Tenet Healthcare Inks Deals With UnitedHealth And Centene
Zacks Investment Research | Dec 06, 2016 04:29AM ET
Tenet Healthcare Corporation (NYSE:THC) recently signed a new three-year agreement with Centene Corp. (NYSE:CNC) to enable the members of the latter and its newly acquired unit – Health Net – access Tenet Healthcare’s hospitals, outpatient centers and employed physicians in 18 states.
Tenet Healthcare has also inked an agreement with UnitedHealth Group Inc. (NYSE:UNH) to renew and extend their national relationship for four years.
Tenet Healthcare remains focused on inorganic growth strategies. Numerous mergers, acquisitions, alliances and partnerships have helped the company to leverage on a strong revenues base and solid earnings.
However, the stock price movement has not been much favorable for the company year to date. The Tenet Healthcare stock has lost 49.3% and substantially underperformed the Zacks categorized Medical-Hospitals industry, which has declined just 9.8%.We do not expect any respite in the near term owing to an uncertainty prevailing in the hospital industry as President-elect Donald Trump intends to repeal ObamaCare.
The Affordable Care Act (ACA) under Obama greatly benefitted the hospital company by increasing the number of insured population and led to a decline in bad debts, which is unfavorable for the companies in this sector. Now that Trump intends to repeal most parts of the act, Universal HeTenet Healthcare is concerned regarding the new act and its effect on earnings.
Coming back, under the new contract with Centene, which will be effective from Jan 1, 2017, all insurance products of Centene and Health Net will be combined into a single contract. The deal comprises Health Insurance Marketplace/Exchange, TRICARE, Medicare Advantage, Medicaid, Medicare-Medicaid Dual Eligible and the Department of Veterans Affairs Patient-Centered Community Care Program (PC3) products. This strategic alliance is expected to offer sustained network coverage of high-quality healthcare services to the members of both the companies.
The agreement with UnitedHealth Group, on the other hand, enables the commercial and Medicare Advantage plan participants of the former to access to Tenet Healthcare’s hospitals, outpatient centers and employed physicians across the country. The new agreement, which is scheduled to be effective from Aug 1, 2017, comprises a value-based care component that rewards providers for providing efficient and quality care.
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The alliance with UnitedHealth Group, one of the leading health benefit plan providers in the U.S, is expected to benefit Tenet Healthcare by enhancing focus on the changing healthcare needs of its customers. The agreement will make way for convenient, low cost yet premium quality solutions for optimum health.
Another company that has recently been leveraged by the strong value proposition of UnitedHealth Group is CVS Health Corporation (NYSE:CVS) , whose retail division – CVS Pharmacy – partnered with UnitedHealth Group’s OptumRx.
Zacks Rank
Tenet Healthcare presently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
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