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Tenet Healthcare Swings To 3Q Loss On Debt-Buyback Impact

DOW JONES NEWSWIRES

Tenet Healthcare Corp. (THC) swung to a third-quarter loss amid a loss related to early debt extinguishment and prior-year investment gains. Meanwhile, its same-hospital bad-debt ratio grew.

President and Chief Executive Officer Trevor Fetter said strong revenue flow, cost controls and robust outpatient business growth "were more than sufficient" to offset an "adverse shift in payer mix." While the recession has impacted the company this year, it "remains less than we would have expected in the context of rising unemployment levels in many of our markets."

The hospital operator again raised its 2009 profit outlook, this time by $25 million to adjusted earnings before interest, taxes, depreciation and amortization of $925 million to $975 million.

Tenet been trying to turn itself around following years of financial and legal trouble, cutting costs and conducting debt exchanges but has seen its prospects improve in recent quarters. In its September interim report Tenet reported stronger-than-expected results amid better-than-expected trends in payer and patient mix, bad-debt expense and volume growth.

Hospital operators have been hit with concerns about rising medical costs, the economy and the H1N1 flu virus. However, potential health-care reform could benefit hospitals if more people are insured. Investor-owned hospital operators also could gain market share--and possibly hospitals--from smaller, nonprofit rivals that are struggling with constrained credit, investment losses and diminished endowments.

The hospital operator reported a loss of $3 million, or 1 cent a share, compared with a prior-year profit of $104 million, or 22 cents a share. The latest period included a $16 million loss related to early-debt extinguishment while last year had a $140 million gain from investment sales.

Revenue increased 5.7% to $2.26 billion amid higher prices and was up 5.2% on a same-hospital basis, as commercial managed-care revenue grew 4.2%.

Analysts polled by Thomson Reuters most recently forecast a 2-cent loss on revenue of $2.25 billion.

Tenet's same-hospital bad debt ratio rose 0.9 percentage point to 8.5% and jumped from 7.4% in the second quarter.

Total admissions edged up 0.1%, but paying admissions declined 0.1%. Commercial managed care admissions fell 4.5%, while outpatient visits were little changed.

Shares closed Monday at $5.30 and didn't trade premarket. The stock has more than quadrupled this year.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com;

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