Tenet Healthcare Sells Hospitals to Support Debt Reduction

By Robb M. Stewart

Dallas-based healthcare-services company, Tenet Healthcare, has made significant moves in its effort to reduce debt leverage. The company closed a deal to sell three hospitals in South Carolina for approximately $2.4 billion and has entered into a definitive agreement to sell four hospitals in Orange County and Los Angeles County, California for $975 million in cash.

Debt Reduction Strategy

Tenet Healthcare's recent sell-off of hospitals in both South Carolina and California aligns with the company's objective to reduce its debt leverage. In total, these transactions are expected to generate after-tax proceeds of about $2.55 billion.

California Hospital Sale

The agreement with UCI Health involves the sale of four hospitals in Orange County and Los Angeles County. This transaction is expected to result in after-tax proceeds of about $800 million. With a total revenue of approximately $1 billion last year, Tenet anticipates recording a pretax book gain of about $500 million.

South Carolina Hospital Sale

Tenet Healthcare has sold three hospitals in South Carolina to Novant, generating after-tax proceeds of about $1.75 billion. Additionally, the company's subsidiary, Conifer Health Solutions, has extended its contract to provide revenue cycle management services for the operations for an expanded 15-year period.

Positive Earnings Projection

Tenet Healthcare is confident about its financial performance for the current year. The company forecasts adjusted earnings before interest, taxes, depreciation, and amortization to surpass its target range of $3.365 billion to $3.465 billion.