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Good morning, and welcome to Tenet Healthcare Corporation's Fourth Quarter 2025 Earnings Conference Call. After the speakers' remarks, there will be a question and answer session for industry analysts. Tenet Healthcare Corporation respectfully asks that analysts limit themselves to one question each. I will now turn the call over to your host, Mr. William McDowell, Vice President of Investor Relations. Mr. McDowell, you may begin. Good morning, everyone, and thank you for joining today's call. I am William McDowell, Vice President of Investor Relations.

Pleased to have you join us for a discussion of Tenet Healthcare Corporation's fourth quarter 2025 results, as well as a discussion of our financial outlook. Tenet Healthcare Corporation's senior management participating in today's call will be Dr. Saumya Sutaria, Chairman and Chief Executive Officer, and Sun Park, Executive Vice President and Chief Financial Officer. Our webcast this morning includes a slide presentation, which has been posted to the Investor Relations section of our website, tenethealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent management's expectations based on currently available information. Actual results and plans could differ materially. Tenet Healthcare Corporation is under no obligation to update any forward-looking statements based on subsequent information. Investors should take note of the cautionary statement slide included in today's presentation as well as the risk factors discussed in our most recent Form 10 and other filings with the Securities and Exchange Commission. With that, I will turn the call over to Saumya Sutaria. Thank you, William, and good morning, everyone. We reported 2025 net operating revenues of

$21.3 billion and consolidated adjusted EBITDA of $4.57 billion, which represents 14% growth over 2024. Full-year adjusted EBITDA margin of 21.4% improved 200 basis points over 200 basis points from the prior year. Our fourth-quarter results were again above our expectations, driven by strong same-store revenue growth, high acuity, and disciplined cost control. I would note that our full-year adjusted EBITDA ended the year nearly $500 million higher than the midpoint of our initial expectations. USPI continues to deliver attractive results. Volumes were strong, and the mix was good. Adjusted EBITDA grew 12% in 2025 to $2.026 billion. Same facility revenues grew 7.5%, highlighted by double-digit same-store volume growth in total joint replacements in the ASCs over the prior year. This performance was once again well above our long-term goal of 3% to 6% organic top-line growth. We had an active year in the M&A and de novo activity lines as well, investing nearly $350 million in 2025 and adding 35 facilities to the portfolio. And the pipeline for both M&A and de novo development remains strong as we look into 2026. We remain the preferred acquirer and developer of assets in this space. Turning to our Hospital segment, Adjusted EBITDA grew 16% to $2.54 billion in 2025. Same-store revenues per adjusted admission were up 5.3% over the prior year as payer mix and acuity remained strong. We have continued to reinvest back in our business to further our capabilities, stepping up our growth capital in 2025. And finally, over the past three years, we have been active repurchasers of our shares, retiring approximately 22% of our outstanding shares for around $2.5 billion since our share repurchase program began in 2022. We expect to continue to deploy capital for share repurchase, particularly at our current valuation multiples. Our portfolio of businesses is now more predictable with consistently strong performance in both the Hospital segment and USPI. Our results represent a continuation of a multiyear track record of strong same-store revenue growth, improved margins, and disciplined execution by our management team. We remain focused on driving further organic growth supplemented by accretive M&A at USPI. Turning to 2026 guidance, we are projecting full-year 2026 adjusted EBITDA of $4.485 billion to $4.785 billion, driven by ongoing strength in demand and acuity, physician recruitment, and service line expansion, as well as additional sites of care joining the portfolio. We are also tackling expense management more structurally in anticipation of the next few years. We anticipate full-year adjusted EBITDA for USPI of $2.13 billion to $2.23 billion. The continued shift of services towards lower-cost sites of care will be furthered by the beginning of the phase-out of the inpatient-only list in 2026. We see this as a gradual tailwind for USPI that will play out over several years. In this first year, we see opportunities in areas such as high-acuity spine and urology procedures. We have detailed tactical plans to capitalize on the opportunity and are actively operationalizing our capabilities to serve patients in 2026. USPI continues to be a high-growth, capital-efficient business that delivers high returns on capital expenditures. Turning to our Hospital segment, we are expecting adjusted EBITDA in the range of $2.355 billion to $2.555 billion in 2026. Our plans reflect the headwind associated with the expiration of the enhanced premium tax credits on the exchange marketplace. We continue to closely monitor enrollment levels as well as the potential ramp-off ramps for individuals to obtain coverage through lower metal tier commercial plans or other options. We are assuming a 20% reduction in overall enrollment as we have more significant exposure in states such as Arizona, Michigan, and California. We recognize the uncertainty regarding effectuation rates as individuals make determinations if they can afford their premiums and the resultant expected increase in uninsured rates and have conservatively taken these matters into our initial guidance. Additionally, we are implementing cost savings plans to help mitigate this pressure and will continue to engage with our patients to ensure that they have good access to care. We are confident in our ability to achieve the strong core earnings growth we forecast for 2026. The significant margin improvements that we have made over the past few years provide us a strong foundation on which to grow our transformed portfolio of businesses. We carry momentum into this new year and have many opportunities to expand our services and deliver value for patients, physician partners, and in turn, our shareholders. And with that, Sun Park will provide us a more detailed review of our financial results. Sun Park? Thank you, Saumya Sutaria, and good morning, everyone.

