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Tenet Healthcare's (THC) Q3 Earnings Beat, Increase Y/Y

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Tenet Healthcare Corporation (THC - Free Report) delivered third-quarter 2018 adjusted net earnings of 29 cents per share, outperforming the Zacks Consensus Estimate by 163.6%. This upside is primarily driven by the performance of the USPI and Conifer Segments. Moreover, the bottom line reversed the year-ago loss of 17 cents.

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation Price, Consensus and EPS Surprise | Tenet Healthcare Corporation Quote

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, down 2.1% year over year. However, the top line beat the Zacks Consensus Estimate by 2.5%. This was due to weak performances by the company’s hospitals.

Tenet Healthcare’s same-hospital exchange admissions were 4577, down 4% year over year.

Same-hospital exchange outpatient visits were 51,539, up 8.1% year over year.

Quarterly Segment Details

Hospital & Other


Net operating revenues in the Hospital Operations and Other segment totaled $3.7 billion, down 2.7% year over year. This downside is largely attributable to hospital divestitures, partially offset by same hospital revenue growth.

On same-hospital basis, patient revenues were $3.4 billion, up 6% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $312 million, up 16% year over year.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $502 million, up 7.3% year over year.

Additionally, the segment reported adjusted EBITDA of $184 million, up 15.7% year over year.

Conifer Segment

Conifer’s revenues decreased 7.5% from the prior-year quarter’s level to $371 million. This was mainly due to the company’s divestment activities by Tenet and other customers.

The segment reported $81 million of adjusted EBITDA in the quarter under review, up 2.5% year over year.

Financial Position

As of Sep 30, 2018, Tenet Healthcare had cash and cash equivalents of $500 million, down 18.2% from the number at year-end 2017.

The company exited the third quarter with $14.1 billion of long-term debt, down 4.1% from the count at 2017 end.

Net cash provided by operating activities for the first nine months of 2018 stands at $799 million, up 12.7% year over year.

2018 Outlook

Adjusted earnings per share are projected between $1.44 and $1.83, down from the earlier projection of $1.54-$1.88.

Tenet Healthcare’s expectation for revenues is in the range of $18.1-$18.3 billion, up from $17.9-$18.3 billion.

Adjusted EBITDA is now estimated between $2.52 and $2.57 billion, down from the previous range of $2.55-$2.65 billion.

Tenet Healthcare now projects its adjusted free cash flow of $600-$800 million, down from $725-$925 million.

The company has lowered its net cash provided by operating activities from $1.245-$1.550 billion to $1.060-$1.335 billion.

Q418 Guidance

The company now anticipates revenues in the band of $4.42-$4.62 billion, up from the earlier prediction of $4.3-$4.5 billion.

The company now envisions adjusted EBITDA between $649 million and $699 million, up from the previous forecast of $575-$625 million.

The company increased the high end of its adjusted earnings per share from continuing operations to a range of 10 cents to 48 cents from the past estimate of 10-24 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 third-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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