Hospital operator Tenet Healthcare (NYSE:THC) announced better-than-expected revenue in Q3 CY2025, with sales up 3.3% year on year to $5.29 billion. The company expects the full year’s revenue to be around $21.25 billion, close to analysts’ estimates. Its non-GAAP profit of $3.70 per share was 10.5% above analysts’ consensus estimates.
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Tenet Healthcare (THC) Q3 CY2025 Highlights:
- Revenue: $5.29 billion vs analyst estimates of $5.26 billion (3.3% year-on-year growth, 0.6% beat)
- Adjusted EPS: $3.70 vs analyst estimates of $3.35 (10.5% beat)
- Adjusted EBITDA: $1.10 billion vs analyst estimates of $1.03 billion (20.8% margin, 6.9% beat)
- The company slightly lifted its revenue guidance for the full year to $21.25 billion at the midpoint from $21.1 billion
- Management raised its full-year Adjusted EPS guidance to $16.10 at the midpoint, a 1.4% increase
- EBITDA guidance for the full year is $4.52 billion at the midpoint, above analyst estimates of $4.46 billion
- Operating Margin: 16.8%, down from 21.3% in the same quarter last year
- Free Cash Flow Margin: 15.7%, similar to the same quarter last year
- Same-Store Sales rose 1.4% year on year (2.7% in the same quarter last year)
- Market Capitalization: $19.1 billion
Company Overview
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE:THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Tenet Healthcare’s 3.5% annualized revenue growth over the last five years was tepid. This wasn’t a great result compared to the rest of the healthcare sector, but there are still things to like about Tenet Healthcare.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Tenet Healthcare’s recent performance shows its demand has slowed as its annualized revenue growth of 1.7% over the last two years was below its five-year trend. 
Tenet Healthcare also reports same-store sales, which show how much revenue its established locations generate. Over the last two years, Tenet Healthcare’s same-store sales averaged 1.9% year-on-year growth. This number doesn’t surprise us as it’s in line with its revenue growth. 
This quarter, Tenet Healthcare reported modest year-on-year revenue growth of 3.3% but beat Wall Street’s estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to grow 4.4% over the next 12 months. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average. At least the company is tracking well in other measures of financial health.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Tenet Healthcare has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average operating margin of 17.1%.
Looking at the trend in its profitability, Tenet Healthcare’s operating margin rose by 1.1 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 5.2 percentage points on a two-year basis.
This quarter, Tenet Healthcare generated an operating margin profit margin of 16.8%, down 4.5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Tenet Healthcare’s EPS grew at an astounding 30.1% compounded annual growth rate over the last five years, higher than its 3.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into the nuances of Tenet Healthcare’s earnings can give us a better understanding of its performance. As we mentioned earlier, Tenet Healthcare’s operating margin declined this quarter but expanded by 1.1 percentage points over the last five years. Its share count also shrank by 15.8%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. 
In Q3, Tenet Healthcare reported adjusted EPS of $3.70, up from $2.92 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Tenet Healthcare’s full-year EPS of $15.52 to grow 3.1%.
Key Takeaways from Tenet Healthcare’s Q3 Results
It was good to see Tenet Healthcare beat analysts’ EPS expectations this quarter. We were also happy its full-year EPS guidance outperformed Wall Street’s estimates. On the other hand, its same-store sales was in line. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 3.3% to $208.99 immediately following the results.
Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.