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Tenet Healthcare Corp. (THC - Free Report) reported third-quarter 2016 operating earnings of 16 cents per share that missed the Zacks Consensus Estimate of 19 cents by 15.8%. Also, the bottom line deteriorated 44.9% on a year-over-year basis.
Tenet Healthcare reported a net loss from continuing operations of $9 million, or 9 cents per share, in the third quarter of 2016, narrowed 67.9% year-over-year from a net loss of $28 million, or 28 cents per share, in the third quarter of 2015.
The company reported adjusted EBITDA of $570 million, up 0.7% year over year
Operational Update
Third-quarter net operating revenue came in at $4.8 billion, up 3.3% from the prior-year quarter. An increase in revenues from hospital operations, the Conifer segment and the ambulatory segment primarily drove the upside. Revenues also surpassed the Zacks Consensus Estimate of $4.7 billion by 2.1%.
Tenet Healthcare’s provision for doubtful accounts was up 7.3% year over year to $367 million, representing a ratio of 7% of revenues before bad debt. Uncompensated care costs were $1.3 billion, up 1.15% year over year.
Same-hospital exchange admissions were 5,465 in the third quarter, up 16.9% from the third quarter of 2015. Same-hospital exchange outpatient visits were 51,015, up 32% year over year.
Uninsured plus charity admissions increased 10.5% year over year on a same-hospital basis in the third quarter of 2016. Uninsured plus charity outpatient visits decreased 2.8% on a same-hospital basis.
Segment Details:
Hospital Segment
Net operating revenue in the Hospital Operations and other segment was $4.2 billion, down 0.4% from the last-year quarter due to hospitals that have been divested since that time. Patient revenues increased to $3.8 billion, up 5.3% from the prior-year quarter. The upside was driven by a 1.4% increase in adjusted patient admissions and a 3.9% rise in net patient revenue per adjusted admission.
Ambulatory segment
The Ambulatory segment delivered net operating revenue of $448 million, up 36.2 % year over year. In addition, the segment generated adjusted EBITDA (Earning before Interest, Taxes, Depriciation and Amortization) of $157 million, up 28.7% year over year.
Conifer Segment
Conifer’s revenues increased 14.7% from the prior-year quarter to $398 million. Conifer’s revenues from third-party customers surged 30% to $239 million. The segment generated $79 million of adjusted EBITDA in the reported quarter, up 29.5% year over year.
As of Sep 30, 2016, Tenet Healthcare had cash and cash equivalents of $649 million, up 82.3% from $356 million as of Dec 31, 2015.
The company exited the third quarter with total assets worth $24.5 billion, up 3.3% from $23.7 billion as of Dec 31, 2015.
Shareholders’ equity was $528 million as of Sep 30, 2016, down 23.6% from $691 million as of Dec 31, 2015.
Net operating cash flow in the first nine months of 2016 increased 1.9% from $835 million in the prior-year period to $851 million.
2016 Outlook
For 2016, Tenet Healthcare projects revenues in the range of $19.65–$19.80 billion, adjusted EBITDA of $2.4–$2.45 billion and adjusted earnings per diluted share of $1.16–$1.21.
Tenet Healthcare expects adjusted free cash flow of $400–$600 million.
Net loss from continuing operations are estimated in the range of $99–$94 million. Loss per share is expected to be in the range of $1 to 95 cents.
Net operating cash flow is projected between $1.2 billion and $1.3 billion.
Fourth-Quarter 2016 Outlook
For the fourth quarter, the company expects revenues in the range of $4.9–$5 billion, adjusted EBITDA of $600–$650 million and adjusted earnings per diluted share of 17–22 cents.
Among the other stocks in the medical sector that have reported their third-quarter earnings so far, the bottom line at Aetna Inc. and Molina Healthcare Inc (MOH - Free Report) surpassed the Zacks Consensus Estimate, while the earnings of Adeptus Health Inc. (ADPT - Free Report) missed estimates.
