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Tenet Healthcare (THC) Q1 Earnings Beat Estimates, Down Y/Y

Zacks Equity Research

Tenet Healthcare Corporation THC delivered first-quarter 2019 adjusted net earnings of 54 cents per share, outperforming the Zacks Consensus Estimate by 80% on the back of operational excellence. However, the bottom line declined 5.3% year over year.

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, down 3.3% year over year due to weak performances by the company’s segments. However, the top line beat the Zacks Consensus Estimate by 0.8%.

Total visits for the company decreased 2% to 169.9 billion in the quarter under review.

Its reported net loss from continuing operations of $27 million came in against the year-ago quarterly net income of $98 million.

Adjusted EBITDA for the first three months of 2019 was $613 million, down 6.4% year over year due to malpractice expense, risk-based contracting business in California, Aspen divestiture and contract termination fees.

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation Price, Consensus and EPS Surprise | Tenet Healthcare Corporation Quote

Quarterly Segment Details

Hospital & Other


Net operating revenues in the Hospital Operations and Other segment totaled $3.9 billion, down 2.2% year over year. This downside is largely attributable to hospital divestitures, partially offset by same hospital revenue growth.

On same-hospital basis, patient revenues were $3.6 billion, up 1.9% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $337 million, down 16.2% year over year due to increase in malpractice expenses and losses due to contract losses, etc.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $480 million, down 3.6% year over year. This was mainly due to the company’s Aspen divestiture.

Additionally, the segment reported adjusted EBITDA of $177 million, up 12% year over year.

Conifer Segment

Conifer’s revenues decreased 13.6% from the prior-year quarter’s level to $349 million. This was mainly due to the company’s divestment activities by Tenet and other customers.

The segment reported $99 million of adjusted EBITDA in the quarter under review, up 1% year over year.

2019 Outlook

The company still expects revenues of $18.0-$18.4 billion.

Net income from continuing operations for 2019 is projected between $17 million and$117 million, up from the earlier estimate of $15-$115 million.

Adjusted EBITDA is still estimated between $2.65 billion and $2.75 billion.
Tenet Healthcare projects adjusted free cash flow of $600-$800 million.

The company expects net cash provided by operating activities of $1.07-$1.375 billion.

Adjusted earnings per share from continuing operations are projected between $2.08 and $2.59.

Q219 Outlook

The company expects revenues for the second quarter between $4.4 billion and $4.7 billion.

For the second quarter, net income or loss attributable to continuing operations can range from a loss of $5 million to an income of $40 million.

Adjusted EBITDA is expected between $625 million and$675 million.

Adjusted earnings per share are projected between 29 cents to 63 cents.

Financial Position

As of Mar 31, 2019, Tenet Healthcare had cash and cash equivalents of $252 million, down 38.7% from the number at year-end 2018.

The company exited the first quarter with $14.8 billion of long-term debt, up 1.2% from the count at 2018 end.

Net cash provided by operating activities for the first three months of 2019 summed $10 million, down 91.2% from the level at 2018end.

Zacks Rank and Performance of Other Players

Tenet Healthcare carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the HMO industry having reported first-quarter earnings so far, the bottom-line figures of Anthem Inc. ANTM, Centene Corporation CNC    and UnitedHealth Group Inc. UNH beat the respective Zacks Consensus Estimate.

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