Tenet Healthcare Corporation THC will report first-quarter 2018 results on Apr 30 after market close.
Tenet Healthcare’s first-quarter results are likely to reflect the industry-wide softness in volumes. Factors such as payor initiatives to move volumes away from hospitals, rising deductibles and prevalence of high deductible health plans, increased proportion of hospital care to be paid by consumers, are driving away volumes and the same is likely to be seen in the to-be-reported quarter. These might in turn result in lower admissions inducing a decline in patient revenues.
However, an unusual flu season in the first quarter must have led to a surge in patient admissions as more patients seek treatment.
The Zacks Consensus Estimate for first-quarter inpatient revenues and outpatient revenues are pegged at $2.5 billion and $1.4 billion, reflecting 5.2% and 7.6% decline, respectively, over the year-ago quarter.
The consensus mark for – adjusted patient admissions in the quarter to be reported is pegged at 0.3 million, down 5.5% year over year.
Other Factors
Tenet Healthcare’s Ambulatory segment has been performing well over the past many quarters. The Zacks Consensus Estimate for this segment’s revenues stands at $486 million for the first quarter, reflecting 7% rise year over year. We expect the same to further benefit from this solid segmental performance.
The company’s cost management program primarily comprised headcount reductions and the renegotiation of contracts with suppliers and vendors. Its enterprise-wide cost-reduction initiatives are likely to decrease expenses and favor margins.
Further, the company’s share buybacks during the first quarter are expected to aid its bottom line.
Why a Likely Positive Surprise?
Our proven model shows that Tenet Healthcare has the right combination of the two key ingredients to beat estimates this quarter.
Zacks ESP: Tenet Healthcare has an Earnings ESPof +121.43%. The positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Tenet Healthcare Corporation Price and EPS Surprise
Zacks Rank: Tenet Healthcare carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have significantly higher chances of an earnings beat.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other stocks worth considering from the medical sector that you may want to consider as these too have the right combination of elements to come up with an earnings beat this time around:
Humana Inc. HUM is scheduled to report first-quarter earnings on May 2. The company has an Earnings ESP of +0.20% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Aetna, Inc.AET has an Earnings ESP of +0.43% and a Zacks Rank of 3. The company is set to report first-quarter earnings on May 1.
Wellcare Health Plans, Inc. WCG has an Earnings ESP of +3.89% and is a Zacks #2 Ranked player. The company is expected to report first-quarter earnings on May 1.
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