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Tenet Healthcare (THC) Q2 Earnings Top Estimates & Rise Y/Y

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Tenet Healthcare Corporation (THC - Free Report) delivered second-quarter 2019 adjusted net income of 56 cents per share, beating the Zacks Consensus Estimate by 27.3%. This upside is primarily driven by the Hospital & Other segment, volume growth in hospital portfolio and earnings growth at USPI. Moreover, the bottom line was up 14.3% year over year in the quarter under review.

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, up 1.2% year over year. Additionally, the top line beat the Zacks Consensus Estimate by 1.7% on the back of contributions made by the Hospital & Other segment.

Tenet Healthcare’s same-hospital exchange admissions were up 3 % year over year.

Same-hospital exchange outpatient visits were down 3.2% year over year.

Quarterly Segment Details

Hospital & Other


Net operating revenues in the Hospital Operations and Other segment came in at $3.8 billion, up 2.5% year over year. This upside is mainly attributable to revenue growth on a same-hospital basis. However, the same was partly offset by divestitures.

On same-hospital basis, patient revenues were $3.54 billion, up 5.7% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) were $347 million, up 0.6% year over year.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $524 million, down 1.3% year over year due to the divestiture of Aspen Healthcare, the company’s former business in the U.K.

Additionally, the segment reported adjusted EBITDA of $207 million, up 8.4% year over year.

Conifer Segment

Conifer’s revenues decreased 8% from the prior-year quarter’s level to $355 million. This was mainly due to the company’s client attrition following certain divestitures.

The segment reported $103 million of adjusted EBITDA in the quarter under review, up 13.2% year over year.

Financial Position

As of Jun 30, 2019, Tenet Healthcare had cash and cash equivalents of $249 million, down 39.4% from the number at 2018 end.

The company exited the second quarter with $14.3 billion of long-term debt, down 2.3% from the count at 2018 end.

Net cash provided by operating activities for the first half of 2019 stands at $294 million, down 36.2% year over year.

2019 Outlook

Adjusted earnings per share are projected between $2.08 and $2.59.

Tenet Healthcare expects revenues in the range of $18-$18.4 billion.

Adjusted EBITDA is estimated between $2.650 billion and $2.750 billion.

Tenet Healthcare anticipates adjusted free cash flow of $600-$800 million. While net cash provided by operating activities is predicted between $1.07 billion and $1.375 billion.

Q319 Guidance

Following second-quarter results, the company provided an outlook for the third quarter.

Tenet Healthcare now anticipates revenues in the range of $4.3-$4.6 billion for the current quarter.

The company now forecasts adjusted EBITDA between $600 million and $650 million.

Adjusted earnings per share from continuing operations are likely to vary between 23 cents and 48 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 medical sector having reported second-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Anthem Inc. (ANTM - Free Report) and Centene Corporation (CNC - Free Report) outpaced the respective Zacks Consensus Estimate.

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