We are very pleased with our performance in 2025, which again demonstrated robust same-store revenue growth in both the hospitals and USPI segments and adjusted EBITDA that exceeded our expectations each quarter, driven by continued high patient acuity, favorable payer mix, and effective expense management. In the fourth quarter, we generated total net operating revenues of $5.5 billion and consolidated adjusted EBITDA of $1.183 billion, a 13% increase over last year. Our adjusted EBITDA margin in the quarter was 21.4%, a continuation of our improved margin performance over multiple quarters. For the full year 2025, net operating revenues were $21.3 billion, and consolidated adjusted EBITDA was $4.566 billion, a 14% increase over 2024. Adjusted EBITDA margins in 2025 were 21.4%, up 210 basis points from the prior year. I would now like to highlight some key items for both of our segments, beginning with USPI. In the fourth quarter, USPI's adjusted EBITDA grew 9% over last year, with adjusted EBITDA margins at 40.5%. USPI delivered a 7.2% increase in same-facility system-wide revenues, with net revenue per case up 5.5% and same-facility case volumes up 1.6%. Turning to our Hospital segment, fourth-quarter adjusted EBITDA was $603 million, a 16% increase over 2024. Same-hospital inpatient adjusted admissions were flat, and revenue per adjusted admissions grew 7.5% year over year. Our consolidated salary, wages, and benefits were 40.2% of net revenues in the quarter, a 110 basis point improvement from the prior year. And our contract labor expense was 2.1% of consolidated SW&D expenses. Next, we will discuss our cash flow, balance sheet, and capital structure. We generated $367 million of free cash flow in the fourth quarter and $2.53 billion of free cash flow for the full year 2025. As of December 31, 2025, we had $2.88 billion of cash on hand, with no borrowings outstanding under our line of credit facility. Additionally, we have no significant debt maturities until late 2027. And finally, during the fourth quarter, we repurchased 943,000 shares of our stock for $198 million. We repurchased 8.8 million shares for $1.386 billion in 2025. Our leverage ratio as of December 31 was 2.25 times EBITDA or 2.85 times EBITDA less NCI, driven by our strong operational performance and financial discipline. We remain committed to a deleveraged balance sheet and believe that we have significant financial flexibility to support our capital deployment priorities and drive shareholder value. Let me now turn to our outlook for 2026. Our 2026 outlook assumes continued growth in same-store volumes and effective pricing, as well as strong operational efficiencies and disciplined cost controls. Additionally, we anticipate further contributions from M&A and de novo center openings at USPI. In addition, we are also assuming same-hospital admission growth of 1% to 2%, adjusted admissions growth of 1% to 2%, and same-facility USPI revenue growth of 3% to 6% for 2026. Importantly, our outlook does not assume any contributions from potential increases in supplemental Medicaid programs that have not yet been approved. Also, we believe that the expiration of the enhanced exchange tax credits will result in lower volume growth and a less favorable payer mix. We estimate that this represents a $250 million impact on our 2026 adjusted EBITDA, primarily in the hospital segment. Clearly, there are a wide range of potential outcomes here, and we will continue to monitor enrollment levels and effectuation rates. We will also leverage Conifer's capabilities to assist our patients with their insurance coverage. Based on all those items, we expect consolidated net operating revenues for 2026 in the range of $21.5 billion to $22.3 billion and consolidated adjusted EBITDA for 2026 in the range of $4.485 billion to $4.785 billion. There are two normalizing items that I would like to call out when comparing 2026 adjusted EBITDA to the prior year. First, we reported $148 million of prior-year supplemental Medicaid payments in 2025. Second, in 2026, we will recognize a one-time $40 million favorable revenue adjustment as a result of the completed Conifer transaction. After normalizing for these items and excluding the headwind from the expiration of the enhanced premium tax credits, our 2026 adjusted EBITDA is expected to grow 10% at the midpoint of our range. Finally, we would expect first-quarter 2026 consolidated adjusted EBITDA to be 24% of our full-year consolidated adjusted EBITDA at the midpoint. We anticipate that USPI's EBITDA in the first quarter will be 22% of our full-year 2026 USPI EBITDA at the midpoint. Turning to our cash flows, for 2026, we expect adjusted cash flow from operations in the range of $3.2 billion to $3.6 billion, capital expenditures in the range of $700 million to $800 million, resulting in adjusted free cash flows in the range of $2.5 billion to $2.8 billion, and adjusted free cash flow after NCI in the range of $1.6 billion to $1.83 billion. This range includes about $150 million in tax payments for the Conifer transaction. Excluding these tax payments, this will represent $1.865 billion of adjusted free cash flow less NCI at the midpoint of our 2026 outlook. We remain focused on strong free cash flow conversion from our EBITDA performance, including the continued outstanding cash collection performance at Conifer, while continuing to invest in high-priority areas of our businesses. Turning to our capital deployment priorities, we are well-positioned to create value for shareholders through the effective deployment of free cash flow. And our priorities have not changed. First, we will continue to prioritize capital investments to grow USPI through M&A. And as Saumya Sutaria noted, we see a strong pipeline to support our $250 million annual target for USPI M&A in 2026. Second, we expect to continue investing in key hospital growth opportunities to fuel organic growth, including our focus on higher acuity service offerings. Third, we will continue to have a balanced approach to share repurchases depending on market conditions and other investment opportunities. And finally, we will continue to evaluate opportunities to retire and/or refinance debt. In conclusion, we had another outstanding year in 2025, with strong revenue growth, disciplined operations, and very attractive free cash flow generation. We are confident in our ability to deliver on our outlook for 2026 and continue to drive value for patients, physician partners, and shareholders. And with that, we are ready to begin the Q&A.