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Tenet Healthcare (THC) Q3 Earnings Miss, Revenues Beat
Tenet Healthcare Corp. (THC - Free Report) reported third-quarter 2016 operating earnings of 16 cents per share that missed the Zacks Consensus Estimate of 19 cents by 15.8%. Also, the bottom line deteriorated 44.9% on a year-over-year basis.
Tenet Healthcare reported a net loss from continuing operations of $9 million, or 9 cents per share, in the third quarter of 2016, narrowed 67.9% year-over-year from a net loss of $28 million, or 28 cents per share, in the third quarter of 2015.
The company reported adjusted EBITDA of $570 million, up 0.7% year over year
Operational Update
Third-quarter net operating revenue came in at $4.8 billion, up 3.3% from the prior-year quarter. An increase in revenues from hospital operations, the Conifer segment and the ambulatory segment primarily drove the upside. Revenues also surpassed the Zacks Consensus Estimate of $4.7 billion by 2.1%.
Tenet Healthcare’s provision for doubtful accounts was up 7.3% year over year to $367 million, representing a ratio of 7% of revenues before bad debt. Uncompensated care costs were $1.3 billion, up 1.15% year over year.
Same-hospital exchange admissions were 5,465 in the third quarter, up 16.9% from the third quarter of 2015. Same-hospital exchange outpatient visits were 51,015, up 32% year over year.
Uninsured plus charity admissions increased 10.5% year over year on a same-hospital basis in the third quarter of 2016. Uninsured plus charity outpatient visits decreased 2.8% on a same-hospital basis.
Segment Details:
Hospital Segment
Net operating revenue in the Hospital Operations and other segment was $4.2 billion, down 0.4% from the last-year quarter due to hospitals that have been divested since that time. Patient revenues increased to $3.8 billion, up 5.3% from the prior-year quarter. The upside was driven by a 1.4% increase in adjusted patient admissions and a 3.9% rise in net patient revenue per adjusted admission.
Ambulatory segment
The Ambulatory segment delivered net operating revenue of $448 million, up 36.2 % year over year. In addition, the segment generated adjusted EBITDA (Earning before Interest, Taxes, Depriciation and Amortization) of $157 million, up 28.7% year over year.
Conifer Segment
Conifer’s revenues increased 14.7% from the prior-year quarter to $398 million. Conifer’s revenues from third-party customers surged 30% to $239 million. The segment generated $79 million of adjusted EBITDA in the reported quarter, up 29.5% year over year.
TENET HEALTH Price, Consensus and EPS Surprise
TENET HEALTH Price, Consensus and EPS Surprise | TENET HEALTH Quote
Financial Position
As of Sep 30, 2016, Tenet Healthcare had cash and cash equivalents of $649 million, up 82.3% from $356 million as of Dec 31, 2015.
The company exited the third quarter with total assets worth $24.5 billion, up 3.3% from $23.7 billion as of Dec 31, 2015.
Shareholders’ equity was $528 million as of Sep 30, 2016, down 23.6% from $691 million as of Dec 31, 2015.
Net operating cash flow in the first nine months of 2016 increased 1.9% from $835 million in the prior-year period to $851 million.
2016 Outlook
For 2016, Tenet Healthcare projects revenues in the range of $19.65–$19.80 billion, adjusted EBITDA of $2.4–$2.45 billion and adjusted earnings per diluted share of $1.16–$1.21.
Tenet Healthcare expects adjusted free cash flow of $400–$600 million.
Net loss from continuing operations are estimated in the range of $99–$94 million. Loss per share is expected to be in the range of $1 to 95 cents.
Net operating cash flow is projected between $1.2 billion and $1.3 billion.
Fourth-Quarter 2016 Outlook
For the fourth quarter, the company expects revenues in the range of $4.9–$5 billion, adjusted EBITDA of $600–$650 million and adjusted earnings per diluted share of 17–22 cents.
Zacks Rank and Performance of Other Stocks
Tenet Healthcare presently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other stocks in the medical sector that have reported their third-quarter earnings so far, the bottom line at Aetna Inc. and Molina Healthcare Inc (MOH - Free Report) surpassed the Zacks Consensus Estimate, while the earnings of Adeptus Health Inc. (ADPT - Free Report) missed estimates.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>