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Tenet Misses Est, Grows Y/Y - Analyst Blog

By: Zacks.com
Posted: 2/26/2013 1:38:00 PM
Referenced Stocks: ACHC;CYH;HMA;THC

Tenet Healthcare Corp. ( THC ) reported fourth-quarter 2012 earnings from continuing operations of 52 cents per share, falling short of the Zacks Consensus Estimate of 69 cents. Operating earnings bounced back from a loss of 55 cents in the year-ago quarter.

Growth in revenues, largely driven by higher volumes and improved pricing fueled the year-over-year improvement, along with cost control measures.

Net income, including loss from discontinued operations of $8 million or 7 cents a share, was $49 million or 45 cents per share in the reported quarter, recovering from a loss of $76 million or 70 cents in the year-ago quarter. Net income for the fourth quarter of 2011 includes $74 million or 68 cents per share related to a loss on early extinguishment of debt and $16 million or 15 cents per share related to a loss from discontinued operations.

Operational Update

Net operating revenues stood at $2.33 billion, up 7.3% from $2.17 billion in the prior-year quarter. However, reported revenues lagged the Zacks Consensus Estimate of $2.52 billion.

During the reported quarter, Tenet Healthcare's net patient revenues per adjusted admission increased 2.8% on a year-over-year basis to $11,866, primarily due to improved terms of commercial managed care contracts and increased Medicare reimbursement rates, partly offset by a less-favorable payer mix.

Total admissions remained at the year-ago quarter's level, while adjusted admissions increased 2.9% year over year due to higher outpatient visits. Surgeries increased 7.5% while emergency department visits improved 8.6%.

Bad debt expense, as a percentage of revenues, increased 20 basis points year over year to 7.9%, stemming from an upsurge in the number of uninsured patients.

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. Adjusted EBITDA margin was 14.4%, expanding 110 basis points year over year. 

Full-Year 2012 Highlights

For full year 2012, Tenet Healthcare reported operating income of $1.70 per share, missing the Zacks Consensus Estimate of $1.96 but ahead of the year-ago level of 56 cents. Operating income increased to $185 million from $68 million in 2011.

Tenet Healthcare's net operating revenue amounted to $9.12 billion in 2012, lagging the Zacks Consensus Estimate of $9.88 billion but 5.4% higher than $8.65 billion reported in 2011. Moreover, adjusted EBITDA grew 6.8% year over year to $1.20 billion in 2012.

Additionally, net income was $141 million or $1.30 per share compared with $58 million or 48 cents per share in 2011.

Financial Position

Tenet Healthcare exited 2012 with cash and cash equivalents of $364 million, surging from $113 million as of Dec 31, 2011. As of Dec 31, 2012, total assets of Tenet Healthcare were $9.04 billion and shareholders' equity was $1.14 billion.

Net cash flow from operating activities in 2012 was $593 million, improving from $497 million in 2011.

Tenet Healthcare's capital expenditures decreased to $148 million in the quarter from $177 million in the prior-year quarter.

Guidance

Tenet Healthcare announced its adjusted EBITDA guidance of $250 million to $290 million for the first quarter of 2013. Adjusted EBITDA guidance for 2013 was affirmed at $1.325-$1.425. The first quarter guidance excludes any contribution associated with the managed care portion of the 30 month California Provider Fee program.

Operating income is projected to be about $835-$965 million. 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 for 2013.

Further, net income in 2013 is anticipated around $118-$234 million.

Results at Other Medical Companies

Health Management Associates ( HMA ), a leading operator of general acute care hospitals, reported fourth quarter and 2012 adjusted (excluding one-time expenses other than stock-based compensation expense) earnings per share of 19 cents and 75 cents, respectively, missing the corresponding Zacks Consensus Estimates of 20 cents and 83 cents.

Community Health Systems, Inc. ( CYH ) declared its fourth-quarter earnings of 85 cents per share, at par with the Zacks Consensus Estimate but striding ahead of the year-ago earnings of 82 cents.

Acadia Healthcare Company, Inc. ( ACHC ) reported adjusted income of 19 cents per share in the fourth quarter of 2012, in line with the Zacks Consensus but beating the year-ago period's earnings of 13 cents.

Zacks Rank

Tenet Healthcare carries a Zacks Rank #2 (Buy).



ACADIA HEALTHCR (ACHC): Free Stock Analysis Report

COMMNTY HLTH SY (CYH): Free Stock Analysis Report

HEALTH MGT ASSC (HMA): Free Stock Analysis Report

TENET HEALTH (THC): Free Stock Analysis Report

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