Tenet Healthcare Corp.
) reported third-quarter 2012 earnings from continuing operations
of 28 cents per share, falling short of the Zacks Consensus
Estimate by 6 cents, but soaring fourfold from 7 cents earned in
the year-ago quarter.
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Growth in revenues, largely driven by higher outpatient visits
and surgeries along with cost containment initiatives fueled the
Net income, including earnings from discontinued operations of 10
million or 9 cents a share, was $40 million or 37 cents per share
in the reported quarter, improving substantially from $6 million
or 5 cents earned in the year-ago quarter.
Net operating revenues stood at $2.2 billion, up 5.8% from $2.1
billion in the prior-year quarter. However, reported revenues
lagged the Zacks Consensus Estimate of $2.4 billion.
During the reported quarter, Tenet's net patient revenues per
adjusted patient day increased 3.7% on a year-over-year basis to
$11,579, primarily due to improved terms of commercial managed
Admissions skidded 0.5% during the quarter, while adjusted
admissions crawled up 1.4% year over year. Surgeries increased
6.3% while emergency department visits improved 4.9%.
Bad debt expense, as a percent of revenues, increased 20 basis
points year over year to 8.5%, stemming from upsurge in uninsured
and charity outpatient visits.
Tenet posted adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $269 million in the
reported quarter, up 40.1% from $192 million in the prior-year
quarter. Adjusted EBITDA margin was 12.1%, expanding 300 basis
points year over year.
Tenet exited the quarter with cash and cash equivalents of $83
million, inching up from $82 million as of June 30, 2012. As of
September 30, 2012, total assets of Tenet were $8.47 billion and
shareholders' equity was $1.2 billion.
Net cash flow from operating activities in the first nine months
of 2012 was $373 million, improving from $324 million in the
Tenet's capital expenditures increased to $108 million in the
quarter from $100 million in the prior-year quarter.
Tenet estimates adjusted EBITDA to be between $313 million to
$353 million in the fourth quarter of 2012. Adjusted EBITDA
guidance for 2012 was lowered to $1.18-$1.22 from $1.250-$1.375
billion guided earlier.
For 2013, it expects adjusted EBITDA to be in the range of $1.325
billion to $1.425 billion.
Operating income is projected to be about $196-225 million down
from $235-317 million. Operating income for 2013 is projected in
the range of $263-335 million.
Additionally, shares outstanding as of December 31, 2012 are
expected to be approximately 107 million, while it is expected at
99 million as of December 31, 2013. Consequently, adjusted
earnings per share for 2012 are expected to be about $1.83-$2.12
and $2.66-$3.38 for 2013.
Further, net income in 2012 is anticipated to be around $134-175
million, down from $165-270 million. For 2013, it is expected to
be $258-335 million.
Universal Health Services Inc
), a rival of Tenet, declared its third-quarter earnings of 92
cents per share, falling short of the Zacks Consensus Estimate of
99 cents but striding ahead of the year-ago earnings of 86 cents.
HCA Holdings Inc.
) reported adjusted income of 77 cents per share in the third
quarter of 2012, lagging the Zacks Consensus estimate by a penny
but bettering the year-ago period's earnings of 60 cents.
Tenet carries a Zacks #3 Rank, implying a short-term Hold rating
that blends well with our long-term Neutral recommendation on the