At this time, we will be conducting a question and answer session. A confirmation tone will indicate your line is in the question queue. Before pressing the star keys, our first question comes from Ben Hendrix with RBC Capital. Please proceed with your question. Ben, are you there? We will go to the next one. Our next question comes from Stephen Baxter with Wells Fargo. Please proceed with your question.

Hi, thank you. I was hoping that perhaps you could expand a little bit on the same-store hospital volume performance in the quarter and any moving parts there? It looked like it was a little bit weaker than the trend. And then just as you are thinking about hospital volumes in 2026, it looks like at the midpoint, you might be looking for that to potentially improve a little bit versus the 2025 performance. So just like to help us think about the moving pieces there with the exchanges in the core performance? Thanks.

Yeah. I mean, obviously, acuity was good, which is what we are really focused on in the fourth quarter. Flu, I mean, I would just say from our standpoint, the respiratory season was probably a little weaker than otherwise might have expected, and that is probably the basic explanation. In 2026, understanding all the moving pieces, as I indicated in my comments, we had invested significantly in growth capital during the year, and we expect to see returns from some of those investments into 2026 and thus the improvement that you pick up on.

Our next question comes from Whit Mayo with Leerink Partners. Please proceed with your question.

Hey, guys. When you say, Saumya Sutaria, that you are tackling expense management more structurally, what do you mean by that? And can you elaborate on what is incremental about the cost efficiencies that you expect to see this year?

