Tenet Healthcare Corporation (THC) Has Jim Cramer Seriously Worried Due To Medicaid Cutback

We recently published a list of Jim Cramer Says “We Have No Idea What’s Really Going To Happen” and Discusses These 12 Stocks. In this article, we are going to take a look at where Tenet Healthcare Corporation (NYSE:THC) stands against other stocks that Jim Cramer discusses.

Tenet Healthcare Corporation (NYSE:THC) is one of the largest hospital operators in America. Cramer rarely comments on the firm, and this particular show was the first time he mentioned Tenet Healthcare Corporation (NYSE:THC) his year. The firm’s shares are up by 30% year-to-date as it has benefited from a strong fiscal first-quarter report issued at the end of April. Tenet Healthcare Corporation (NYSE:THC)’s fiscal first quarter saw the firm report $4.36 in earnings per share and $5.22 billion in revenue. Both of these beat analyst estimates of $3.17 and $5.14 billion. However, in his comments, Cramer warned about the impact of lower medical spending on the firm:

“The ones I’m [inaudible] worried about, I’m worried about. . . Tenet on the cutback in Medicaid. Because [it thrives] on Medicaid. . . .because they’re gonna delay reimbursement or they’re going to lower reimbursement. Because Medicaid, Medicaid is cut back.”

A room full of medical personnel collaborating on a treatment plan for a patient.

Meridian Funds mentioned Tenet Healthcare Corporation (NYSE:THC) in its Q4 2024 investor letter. Here is what the firm said:

“Tenet Healthcare Corporation (NYSE:THC) is one of the top ten U.S. operators of hospitals, outpatient surgery centers, and healthcare business process services. We initiated our position in late 2022, believing that the market’s short-term focus on COVID related staffing and admissions challenges overshadowed the value of Tenet’s long-term strategy of growing outpatient surgery centers. Tenet’s execution in 2024 has been very strong, guided by consistent patient growth and the accelerated shift to outpatient surgery following its hospital divestitures. However, the stock experienced a sell-off during the quarter, driven by market concerns over new administration policies and weaker hospital admissions data from the late flu season. We view the sell-off as another example of market overreaction to near-term headlines overshadowing the company’s long-term value creation strategy. In terms of position management, we had reduced our holding by nearly one-third prior to the sell-off on expectations that earnings growth—while still robust—would decelerate into 2025. As of period end, we see the valuation as compelling to hold given the long-term growth strategy in outpatient services—an area not likely to be affected by new administration policies.”

Overall, THC ranks 7th on our list of stocks that Jim Cramer discusses. While we acknowledge the potential of THC, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than THC and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.