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Can Tenet Healthcare (THC) Post Q1 Earnings Beat on Low Costs?

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Tenet Healthcare Corporation (THC - Free Report) is set to beat earnings estimates for first-quarter 2022, whose results are set to be released on Apr 20, after the closing bell.

In the last reported quarter, the leading healthcare service provider’s adjusted net earnings of $2.70 per share beat the Zacks Consensus Estimate of $1.56, primarily due to reduced expenses and operational excellence. Improved performance of the Ambulatory Care business supported the bottom line.

Let’s see how things have improved prior to the first-quarter 2022 earnings announcement.

Trend in Estimate Revision

In the past seven days, the Zacks Consensus Estimate for first-quarter 2022 earnings per share of $1.04 has witnessed no upward or downward revisions. This estimate is indicative of a 20% decline from the year-ago reported figure of $1.30 per share. Similarly, the Zacks Consensus Estimate for revenues is pegged at $4.7 billion, suggesting a decrease of 1.9% from the year-ago reported figure.

Tenet Healthcare beat earnings estimates in each of the trailing four quarters, delivering an average surprise of 66%. This is depicted in the graph below.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Tenet Healthcare this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Earnings ESP for the company is currently +2.06%. This is because the Most Accurate Estimate is currently pegged at $1.06 per share, higher than the Zacks Consensus Estimate of $1.04. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Tenet Healthcare currently holds a Zacks Rank #3.

Factors Driving Q1 Earnings

The gradual improvement in adjusted admissions and outpatient admissions throughout the first quarter is likely to strengthen Tenet Healthcare’s results. Also, the company’s operations are expected to have gained from the strong performance of the USPI Holding Company, Inc., in which Tenet Healthcare holds a 95% interest.

THC’s growing care network is expected to have contributed generously toward first-quarter performance. Further, decreasing operating costs are likely to have benefited its bottom line, positioning the company for an earnings beat.

Yet, the Zacks Consensus Estimate for THC’s Ambulatory segment adjusted EBITDA (including grant income) for the first quarter is pegged at $192 million, indicating a decline from $257 million a year ago. Similarly, the consensus mark for Conifer segment adjusted EBITDA is pegged at $71 million, signaling a decrease from $86 million in the year-ago period.

The Zacks Consensus Estimate for THC’s Hospital segment adjusted EBITDA is pegged at $367 million, predicting a decline from $434 million a year ago. These factors might have resulted in a year-over-year decline in earnings per share in the first quarter, partially offset by declining operating costs.

Other Stocks That Warrant a Look

Here are some other companies from the Medical space that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:

ProPhase Labs, Inc. (PRPH - Free Report) has an Earnings ESP of +22.08% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ProPhase’s bottom line for the to-be-reported quarter is expected to rise 69.6% year over year.

Avanos Medical, Inc. (AVNS - Free Report) has an Earnings ESP of +4.17% and is a Zacks #2 Ranked player.

Avanos Medical’s earnings per share for the to-be-reported quarter are expected to jump 4.4% year over year.

Axcella Health Inc. (AXLA - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #2.

Axcella Health’s bottom line for the to-be-reported quarter is expected to improve 5% year over year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.