Tenet Healthcare Corp.
(
THC
) 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.
Operational Update
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
quarter.
Financial Position
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
quarter.
Guidance
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
$235-317 million.
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
million.
Peer Take
Universal Health Services Inc.
(
UHS
), 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.
Another competitor,
HCA Holdings Inc.
(
HCA
) 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.
Zacks Rank
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.
HCA HOLDINGS (HCA): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
UNIVL HLTH SVCS (UHS): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research