Tenet Healthcare (NYSE:THC) executives outlined details of what they described as an “accretive” transaction involving Conifer’s revenue cycle management services contract with CommonSpirit during an analyst conference call, emphasizing the value generated, the structure of cash payments, and the strategic implications for Conifer going forward.
Transaction overview and stated value
Chairman and CEO Saum Sutaria said Tenet has closed an asset sale related to Conifer’s revenue cycle contract with CommonSpirit, a relationship that has been in place since 2012. Sutaria characterized the deal as generating total value to Tenet of $2.65 billion, made up of cash payments, reductions to “material” balance sheet liabilities, and the value associated with Tenet acquiring an additional 23.8% of Conifer equity as part of the transaction.
Key mechanics: contract timeline, EBITDA and NCI, and payments
CFO Sun Park walked through the deal’s components and how Tenet expects them to flow through results and the balance sheet. Park said Conifer will continue providing revenue cycle services to CommonSpirit through the end of 2026 at terms consistent with the existing contract. As a result, Tenet expects to recognize the same amount of adjusted EBITDA in 2026 from those services as it would have without the transaction. For context, Park said estimated annual 2025 adjusted EBITDA less NCI from the contract was approximately $190 million.
Park also said the equity transfer is retroactively effective as of January 1, 2026, which means Tenet will not record income available for non-controlling interests related to CommonSpirit in 2026. He said Tenet’s NCI expense would be lower by about $100 million in 2026 as all Conifer economics will be recognized by Tenet.
On cash flows, Park said CommonSpirit will pay $1.9 billion to Tenet over the next three years. He detailed the schedule as:
- $540 million in the first quarter of 2026
- $453 million installments at the beginning of the first quarters of 2027, 2028, and 2029
However, Park said Tenet will also pay $540 million to CommonSpirit in the first quarter of 2026 to eliminate CommonSpirit’s capital account and redeem its 23.8% equity stake in Conifer, effective January 1, 2026. Park said that payment will offset the $540 million installment due to Tenet in 2026.
He added that CommonSpirit’s capital account of $885 million is largely reflected on Tenet’s balance sheet under “Redeemable Non-Controlling Interest in the Equity of Consolidated Subsidiaries,” and Tenet expects to reduce that balance in the first quarter of 2026. Park also said Tenet’s additional paid-in capital balance will increase by $305 million as a result of the transaction.
Strategic implications for Conifer
Sutaria said Tenet understands CommonSpirit’s desire to in-source revenue cycle functions as part of a broader transformation, and he described the relationship as productive over more than a decade. Looking ahead, he said Conifer remains committed to innovation and automation aimed at reducing “cost to collect” across Tenet’s hospitals and third-party clients.
Management highlighted future opportunities to leverage Conifer’s scale, including offshoring, automation, and applying AI to improve efficiency and capabilities. Sutaria said the transaction returns full strategic control of Conifer to Tenet, which he framed as important to aligning ongoing investments across the organization.
In the Q&A, Sutaria said the company did not view the CommonSpirit transition as negatively affecting client retention and noted Tenet has “new clients coming on board,” with an expectation to redeploy resources for growth objectives. He also said Conifer has been investing in areas such as automated conversion of clinical notes into claims, automation in coding, AI-driven denials management, and workflow tools powered by AI and advanced analytics.
Capital deployment and other commentary
Sutaria said the transaction strengthens Tenet’s cash flow position over the next several years and said 2026 priorities will include deploying capital to generate shareholder value. He identified share repurchase as an “important priority,” alongside continued ambulatory M&A and capital spending to support organic growth, while maintaining a “deleveraged” balance sheet.
In response to questions on capital allocation, Sutaria said the company’s capital allocation categories have not changed, but the transaction could provide an opportunity to accelerate activity and increase resources available for share repurchases. He also pointed to a continued pipeline at USPI, including both tuck-in acquisitions and multi-center deals, as well as a “robust de novo strategy.”
Separately, investor relations VP Will McDowell reiterated that Tenet expects fourth-quarter 2025 adjusted EBITDA to be at the upper end of previously issued guidance, citing strength in same-store revenues and disciplined expense management across hospitals and USPI. He said the company would not provide further 2026 guidance or additional details about 2025 results on the call.
Contract duration and tax considerations raised in Q&A
On contract duration, Sutaria said the CommonSpirit contract started in 2012 and was originally structured to run for 20 years, implying an end date of 2032. He also clarified that the $1.9 billion relates to the revenue cycle contract rather than equity ownership.
Addressing tax questions, management said the $1.9 billion payment would largely be treated as a “normal taxable structure,” while the tax impact associated with the balance sheet liability reduction was described as relatively modest, with more detail to come later.
About Tenet Healthcare (NYSE:THC)
Tenet Healthcare Corporation (NYSE: THC) is a diversified American healthcare services company that owns and operates acute care hospitals and a broad range of outpatient facilities. Its portfolio includes general acute-care hospitals, specialty hospitals, ambulatory surgery centers, urgent care and diagnostic imaging centers, and other ancillary service locations. Tenet’s operations are oriented around delivering inpatient and outpatient clinical care across multiple medical specialties, with an emphasis on surgical services, emergency care, and advanced diagnostics.
In addition to facility-based care, Tenet provides integrated services designed to support clinical operations and improve patient access and care coordination.
