Tenet Healthcare Corp
) reported second-quarter 2013 income from continuing operations
of $69 million or 66 cents per share, falling short of the Zacks
Consensus Estimate of 69 cents per share. Operating earnings
improved from $44 million or 41 cents in the year-ago quarter.
ACADIA HEALTHCR (ACHC): Free Stock Analysis
HCA HOLDINGS (HCA): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
VANGUARD HEALTH (VHS): Free Stock Analysis
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Growth in revenues along with cost control measures fueled the
Net loss, including an income from discontinued operations,
impairments, restructuring charges, acquisition-related costs,
the loss on early extinguishment of debt, litigation and
investigation costs and other tax adjustments, was $50 million or
49 cents per share in the reported quarter.
Results compared unfavorably with $6 million or 6 cents loss
incurred in the year-ago quarter.
Net operating revenues stood at $2.42 billion, up 6.9% from $2.26
billion in the prior-year quarter. However, reported revenues
slightly lagged the Zacks Consensus Estimate of $2.44 billion.
During the reported quarter, Tenet Healthcare's net patient
revenues per adjusted admission increased 2.7% on a
year-over-year basis to $12,208, primarily due to improved terms
of commercial managed care contracts.
Total admissions declined 3.5% from the year-ago quarter level,
while adjusted admissions declined 0.7% year over year due to
lower inpatient admissions, which offset higher outpatient
visits. Surgeries increased 13.9%, while emergency department
visits improved 2.9%.
Bad debt expense, as a percentage of revenues, increased 20 basis
points year over year to 7.9%.
Tenet Healthcare posted adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $336 million in the
reported quarter, up 16.7% from $288 million in the prior-year
quarter. The improvement was driven by increase in revenues
coupled with lower expenses. Adjusted EBITDA margin was 13.9%,
expanding 120 basis points year over year.
Tenet Healthcare exited the reported quarter with cash and cash
equivalents of $90 million, sinking from $364 million as of Dec
31, 2012. As of Jun 30, 2013, total assets of Tenet Healthcare
were $9.2 billion and shareholder equity was $895 million.
Net cash flow from operating activities in the first half of 2013
was $128 million, contracting from $201 million in the year-ago
Tenet Healthcare's capital expenditures slightly increased to
$256 million in the first half of 2013 from $252 million in the
Tenet Healthcare spent $92 million to repurchase 1.998 million
shares under its $500 million share buyback program during the
On Jun 24, 2013, Tenet Healthcare announced its plans to acquire
a small competitor firm -
Vanguard Health Systems Inc
) -- in an all-cash deal of $4.3 billion.
The acquisition not only diversifies Tenet's business portfolio
but is aligned with the benefits of the healthcare reforms in the
U.S. that requires citizens to have medical insurance coverage,
offering ample growth opportunities for healthcare providers as
The non-overlapping business of Vanguard also brings in 28 new
acute care and specialty hospitals across Texas, increasing
Tenet's exposure to areas of child and heart care. The
acquisition further complements the company's strategy of
expanding its operating and competitive leverage in the
metropolitan markets via inorganic growth.
Tenet Healthcare announced its adjusted EBITDA guidance of $275
million to $325 million for the third quarter of 2013.
Adjusted EBITDA guidance for 2013 was lowered to $1.25-$1.3
billion from $1.325-$1.425 billion guided earlier, attributable
to lower than expected inpatient volumes in the first half of
2013. The mid-point of the guidance represents a 6% hike over
$1.203 billion reported in 2012. This guidance also excludes the
impact of the acquisition of Vanguard Health Systems, expected to
close by the end of this year.
Performance of medical sector stocks
HCA Holdings, Inc
) reported net income of 91 cents, 3.4% higher from the Zacks
Consensus Estimate and 7.1% better than the year-ago earnings.
Acadia Healthcare Company, Inc.
) reported net income of 26 cents, a penny ahead of Zacks
Consensus Estimate and 8 cents better than the year-ago earnings.
Tenet Healthcare carries a Zacks Rank #3 (Hold).