Tenet Healthcare Corp. THC reported second-quarter 2015 operating earnings of 75 cents per share that comfortably surpassed the Zacks Consensus Estimate of 49 cents. The results were also significantly above the year-ago income of 17 cents per share and exceeded the company guided range of 15–64 cents as well.
Strategies executed to improve the care delivery model and alignment of the company’s operations with the market trend in the health care system, along with investments in the fast-growing ambulatory surgery sector, contributed to the upside.
Including post-tax impairments, restructuring charges, acquisition-related expenses, and litigation and investigation expenses, net loss of Tenet Healthcare in the reported quarter was 61 cents per share, wider than the year-ago loss of 27 cents.
Operational Update
Net operating revenue of Tenet Healthcare came in at $4.49 billion beating the Zacks Consensus Estimate of $4.36 billion. Revenues were also up 11.2% from the prior-year quarter. The improvement was largely attributable to an increase in same-hospital adjusted patient admissions, same-hospital net patient revenue per adjusted patient admission, and higher revenues at Conifer from non-Tenet hospitals. Additionally, acquisitions, joint ventures and newly constructed facilities also contributed to the upside.
Tenet Healthcare’s net patient revenue per adjusted admission increased 4.5% year over year to $11,764.
Total admissions increased 3.7%, while adjusted admissions rose 4.6%, both on a year-over-year basis. Additionally, the area of strategic focus through surgeries improved 3.1% and emergency department visits grew 5.8%.
As a percentage of revenues, bad debt expense ratio came in at 7.3%, unchanged from the year-ago quarter.
Tenet Healthcare’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved 23.5% year over year to $568 million in the second quarter. This also was higher than the company guided range of $500–$550 million.
Financial Position
As of Jun 30, 2015, Tenet Healthcare had cash and cash equivalents of $299 million, up from $193 million as of Dec 31, 2014. The company exited the second quarter with total assets amounting to $22.7 billion, up from $18.1 billion as of Dec 31, 2014. Shareholders’ equity as of Jun 30, 2015 was $803 million, higher than $651 as of Dec 31, 2014.
Net cash outflow in the first six months of 2015 was $353 million, significantly higher than $247 million in the year-ago period.
Tenet Healthcare’s capital expenditure decreased to $175 million in the second quarter from $242 million in the year-ago quarter.
Guidance
Third Quarter of 2015
Adjusted EBITDA for the third quarter is expected in the range of $550–$600 million. Tenet Healthcare expects earnings per share for the quarter to be between 5 cents and 49 cents. The outlook incorporates electronic health record initiatives worth $8 million.
Net operating revenues are expected in the $4.65–$4.85 billion range.
2015
Tenet Healthcare’s board of directors increased the adjusted EBITDA outlook for 2015 to the range of $2.225–$2.325 billion, from $2.05–$2.15 billion guided earlier. Earnings per share guidance now lies in the $1.32–$2.21 range compared with the earlier guidance of at $1.32–$2.40.
Net operating revenue for 2015 is expected between $18.1–$18.5 billion, higher than $17.4–$17.7 billion guided earlier.
Adjusted cash flow is expected to be between $225 million and $425 million.
Performance of Other Stocks in the Healthcare Space
Cigna Corp. CI reported second-quarter 2015 operating net earnings of $2.55 per share comfortably beating the Zacks Consensus Estimate of $2.38.
Anthem Inc. ANTM reported second-quarter 2015 adjusted income of $3.10 per share that surpassed the Zacks Consensus Estimate of $2.74.
Molina Healthcare, Inc. MOH reported second-quarter 2015 adjusted net income from continuing operations of 86 cents per share that handily beat the Zacks Consensus Estimate of 66 cents per share.
Zacks Rank
Currently, Tenet Healthcare sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment