TENET HEALTHCARE CORP

Previous wording

Our business consists of our Hospital Operations and Services (“Hospital Operations”) segment and our Ambulatory Care segment. Our Hospital Operations segment is comprised of our acute care and specialty hospitals, a network of employed physicians and ancillary outpatient facilities. At June 30, 2025, our subsidiaries operated 49 hospitals serving primarily urban and suburban communities in eight states. Our Hospital Operations segment also included 134 outpatient facilities at June 30, 2025, including urgent care centers, imaging centers, off‑campus hospital emergency departments and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.

Current wording

Our business consists of our Hospital Operations and Services (“Hospital Operations”) segment and our Ambulatory Care segment. Our Hospital Operations segment is comprised of our acute care and specialty hospitals, a network of employed physicians and ancillary outpatient facilities. At September 30, 2025, our subsidiaries operated 50 hospitals serving primarily urban and suburban communities in eight states. Our Hospital Operations segment also included 135 outpatient facilities at September 30, 2025, including urgent care centers, imaging centers, off‑campus hospital emergency departments and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.

Previous wording

Our Ambulatory Care segment, through our USPI Holding Company, Inc. subsidiary (“USPI”), held ownership interests in 521 ambulatory surgery centers (each, an “ASC”), 385 of which are consolidated, and 26 surgical hospitals, eight of which are consolidated, in 37 states at June 30, 2025. USPI’s facilities offer a range of procedures and service lines, including, among other specialties: orthopedics, total joint replacement, and spinal and other musculoskeletal procedures; gastroenterology; pain management; otolaryngology (ear, nose and throat); ophthalmology; and urology.

Current wording

Our Ambulatory Care segment, through our USPI Holding Company, Inc. subsidiary (“USPI”), held ownership interests in 530 ambulatory surgery centers (each, an “ASC”), 398 of which are consolidated, and 26 surgical hospitals, eight of which are consolidated, in 37 states at September 30, 2025. USPI’s facilities offer a range of procedures and service lines, including, among other specialties: orthopedics, total joint replacement, and spinal and other musculoskeletal procedures; gastroenterology; pain management; otolaryngology (ear, nose and throat); ophthalmology; and urology.

Previous wording

In certain cases, information presented in MD&A for our Hospital Operations segment is described as presented on a same‑hospital basis, which includes facilities we operated for the entirety of the periods presented. For the six-month periods ended June 30, 2025 and 2024, information presented on a same‑hospital basis includes the results of our same hospitals and those outpatient centers we operated throughout both periods, and excludes the results of: (1) Westover Hills Baptist Hospital, the acute care hospital we opened in Texas in July 2024; (2) a rehabilitation hospital in El Paso, Texas, in which we acquired a majority ownership interest in September 2024; (3) three hospitals located in South Carolina and certain related operations (the “SC Hospitals”) we sold in January 2024; (4) four hospitals and certain related operations located in Orange County and Los Angeles County, California (the “OCLA CA Hospitals”) we sold in March 2024; (5) two hospitals and certain related operations located in San Luis Obispo County, California (the “Central CA Hospitals”), which we also sold in March 2024; (6) five hospitals and certain related operations located in Alabama we divested in September 2024 (the “AL Hospitals”); and (7) businesses classified as discontinued operations for accounting purposes during those periods, along with other ancillary facilities acquired or divested during the reporting periods that have a limited financial or operational impact. We present same‑hospital data because we believe it provides investors with useful information regarding the performance of our current portfolio of hospitals and other operations that are comparable for the periods presented. Furthermore, same‑hospital data may more clearly reflect recent trends we are experiencing with respect to volumes, revenues and expenses exclusive of variations caused by the addition or disposition of individual hospitals and other operations.

