Tenet’s Industry-Leading Debt Load Inflates
Tenet Healthcare, already carrying the highest debt-to-equity load among U.S. health-facilities companies, is planning to increase shareholder returns with a strategy that’s leading to more borrowing.
Tenet announced a four-point program on Oct. 1 that included $800 million of debt in a two-part bond sale that day. It’s also aiming to make $400 million of acquisitions, purchase $500 million of its stock and to execute a reverse stock split.
It can’t generate “meaningful” cash from earnings and may have to borrow more to fulfill its plan, according to Fitch. Tenet’s ratio of debt to Ebitda is now about 5.1 times, up from 4.37 before the debt sale, increasing its leverage at the fastest rate among U.S. hospital companies in the year through June 30.