Tenet Healthcare Corp.
) reported first-quarter 2013 income from continuing operations
of $34 million or 33 cents per share, surpassing the Zacks
Consensus Estimate of 28 cents per share. Operating earnings
improved from $13 million or 15 cents in the year-ago
Growth in revenues, largely driven by improved pricing, fueled
the year-over-year improvement along with cost control
Net loss, including $75 million from an industry-wide Medicare
inpatient prospective payment settlement and a loss from
discontinued operations of $2 million or 2 cents a share, along
with impairments, restructuring charges, acquisition-related
costs and the loss on early extinguishment of debt, was $88
million or 85 cents per share in the reported quarter.
Results compared unfavorably with $58 million or 53 cents
earned in the year-ago quarter. Net income for the first quarter
of 2012 included $1 million or 1 cent per share related to income
from discontinued operations.
Net operating revenues stood at $2.39 billion, up 3.7% from
$2.30 billion in the prior-year quarter. However, reported
revenues lagged the Zacks Consensus Estimate of $2.62
During the reported quarter, Tenet Healthcare's net patient
revenues per adjusted admission increased 1.6% on a
year-over-year basis to $11,884, primarily due to improved terms
of commercial managed care contracts and increased Medicare
Total admissions declined 4% from the year-ago quarter level,
while adjusted admissions declined 2.5% year over year due to
lower inpatient admissions, which offset higher outpatient
visits. Surgeries increased 8.8%, while emergency department
visits improved 3.1%.
Bad debt expense, as a percentage of revenues, increased 40
basis points year over year to 8.0%.
Tenet Healthcare posted adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) of $274 million in
the reported quarter, up 16.6% from $235 million in the
prior-year quarter. Adjusted EBITDA margin was 11.5%, declining
200 basis points year over year.
Tenet Healthcare exited the reported quarter with cash and
cash equivalents of $95 million, sinking from $364 million as of
Dec 31, 2012. As of Mar 31, 2013, total assets of Tenet
Healthcare were $8.9 billion and shareholder equity was $969
Net cash outflow from operating activities in the reported
quarter was $32 million, contracting from $42 million outflow in
the year-ago quarter.
Tenet Healthcare's capital expenditures decreased to $133
million in the quarter from $136 million in the prior-year
Tenet Healthcare spent $100 million to repurchase 2.5 million
shares under its $500 million share buyback program during the
Tenet Healthcare announced its adjusted EBITDA guidance of
$325 million to $375 million for the second quarter of 2013. The
guidance includes $54 million associated with the expected
approval of the managed care portion of the 30-month California
Provider Fee program along with $31 million from the recognition
of Health Information Technology (HIT) incentives.
Adjusted EBITDA guidance for 2013 was affirmed at
$1.325-$1.425 billion. Operating income is projected at about
Additionally, shares outstanding as of Dec 31, 2013 are
expected to be approximately 104 million. Consequently, adjusted
earnings per share for 2013 are expected to be about $2.31-$3.31
Further, net income of Tenet Healthcare in 2013 is anticipated
at around $114-$224 million. Net operating revenue is expected to
be around $9.8-$10.1 billion.
Tenet Healthcare carries a Zacks Rank #4 (Sell). Other
companies in the medical sector worth considering are
VCA Antech Inc.
) - Zacks Rank #1 (Strong Buy),
) - Zacks Rank #2 (Buy) and
Coventry Health Care Inc.
) - Zacks Rank #2 (Buy).
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