Current wording

In certain cases, information presented in MD&A for our Hospital Operations segment is described as presented on a same‑hospital basis, which includes facilities we operated for the entirety of the periods presented. For the nine-month periods ended September 30, 2025 and 2024, information presented on a same‑hospital basis includes the results of our same hospitals and those outpatient centers we operated throughout both periods, and excludes the results of: (1) three hospitals located in South Carolina and certain related operations (the “SC Hospitals”) we sold in January 2024; (2) four hospitals and certain related operations located in Orange County and Los Angeles County, California (the “OCLA CA Hospitals”) we sold in March 2024; (3) two hospitals and certain related operations located in San Luis Obispo County, California (the “Central CA Hospitals”), which we also sold in March 2024; (4) Westover Hills Baptist Hospital (“Westover Hills Hospital”), the acute care hospital we opened in Texas in July 2024; (5) a rehabilitation hospital in El Paso, Texas, in which we acquired a majority ownership interest in September 2024; (6) five hospitals and certain related operations located in Alabama we divested in September 2024 (the “AL Hospitals” and, together with the SC Hospitals, OCLA CA Hospitals and Central CA Hospitals, the “Divested Hospitals”); (7) the Florida Coast Medical Center, an acute care hospital we opened in Florida in September 2025; and (7) businesses classified as discontinued operations for accounting purposes during those periods, along with other ancillary facilities acquired or divested during the reporting periods that have a limited financial or operational impact. We present same‑hospital data because we believe it provides investors with useful information regarding the performance of our current portfolio of hospitals and other operations that are comparable for the periods presented. Furthermore, same‑hospital data may more clearly reflect recent trends we are experiencing with respect to volumes, revenues and expenses exclusive of variations caused by the addition or disposition of individual hospitals and other operations.

Previous wording

In the Management Overview section of MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”), we describe several trends impacting the healthcare industry, as well as other factors affecting the environment in which we operate, including staffing and labor trends, supply chain operational challenges, general economic and geopolitical conditions, and the impact of potential changes in federal and state healthcare laws, regulations, funding policies and reimbursement practices. In addition, the potential for new or increased tariffs on various goods including, but not limited to, medical supplies, pharmaceuticals and capital equipment has created further uncertainty within the healthcare sector. While we closely monitor developments in international trade policy, including those related to tariffs imposed or proposed by the U.S. government and its trading partners, the scope, implementation timeline and duration of such measures remain unclear. As a result, we are unable to predict if or to what extent future tariff actions could materially impact our supply chain, capital expenditures or operating costs.

Current wording

In the Management Overview section of MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”), we describe several trends impacting the healthcare industry, as well as other factors affecting the environment in which we operate, including staffing and labor trends, supply chain operational challenges, general economic and geopolitical conditions, and the impact of potential changes in federal and state healthcare laws, regulations, funding policies and reimbursement practices. In addition, the potential for new or increased tariffs on various goods including, but not limited to, medical supplies, pharmaceuticals and capital equipment and the potential impact to reimbursements and disruption in payments from the government shutdown have created further uncertainty within the healthcare sector. While we closely monitor developments in international trade policy, including those related to tariffs imposed or proposed by the U.S. government and its trading partners, the scope, implementation timeline and duration of such measures remain unclear. We are unable to predict if or to what extent future tariff actions could materially impact our supply chain, capital expenditures or operating costs, or the impact of a prolonged government shutdown on our operations.

Previous wording

In July 2025, the Republican budget reconciliation package, the One Big Beautiful Bill Act (“OBBBA”), was signed into law, enacting significant changes to, among other things, the federal tax code and U.S. healthcare policy, coverage and reimbursement systems. While the most substantial healthcare provisions are not scheduled to take effect until 2027 and thereafter, the OBBBA introduces new limitations and eligibility requirements that are expected to materially impact Medicaid funding and enrollment, as well as the health insurance marketplace. We are unable to predict at this time how states will implement various requirements of the law. In addition, we are currently evaluating the OBBBA’s modifications to sections of the Internal Revenue Code related to the deductibility of depreciation and business interest expense, certain of which will become effective in 2025. Additional discussion about the OBBBA’s expected impact on healthcare in the U.S. is set forth in the Government Programs section, and the tax-related provisions of the law are described in further detail in the Income Tax Expense section of Results of Operations, both below.

Current wording

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, enacting significant changes to, among other things, the federal tax code and U.S. healthcare policy, coverage and reimbursement systems. While the most substantial healthcare provisions are not scheduled to take effect until 2027 and thereafter, the OBBBA introduces new limitations and eligibility requirements that are expected to materially impact Medicaid funding and enrollment, as well as the health insurance marketplace. We are unable to predict at this time how states will implement various requirements of the law. In addition, the OBBBA contained significant changes to the U.S. federal tax code related to the deductibility of depreciation and business interest expense. We do not believe these changes will have a material impact on current year tax expense. Additional discussion about the OBBBA’s expected impact on healthcare in the U.S. is set forth in the Government Programs section, and the tax-related provisions of the law are described in further detail in the Income Tax Expense section of Results of Operations, both below.