Yes. Structurally, Whit really refers to the notion that we are looking, as opposed to what I would describe as more traditional annual expense management, we are looking, as we have talked about over the past year, more thoroughly at the deployment of technology basically that allows us more expense reduction opportunities, and that includes the application of those technologies in our global business center. That is a little bit of a different pathway than before, more sustainable, more I would describe as modernization of the business, given some of the new tools and technologies available to us. It is not just AI, which, you know, is I think become kind of the central buzzword for this. But there is a lot more that can be done in automation. And then the other thing is just as we look at our clinical throughput, the application of those technologies ramping up in our clinical throughput, we believe, is another area to take things to the next level. So whether that is areas like length of stay management or throughput in some of the more high-value portions of the hospitals, real estate, etcetera, ORs, ERs, etcetera. Those kinds of things become more structural in nature. That is what I meant by that.

Okay. Thanks.

Our next question comes from Ben Hendrix with RBC Capital Markets. Your line is live.

Great. Thank you very much, and apologies for getting cut off earlier. I just wanted to get a little more color on the hospital admission growth guide, the 1% to 2%. Just wanted to talk a little bit about the slowdown from last year, the degree to which if we can parse out that slowdown between exchange expiry, between kind of investments toward higher acuity and higher margin capabilities in the hospital setting, and then also just a general slowdown of admissions we have been seeing across the acute sector to begin with. So just any commentary you can offer there. Thank you.

Yes. Hey, Ben, it is Sun. Saumya Sutaria already commented on kind of the Q4 mission, including the flu respiratory season being sort of not material for us. And then as we get into 2026, a lot of it has to do with this CapEx and technology investment that we have made in 2025, creating some volume momentum coming into 2026. On your question about the exchange, as we said in our comments, there is a pretty wide range of potential outcomes here. As Saumya Sutaria mentioned, we are assuming about a 20% decrease in enrollment. But we would have to then there are lots of areas where, what happens to those volumes. Right? Do those people find, do those patients find alternate coverage? And other plans, alternative plans? You know, certainly a big majority of them could become uninsured. But, you know, that volume will still show up at our hospitals, obviously, and in USPI. Just the question then becomes, can we optimize our cost and efficiency? So our range anticipates some impact of lost volumes, but, you know, I think our EBITDA range and as we discussed, our lost EBITDA ranges quantifying the exchange a little bit more.

Our next question comes from Matthew Gillmor with KeyBanc Capital Markets. Your line is now live.

Hey, thanks for the question. Maybe following up on the cost efficiencies. Are you able to quantify what you are able to pull through this year? Was also curious about the timing building throughout the year such that you will get a year-over-year benefit in future periods. Or do they take place earlier in the year so they are all captured in '26?

Yeah. No, we are not providing specific guidance between that. I mean, you think about our guidance from a core growth of EBITDA standpoint, I would just expect that embedded in there is both the value of the initiatives that we have invested in through capital and growth strategies for this year and expense management strategies that would be, you know, more, I guess, I said more structural over and above what we might have done in a typical year. And as I indicated, you know, the thought process behind those is not just about 2026, it is about being prepared for the years ahead.

Fair enough. Thank you. Our next question comes from Kevin Fischbeck with Bank of America. Your line is now live.

Yes, thanks. Now I guess I just want to follow up on that point. I guess we think about that type of growth, I mean, is this the type of growth that you think is sustainable in out years as we think about offsets? Because 10 is a pretty big number to be thinking about. And so I just want to understand, is this new focus on expense management replicable? Are you it kind of is what we are doing in year one and that is it? Or is this is what we are doing in year one and we should be thinking about similar types of opportunity in the out years because it is a little hard to bridge what would normally be viewed as, you know, a hospital business that might grow 3% to 5%. Now you are saying it is 10%. Like, is that sustainable?

Well, Kevin, I mean, I think two things. One is we have built up a track record of acuity growth and net revenue per case growth ahead of, ahead of, you know, generally what the market does. Our margin expansion over the past, not just two years as I indicated, but even beyond that in the hospital segment itself, has been significant above and beyond the asset sales that we did, which obviously helped some of that margin improvement. We said all along that we kept the markets where we felt like we had the best opportunities for growth and leadership. And as we look ahead, the environment that may be coming, you know, in '28, '29, etcetera, with OBBB and other things, now is the time to take on the challenge of really being well prepared for that. And so, you know, look, we understand what the core growth guidance is. We think it is very attractive guidance. We think there is a lot of work that is going to be required to get there and creativity. But on the other hand, that is exactly the work we should be doing given the platform that we have built. And so that is what we are going after.

Our next question is from Josh Raskin with Nephron Research. Your line is now live.

