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Factors Likely to Shape Tenet Healthcare's (THC) Q2 Earnings

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Tenet Healthcare Corporation (THC - Free Report) is slated to report second-quarter 2022 results on Jul 21, after the market closes.

Q2 Estimates

The Zacks Consensus Estimate for Tenet Healthcare’s second-quarter earnings per share is pegged at 94 cents, which indicates a decline of 40.9% from the prior-year quarter’s reported figure.

The consensus mark for revenues stands at $4.9 billion, suggesting a 2% decrease from the year-ago quarter’s reported number.

Earnings Surprise History

Tenet Healthcare boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 71.78%. This is depicted in the chart below:

Factors to Note

Revenues of Tenet Healthcare in the second quarter are likely to reflect the impact of softer contribution from its Hospital segment. The Zacks Consensus Estimate for second-quarter net operating revenues of the Hospital unit is pegged at $3.9 billion, which indicates a 4.8% decline from the prior-year quarter’s reported figure.

Meanwhile, the Ambulatory Care business is likely to have gained from better patient volumes and new service line growth. The consensus mark for the Ambulatory segment’s revenues stands at $827 million, suggesting a 24.5% growth from the prior-year quarter’s adjusted figure.

The Conifer segment is expected to have benefited on the back of commercial capabilities, which resulted in a robust sales pipeline, and continued business expansion endeavors. The consensus mark for the segment’s revenues stands at $327 million, indicating a 2.5% rise year over year.

The gradual recovery of adjusted admissions and outpatient visits in the second quarter might have favored the quarterly performance of Tenet Healthcare.

Margins of Tenet Healthcare are expected to have received a boost on the back of reduced operating costs. However, the shortage of nurses throughout the United States remains a concern for hospital facilities, and THC has been no exception to the trend. Likewise, the healthcare provider has been grappling with elevated staffing costs related to the hiring of temporary contract nurses. Along with the Hospital unit, increased capital expenditures pursued by Tenet Healthcare as part of its robust expansion initiatives might have also weighed on the performance of the Ambulatory segment.

Thereby, the Zacks Consensus Estimate for adjusted EBITDA of THC’s Ambulatory and Hospital segments stands at $217 million and $400 million, respectively. The figures mark a fall of 26.4% and 10.9% from their respective year-over-year reported figures. Similarly, the consensus mark for the Conifer segment’s adjusted EBITDA is pegged at $71 million, suggesting a 21.1% decline year over year.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Tenet Healthcare this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Earnings ESP: Tenet Healthcare has an Earnings ESP of -25.53% because the Most Accurate Estimate of 70 cents is pegged lower than the Zacks Consensus Estimate of 94 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: THC currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for Tenet Healthcare, here are some companies from the Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:

STERIS plc (STE - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank of 1 at present. The Zacks Consensus Estimate for second-quarter 2022 earnings of STERIS stands at $8.71, suggesting growth of 10% from the prior-year quarter’s reported figure.

STE beat earnings estimates in each of the trailing four quarters.

Neurocrine Biosciences, Inc. (NBIX - Free Report) has an Earnings ESP of +40.43% and a Zacks Rank #2. The Zacks Consensus Estimate for Neurocrine Biosciences’ second-quarter 2022 earnings is pegged at $1.91 per share, which indicates more than doubling itself from the prior-year quarter’s reported figure.

The consensus mark for NBIX’s second quarter’s earnings has moved 1.8% north over the past seven days.

Medpace Holdings, Inc. (MEDP - Free Report) has an Earnings ESP of +6.23% and a Zacks Rank of 2. The Zacks Consensus Estimate for Medpace’s second-quarter 2022 earnings is pegged at $5.90 per share, indicating an improvement of 22.7% from the year-ago quarter’s reported figure.

MEDP beat earnings estimates in each of the trailing four quarters.

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