Previous wording

In July 2025, our board of directors authorized a $1.500 billion increase to the $1.500 billion share repurchase program it originally authorized in July 2024, which program has no expiration date. Repurchases may be made in open‑market or privately negotiated transactions, at management’s discretion subject to market conditions and other factors, and in a manner consistent with applicable securities laws and regulations. Our share repurchase program does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time.

Current wording

In the nine months ended September 30, 2025, we repurchased $1.188 billion of our common stock pursuant to our share repurchase program. This program has no expiration date, it does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time. At September 30, 2025, there was $1.688 billion available under this program for future repurchases.

Previous wording

Total admissions decreased by 7,663, or 6.1%, total emergency department visits decreased by 55,161, or 9.4%, and total surgeries decreased by 10,870, or 13.7%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decreases in our volumes were primarily related to the divestiture of the AL Hospitals in September 2024, partially offset by an increase in our same‑hospital admissions during the period in 2025.

Current wording

Total admissions decreased by 7,992, or 6.3%, total emergency department visits decreased by 43,872, or 7.6%, and total surgeries decreased by 8,433, or 10.9%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The decreases in our volumes primarily reflected the divestiture of the AL Hospitals in September 2024, partially offset by higher same‑hospital admissions during the three months ended September 30, 2025 and incremental volumes associated with the opening of our Westover Hills Hospital.

Previous wording

The 17.2% increase in our Ambulatory Care segment’s total consolidated cases in the three months ended June 30, 2025, as compared to the same period in 2024, was primarily attributable to incremental case volume from our recent acquisitions, net of the impact of the closure and sale of certain facilities, as well as service line growth during 2025.

Current wording

The 6.2% increase in our Ambulatory Care segment’s total consolidated cases in the three months ended September 30, 2025, as compared to the same period in 2024, was primarily attributable to incremental case volume from our recent acquisitions and same-facility case growth, net of the impact of the closure and sale of certain facilities.

Previous wording

Consolidated net operating revenues increased by $163 million, or 3.2%, in the three months ended June 30, 2025 compared to the same period in 2024. The increase of $34 million, or 0.9%, in our Hospital Operations segment’s net operating revenues for the three‑month period in 2025, as compared to the same period in 2024, was primarily due to the positive impact of a more favorable payer mix, higher patient acuity and same-hospital admissions, growth in Medicaid supplemental revenue, and negotiated commercial rate increases in the 2025 period, partially offset by the divestiture of the AL Hospitals.

Current wording

Consolidated net operating revenues increased by $163 million, or 3.2%, in the three months ended September 30, 2025 compared to the same period in 2024. The increase of $27 million, or 0.7%, in our Hospital Operations segment’s net operating revenues for the three‑month period in 2025, as compared to the same period in 2024, was primarily due to the positive impact of a more favorable payer mix, increases in our same-hospital admissions, higher patient acuity, growth in Medicaid supplemental revenue and negotiated commercial rate increases in the 2025 period, largely offset by the divestiture of the AL Hospitals.

Previous wording

Net operating revenues in our Ambulatory Care segment increased by $129 million, or 11.3%, in the three months ended June 30, 2025 compared to the same period in 2024. This change was primarily driven by our recent acquisitions, net of the impact of the closure and sale of certain facilities, as well as higher net revenue per case and service line growth in the 2025 period.

Current wording

Net operating revenues in our Ambulatory Care segment increased by $136 million, or 11.9%, in the three months ended September 30, 2025 compared to the same period in 2024. This change was primarily driven by our recently acquired ASCs, an increase in same-facility case volume and higher net revenue per case during the 2025 period, partially offset by the impact of the closure and sale of certain facilities.

Previous wording

Salaries, wages and benefits expense for our Hospital Operations segment decreased by $38 million, or 2.0%, in the three months ended June 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the divestiture of the AL Hospitals in September 2024, as well as lower contract labor and premium pay costs and a decrease in incentive compensation expense during the 2025 period. These factors were partially offset by higher health benefits costs, an increase in recruiting and retention expense, and annual merit increases for certain of our employees. On a per adjusted admission basis, salaries, wages and benefits expense in our Hospital Operations segment during the three months ended June 30, 2025 increased by 5.6% compared to the same period in 2024.