Thanks. I want to stay on the same topic. And Saumya Sutaria, I appreciate what you just said. I sort of looked at it. Margins were up 680 basis points into 2019, and the hospital segment is up 660 basis points. So it is not really mix. Seems as though we have heard a lot about process improvement and optimization at Tenet Healthcare Corporation for a couple of years, and now we are hearing about this new focus on expense management. I would just be curious to get your view on just the broader technology agenda, specifically including AI, and, you know, overall business including revenue cycle management. And just, you know, do you think there are additional step function improvements in margins? I guess that is the main question. Do you think we are going to see continued margin improvement like we have seen in the past?

Yes. I mean, I do not obviously, we are giving guidance in a year where there happens to be a headwind that we have done our best to quantify with respect to the exchange premium tax credits. You know, stated a different way, if those headwinds were not there, we have been saying all along that we continue to believe there is margin expansion opportunity in the hospital segment. The urgency with respect to much of what we are talking about doing is enhanced because of the, you know, what has happened on the exchange marketplace or what has not happened on the exchange marketplace, you know, as the case may be. The other thing I am mindful of is that, you know, there are what happens with respect to many of these reimbursement items might change over the next couple of years. Right? So we are not really planning out to that level of specificity for '27, '28, etcetera, there are elections that happen between now and then. That could alter, modify, or just transform policy from where it is today. But I think this gets back to the first part of your question, which is as we look around the environment, we have done a lot in this organization to improve reliability, accountability, the types of efficiencies we have taken, as we have scaled the company down in the hospital segment, reliably moving our overhead structure in line with that, all the things you would expect from an organization that is attempting to be best in class in what it does. And now, with the advent of many of these technologies in AI and automation, the ability to actually begin to deploy those and see if we can drive the next level of improvement, we are better set up for that now because we have more standard processes. We have more standard workflows. We have labor standards and supply standards that have been uniformly disseminated across the company. You know, it is much harder to do those things when every market is doing something very different versus having established those standards. And we have done that, and we have consistently demonstrated that establishing those standards have improved our business. So now it is about taking that to the next level. And that is really what we are talking about.

Our next question comes from Justin Lake with Wolfe Research. Your line is now live.

Thanks. Good morning. Wanted to follow up on some of the guidance stuff. Appreciate all the details. You mentioned obviously the DPP, gave us the one-time benefit last year that comes out. I am just curious if you could specify, is DPP other than that flat year over year or any change within that core guidance? Maybe you could also give us the run rate of DPP. And then I thought your estimate of the impact of the subsidy expirations was towards the higher end of my expectations at least. And I am curious how you treated your at least your thoughts on the shift potential shift of some of these enrollees back to employer commercial? What you have assumed there versus, let us say, I think, UHS or one of your peers is assuming none, one of your peers is assuming 15% to 20%? Thanks.

Hey, Justin. It is Sun. Thanks for your questions. On your question about the Medicaid supplemental payments, yes, as you pointed out, so a couple of numbers here. We finished 2025 with $1.34 billion in total supplemental payments. And obviously, we pointed out about $148 million of is out of period payments. So let us call it 1.2 effective run rate for 2025. In 2026, our guidance assumes effectively a pretty consistent number with our 2025 normalized baseline. So hopefully that helps. And then on your question about exchange, yeah, I mean, like we said, we assume about 20% overall of enrollment. I would say on your question about our assumptions for people finding alternative plans, including commercial, we are about 10% to 15% as an internal assumption. Now all of that, again, depends on what we see in Q1. And what run rates we see, but that is our assumption embedded in our guidance.

Our next question comes from Pito Chickering with Deutsche Bank. Your line is now live.

Hey, good morning, guys. Thanks for taking my question. Can I ask about sort of the first-quarter guidance? Normally, you guys get more than 24% of EBITDA in the first quarter? I think in the script, you said that 21% of the company ACs, which is normal. So the means of the changes actually the hospital segment. So is this something fundamental like the flu or lower circle demand, or is this just the $40 million of prior period PPP from last year or something else? And then just a quick clarification, can you quantify the DPP that you received in the '25 fixed?

