UBS affirmed a Buy rating and a $260.00 price target on Tenet Healthcare (NYSE: THC) following the company's disclosure of a strategic change involving its Conifer Health revenue cycle management unit. The decision by CommonSpirit to redeem its minority stake and to discontinue its service agreement with Conifer was the catalyst for UBS's note, though the firm left its guidance intact.
On February 2nd, Tenet revealed that CommonSpirit will redeem a 23.8% equity interest in Conifer Health Solutions and will exit the contract under which it receives Conifer’s revenue cycle services at the end of 2026. That existing service agreement had previously been scheduled to continue through 2032.
Tenet said the current contract with CommonSpirit produces about $190 million in annual adjusted EBITDA less non-controlling interest for Conifer. Given CommonSpirit’s role as a material customer for Conifer, the announced timeline for contract termination and equity redemption represents a meaningful commercial shift for the revenue cycle business.
UBS analyst AJ Rice maintained the firm’s positive stance on Tenet, preserving both the Buy rating and the $260.00 price objective despite the changes at Conifer. The firm did not revise its target in response to the announcement.
Tenet also released preliminary fourth-quarter results, reporting adjusted EBITDA at the upper end of its guidance range. That preliminary strength prompted RBC Capital to raise its price target on Tenet to $253 while keeping an Outperform rating.
Separately, Tenet has completed a transaction with CommonSpirit that returned full ownership of Conifer to Tenet. The terms disclosed by Tenet include payments to the company totaling approximately $1.9 billion to be received over the next three years. As part of the arrangement, Conifer is to pay CommonSpirit $540 million to redeem the equity stake by January 1, 2026.
On the equity research side, ratings and targets from other firms differed. TD Cowen reduced its price target to $230 from a higher level but retained a Buy rating, with analyst Ryan Langston noting a slim chance of extension for Affordable Care Act subsidies as a factor. Cantor Fitzgerald reiterated an Overweight rating with a $245 price target, expressing a positive view on Tenet’s growth potential into 2026.
In addition to the ownership and contract shifts at Conifer, Tenet has moved in the debt markets. The company issued $2.25 billion in new notes intended for debt refinancing, deploying the proceeds to redeem outstanding notes as part of its balance sheet management.
These developments together - the Conifer equity redemption and service wind-down, the preliminary quarterly results, varying analyst target changes, and the new notes issuance - outline a period of strategic and financial reconfiguration for Tenet. Analysts differ on short-term valuations, but UBS has elected to keep a constructive rating and price target after the Conifer announcement.