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Why Is Tenet Healthcare (THC) Up 15% Since Its Last Earnings Report?
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It has been about a month since the last earnings report for Tenet Healthcare Corporation (THC - Free Report) . Shares have added about 15% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is THC 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 catalysts.
Tenet Healthcare Q4 Earnings & Revenues Top Estimates
Tenet Healthcare reported fourth-quarter 2017 adjusted net income of $1.40 per share, surpassing the Zacks Consensus Estimate of $1.30 by 7.7%. The bottom line also rose from 23 cents in the year-ago period.
The company’s fourth quarter results were strong across its business segments on the back of volume growth in its hospital and Ambulatory segments, prudent cost management as well as strong financial results at USPI and Conifer segment.
Including non-cash partial write-down of the company’s deferred tax assets due to reduction in the corporate federal income tax rate, pre-tax impairment and restructuring charge and other items, the company reported net loss of $2.28 per share, comparing unfavorably with net loss of 79 cents a year ago.
Fourth-quarter net operating revenues came in at $4,978 million, up 2.4% from the prior-year quarter. The top line also beat the Zacks Consensus Estimate by 1.7%.
Full-Year Updates
For 2017, the company reported net loss of $7, much wider than the net loss of $1.88 in the year-earlier quarter.
For 2017, the company reported net operating revenues of $19,179 million, down 2.3% year over year.
Quarterly Operational Update
Tenet Healthcare’s same-hospital exchange admissions were 4,857 in the fourth quarter, up 0.2% year over year.
Same-hospital exchange outpatient visits were 51,451 in the reported quarter, up 15.2% from the comparable quarter, last year.
Tenet Healthcare’s provision for doubtful accounts was $325 million, representing a ratio of 6.1% of revenues before bad debt compared with $354 million in the prior-year quarter or 6.9% of revenues before bad debt. The increase in bad-debt ratio was primarily attributable to a $15-million decrease in same-hospital self-pay revenues, revenue growth in Ambulatory segment, the sale of Houston hospitals in 2017 and full-year California Provider Fee revenues recorded in the fourth quarter of 2017.
Total operating expenses were $4.5 billion, down 1.8% year over year due to a decline in salaries, wages and benefits plus depreciation and amortization costs.
Quarterly Segment Details:
Hospital & Other
Net operating revenues in the Hospital Operations and Other segment increased 3.4% from $4.2 billion a year ago.
On a same-hospital basis, patient revenues were $4.1 billion, up 6.1% from fourth-quarter 2016.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $538 million, up 36.2% year over year.
Ambulatory Segment:
The Ambulatory segment generated net operating revenues of $545 million, up 14% year over year.
In addition, the segment reported adjusted EBITDA of $223 million, up 22% year over year.
Conifer Segment:
Conifer’s revenues decreased 2% from the prior-year quarter to $394 million.
The segment reported $79 million of adjusted EBITDA in the quarter under review, up 9.7% year over year.
Financial Position
As of Dec 31, 2017, Tenet Healthcare had cash and cash equivalents of $611 million, down 14.7% from year-end 2016.
The company exited the fourth quarter with $14.8 billion of long-term debt, down 1.8% from year-end 2016.
Net cash provided by operating activities for 2017 was $1200 million, representing a 115% increase from $558 million in 2016.
2018 Outlook
Adjusted earnings per share are projected between 73 cents and $1.07, up from the earlier projection of 58-97 cents.
Tenet Healthcare forecasts revenues in the range of $17.9-$18.3 billion, up from the previously guided range of $17.8-$18.2 billion.
Adjusted EBITDA is expected between $2.5 billion and $2.6 billion.
Tenet Healthcare estimates adjusted free cash flow of $675-$875 million. It also anticipates net cash provided by operating activities between $1.245 billion and $1.450 billion.
First-Quarter 2018 Outlook
The company predicts revenues in the range of $4.45-$4.65 billion.
It expects adjusted EBITDA between $580 million and $630 million.
Net income from continuing operations is likely to be between $50 million and $70 million.
Adjusted earnings per share from continuing operations are expected to range from a loss of 10 cents to earnings of 5 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimate. There have been two revisions higher for the current quarter compared to six lower. In the past month, the consensus estimate has shifted by 114.9% due to these changes.
At this time, THC has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, THC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Tenet Healthcare (THC) Up 15% Since Its Last Earnings Report?
