Tenet’s CEO-Led Turnaround Powers a $2 Billion Share Repurchase Boost- Buyback Wednesdays

Operating a hospital may be one of the hardest businesses in America. According to the latest National Hospital Flash Report from Kaufman Hall, the industry’s adjusted median operating margin was just 1.3% last year. Operators have limited control over revenue, yet they must keep emergency rooms, intensive care units and other essential services staffed around the clock. Labor, drug and supply costs continue to rise, insurers can delay or deny payment for care already delivered, and a single policy change can abruptly reshape a hospital’s payer mix. 

Dr. Saum Sutaria has run Tenet Healthcare (THC) against that grain since taking over as CEO in 2021, turning a debt-heavy, scandal-scarred hospital operator into one of the best-performing stocks in the sector.

The transformation resembles Hubert Joly’s celebrated turnaround of Best Buy (BBY). There is also an intriguing connection between the two executives – both spent more than a decade at McKinsey before taking on their respective corporate turnarounds. This Masters in Business podcast episode with Hubert Joly from 2021 is one of my favorite podcast episodes.

Tenet’s shares have risen from roughly $75 when Sutaria became CEO to around $260 today, producing a gain of nearly 250%.

The company’s latest results suggest the transformation is still gaining momentum. Second-quarter adjusted earnings per share increased 52%, management raised its full-year outlook, and Tenet’s board authorized another $2 billion in share repurchases, on top of the billions already spent retiring stock.

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