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Tenet Healthcare (THC) Q2 Earnings Top & Up Y/Y, Revenues Lag

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Tenet Healthcare Corporation (THC - Free Report) delivered second-quarter 2018 adjusted net income of 49 cents per share, outperforming the Zacks Consensus Estimate by 104.2%. The upside is primarily driven by the performance of Ambulatory Segment. Moreover, the bottom line rebounded from the year-ago loss of 17 cents.

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, down 6.2% year over year. Additionally, the top line missed the Zacks Consensus Estimate by 1.6%. This was due to weak performances by the Hospital and other plus Conifer segments.

Tenet Healthcare’s same-hospital exchange admissions were 4,725, down 5.6 % year over year.

Same-hospital exchange outpatient visits were 51,845, up 0.6%  year over year.

Quarterly Segment Details

Hospital & Other

Net operating revenues in the Hospital Operations and Other segment came in at $3.7 billion, down 8.6% year over year This downside is largely attributable to hospital divestitures and a decline in health plan business.

On same-hospital basis, patient revenues were $3.4 billion, up 3.2% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $345 million, down 0.3% year over year.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $531 million, up 12.5% year over year.

Additionally, the segment reported adjusted EBITDA of $198 million, up 20.7% year over year.

Conifer Segment

Conifer’s revenues decreased 3.5% from the prior-year quarter’s level to $386 million. This was mainly due to the company’s divestiture activities.

The segment reported $91 million of adjusted EBITDA in the quarter under review, up 51.7% year over year.

Financial Position

As of Jun 30, 2018, Tenet Healthcare had cash and cash equivalents of $403 million, down 34% from the number at year-end 2017.

The company exited the second quarter with $14.2 billion of long-term debt, down 3.4% from the count at 2017 end.

Net cash provided by operating activities for the first half of 2018 stands at $461 million, up 15% year over year.

2018 Outlook

Adjusted earnings per share are projected between $1.54 and $1.88, up from the earlier projection of $1.36-$1.70.

Tenet Healthcare retains its expectation for revenues in the range of $17.9-$18.3 billion.

Adjusted EBITDA is reaffirmed between $2.55 billion and $2.65 billion.

Tenet Healthcare reiterates adjusted its free cash flow of $725-$925 million. However, the company has lowered its net cash provided by operating activities from $1.245-$1.550 billion to $1.220-$1.525 billion.

3Q18 Guidance

The company now anticipates revenues in the range of $4.3-$4.5 billion, down from the earlier projection of $4.475-$4.675 billion.

The company now envisions adjusted EBITDA between $575 million and $625 million, down from the previous prediction of $605-$655 million.

Adjusted earnings per share from continuing operations are likely to vary between 10 cents and 24 cents, down from the past estimate of 15-29 cents.

Zacks Rank and Performance of Other Players

Tenet Healthcare carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the HMO industry having reported second-quarter earnings so far, the bottom line of Anthem Inc. (ANTM - Free Report) , Centene Corporation (CNC - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat the respective Zacks Consensus Estimate.

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