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Tenet Healthcare Grows on Acquisitions, Lower Revenues Hurt
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Tenet Healthcare Corporation (THC - Free Report) is a provider of healthcare services through general hospitals and related healthcare facilities. The company has significantly grown inorganically over past many years. It has expanded scale of business, boosted operating capacity and geographical presence through numerous acquisitions, partnerships and strategic alliances. It has also joined forces with companies like Blue Cross Blue Shield of Texas, Cigna Corp (CI - Free Report) , Aetna Inc , UnitedHealth Group, Inc (UNH - Free Report) , Humana, Centene and many more.
Apart from buyouts, the company has been divesting its non-core and unprofitable business units to repay its debt and maintain financial liquidity. In December 2017, the company disclosed its intention to put up its Conifer segment for sale to offer quality health solutions to its clients including its own hospitals and maximize shareholders’ value.
Tenet Healthcare is undertaking cost reduction initiatives to lower annual operating expenses by $250 million, with annualized run-rate savings to be achieved by 2018 end. Nearly 75% of the savings are likely to be achieved from actions within the company’s hospital operations and other segment. During the first nine months of 2017, the company’s total operating expenses decreased 1.5% year over year.
Tenet Healthcare’s board is going through a reshuffle since Aug 31, 2017 for ensuring the right mix of opinions, skills and experience aimed at enhancing value of the company. To date, three new independent directors with significant healthcare, financial and operational expertise have been appointed. The board will continue its search for additional independent directors who can further enhance its expertise.
In a year's time, shares of Tenet Healthcare have lost 1.6%, underperforming the industry’s rally of 6.4%. However, the company’s relentless efforts to create value for investors and other fundamentals are likely to favor the stock going forward. Notably, the stock has a Value Score of A.
However, the company’s top line has been declining over the last two quarters due to reduced admissions, inpatient and outpatient surgeries, emergency department visits and total outpatient visits. These can be attributed to the high deductible plans that result in more out-of-pocket expenses of the patients.
Another headwind for the company is its rising level of debt. This has led to a rise in interest expenses which, in turn, weighs on the bottom line.
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Tenet Healthcare Grows on Acquisitions, Lower Revenues Hurt
Tenet Healthcare Corporation (THC - Free Report) is a provider of healthcare services through general hospitals and related healthcare facilities. The company has significantly grown inorganically over past many years. It has expanded scale of business, boosted operating capacity and geographical presence through numerous acquisitions, partnerships and strategic alliances. It has also joined forces with companies like Blue Cross Blue Shield of Texas, Cigna Corp (CI - Free Report) , Aetna Inc , UnitedHealth Group, Inc (UNH - Free Report) , Humana, Centene and many more.
Apart from buyouts, the company has been divesting its non-core and unprofitable business units to repay its debt and maintain financial liquidity. In December 2017, the company disclosed its intention to put up its Conifer segment for sale to offer quality health solutions to its clients including its own hospitals and maximize shareholders’ value.
Tenet Healthcare is undertaking cost reduction initiatives to lower annual operating expenses by $250 million, with annualized run-rate savings to be achieved by 2018 end. Nearly 75% of the savings are likely to be achieved from actions within the company’s hospital operations and other segment. During the first nine months of 2017, the company’s total operating expenses decreased 1.5% year over year.
Tenet Healthcare’s board is going through a reshuffle since Aug 31, 2017 for ensuring the right mix of opinions, skills and experience aimed at enhancing value of the company. To date, three new independent directors with significant healthcare, financial and operational expertise have been appointed. The board will continue its search for additional independent directors who can further enhance its expertise.
In a year's time, shares of Tenet Healthcare have lost 1.6%, underperforming the industry’s rally of 6.4%. However, the company’s relentless efforts to create value for investors and other fundamentals are likely to favor the stock going forward. Notably, the stock has a Value Score of A.
However, the company’s top line has been declining over the last two quarters due to reduced admissions, inpatient and outpatient surgeries, emergency department visits and total outpatient visits. These can be attributed to the high deductible plans that result in more out-of-pocket expenses of the patients.
Another headwind for the company is its rising level of debt. This has led to a rise in interest expenses which, in turn, weighs on the bottom line.
Zacks Rank
Tenet Healthcare carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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