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Investing.com - UBS raised its price target on Tenet Healthcare (NYSE:THC) to $238.00 from $230.00 on Wednesday, while maintaining a Buy rating on the healthcare services provider. The stock, currently trading at $155.97, has seen a 10% decline over the past week, despite strong fundamentals and a GREAT financial health score according to InvestingPro analysis.
The firm noted that Tenet management clarified the $79 million of favorable impact from out-of-period supplemental payments included three quarters of the recently approved Tennessee Directed Payment Program (DPP), covering the period from Q3 2024 through Q1 2025. With a market capitalization of $14.49 billion and a P/E ratio of 11.16, InvestingPro data suggests the company remains attractively valued relative to its peers.
Tenet reiterated expectations that the Tennessee DPP will contribute approximately $35 million for 2025, which includes six quarters of activity, equating to roughly $6 million per quarter. This implies the $79 million out-of-period amount includes $18 million from Tennessee and approximately $60 million from other states.
Management indicated that other state true-ups contributed to the overall benefit as well, with Tenet expecting $1.1 billion to $1.2 billion of supplemental payments in 2025.
UBS estimates that approximately $800 million of these expected supplemental payments comes from directed payment programs, which the firm considers most at risk from the recent reconciliation bill, though Tenet does not publicly provide the breakdown of supplemental payments across different categories.
In other recent news, Tenet Healthcare reported impressive financial results for the second quarter of 2025. The company posted an earnings per share (EPS) of $4.02, significantly exceeding the forecasted $2.88. Additionally, Tenet Healthcare’s revenue reached $5.27 billion, surpassing expectations of $5.16 billion. The company’s adjusted EBITDA, excluding non-controlling interests, was $887 million, which outperformed Raymond (NSE:RYMD) James’ estimate of $758 million. The Hospital segment contributed $584 million to this figure, while the Ambulatory Surgery Center (ASC) segment added $303 million, both surpassing their respective estimates. Following these results, Raymond James raised its price target for Tenet Healthcare to $200 from $185, maintaining an Outperform rating. These developments reflect Tenet Healthcare’s strong operational performance and financial health.
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