Current wording

Salaries, wages and benefits expense for our Hospital Operations segment decreased by $20 million, or 1.0%, in the three months ended September 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the divestiture of the AL Hospitals in September 2024, as well as a decrease in incentive compensation expense and lower contract labor and premium pay costs during the 2025 period. These factors were partially offset by higher employee benefit costs and annual merit increases for certain of our employees. On a per adjusted admission basis, salaries, wages and benefits expense in our Hospital Operations segment during the three months ended September 30, 2025 increased by 5.8% compared to the same period in 2024.

Previous wording

Supplies expense for our Hospital Operations segment decreased by $9 million, or 1.5%, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This change was primarily due to the divestiture of the AL Hospitals during 2024, partially offset by an increase in same-hospital patient admissions and higher acuity during the 2025 period. On a per adjusted admission basis, supplies expense increased by 6.3% in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Current wording

Supplies expense for our Hospital Operations segment decreased by $3 million, or 0.5%, during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This change was primarily due to the divestiture of the AL Hospitals during 2024, as well as our continued focus on cost‑efficiency measures, which include product standardization, contract management, improved utilization, bulk purchases, focused spending and operational improvements, among others. These factors were partially offset by an increase in same-hospital patient admissions, as well as higher acuity during the 2025 period. On a per adjusted admission basis, supplies expense increased by 6.3% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Previous wording

Other operating expenses for our Hospital Operations segment decreased by $45 million, or 4.6%, in the three months ended June 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the divestiture of the AL Hospitals, as well as a reduction in malpractice expense, partially offset by an increase in professional and consulting fees. On a per adjusted admission basis, other operating expenses during the three months ended June 30, 2025 increased by 2.9% compared to the same period in 2024.

Current wording

Other operating expenses for our Hospital Operations segment decreased by $18 million, or 1.9%, in the three months ended September 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the divestiture of the AL Hospitals during the three months ended September 30, 2024, partially offset by an increase in same-hospital medical fees; malpractice expense; and professional and consulting fees during the same period in 2025. On a per adjusted admission basis, other operating expenses during the three months ended September 30, 2025 increased by 5.0% compared to the same period in 2024.

Previous wording

Cash and cash equivalents were $2.625 billion at June 30, 2025 compared to $2.999 billion at March 31, 2025. Significant cash flow items in the three months ended June 30, 2025 included:

Current wording

Cash and cash equivalents were $2.975 billion at September 30, 2025 compared to $2.625 billion at June 30, 2025. Significant cash flow items in the three months ended September 30, 2025 included:

Previous wording

•Net cash provided by operating activities before interest, taxes, impairment and restructuring charges, and acquisition‑related costs, and litigation costs and settlements of $1.516 billion;

Current wording

•Net cash provided by operating activities before interest, taxes, impairment and restructuring charges, and acquisition‑related costs, and litigation costs and settlements of $1.248 billion;

Previous wording

•Distributions paid to noncontrolling interests totaling $185 million; and

Current wording

•Distributions paid to noncontrolling interests totaling $211 million;

Previous wording

•Purchases of businesses or joint venture interests, net of cash acquired, of $120 million.

Current wording

•Purchases of businesses or joint venture interests, net of cash acquired, of $119 million;

Previous wording

•$747 million of payments to purchase approximately 4,601 thousand shares of our common stock;

Current wording

•$93 million of payments to purchase approximately 598 thousand shares of our common stock; and

Previous wording

Net cash provided by operating activities was $1.751 billion in the six months ended June 30, 2025 compared to $1.333 billion in the six months ended June 30, 2024. Key factors contributing to the change between the 2025 and 2024 periods included the following:

Current wording

Net cash provided by operating activities was $2.809 billion in the nine months ended September 30, 2025 compared to $2.378 billion in the nine months ended September 30, 2024. Key factors contributing to the change between the 2025 and 2024 periods included the following:

Previous wording

•An increase in net income before interest, taxes, depreciation and amortization, impairment and restructuring charges, acquisition‑related costs, litigation costs and settlements, loss from early extinguishment of debt, other non-operating income or expense, and net gains on sales, consolidation and deconsolidation of facilities of $315 million;

