Tenet Healthcare Corporation

Good morning and welcome to Tenet Healthcare's fourth quarter 2025 earnings conference call. After the speaker's remarks, there will be a question and answer session for industry analysts. At that time, if you'd like to ask a question, please press star 1 on your telephone keypad to enter the question queue. Tenet respectfully asks that analysts limit themselves to one question each. I'll now turn the call over to your host, Mr. Will McDowell, Vice President of Investor Relations. Mr. McDowell, you may begin.

Good morning, everyone, and thank you for joining today's call. I am Will McDowell, Vice President of Investor Relations. We're pleased to have you join us for a discussion of Tenet's fourth quarter 2025 results, as well as a discussion of our financial outlook. Tenet Senior Management participating in today's call will be Dr. Sam Satoria, Chairman and Chief Executive Officer, and Sun Park, Executive Vice President and Chief Financial Officer. Our webcast this morning includes a slide presentation, which has been posted to the investor relations section of our website, tenanthealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent management's expectations based on currently available information. Actual results and plans could differ materially. Tenant is under no obligation to update any forward-looking statements based on subsequent information. Investors should take note of the cautionary statement slide included in today's presentation, as well as the risk factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. With that, I'll turn the call over to Sam.

Thank you, Will, and good morning, everyone. We reported 2025 net operating revenues of $21.3 billion and consolidated adjusted EBITDA of $4.57 billion, which represents 14% growth over 2024. Full-year adjusted EBITDA margin of 21.4% improved over 200 basis points from the prior year. Our fourth quarter results were, again, above our expectations, driven by strong same-store revenue growth, high acuity, and disciplined cost control. I would note that our full-year adjusted EBITDA ended the year nearly $500 million higher than the midpoint of our initial expectations. USPI continues to deliver attractive results. Volumes were strong and mix was good. Adjusted EBITDA grew 12% in 2025 to $2.026 billion. Same facility revenues grew 7.5%, highlighted by double-digit same-store volume growth in total joint replacements in the ASCs over prior year. This performance was once again well above our long-term goal of 3% to 6% organic top-line growth. We had an active year in the M&A and de novo activity lines as well, investing nearly $350 million in 2025 and adding 35 facilities to the portfolio. And the pipeline for both M&A and de novo development remains strong as we look into 2026. We remain the preferred acquirer and developer of assets in this space. Turning to our hospital segment, adjusted EBITDA grew 16% to $2.54 billion in 2025. Same-store revenues per adjusted admission was up 5.3% over the prior year as payer mix and acuity remained strong. We've continued to reinvest back in our business to further our capabilities, stepping up our growth capital in 2025. And finally, over the past three years, we've been active repurchasers of our shares. retiring approximately 22% of our outstanding shares for around $2.5 billion since our share repurchase program began in the fourth quarter of 22. We expect to continue to deploy capital for share repurchase, particularly at our current valuation multiples. Our portfolio of businesses is now more predictable with consistently strong performance in both the hospital segment and USPI. Our results represent a continuation of a multiyear track record of strong same-store revenue growth, improved margins, and disciplined execution by our management team. We remain focused on driving further organic growth supplemented by accretive M&A at USPI. Turning to 2026 guidance, we are projecting full-year 2026 adjusted EBITDA of 4.485 to 4.785 billion, driven by ongoing strength in demand and acuity, physician recruitment, and service line expansion, as well as additional sites of care joining the portfolio. We are also tackling expense management more structurally in anticipation of the next few years. We anticipate full year adjusted EBITDA for USPI of $2.13 to $2.23 billion. The continued shift, mixed shift of services towards lower cost sites of care will be furthered by the beginning of the phase out of the inpatient only list in 2026. We see this as a gradual tailwind for USPI that will play out over several years. In this first year, we see opportunities in areas such as high acuity spine and urology procedures. We have detailed tactical plans to capitalize on the opportunity and are actively operationalizing our capabilities to serve patients in 2026. USPI continues to be a high-growth, capital-efficient business that delivers high returns on capital expenditures. Turning to our hospital segment, We are expecting adjusted EBITDA in the range of $2.355 billion to $2.555 billion in 2026. Our plans reflect the headwind associated with the expiration of the enhanced premium tax credits on the exchange marketplace. We continue to closely monitor enrollment levels as well as the potential ramp off ramps for individuals to obtain coverage. through a lower metal tier, commercial plans, or other options. We're assuming a 20% reduction in overall enrollment as we have more significant exposure in states such as Arizona, Michigan, and California. We recognize the uncertainty regarding effectuation rates as individuals make determinations if they can afford their premiums and the resultant expected increase in uninsured rates and have conservatively taken these matters into consideration into our initial guidance. Additionally, we are implementing cost savings plans to help mitigate this pressure and will continue to engage with our patients to ensure that they have good access to care. We are confident in our ability to achieve the strong core earnings growth we forecast for 2026. The significant margin improvements that we have made over the past few years provides us a strong foundation from which to grow our transformed portfolio of businesses. We carry momentum into this new year and have many opportunities to expand our services and deliver value for patients, physician partners, and in turn, our shareholders. And with that, Son will provide us a more detailed review of our financial results.