Tenet Healthcare (THC) Q1 Earnings & Revenues Miss Estimates
Zacks Investment Research | May 01, 2017 10:06PM ET
Tenet Healthcare Corp. ( (NYSE:THC) ) reported first-quarter 2017 operating earnings of 27 cents per share that missed the Zacks Consensus Estimate of 53 cents by 79%. Also, the bottom line deteriorated 40% year over year due to lower revenue generation.
This underperformance was primarily because no revenues were generated by the California Provider Fee program, the sale of Tenet’s hospitals in Atlanta, GA and approximately $7 million in start-up losses in the first quarter.
Tenet Healthcare reported a net loss from continuing operations of $52 million in the first quarter, which narrowed 5.4% year over year. Adjusted EBITDA of $527 million declined 14.6% year over year.
Operational Update
First-quarter net operating revenue came in at $4.8 billion, down 4.6% from the prior-year quarter. Revenues also missed the Zacks Consensus Estimate of by 0.8%.
For the first quarter, Tenet Healthcare’s provision for doubtful accounts increased 1.9% year over year to $383 million due to higher bad debt ratio. The increase in the bad debt ratio mainly stemmed from a $34 million increase in uninsured revenues.
Same-hospital exchange admissions were 5,168, down 1.8% from the year-ago quarter. Same-hospital exchange outpatient visits were 51,008, up 13.9% from the first quarter of 2016.
Total operating expense of $4.6 billion decreased 3% year over year due to a substantial decline in salaries, wages and benefits, supplies and litigation, and investigation costs.
Quarterly Segment Details:
Hospital & Other
Net operating revenue in the Hospital Operations and Other segment decreased 6.4% from the last-year quarter to $4.1 billion. This was mainly because of the divestment of certain hospitals over this period.
Adjusted EBITDA was $309 million, down 26.1% year over year. This was because no revenues were recorded under the California Provider Fee program, the sale of Tenet’s hospitals in Atlanta, GA and approximately $7 million in start-up losses in the first quarter.
Ambulatory Segment:
The Ambulatory segment generated net operating revenue of $455 million, up 6.1% year over year.
In addition, the segment reported adjusted EBITDA (Earnings before Interest, Taxes, Depriciation and Amortization) of $153 million, up 12.5% year over year.
Conifer Segment:
Conifer’s revenues increased 4.4% from the prior-year quarter to $402 million on the back of 11.5% higher revenues generated from third-party customers.
The segment generated $65 million of adjusted EBITDA in the reported quarter, up 3.2% year over year.
Business Update
Tenet and Humana (NYSE:HUM) reached a new, multi-year agreement, per which all of Tenet’s hospitals and hospital-affiliated outpatient centers and employed physicians will be phased back into Humana’s network between Jun 1, and Oct 1, 2017.
Tenet and HCA Holdings entered into a definitive agreement for the sale of Tenet’s acute care hospitals and related operations in Houston, TX. The transaction is expected to result in net proceeds of approximately $725 million and is expected to be completed in the third quarter of 2017, subject to customary regulatory approvals and closing conditions.
Tenet Healthcare Corporation Price, Consensus and EPS Surprise
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