Hey, Pito. It is Sun. Just to be clear, our USPS Q1 guidance is 22% of our full-year guidance in Q1 for USPI. And then for our hospital, you are right. You know, I think the $40 million one-time benefit in Q1 kind of skews the total rates. Other than that, we see pretty, you know, standard annual Q1 percentages as a percent of the full year. And then for your question on DPP Q4, we had $315 million.

Great. Thanks so much.

Thank you.

Our next question is from Andrew Mok with Barclays Bank. Your line is now live.

Hi, this is Thomas Walsh on for Andrew. With Conifer's services to CommonSpirit concluding at the end of this year, could you frame the current plan to redeploy existing resources to growth opportunities? And otherwise reduce expenses? To right-size the cost structure?

Well, I mean, we have a full year of service that we have to execute with respect to Conifer and our client this year. So we are not expecting to take cost reductions this year from that perspective. If anything, we may both increase revenue and cost if we end up doing more from a transition service standpoint, and that may come with a margin. You know, after that, we have talked about the fact that we have other growth opportunities that are already locked in starting in and around 2027 that will allow us to redeploy talent in that direction. So we can see that, you know, we will be rebasing a bit the business at Conifer and preparing it for future growth. I mean, I do not know. I would kind of just go back to the core of what actually happened here in what we did. I mean, if I were to be very simple about this, we had an expiring contract for which the cash flow that we would have taken in between 2026 and 2032 was basically breakeven at best because at the end of that period, we would have significant obligations to the client in terms of payments that would need to be made and, you know, equity that we would have to buy back. I mean, one thing that may not have been so clear, we have not made cash distributions from that joint venture in the last decade. And that resulted in a pretty significant buildup of redeemable non-controlling interest other liabilities. So what we did was we retired $885 million of those obligations on the balance sheet and got back 23.8% of the equity that was in the joint venture for $540 million. And then if you look at the remaining six years of the transaction, of the contract that got dealt with in the transaction, we received $1.9 billion in accelerated cash flow over three years that would have come over six years in the contract. And the present value of those two things was roughly double what we would have got by running off the contract. So, I mean, we have gone back for what it is worth and done the math. If you just look at this on an NPV basis after tax, the incremental value from actually running out the contract that we have created again, post-tax present value was north of a billion dollars. We calculate $1.1 billion. I mean, this was absolutely the right path to go down in addition to getting complete control of the strategic future of Conifer. How we deal with that in 2027 and beyond, including growth opportunities, investments that we can now control in reducing the cost to collect and positioning Conifer to be more competitive, is the work of 2026 that we have in this asset. But maybe that kind of bottom-line calculation, you know, now that we have had a chance to look at what the earnings will look like in the out years, based on what we know today, is helpful in framing what we did in this transaction. Again, after-tax NPV of about $1 billion to $1.1 billion is what we calculate. We are pleased with the outcome.

Our next question is from Scott Fidel with Goldman Sachs. Your line is now live.

Thanks. Good morning. I was hoping maybe you could elaborate a bit on for the ASC business, how you are thinking about it and planning for investments. They could be either around the new facilities or in terms of organic or de novo expansion. From a case mix and procedure perspective, just, you know, interested in where you see, you know, underlying demand the strongest, where you see, you know, the best opportunities, you know, to continue to drive the trend that you have had of, you know, favorable case mix and profitable, you know, sort of acuity and procedure growth in some of these specialty areas of the ASC business.

Yes. No, thanks for the question. I guess I would make three comments. One is that I alluded earlier to the inpatient-only list and additional opportunities there. I think that will be a slow tailwind going forward as there are more things that qualify in that area. I think USPI is well known to be kind of at the leading edge of the innovation in higher acuity procedures in that area. We continue to build on our urology platform, looking forward to doing more spine work there. A lot of the robotics capabilities that we have brought into the ASCs continue to allow us to find new avenues of expansion. And obviously, the large ongoing opportunity that we continue to see double-digit growth in our joint programs across the network, all those areas are, I think, attractive, you know, looking forward. We had a big M&A year, and a lot of the value that USPI brings after they acquire the assets and get into those settings is the planning for service line diversification and whatnot. So, you know, we have a big cohort this year that usually takes about a year to start to work on new physician entry and restructuring of the operating schedules, you know, where possible, to bring some of that higher acuity in. Sometimes, as we have talked about in the past, it removes lower acuity procedures in the context of doing that. When you get new centers, usually, it takes a year or so to kind of get that done. So we have a lot of work to do in that regard. And then the last point I would make is that, you know, Q4, as we expected about a year ago, we said that we saw a ramp going forward. Q4 had a nice pickup in GI case recovery as well. And that was an important driver of that performance. So I think it is the same this year. We expect the year to build over the year stronger and stronger. The first quarter last year was an incredibly strong quarter for us because of a lot of the synergies that dropped on the covenant transaction, you know, the CPP transaction in 2025. But as we kind of overcome that, this first quarter, expect to see growing momentum in the business looking ahead.

