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Tenet Healthcare (THC) Q3 Earnings & Revenues Beat Estimates

Zacks Equity Research

Tenet Healthcare Corporation THC delivered third-quarter 2019 adjusted net income of 58 cents per share, beating the Zacks Consensus Estimate by 107.1% on the back of volume growth and better revenues. Moreover, the bottom line shot up 100% year over year.

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, up 1.8% year over year. Additionally, the top line beat the Zacks Consensus Estimate by 2.4% on contributions from the Hospital & Other and Ambulatory segments.

Hospital segment’s same-hospital admissions were up 3.6% year over year.

Quarterly Segment Details

Hospital & Other


Net operating revenues in the Hospital Operations and Other segment totaled $3.8 billion, up 2.3% year over year. This upside is mainly attributable to revenue growth on same-hospital basis. However, the same was partly offset by hospital divestitures.

On same-hospital basis, patient revenues were $3.56 billion, up 5.8% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $343 million, up 7.1% year over year.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $522 million, up 4% year over year.

Additionally, the segment reported adjusted EBITDA of $207 million, up 13.7% year over year.

Conifer Segment

Conifer’s revenues decreased 9.4% from the prior-year quarter’s level to $336 million. This was mainly due to the company’s client attrition following certain divestitures.

The segment’s adjusted EBITDA of $90 million was up 11.1% year over year.

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation Quote

Financial Position

As of Sep 30, 2019, Tenet Healthcare had cash and cash equivalents of $314 million, down 23.6% from the number at 2018 end.

The company exited the third quarter with $14.8 billion of long-term debt, up 1.5% from the 2018-end level.

Net cash provided by operating activities for the first nine months of 2019 was $713 million, down 10.8% year over year.

2019 Outlook

Post third-quarter results, the company revised its guidance. Revenues are now expected between $18.350 billion and $18.550 billion compared with the earlier view of $18-$18.4 billion.

Adjusted earnings per share are now projected between $2.25 and $2.91.
Adjusted EBITDA is estimated between $2.650 billion and $2.750 billion.
Tenet Healthcare anticipates adjusted free cash flow of $600-$800 million. While net cash provided by operating activities is predicted between $1.045 billion and $1.325 billion.

Q419 Guidance

Following third-quarter results, the company provided an outlook for the fourth quarter.

Tenet Healthcare now anticipates revenues in the range of $4.678-$4.878 billion for the current quarter.

The company forecasts adjusted EBITDA between $749 million and $849 million.

Adjusted earnings per share from continuing operations are likely to vary between 57 cents and $1.23.

Zacks Rank and Performance of Other Players

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

Among other players from the medical sector, having already reported third-quarter earnings, the bottom-line results of UnitedHealth Group Incorporated UNH, Anthem Inc. ANTM and Centene Corporation CNC topped the respective Zacks Consensus Estimate.

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