Dallas-based Tenet Healthcare, parent company of ASC giant United Surgical Partners International, has sold 14 hospitals this year for more than $4.8 billion, according to an Oct. 29 third quarter earnings call.
"As a result of these sales, our current hospital portfolio has an enhanced return profile, more attractive geographies for us and our business model," Tenet CEO Saum Sutaria, MD, said in the earnings call.
The for-profit system sold nine hospitals in California and South Carolina in the first quarter. On Sept. 30, it completed the sale of its 70% ownership interest in Birmingham, Ala.-based Brookwood Baptist Health to Orlando (Fla.) Health.
The for-profit system sold its 70% ownership stake in five Alabama hospitals on Oct. 1 in a deal valued at approximately $910 million in cash, with after-tax proceeds of approximately $790 million. In March, Tenet completed the $975 million sale of four Southern California hospitals to Orange, Calif.-based UCI Health. Tenet sold three South Carolina hospitals to Winston-Salem, N.C.-based Novant Health for $2.4 billion, effective Feb. 1.
The hospital sales have allowed Tenet to significantly improve its leverage ratio, Dr. Sutaria said, and the company is committed to a deleveraged balance sheet going forward.
"We are very pleased with the deleveraging accomplished to date," Dr. Sutaria added, "Looking forward, we are well positioned to create value for shareholders through stronger free cash flow generation. Our transformed portfolio provides us with a high degree of capital and financial flexibility."
While it sells off hospitals, Tenet is investing heavily in its ASC chain. In 2023, the company initially planned to invest $250 million in ASC mergers and acquisitions, but Dr. Sutaria said that it has surpassed this target.
"We continue to believe accelerating spend at USPI is the single most accretive thing to bring value within the company," Dr. Sutaira said.