Tenet Healthcare Corp.
) reported second-quarter 2012 income from continuing operations of
10 cents per share, surpassing the Zacks Consensus Estimate of 5
cents, as well as the prior-year quarter's earnings of 8 cents.
Operating income for the quarter under review inched up to $42
million from $40 million recorded in the year-ago quarter.
Growth in revenues arising from higher adjusted admissions,
outpatient visits and surgeries led to the year-over-year
improvement in earnings. However, the growth was partially offset
by the rising operating expenses.
Considering post-tax impairment and restructuring charges of $50
million ($100 million pre-tax) or 12 cents per share, related to
the anticipated sale of Creighton University Medical Center, net
loss came in at $6 million or 1 cent per share versus net income of
$55 million or 11 cents per share in the year-ago quarter.
Net operating revenues stood at $2.27 billion, up 6.2% from
$2.13 billion in the prior-year quarter. However, reported revenues
lagged the Zacks Consensus Estimate of $2.48 billion.
During the reported quarter, Tenet's net patient revenues per
adjusted patient day increased 5.3% on a year-over-year basis to
$2,543, primarily due to improved terms of commercial managed care
contracts, partially offset by an adverse shift in payer mix.
Admissions edged down 0.4% during the quarter, while adjusted
admissions climbed 1.5% year over year. Surgeries increased 4.9%
and emergency department visits improved 5.0%.
Bad debt expense increased 13.1% to $190 million from $168
million in the second quarter of 2011.
Tenet posted adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $288 million in the
reported quarter, up 4.7% from $275 million in the prior-year
quarter. Adjusted EBITDA for the year-ago quarter includes Health
Information Technology incentive payment of $25 million. Adjusted
EBITDA margin was 12.7% compared with 12.9% in the year-ago
Tenet exited the quarter with cash and cash equivalents of $82
million, down from $104 million as of March 31, 2012. As of June
30, 2012, total assets of Tenet were $8.49 billion and
shareholders' equity was $1.18 billion.
Net cash flow from operating activities in the reported quarter
was $243 million, soaring up from $178 million in the year-ago
quarter. Tenet's capital expenditures increased to $116 million in
the quarter, compared with $82 million in the prior-year
Tenet affirmed its adjusted EBITDA guidance of $1.250-$1.375
billion for 2012. Net operating revenues are expected to be about
$9.0-9.3 billion, while operating income is projected to be about
Additionally shares outstanding as of December 31, 2012 are
expected to be approximately 437 million. Consequently, earnings
per share for 2012 are expected to be about 54-73 cents.
Further, net income is anticipated to be around $165-270
Universal Health Services Inc.
), a rival of Tenet, declared its second-quarter earnings of $1.12
per share, beating both the Zacks Consensus Estimate of $1.11 and
the year-ago earnings of $1.04.
HCA Holdings Inc.
) reported adjusted income of 85 cents per share in the second
quarter of 2012, surpassing the Zacks Consensus estimate of 78
cents and the year-ago earnings of 51 cents.
Tenet carries a Zacks #2 Rank, implying a short-term Buy rating.
Considering the fundamentals, we maintain our long-term Outperform
recommendation on the shares.
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