It has been about a month since the last earnings report for Tenet Healthcare (THC Quick QuoteTHC - Free Report) . Shares have added about 17% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Tenet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Tenet Healthcare Q1 Earnings Beat Estimates, Rise Y/Y

Tenet Healthcare Corporation first-quarter 2020 earnings of $1.28 per share, beat the Zacks Consensus Estimate by 433.3%. Further, the bottom line soared 113.3% year over year, mainly owing to operational performance in its business segments along with a favourable income tax benefit.

The results were partly offset by a decline in patient volumes in the last two weeks of March due to government order and cancellation of elective surgery following the COVID-19 outbreak.

Quarterly Operational Update

Net operating revenues of $4.5 billion slid 0.6% year over year due to lower contribution by Hospital operations and Conifer segments. Moreover, the top line missed the Zacks Consensus Estimate by 2.2% due to decline in surgeries.

The company reported net income from continuing operations of $94 million against the year-ago quarter’s net loss of $20 million. In the quarter under review, adjusted EBITDA was $585 million, down 6.1% year over year.

Quarterly Segmental Details

Hospital & Other

Net operating revenues for the Hospital Operations and Other segment totaled $3.8 billion, down 0.7% year over year. This was due to the impact of coronavirus, which intensified in March 2020.

On a same-hospital basis, net patient revenues were $3.54 billion, down 0.4% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $342 million slipped 1.4% year over year.

Ambulatory

The Ambulatory segment generated net operating revenues of $490 million, up 2.1% year over year.

Additionally, the segment reported adjusted EBITDA of $156 million, down 11.9% year over year.

Conifer

Conifer’s revenues decreased 4.9% from the prior-year quarter to $332 million. This was primarily due to client attrition as a result of hospital divestitures by both Tenet and other customers.

The segment reported $87 million of adjusted EBITDA in the quarter under review, down 12.1% year over year.

The company is working on spinning off its Conifer segment.

Financial Position

As of Mar 31, 2020, Tenet Healthcare had cash and cash equivalents of $613 million, up 134% from the level at 2019 end.

The company exited the fourth quarter with $15.1 billion of long-term debt, up 3.4% from the level at 2019 end.

For the first quarter, net cash provided by operating activities was $129 million compared with $10 million in the year-ago period.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -151.39% due to these changes.

VGM Scores

Currently, Tenet has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tenet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.