
Few details have been provided over the potential deal, but the for-profit, according to the WSJ, has more than $15 million in debt and has a market value of $1.6 billion.
Last quarter found the company disclosing a net loss of $56 million, in part due to weaker-than-expected patient volumes. "We are not surprised by these results and view the admissions growth headwinds facing the hospital sector as longer-term issues that will not be solved in the coming quarters," Piper Jaffray analyst Sarah James stated at the time of the earnings report in August.
In order to curb some financial losses and inject a stream of capital, Fetter announced Tenet plans to sell eight U.S. hospitals in four markets and all nine U.K. facilities to reduce debt. Fetter said the move should yield between $900 million and $1 billion.
The idea of a sale is interesting, but one overarching question would be who will purchase the company, which runs and operates about 500 care delivery facilities. Tenet's stock is down from $23.25 per share a year ago to $16.24 per share at the close of business on Wednesday. Another beleaguered hospital operator, Community Health Systems, has been performing poorly financially. Most hospitals are facing declining or flattening reimbursements and weak organic patient growth. Tenet has many facilities, but that could prove to be a difficult selling point under the stark reality that the hospital business is currently tough.