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Tenet Healthcare (THC) Down 4.9% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Tenet Healthcare Corporation (THC - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenet Healthcare Q4 Earnings & Revenues Miss Estimates
Tenet Healthcare reported fourth-quarter 2016 operating earnings of $0.06 per share that missed the Zacks Consensus Estimate of $0.20 by 70%. Also, the bottom line deteriorated 62.5% year over year due to lower revenue generation.
Tenet Healthcare reported a net loss from continuing operations of $79 million in the fourth quarter, which narrowed 21% year over year. Adjusted EBITDA of $613 million remained flat year over year in the fourth quarter of 2016.
For 2016, net loss from continuing operations came in at $192 million. The reported loss is 37% wider than a loss of $140 million in 2015.
Operational Update
Fourth-quarter net operating revenue came in at $4.8 billion, down 3.3% from the prior-year quarter. This was primarily due to a 6.3% year-over-year decrease in the top line of Hospital & Other segment of Tenet Healthcare. Revenues also missed the Zacks Consensus Estimate of by 2%. For 2016, the company recorded a 5.3% year-over-year increase in net operating revenue to $19.6 billion.
For the fourth quarter, TenetHealthcare's provision for doubtful accounts decreased 9.5% year over year to $354 million.
Total operating expenses of $4.6 billion decreased 2.8% year over year due to a substantial decline in depreciation and amortization expenses along with lower salaries, wages and benefits , supplies and electronic health record incentives as well. Uncompensated care costs were down 6.2% year over year to $1.3 billion.
Same-hospital exchange admissions were 4,916 in the fourth quarter, up 13.6% from the last-year quarter. Same-hospital exchange outpatient visits were up 26.4% year over year to 48,435.
Quarterly Segment Details:
Hospital & Other
Net operating revenue in the Hospital Operations and other segment was down 6.3% from the last-year quarter to $4.14 billion. This was mainly because of the hospitals that were divested over this period.
Adjusted EBITDA was $358 million, down 9.1% year over year. This was owing to divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives.
Ambulatory Segment :
The Ambulatory segment generated net operating revenue of $478 million, up 20.4% year over year. In addition, the segment reported adjusted EBITDA (Earnings before Interest, Taxes, Depriciation and Amortization) of $183 million, up 15.8% year over year.
Conifer Segment:
Conifer's revenues increased 4.7% from the prior-year quarter to $402 million. Conifer's revenues from third-party customers jumped 16% to $239 million. The segment generated $72 million of adjusted EBITDA in the reported quarter, up 18% year over year.
Financial Position
As of Dec 31, 2016, Tenet Healthcare had cash and cash equivalents of $716 million, up 101% from year-end 2015.
The company exited the fourth quarter with total assets worth $24.7 billion, up 4.2% from 2015 end.
As of Dec 31, 2016, shareholders' equity was $417 million, down 32.6% from Dec 31, 2015.
Net operating cash flow for 2016 plunged 46% year over year to $558 million. 2017 Outlook
Tenet Healthcare projects revenues in the range of $19.7-$20.1 billion, adjusted EBITDA of $2.5-$2.6 billion and adjusted earnings per diluted share of $1.05-$1.30.
Tenet Healthcare expects adjusted free cash flow of $600-$800 million. Net income from continuing operations is estimated in the range of $99-$94 million. Loss per share is expected in the range of $107-$133 million.
First-Quarter 2017 Outlook
For the first quarter, the company expects revenues in the range of $4.75-$4.95 billion, adjusted EBITDA of $475-$525 million. Net loss from continuing operations is expected between $60 million and 45 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been six downward revisions for the current quarter. In the past month, the consensus estimate also shifted by 214.9% due to these changes.
At this time, Tenet Healthcare's stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
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Tenet Healthcare (THC) Down 4.9% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Tenet Healthcare Corporation (THC - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenet Healthcare Q4 Earnings & Revenues Miss Estimates
Tenet Healthcare reported fourth-quarter 2016 operating earnings of $0.06 per share that missed the Zacks Consensus Estimate of $0.20 by 70%. Also, the bottom line deteriorated 62.5% year over year due to lower revenue generation.
Tenet Healthcare reported a net loss from continuing operations of $79 million in the fourth quarter, which narrowed 21% year over year. Adjusted EBITDA of $613 million remained flat year over year in the fourth quarter of 2016.
For 2016, net loss from continuing operations came in at $192 million. The reported loss is 37% wider than a loss of $140 million in 2015.
Operational Update
Fourth-quarter net operating revenue came in at $4.8 billion, down 3.3% from the prior-year quarter. This was primarily due to a 6.3% year-over-year decrease in the top line of Hospital & Other segment of Tenet Healthcare. Revenues also missed the Zacks Consensus Estimate of by 2%. For 2016, the company recorded a 5.3% year-over-year increase in net operating revenue to $19.6 billion.
For the fourth quarter, TenetHealthcare's provision for doubtful accounts decreased 9.5% year over year to $354 million.
Total operating expenses of $4.6 billion decreased 2.8% year over year due to a substantial decline in depreciation and amortization expenses along with lower salaries, wages and benefits , supplies and electronic health record incentives as well. Uncompensated care costs were down 6.2% year over year to $1.3 billion.
Same-hospital exchange admissions were 4,916 in the fourth quarter, up 13.6% from the last-year quarter. Same-hospital exchange outpatient visits were up 26.4% year over year to 48,435.
Quarterly Segment Details:
Hospital & Other
Net operating revenue in the Hospital Operations and other segment was down 6.3% from the last-year quarter to $4.14 billion. This was mainly because of the hospitals that were divested over this period.
Adjusted EBITDA was $358 million, down 9.1% year over year. This was owing to divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives.
Ambulatory Segment :
The Ambulatory segment generated net operating revenue of $478 million, up 20.4% year over year.
In addition, the segment reported adjusted EBITDA (Earnings before Interest, Taxes, Depriciation and Amortization) of $183 million, up 15.8% year over year.
Conifer Segment:
Conifer's revenues increased 4.7% from the prior-year quarter to $402 million. Conifer's revenues from third-party customers jumped 16% to $239 million.
The segment generated $72 million of adjusted EBITDA in the reported quarter, up 18% year over year.
Financial Position
As of Dec 31, 2016, Tenet Healthcare had cash and cash equivalents of $716 million, up 101% from year-end 2015.
The company exited the fourth quarter with total assets worth $24.7 billion, up 4.2% from 2015 end.
As of Dec 31, 2016, shareholders' equity was $417 million, down 32.6% from Dec 31, 2015.
Net operating cash flow for 2016 plunged 46% year over year to $558 million.
2017 Outlook
Tenet Healthcare projects revenues in the range of $19.7-$20.1 billion, adjusted EBITDA of $2.5-$2.6 billion and adjusted earnings per diluted share of $1.05-$1.30.
Tenet Healthcare expects adjusted free cash flow of $600-$800 million.
Net income from continuing operations is estimated in the range of $99-$94 million. Loss per share is expected in the range of $107-$133 million.
First-Quarter 2017 Outlook
For the first quarter, the company expects revenues in the range of $4.75-$4.95 billion, adjusted EBITDA of $475-$525 million. Net loss from continuing operations is expected between $60 million and 45 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been six downward revisions for the current quarter. In the past month, the consensus estimate also shifted by 214.9% due to these changes.
Tenet Healthcare Corporation Price and Consensus
Tenet Healthcare Corporation Price and Consensus | Tenet Healthcare Corporation Quote
VGM Scores
At this time, Tenet Healthcare's stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.