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Tenet Healthcare (THC) Q3 Earnings Beat Mark, Increase Y/Y

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Tenet Healthcare Corporation (THC - Free Report) 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.


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.

Zacks Rank

Tenet Healthcare currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the medical sector players that have reported third-quarter results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) and Anthem, Inc. (ANTM - Free Report) beat the respective Zacks Consensus Estimate.

Stock to Consider

Here is a stock worth considering from the medical sector with the perfect mix of elements to surpass estimates in its upcoming release:

Acadia Healthcare Company, Inc. (ACHC - Free Report) has an Earnings ESP of +3.00% and a Zacks Rank #3 (Hold), currently. You can uncover the best stocks to buy or sell before they are reported with our  Earnings ESP Filter.