Tenet Healthcare (THC) is a long suffering company and stock, but by virtue of today's Supreme Court decision upholding basically all of the Affordable Care Act provisions, and specifically the "mandated" coverage, Tenet's share price could actually double or triple just by that ruling alone.
There are many reasons that the for-profit hospital sector stands to gain, but let me outline just the basic reasons which also happen to be the most important:
- By virtue of the "mandate" more patients will have insurance
- There will be far fewer bad debts from the uninsured
- Revenue and profits will grow exponentially as not only will balance sheets be cleaned up, but going forward there will be more assets than liabilities being entered
Tenet has been a beleaguered stock and company for about 10 years now, and has seen its share price go from a high of $49.50 back in 2002, down to its all-time low of $1.07/share in 2009.
A review of this 2006 report (pdf) could give you all you need to know about Tenet's history of issues, and this recent article from just a few months ago gives us more evidence that Tenet has been digging its way out of its messy past.
I am not suggesting that the stock will hit $50.00 anytime soon, if ever, but given the developments of today, as well as some rather aggressive moves by Tenet itself, the share price could easily double or triple within 12-24 months.
Trading off of its 52-week lows, and under its 52-week highs, Tenet just might be a fast-rising stock for both short- and long-term investors.
What Else Has Tenet Done?
As noted in this article just today the Affordable Care Act alone is not the only thing THC has going for it:
"In early June, Tenet Healthcare Corporation stated at the Jeffries Global Healthcare Conference that while pressure on state budgets has led to cuts it was added that these challenges appear to be behind the company. Otherwise, investors should note that Tenet Healthcare Corporation has recently announced a big 10 year contract win with Catholic Health Initiatives for 56 of its hospitals that will be implemented in 2013. Naturally there will be start-up costs associated with the contract but CHI's system has 61 hospitals, 20 long-term care facilities and a number of outpatient facilities along with $9.6 billion in revenue (THC's 2011 revenue was $8.9) - meaning Tenet Healthcare Corporation is in for a growth spurt."
Also from that article, we can see the share price trending up since last October.
In this Barron's article, my position is stated quite well by the author:
"If the individual mandate remains in place, it could result in 33 million newly insured Americans by 2022. That's a boon to for-profit hospitals including HCA (HCA), Community Health Systems (CYH) and Tenet Healthcare (THC) because their exposure to bad-debt charges from unpaid medical bills could drop."
Now we know that the mandate is in place and Tenet stands to gain quite nicely if not swiftly as well.
Tenet has seen its troubles almost evaporate before its eyes today. As one of the nation's largest for-profit urban-based hospital corporations, i believe it stands to gain the most now.
Do your own research and do not base any decision on my opinion, but i am going to be buying Tenet Healthcare at these prices.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in THC over the next 72 hours.