It has been about a month since the last earnings report for Tenet Healthcare Corporation (THC - Free Report) . Shares have added about 15% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is THC 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 catalysts.
Tenet Healthcare Q4 Earnings & Revenues Top Estimates
Tenet Healthcare reported fourth-quarter 2017 adjusted net income of $1.40 per share, surpassing the Zacks Consensus Estimate of $1.30 by 7.7%. The bottom line also rose from 23 cents in the year-ago period.
The company’s fourth quarter results were strong across its business segments on the back of volume growth in its hospital and Ambulatory segments, prudent cost management as well as strong financial results at USPI and Conifer segment.
Including non-cash partial write-down of the company’s deferred tax assets due to reduction in the corporate federal income tax rate, pre-tax impairment and restructuring charge and other items, the company reported net loss of $2.28 per share, comparing unfavorably with net loss of 79 cents a year ago.
Fourth-quarter net operating revenues came in at $4,978 million, up 2.4% from the prior-year quarter. The top line also beat the Zacks Consensus Estimate by 1.7%.
Full-Year Updates
For 2017, the company reported net loss of $7, much wider than the net loss of $1.88 in the year-earlier quarter.
For 2017, the company reported net operating revenues of $19,179 million, down 2.3% year over year.
Quarterly Operational Update
Tenet Healthcare’s same-hospital exchange admissions were 4,857 in the fourth quarter, up 0.2% year over year.
Same-hospital exchange outpatient visits were 51,451 in the reported quarter, up 15.2% from the comparable quarter, last year.
Tenet Healthcare’s provision for doubtful accounts was $325 million, representing a ratio of 6.1% of revenues before bad debt compared with $354 million in the prior-year quarter or 6.9% of revenues before bad debt. The increase in bad-debt ratio was primarily attributable to a $15-million decrease in same-hospital self-pay revenues, revenue growth in Ambulatory segment, the sale of Houston hospitals in 2017 and full-year California Provider Fee revenues recorded in the fourth quarter of 2017.
Total operating expenses were $4.5 billion, down 1.8% year over year due to a decline in salaries, wages and benefits plus depreciation and amortization costs.
Quarterly Segment Details:
Hospital & Other
Net operating revenues in the Hospital Operations and Other segment increased 3.4% from $4.2 billion a year ago.
On a same-hospital basis, patient revenues were $4.1 billion, up 6.1% from fourth-quarter 2016.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $538 million, up 36.2% year over year.
Ambulatory Segment:
The Ambulatory segment generated net operating revenues of $545 million, up 14% year over year.
In addition, the segment reported adjusted EBITDA of $223 million, up 22% year over year.
Conifer Segment:
Conifer’s revenues decreased 2% from the prior-year quarter to $394 million.
The segment reported $79 million of adjusted EBITDA in the quarter under review, up 9.7% year over year.
Financial Position
As of Dec 31, 2017, Tenet Healthcare had cash and cash equivalents of $611 million, down 14.7% from year-end 2016.
The company exited the fourth quarter with $14.8 billion of long-term debt, down 1.8% from year-end 2016.
Net cash provided by operating activities for 2017 was $1200 million, representing a 115% increase from $558 million in 2016.
2018 Outlook
Adjusted earnings per share are projected between 73 cents and $1.07, up from the earlier projection of 58-97 cents.
Tenet Healthcare forecasts revenues in the range of $17.9-$18.3 billion, up from the previously guided range of $17.8-$18.2 billion.
Adjusted EBITDA is expected between $2.5 billion and $2.6 billion.
Tenet Healthcare estimates adjusted free cash flow of $675-$875 million. It also anticipates net cash provided by operating activities between $1.245 billion and $1.450 billion.
First-Quarter 2018 Outlook
The company predicts revenues in the range of $4.45-$4.65 billion.
It expects adjusted EBITDA between $580 million and $630 million.
Net income from continuing operations is likely to be between $50 million and $70 million.
Adjusted earnings per share from continuing operations are expected to range from a loss of 10 cents to earnings of 5 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimate. There have been two revisions higher for the current quarter compared to six lower. In the past month, the consensus estimate has shifted by 114.9% due to these changes.
Tenet Healthcare Corporation Price and Consensus
Tenet Healthcare Corporation Price and Consensus | Tenet Healthcare Corporation Quote
VGM Scores
At this time, THC has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, THC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.