Larry Robbins Keeps Buying Shares of Tenet Healthcare Corp. (THC)

The Affordable Care Act signed into law by President Barack Obama in March 2010 and other government changes related to healthcare payments have triggered a trend of hospital industry consolidation over the last few years. As a result, the wave of M&A activity might have assisted some companies in lowering their costs and deal with the downward pressure on revenues. Tenet has embarked on this wave of consolidation as well. On July 15, Tenet Healthcare and Dignity Health and Ascension announced a newly-created partnership that will own and operate Carondelet Health Network based in Tucson, Arizona. At the time, Ascension owned 100% of Carondelet, while Tenet was set to be the majority partner in the new joint venture that would manage the operations of three hospitals, related physician practices, outpatient and ambulatory services, among other affiliated businesses. However, this is just one of the deals completed by Tenet Healthcare lately. Tenet completed another transaction earlier this summer that gave it control of United Surgical Partners International. Similarly, the deal created a joint venture with the private equity firm Welsh, Carson, Anderson & Stowe that combines the short-stay surgery and imaging center assets of Tenet and United Surgical Partners International (the aforementioned private equity firm owns USPI). At the same time, Tenet acquired an U.K. short-stay surgery-center company called Aspen Healthcare Ltd. from Welsh Carson. Therefore, it seems that Tenet has been continuously attempting to develop its business and operations, which is actually what investors expect from this type of companies.

Let’s now take a quick look at the company’s freshly-announced financial results for the second quarter of 2015. Tenet Healthcare posted net operating revenue of $4.49 billion for the quarter, compared to $4.36 billion reported a year ago. The company also reported adjusted EBITDA of $568 million, up by 23.5% year-over-year, while its adjusted net income stood at $76 million or $0.75 per diluted share, compared to adjusted $17 million or $0.28 per share reported for the second quarter of 2014. Within our database of over 700 hedge funds, Perry Capital, founded and overseen by Richard Perry, represents the second-largest shareholder of Tenet Healthcare Corp. (NYSE:THC), holding an equity stake of 1.58 million shares as of March 31.

Disclosure: None