Current wording

•An increase in net income before interest, taxes, depreciation and amortization, impairment and restructuring charges, acquisition‑related costs, litigation costs and settlements, loss from early extinguishment of debt, other non-operating income or expense, and net gains on sales, consolidation and deconsolidation of facilities of $436 million;

Previous wording

•Interest payments that were $60 million lower in the 2025 period; and

Current wording

•Interest payments that were $56 million lower in the 2025 period;

Previous wording

This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. All statements, other than statements of historical or present facts, that address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions and government actions on our business. Forward‑looking statements represent management’s expectations, based on currently available information, as to the outcome and timing of future events, but, by their nature, address matters that are indeterminate. They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements. Such factors include, but are not limited to, the risks described in the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report.

Current wording

This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. All statements, other than statements of historical or present facts, that address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions and government actions on our business. Forward‑looking statements represent management’s expectations, based on currently available information, as to the outcome and timing of future events, but, by their nature, address matters that are indeterminate. They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements. Such factors include, but are not limited to, the risks of potential delays, reductions or disruptions in payments from a prolonged government shutdown, and other risks described in the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report.

Previous wording

•reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began for Medicare payments in FFY 2014 and, under current law, are scheduled to commence for Medicaid payments on October 1, 2025.

Current wording

•reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began for Medicare payments in FFY 2014 and on October 1, 2025 for Medicaid payments.

Previous wording

Over the past several years, various laws and regulations lengthened the enrollment period, expanded income eligibility, and reduced premium caps for subsidies for individuals purchasing Affordable Care Act coverage through state and federal marketplaces – all of which led to increased enrollment numbers, particularly in states that have not expanded Medicaid. Certain of these provisions are set to expire at the end of 2025; if they are not extended, increases in premiums, which could be significant, are likely, potentially leading to decreased enrollment and a corresponding rise in the uninsured or a shift of individuals from commercial coverage to government program coverage beginning in 2026. In such a case, we may experience decreased patient volumes, reduced revenues and an increase in uncompensated care, which would adversely affect our results of operations and cash flows.

Current wording

Over the past several years, various laws and regulations lengthened the enrollment period, expanded income eligibility, and reduced premium caps for subsidies for individuals purchasing Affordable Care Act coverage through state and federal marketplaces – all of which led to increased enrollment numbers, particularly in states that have not expanded Medicaid. Certain of these provisions are set to expire at the end of 2025; if they are not extended or if the state and federal marketplaces are otherwise materially disrupted, increases in premiums, which could be significant, are likely. Such increases could potentially lead to decreased enrollment and a corresponding rise in the uninsured or a shift of individuals from commercial coverage to government program coverage beginning in 2026. In such a case, we may experience decreased patient volumes, reduced revenues and an increase in uncompensated care, which would adversely affect our results of operations and cash flows.

Previous wording

Medicare offers its beneficiaries different ways to obtain their medical benefits. One option, the Original Medicare Plan (which includes “Part A” and “Part B”), is a fee‑for‑service (“FFS”) payment system. The other option, called Medicare Advantage (sometimes called “Part C” or “MA Plans”), includes health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), private FFS Medicare special needs plans and Medicare medical savings account plans. Our total net patient service revenues from operation of the hospitals and related outpatient facilities in our Hospital Operations segment for services provided to patients enrolled in the Original Medicare Plan were $530 million and $518 million for the three months ended June 30, 2025 and 2024, respectively, and $1.078 billion and $1.128 billion for the six months ended June 30, 2025 and 2024, respectively. A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided in our Annual Report. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Regulatory and Legislative Updates” below.

Current wording

Medicare offers its beneficiaries different ways to obtain their medical benefits. One option, the Original Medicare Plan (which includes “Part A” and “Part B”), is a fee‑for‑service (“FFS”) payment system. The other option, called Medicare Advantage (sometimes called “Part C” or “MA Plans”), includes health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), private FFS Medicare special needs plans and Medicare medical savings account plans. Our total net patient service revenues from operation of the hospitals and related outpatient facilities in our Hospital Operations segment for services provided to patients enrolled in the Original Medicare Plan were $512 million and $504 million for the three months ended September 30, 2025 and 2024, respectively, and $1.590 billion and $1.632 billion for the nine months ended September 30, 2025 and 2024, respectively. A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided in our Annual Report. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Regulatory and Legislative Updates” below.