Our next question is from Ryan Langston with TD Cowen. Your line is now live.

Great, thanks. Can you tell us where exchange volumes and revenues tracked in the fourth quarter? And I know you do not assume any pickup from the supplemental programs that are not approved. But do you have any insight into where we are at in the approval process for the pending programs, like Florida, Arizona, California? Thanks.

Hey, Ryan. On Q4 for exchanges, we were about almost 7%, I am sorry, 7.5% of total admissions for HICCs, and then a little over 6.5%, somewhere in there, of our total revenues, consolidated revenues, was from exchange. On your question about Medicaid supplemental payments, yeah, we are obviously tracking all the sort of the pending submissions and approvals in some of the states that you mentioned. We do not, I do not know that we have any specific updates to provide at this time. We will obviously continue to monitor.

Yeah. I mean, I think it is just worth reemphasizing, you know, we have not put anything in our guidance about programs that have not yet received approval for '26.

Alright. Appreciate it. Thank you.

Anything incremental, sorry. I should be clear. Anything incremental in our guidance?

Our next question comes from A.J. Rice with UBS. Your line is now live.

Hi, everybody. Maybe just some comments on what you are seeing with care contracting. Obviously, that sector continues to be under pressure with some of the government programs, etcetera. And I wondered, is there any change in discussion, in terms of the pace of new contract or contract renegotiations or terms? Or just general update in rates?

Yes. Hey, A.J. It is Sun. No. No real change in our commentary. Look, I think we have very positive and successful conversations with payers in general based on Tenet Healthcare Corporation's overall service lines and what we bring to the table, including USPI as part of the overall package as well. Our commentary on rates is pretty consistent. We see 3% to 5% range from payers. And, overall, from a contracting standpoint, we are virtually contracting 2026. I would say, you know, high nineties. And then even for '27, we are about 80% contracted. I think we are in a very, very good spot. Thanks for your question.

Okay.

Our next question is from Sarah James with Cantor Fitzgerald. Your line is now live.

Thank you. Can you elaborate a little bit more about what you saw in payer mix in 4Q for USPI? And then unpack what you are assuming for hospital and USPI as far as the scale of change in '26 between 1Q 2026 and 4Q 2026? Thanks.

I will take the second half of it. I do not think we are anticipating any different if you are asking the question about are we anticipating any sort of a different mix quarter to quarter than we saw in the amount of EBITDA that we generate in the hospital segment or USPI proportionally, I do not think we are saying that at all. I mean, you know, this is always the case where you have, you could have movement of a percentage point or something like that. Up or down depending on we deal with winter weather, we deal with hurricanes, we deal with, but, you know, we rebook those things and attempt to deal with them. Sometimes that is intra-quarter, sometimes it is out of quarter. So I would personally focus on the overall guide, and our message in terms of the percentages for Q1 are not meant to imply that we are changing our proportions for Q2, Q3, and Q4.

Yeah. I got it. I guess I was thinking more in terms of as effective effectuation takes place, if you would expect the payer mix to change at the end of the year and to what degree compared to your assumptions and what

Yeah. I would say that, I mean, there is a reason why the guidance range is wider than it normally is. I mean, we do not know, right. I mean, we are tracking it. We have a unique vantage point with Conifer because we do enrollment work as well. So we get a bit of a view into what that enrollment work is yielding in terms of where are people going, what reaction are they having to their premiums as they get exposure to them? So I think we will have some leading-edge insights there. But let us be honest, it is not perfect at this stage. It is very early in the year, and, you know, I think the guidance is appropriately broad in the hospital segment because we really do not know exactly how that is going to translate. We have been transparent with our assumptions with you all, so that you can see where that is going to run relative to what actually happens.

