Tenet Healthcare Corp. (THC) reported fourth-quarter 2014 operating earnings of $1.03 per share that missed the Zacks Consensus Estimate of $1.20. However, the results compared favorably with the year-ago quarter earnings of 43 cents per share.
The year-over-year upside was driven by the strategies undertaken by the company to gain market share, economic improvement and expanded health coverage, higher admissions and growth in the Conifer business.
Including post-tax impairments, restructuring charges, acquisition-related expenses, litigation and investigation expenses, net income of Tenet Healthcare in the reported quarter was 61 cents per share, comparing favorably with the year-ago loss of 17 cents.
Operational Update
Net operating revenue of Tenet Healthcare came in at $4.5 billion beating the Zacks Consensus Estimate of $4.4 billion. Revenues were also up 15% from the prior-year quarter. The improvement was largely attributable to an increase in patient volume, improvement in terms of the commercial managed care contracts, better performance in the Conifer services business and higher contribution from the California Provider Fee program.
Tenet Healthcare’s net patient revenue per adjusted admission increased 6.8% year over year to $12,243.
Total admissions increased 4% while adjusted admissions rose 4.5%, both on a year-over-year basis. Additionally, the area of strategic focus through surgeries increased 7.5% and emergency department visits grew 7.3%.
As a percentage of revenues, bad debt expense ratio decreased 80 basis points year over year to 7.4%.
Tenet Healthcare’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved 45.5% year over year to $646 million in the fourth quarter.
Full-Year Highlights
Tenet Healthcare reported 2014 operating earnings of $1.27 per share that missed the Zacks Consensus Estimate of $1.61. However, the results compared unfavorably with $1.76 per share earned in 2013.
Net income came in at 12 cents per share in 2014, rebounding from the year ago loss of $1.32 per share.
Net operating revenue of Tenet Healthcare came in at $16.6 billion, up 49.7% from $11.1 billion in 2013.
Financial Position
As of Dec 31, 2014, Tenet Healthcare had cash and cash equivalents of $193 million, up from $113 million as of Dec 31, 2013. The company exited 2014 with total assets amounting to $18.1 billion, up from $16.5 billion as of Dec 31, 2013. Shareholder equity as of Dec 31, 2014 was $651 million, down from $755 million as of Dec 31, 2013.
Net cash inflow from operating activities in 2014 was $687 million, higher than $589 million in the year-ago period.
Tenet Healthcare’s capital expenditure decreased to $199 million in the fourth quarter of 2014 from $293 million in the year-ago quarter.
Guidance
First Quarter of 2015
Adjusted EBITDA for the first quarter is expected in the range of $475–$525 million. Tenet Healthcare expects earnings per share for the quarter to be between 5 cents and 55 cents.
Net operating revenue is guided in the range of $4.3–$4.5 billion.
2015
Tenet Healthcare’s board of directors of provided the adjusted EBITDA outlook for 2015 in the range of $2.05–$2.15 billion. Earnings per share is projected to be between $1.32 and $2.40.
Net operating revenue for 2015 is expected between $17.4 billion and $17.7 billion.
Tenet Healthcare expects its adjusted net cash flow in 2015 to be in the range of $1.15–$1.25 billion. Adjusted free cash flow is anticipated in the range of $150–$350 million.
Other Stocks in the Healthcare Space
Aetna Inc. (AET) reported fourth-quarter 2014 earnings of $1.22 per share, in line with the Zacks Consensus Estimate.
Anthem Inc. (ANTM) reported fourth-quarter 2014 adjusted net income of $1.73 per share, beating the Zacks Consensus Estimate of $1.72.
Molina Healthcare Inc. (MOH) reported fourth-quarter 2014 net income from continuing operations of 69 cents per share, comfortably above the Zacks Consensus Estimate of 60 cents per share.
Zacks Rank
Currently, Tenet Healthcare carries a Zacks Rank #5 (Strong Sell).
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