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Tenet (THC) Up 11.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Tenet Healthcare (THC - Free Report) . Shares have added about 11.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tenet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenet Healthcare reported third-quarter 2021 adjusted net earnings of $1.99 per share, which surpassed the Zacks Consensus Estimate by 82.6%. The bottom line climbed 210.9% year over year.
The company’s results reflect growing revenues and improving patient volumes.
Quarterly Operational Update
Net operating revenues improved 7.4% year over year to $4.8 billion, courtesy of well-performing Hospital and Ambulatory segments. The top line beat the Zacks Consensus Estimate by 0.04%.
The company’s adjusted net income from continuing operations skyrocketed 217.6% year over year to $216 million. In the third quarter, adjusted EBITDA excluding grant income totaled $851 million, which surged 37% from the prior-year quarter’s level.
Operating expenses inched up 1.8% year over year to $4.3 billion in the quarter due to rise in salaries, wages and benefits, supplies, and litigation and investigation costs.
Quarterly Segmental Details
Hospital Operations and Other
Net operating revenues from the segment amounted to $4 billion, which rose 6% year over year. The upside can be attributed to a substantial rise in volumes from the prior-year quarter’s reading, higher patient acuity, better payer mix and pricing yield.
On same-hospital basis, net patient service revenues improved 10.9% year over year to $3.599 billion.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excluding grant income was $494 million, which increased 66.3% year over year.
Ambulatory Care
The Ambulatory segment delivered net operating revenues of $666 million in the third quarter, which soared 17.9% year over year. The improvement can be attributed to expanding volumes, improved patient acuity, growth in new service line and added revenues from the buyout of SCD portfolio in December 2020.
However, the uptick was partly offset by the divestiture of the urgent care centers and the imaging centers as part of the reorganization process under the company’s Hospital segment.
The segment reported an adjusted EBITDA excluding grant income of $272 million, up 19.3% from the prior-year quarter’s level.
Conifer
Net operating revenues from the segment declined 3.4% year over year to $314 million due to previously disclosed Tenet contract changes.
Adjusted EBITDA from the segment was $85 million in the quarter under review, down 11.5% year over year.
Financial Position
Tenet Healthcare exited the third quarter with cash and cash equivalents of $2.2 billion, which declined 6.3% from the level at 2020 end. It doesn’t have any outstanding borrowings under its $1.9 billion line-of-credit facility as of Sep 30, 2021.
During the nine months ended Sep 30, 2021, net cash provided by operating activities declined 27.2% year over year.
2021 Guidance
Concurrent with third-quarter results, the company updated its outlook for 2021. For the current year, it projects net income per share to be $7.09-$7.50, higher than the prior guidance of $6.25-$7.17.
Net operating revenues are anticipated between $19.5 and $19.8 billion, up from the prior forecast of $19.25-$19.65 billion.
Adjusted EBITDA is estimated to be $3.275-$3.325 billion, up from the prior prediction of $3.150-$3.250 billion.
Adjusted EPS is expected within $6.15 and $6.38, higher than the previous guidance of $5.23-$5.73.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -19.8% due to these changes.
VGM Scores
At this time, Tenet has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tenet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Tenet (THC) Up 11.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Tenet Healthcare (THC - Free Report) . Shares have added about 11.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tenet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenet Healthcare Q3 Earnings Beat Mark, Increase Y/Y
Tenet Healthcare reported third-quarter 2021 adjusted net earnings of $1.99 per share, which surpassed the Zacks Consensus Estimate by 82.6%. The bottom line climbed 210.9% year over year.
The company’s results reflect growing revenues and improving patient volumes.
Quarterly Operational Update
Net operating revenues improved 7.4% year over year to $4.8 billion, courtesy of well-performing Hospital and Ambulatory segments. The top line beat the Zacks Consensus Estimate by 0.04%.
The company’s adjusted net income from continuing operations skyrocketed 217.6% year over year to $216 million. In the third quarter, adjusted EBITDA excluding grant income totaled $851 million, which surged 37% from the prior-year quarter’s level.
Operating expenses inched up 1.8% year over year to $4.3 billion in the quarter due to rise in salaries, wages and benefits, supplies, and litigation and investigation costs.
Quarterly Segmental Details
Hospital Operations and Other
Net operating revenues from the segment amounted to $4 billion, which rose 6% year over year. The upside can be attributed to a substantial rise in volumes from the prior-year quarter’s reading, higher patient acuity, better payer mix and pricing yield.
On same-hospital basis, net patient service revenues improved 10.9% year over year to $3.599 billion.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excluding grant income was $494 million, which increased 66.3% year over year.
Ambulatory Care
The Ambulatory segment delivered net operating revenues of $666 million in the third quarter, which soared 17.9% year over year. The improvement can be attributed to expanding volumes, improved patient acuity, growth in new service line and added revenues from the buyout of SCD portfolio in December 2020.
However, the uptick was partly offset by the divestiture of the urgent care centers and the imaging centers as part of the reorganization process under the company’s Hospital segment.
The segment reported an adjusted EBITDA excluding grant income of $272 million, up 19.3% from the prior-year quarter’s level.
Conifer
Net operating revenues from the segment declined 3.4% year over year to $314 million due to previously disclosed Tenet contract changes.
Adjusted EBITDA from the segment was $85 million in the quarter under review, down 11.5% year over year.
Financial Position
Tenet Healthcare exited the third quarter with cash and cash equivalents of $2.2 billion, which declined 6.3% from the level at 2020 end. It doesn’t have any outstanding borrowings under its $1.9 billion line-of-credit facility as of Sep 30, 2021.
During the nine months ended Sep 30, 2021, net cash provided by operating activities declined 27.2% year over year.
2021 Guidance
Concurrent with third-quarter results, the company updated its outlook for 2021. For the current year, it projects net income per share to be $7.09-$7.50, higher than the prior guidance of $6.25-$7.17.
Net operating revenues are anticipated between $19.5 and $19.8 billion, up from the prior forecast of $19.25-$19.65 billion.
Adjusted EBITDA is estimated to be $3.275-$3.325 billion, up from the prior prediction of $3.150-$3.250 billion.
Adjusted EPS is expected within $6.15 and $6.38, higher than the previous guidance of $5.23-$5.73.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -19.8% due to these changes.
VGM Scores
At this time, Tenet has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tenet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.