NEW YORK (TheStreet) -- Shares of Tenet Healthcare Corp. (THC) - Get Report are up 3.08% to $51.15 in morning trading today as the hospital operator said it would form a joint venture with United Surgical Partners International in a cash and debt transaction that Reuters values at $1.93 billion.

The Tenet and USPI joint venture will be the largest provider of ambulatory surgery in the U.S., the company said.

Under the terms of the agreement, Tenet will initially own 50.1% of the joint venture and will consolidate its financial results. Welsh, Carson, Anderson & Stowe and the other existing investors in USPI will initially own the remaining 49.9%. Tenet will have a path to full ownership of USPI over the next five years through a put/call structure.

Financially, the transaction is expected to be neutral to EPS this year and accretive to EPS in 2016, to sustainably increase EBITDA margins and EBITDA growth, and improve Tenet's cash flow profile, the company said. The company expects a minimal increase in its leverage ratio in the near term and to remain on a path to reduce leverage over time.

"Through strong partnerships with physicians and leading health systems, USPI has built a network of relationships and facilities that are providing high quality surgical care across the U.S.," said Trevor Fetter, Tenet's president and CEO. "Creating this joint venture with the premier operator of short-stay hospitals and surgery centers has strategic and financial benefits for both parties. The partnership accelerates Tenet's and USPI's shared strategy to expand our ambulatory service offerings to meet growing consumer demand for services that are provided in a lower cost, more convenient setting and that are aligned with the long-term transition to value-based care," Fetter added.

Tenet also announced that it has entered into a definitive agreement to acquire from Welsh Carson the operations of Aspen Healthcare Ltd. for $215 million in cash, which operates nine private hospitals and clinics in the U.K. Aspen began as a two hospital system that was acquired by USPI in April 2000 with backing from Welsh Carson. USPI grew the system before a restructuring of the USPI group in 2012, which resulted in it becoming an independent company majority owned by Welsh Carson.

"Aspen Healthcare has achieved a strong track record of performance under Welsh Carson's ownership, and their significant and smart capital investments in recent years have positioned the company to drive additional robust growth in the future," Fetter noted.

These transactions are expected to close by the third quarter of 2015.

Dallas-based Tenet Healthcare, a healthcare services company, primarily operates acute care hospitals and related healthcare facilities in the U.S.

Separately, TheStreet Ratings team rates TENET HEALTHCARE CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TENET HEALTHCARE CORP (THC) a HOLD. The primary factors that have impacted our rating are mixed,  some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• TENET HEALTHCARE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TENET HEALTHCARE CORP turned its bottom line around by earning $0.32 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings ($1.94 versus $0.32).
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 354.2% when compared to the same quarter one year prior, rising from -$24.00 million to $61.00 million.
• Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
• Net operating cash flow has decreased to $219.00 million or 14.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• The debt-to-equity ratio is very high at 18.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
• You can view the full analysis from the report here: THC Ratings Report

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