Previous wording

Medicaid programs and the corresponding reimbursement methodologies vary from state‑to‑state and from year‑to‑year. In addition to traditional Medicaid programs, we also receive DSH and other supplemental revenues under various state Medicaid programs. All Medicaid patient service revenue is presented net of provider taxes or assessments paid by our hospitals. During the three and six months ended June 30, 2025 and 2024, revenue from Medicaid programs included $351 million and $286 million, respectively, and $677 million and $625 million, respectively, of revenue attributable to DSH and other supplemental programs. Revenue from Medicaid programs constituted approximately 11% of our total net patient services revenues during each of the six-month periods ended June 30, 2025 and 2024.

Current wording

Medicaid programs and the corresponding reimbursement methodologies vary from state‑to‑state and from year‑to‑year. In addition to traditional Medicaid programs, we also receive DSH and other supplemental revenues under various state Medicaid programs. All Medicaid patient service revenue is presented net of provider taxes or assessments paid by our hospitals. During the three and nine months ended September 30, 2025 and 2024, revenue from Medicaid programs included $346 million and $268 million, respectively, and $1.023 billion and $893 million, respectively, of revenue attributable to DSH and other supplemental programs. Revenue from Medicaid programs constituted approximately 11% of our total net patient services revenues during each of the nine-month periods ended September 30, 2025 and 2024.

Previous wording

Proposed Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems—Section 1886(d) of the Social Security Act requires CMS to update Medicare inpatient FFS payment rates for hospitals reimbursed under the inpatient prospective payment systems (“IPPS”) annually. The updates generally become effective October 1, the beginning of the FFY. In April 2025, CMS issued proposed changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2026 Rates (“Proposed IPPS Rule”). According to CMS, the combined impact of the proposed payment and policy changes in the Proposed IPPS Rule for operating costs will yield an average 3.4% increase in Medicare operating payments for propriety hospitals in FFY 2026.

Current wording

Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems—Section 1886(d) of the Social Security Act requires CMS to update Medicare inpatient FFS payment rates for hospitals reimbursed under the inpatient prospective payment systems (“IPPS”) annually. The updates generally become effective October 1, the beginning of the FFY. In August 2025, CMS issued final changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2026 Rates (“Final IPPS Rule”). According to CMS, the combined impact of the proposed payment and policy changes in the Final IPPS Rule for operating costs will yield an average 4.4% increase in Medicare operating payments for proprietary hospitals in FFY 2026. The Final IPPS Rule includes the following payment and policy changes, among others:

Previous wording

As described in detail in our Annual Report, in addition to payments from government programs, we receive revenue under contracts with commercial insurers, including both managed care arrangements with various HMOs and PPOs and indemnity‑based agreements. These contracts offer varying structures for patient access, utilization and reimbursement. Our top 10 managed care payers generated 69% of our managed care net patient service revenues for the six months ended June 30, 2025. During the same period, national payers generated 48% of our managed care net patient service revenues; the remainder came from regional or local payers.

Current wording

As described in detail in our Annual Report, in addition to payments from government programs, we receive revenue under contracts with commercial insurers, including both managed care arrangements with various HMOs and PPOs and indemnity‑based agreements. These contracts offer varying structures for patient access, utilization and reimbursement. Our top 10 managed care payers generated 69% of our managed care net patient service revenues for the nine months ended September 30, 2025. During the same period, national payers generated 48% of our managed care net patient service revenues; the remainder came from regional or local payers.

Previous wording

The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the three months ended June 30, 2025 and 2024 was $2.423 billion and $2.383 billion, respectively, and $4.823 billion and $5.039 billion during the six months ended June 30, 2025 and 2024, respectively. All Medicaid managed care patient service revenue is presented net of provider taxes or assessments paid by our hospitals.

Current wording

The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the three months ended September 30, 2025 and 2024 was $2.374 billion and $2.425 billion, respectively, and $7.197 billion and $7.464 billion during the nine months ended September 30, 2025 and 2024, respectively. All Medicaid managed care patient service revenue is presented net of provider taxes or assessments paid by our hospitals.

