Back to top

Analyst Blog

Tenet Healthcare Corp. (THC - Analyst Report) reported first-quarter 2013 income from continuing operations of $34 million or 33 cents per share, surpassing the Zacks Consensus Estimate of 28 cents per share. Operating earnings improved from $13 million or 15 cents in the year-ago quarter.

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

Net loss, including $75 million from an industry-wide Medicare inpatient prospective payment settlement and a loss from discontinued operations of $2 million or 2 cents a share, along with impairments, restructuring charges, acquisition-related costs and the loss on early extinguishment of debt, was $88 million or 85 cents per share in the reported quarter.

Results compared unfavorably with $58 million or 53 cents earned in the year-ago quarter. Net income for the first quarter of 2012 included $1 million or 1 cent per share related to income from discontinued operations.

Operational Update

Net operating revenues stood at $2.39 billion, up 3.7% from $2.30 billion in the prior-year quarter. However, reported revenues lagged the Zacks Consensus Estimate of $2.62 billion.

During the reported quarter, Tenet Healthcare’s net patient revenues per adjusted admission increased 1.6% on a year-over-year basis to $11,884, primarily due to improved terms of commercial managed care contracts and increased Medicare reimbursement rates.

Total admissions declined 4% from the year-ago quarter level, while adjusted admissions declined 2.5% year over year due to lower inpatient admissions, which offset higher outpatient visits. Surgeries increased 8.8%, while emergency department visits improved 3.1%.

Bad debt expense, as a percentage of revenues, increased 40 basis points year over year to 8.0%.

Tenet Healthcare posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $274 million in the reported quarter, up 16.6% from $235 million in the prior-year quarter. Adjusted EBITDA margin was 11.5%, declining 200 basis points year over year. 

Financial Position

Tenet Healthcare exited the reported quarter with cash and cash equivalents of $95 million, sinking from $364 million as of Dec 31, 2012. As of Mar 31, 2013, total assets of Tenet Healthcare were $8.9 billion and shareholder equity was $969 million.

Net cash outflow from operating activities in the reported quarter was $32 million, contracting from $42 million outflow in the year-ago quarter.

Tenet Healthcare’s capital expenditures decreased to $133 million in the quarter from $136 million in the prior-year quarter.

Share Buyback

Tenet Healthcare spent $100 million to repurchase 2.5 million shares under its $500 million share buyback program during the reported quarter.


Tenet Healthcare announced its adjusted EBITDA guidance of $325 million to $375 million for the second quarter of 2013. The guidance includes $54 million associated with the expected approval of the managed care portion of the 30-month California Provider Fee program along with $31 million from the recognition of Health Information Technology (HIT) incentives.

Adjusted EBITDA guidance for 2013 was affirmed at $1.325–$1.425 billion. Operating income is projected at about $821–$951 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 of Tenet Healthcare in 2013 is anticipated at around $114–$224 million. Net operating revenue is expected to be around $9.8–$10.1 billion.

Zacks Rank

Tenet Healthcare carries a Zacks Rank #4 (Sell). Other companies in the medical sector worth considering are VCA Antech Inc. (WOOF - Snapshot Report) – Zacks Rank #1 (Strong Buy), Centene Corp. (CNC - Snapshot Report) – Zacks Rank #2 (Buy) and Coventry Health Care Inc. – Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.50 +4.36%
PLANAR SYST… PLNR 4.32 +4.10%
ERBA DIAGNO… ERB 2.89 +3.58%
GTT COMMUNI… GTT 12.00 +3.00%
MALLINCKROD… MNK 71.34 +2.63%