And, Sarah, this is Sun. On your question about payer mix on USPI, I would say it has been very consistent. As Saumya Sutaria mentioned, we have some GI that came back, so that will tweak the overall mix a little bit from a payer standpoint. But nothing substantive. So we are very pleased with the payer mix. You know, in Q4, we reported, you know, at USPI, net revenue per case growth of 5.5%, total EBITDA margins above 40%. So I think all those metrics show very strong revenue acuity.

Thank you.

Our next question is from Benjamin Rossi with JPMorgan. Your line is now live.

Hey, good morning. Thanks for taking my question. Just as a follow-up for the ambulatory side. For the $30 million EBITDA headwind across ambulatory from the EAPTC is expiring, much of your payer mix for the ambulatory segment came from the ACA exchanges? 2024 and 2025? Then did you see any pull forward across that cohort here during the fourth quarter given your typical seasonal dynamics for ambulatory? Thanks.

Yes. Ben, we disclose that information in terms of the segment, but we have been pretty clear all along that HICS exposure at USPI is significantly less than the hospital segment. And no, we did not see any significant pull forward. We looked for it. Remember, we talked about this a quarter ago. As well. We looked for it, but we did not see any significant pull forward.

Great. Thanks.

Thanks.

Our next question comes from John Ransom with Raymond James. Your line is now live. John, are you there? Are you muted, John?

Sorry. Can you hear me now?

We can.

Oh, sorry. You know, there is a big narrative over the past few months that providers are getting on top of payers, quote, unquote, with coding advances assisted by AI, particularly claims resubmissions or easier. Is that exaggerated? Are we what inning are we in it? And just given that you are positioned on Encada firm being a provider, what is your position on that debate?

Yeah. I mean, John, I can only comment for Tenet Healthcare Corporation and, I guess, to some extent for how we operate at Conifer. Our coding has always been appropriate and compliant. We audit carefully. We have not changed our coding practices over the last few years, either for ourselves or necessarily for our clients. We aim for very high degrees of accuracy. And we have not made changes in those areas. We have obviously been successful in increasing our acuity, which has supported our net revenue per case in terms of our pathway there. And finally, just to unpack a little bit the question earlier related to this, with Sun's comments about our managed care contracting environment, you know, we also do not have extremely heavy HOPD, you know, HOPD market drive from what we are doing. So we do a lot on the basis of freestanding outpatient in what we do. And that ends up being a value to the plans. We have not found ourselves in conflict over coding practices. We find ourselves, you know, in conflict over the nature of the amount of time and energy we put into disputes, denials, underpayments, and things of that nature, that, you know, have a process back and forth that you have got to work through. But increasingly, we have been setting up systems with the health plans to have adjudication mechanisms to work with them on in order to resolve these things in a less resource-intensive way. Some payers have been better than others about doing that with us. But that is the path we are moving down.

Thank you.

Welcome.

Our final question is from Craig Hettenbach with Morgan Stanley. Your line is now live.

Yes, thank you. And appreciate all the details given the fluid backdrop in terms of puts and takes on this year. So I am just keying off of your comment of taking an active approach to buybacks, especially at the current valuation multiple. Given the significantly stronger balance sheet, free cash flow generation, and common spirit kind of proceeds, how are you and the Board just thinking about kind of the right cadence here of buybacks?

Well, yes, I mean, I purposely indicated, I purposely noted and indicated that, I mean, all these things link together, right? I mean, it is not just that we have significant cash on the balance sheet. We just described maybe in more detail today, the kind of value we just generated from the Conifer transaction, effectively, a portion of that transaction was, you know, like debt retirement. Right? I mean, it was an obligation on the balance sheet that was real coming up in the next few years. And so then the other proceeds from that go back into investing in the business, investing in USPI, and it gives us the opportunity for more share buybacks. And, you know, I would link this to our guidance for 2026 in terms of, I know we have talked a little bit about, you know, our growth rates and core growth rates. I mean, we attempt to operate and behave like a company that trades at a higher multiple. We will deploy our balance sheet like an organization that recognizes that the multiple has a valuation that is attractive to buy back shares. And I think we have done that over the last year. I mean, that is our mindset. Right? We expect to perform at that level. We also expect to deploy our balance sheet in a way that demonstrates we have confidence in our ability to operate. That might be the easiest way to describe how we think about the two. They are interlinked for us.

Thank you.