Previous wording

Consolidated net operating revenues increased $18 million, or 0.2%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Our Hospital Operations segment’s net operating revenues decreased by $310 million, or 3.7%, during the six months ended June 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the sales of the SC Hospitals, OCLA CA Hospitals, Central CA Hospitals and AL Hospitals during 2024. The impact of these sales was partially offset by a more favorable payer mix, higher patient admissions and acuity, growth in Medicaid supplemental revenue, and negotiated commercial rate increases in the 2025 period.

Current wording

Consolidated net operating revenues increased $181 million, or 1.2%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Our Hospital Operations segment’s net operating revenues decreased by $283 million, or 2.3%, during the nine months ended September 30, 2025 compared to the same period in 2024. This decrease was primarily attributable to the sales of the Divested Hospitals during 2024, partially offset by a more favorable payer mix, increased same‑hospital patient admissions, higher patient acuity, growth in Medicaid supplemental revenue and negotiated commercial rate increases in the 2025 period.

Previous wording

During the six months ended June 30, 2025, net operating revenues in our Ambulatory Care segment increased by $328 million, or 15.4%, as compared to the same period in 2024. This increase was driven by incremental revenue from our recent acquisitions, net of the impact of the closure and sale of certain facilities, as well as growth in same‑facility net operating revenues, reflecting higher net revenue per case.

Current wording

During the nine months ended September 30, 2025, net operating revenues in our Ambulatory Care segment increased by $464 million, or 14.2%, as compared to the same period in 2024. This increase was driven by incremental revenue from our recent acquisitions, net of the impact of the closure and sale of certain facilities, as well as growth in same‑facility net operating revenues attributable to higher net revenue per case.

Previous wording

Same‑hospital net operating revenues increased by $206 million, or 5.5%, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to the positive impact of a more favorable payer mix, higher patient admissions and acuity, growth in Medicaid supplemental revenue, and negotiated commercial rate increases in the 2025 period. Same‑hospital net operating revenues increased by $452 million, or 6.0%, during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to the factors discussed above.

Current wording

Same‑hospital net operating revenues increased by $254 million, or 6.8%, during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to the positive impact of a more favorable payer mix; higher patient admissions and acuity; growth in Medicaid supplemental revenue; and negotiated commercial rate increases in the 2025 period. Same‑hospital net operating revenues increased by $706 million, or 6.3%, during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to the factors discussed above.

Previous wording

Same‑hospital salaries, wages and benefits expense increased by $59 million, or 3.3%, in the three months ended June 30, 2025 compared to the same period in 2024. This change was primarily attributable to higher health benefits costs, an increase in recruiting and retention expense, and annual merit increases for certain of our employees. These factors were partially offset by a decrease in contract labor and premium pay costs, as well as lower incentive compensation expense. Same‑hospital salaries, wages and benefits expense as a percentage of net operating revenues decreased by 100 basis points to 46.3% in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Current wording

Same‑hospital salaries, wages and benefits expense increased by $79 million, or 4.4%, in the three months ended September 30, 2025 compared to the same period in 2024. This change was primarily attributable to higher employee benefit costs and annual merit increases for certain of our employees. These factors were partially offset by lower incentive compensation expense and a decrease in contract labor and premium pay costs in the 2025 period. Same‑hospital salaries, wages and benefits expense as a percentage of net operating revenues decreased by 110 basis points to 47.1% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Previous wording

Same‑hospital salaries, wages and benefits expense increased by $82 million, or 2.3%, in the six months ended June 30, 2025 compared to the same period in 2024. This increase was driven by the same factors described above. As a percentage of net operating revenues, same‑hospital salaries, wages and benefits decreased by 160 basis points to 45.8% in the six months ended June 30, 2025 compared to the same period in 2024.

Current wording

Same‑hospital salaries, wages and benefits expense increased by $161 million, or 3.0%, in the nine months ended September 30, 2025 compared to the same period in 2024. This increase was driven by the same factors described above. As a percentage of net operating revenues, same‑hospital salaries, wages and benefits expense decreased by 150 basis points to 46.2% in the nine months ended September 30, 2025 compared to the same period in 2024.

Previous wording

Same‑hospital supplies expense increased by $32 million, or 5.7%, in the three months ended June 30, 2025 compared to the same period in 2024. This increase was driven by higher patient admissions and acuity, partially offset by our continued focus on cost‑efficiency measures, which include product standardization, contract management, improved utilization, bulk purchases, focused spending and operational improvements, among others. Same‑hospital supplies expense as a percentage of net operating revenues in the three months ended June 30, 2025 was consistent with the same period in 2024.

Current wording

Same‑hospital supplies expense increased by $41 million, or 7.5%, in the three months ended September 30, 2025 compared to the same period in 2024. This increase was driven by higher patient admissions and acuity, partially offset by our cost‑efficiency measures. Same‑hospital supplies expense as a percentage of net operating revenues in the three months ended September 30, 2025 was consistent with the same period in 2024.

Previous wording

Same‑hospital supplies expense increased by $62 million, or 5.5%, in the six months ended June 30, 2025 compared to the same period in 2024. This increase was driven by the same factors described above. Same‑hospital supplies expense as a percentage of net operating revenues in the six months ended June 30, 2025 was consistent with the same period in 2024.

Current wording

Same‑hospital supplies expense increased by $103 million, or 6.2%, in the nine months ended September 30, 2025 compared to the same period in 2024. This increase was driven by the same factors described above. Same‑hospital supplies expense as a percentage of net operating revenues in the nine months ended September 30, 2025 was consistent with the same period in 2024.

Previous wording

Same‑hospital other operating expenses increased by $26 million, or 2.9%, in the three months ended June 30, 2025 compared to the same period in 2024. This change was primarily attributable to increases in our medical fees, software costs, and professional and consulting fees, partially offset by lower malpractice expense during the 2025 period. Same‑hospital other operating expenses as a percentage of net operating revenues decreased by 50 basis points to 23.3% for the three months ended June 30, 2025 compared to 23.8% for the three months ended June 30, 2024.

Current wording

Same‑hospital other operating expenses increased by $53 million, or 6.2%, in the three months ended September 30, 2025 compared to the same period in 2024. This change was primarily attributable to increases in our medical fees; malpractice expense; and professional and consulting fees during 2025. Same‑hospital other operating expenses as a percentage of net operating revenues decreased by 10 basis points to 23.0% for the three months ended September 30, 2025 compared to 23.1% for the three months ended September 30, 2024.

Previous wording

Same‑hospital other operating expenses increased by $79 million, or 4.5%, in the six months ended June 30, 2025 compared to the same period in 2024. This increase was primarily attributable to the same factors discussed above. Same‑hospital other operating expenses as a percentage of net operating revenues decreased by 40 basis points to 22.8% for the six months ended June 30, 2025 compared to 23.2% for the six months ended June 30, 2024.

Current wording

Same‑hospital other operating expenses increased by $132 million, or 5.1%, in the nine months ended September 30, 2025 compared to the same period in 2024. This change was primarily attributable to increases in our medical fees; professional and consulting fees; and software costs. Same‑hospital other operating expenses as a percentage of net operating revenues decreased by 30 basis points to 22.9% for the nine months ended September 30, 2025 compared to 23.2% for the nine months ended September 30, 2024.

Previous wording

Our Ambulatory Care segment’s net operating revenues increased by $129 million, or 11.3%, during the three months ended June 30, 2025 compared to the same period in 2024. The change was driven by an $84 million increase in same‑facility net operating revenues, reflecting higher net revenue per case, as well as a $45 million increase from our recent acquisitions, net of the impact of the closure and sale of certain facilities.

Current wording

Our Ambulatory Care segment’s net operating revenues increased by $136 million, or 11.9%, during the three months ended September 30, 2025 compared to the same period in 2024. The change was driven by a $72 million increase in same‑facility net operating revenues, due primarily to growth in our case volumes and higher net revenue per case, as well as a $64 million increase from our recent acquisitions, net of the impact of the closure and sale of certain facilities.

Previous wording

Net operating revenues increased by $328 million, or 15.4%, during the six months ended June 30, 2025 compared to the same period in 2024. The change was driven by a $169 million increase in same‑facility net operating revenues, reflecting higher net revenue per case, as well as a $159 million increase from our recent acquisitions, net of the impact of the closure and sale of certain facilities.

Current wording

Net operating revenues increased by $464 million, or 14.2%, during the nine months ended September 30, 2025 compared to the same period in 2024. The change was driven by a $241 million increase in same‑facility net operating revenues, reflecting higher net revenue per case, as well as a $223 million increase from our recent acquisitions, net of the impact of the closure and sale of certain facilities.