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Tenet Healthcare (THC) Q4 Earnings Beat Estimates, Down Y/Y

Zacks Equity Research
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Tenet Healthcare Corporation THC delivered fourth-quarter 2018 adjusted net earnings of 51 cents per share, outperforming the Zacks Consensus Estimate by 112.5%. However, the same declined 63.6% year over year mainly due to fall in operating revenues.

Quarterly Operational Update

Net operating revenues were $4.6 billion, down 7.2% year over year due to poor performances by Conifer, and Hospital and other segments. However, the top line beat the Zacks Consensus Estimate by 2.9%.

Total visits for the company decreased 8.8% to 1734.4 billion in the fourth quarter of 2018.

It reported net loss from continuing operations of $5 million, narrower than the year-ago quarter’s net loss of $230 million. In the quarter under review, Adjusted EBITDA was 684 million, down 18.6% year over year.

Full-Year Highlights

Net operating revenues for 2018 declined 4.5% year over year to $18.3 billion.

The company witnessed net loss from continuing operations of 5 cents per share, narrower than net loss of $2.28 in the year-ago quarter.

Quarterly Segmental Details

Hospital & Other

Net operating revenues for the Hospital Operations and Other segment totaled $3.8 billion, down 8.4% year over year. This downside was largely attributable to hospital divestitures, partially offset by same hospital revenue growth.

On a same-hospital basis, net patient revenues were $3.5 billion, down 1.3% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $352 million, down 34.6% year over year.


The Ambulatory segment generated net operating revenues of $554 million, up 1.7% year over year.

Additionally, the segment reported adjusted EBITDA of $245 million, up 9.9% year over year.


Conifer’s revenues decreased 5.6% from the prior-year quarter’s level to $372 million. This was mainly due to the company’s divestment activities.

The segment reported $87 million of adjusted EBITDA in the quarter under review, up 10.1% year over year.

Financial Position

As of Dec 31, 2018, Tenet Healthcare had cash and cash equivalents of $411 million, down 32.7% from the number at the end of 2017.

The company exited the fourth quarter with $182 million of long-term debt, up 24.6% from the count at 2017 end.

For 2018, net cash provided by operating activities was $1049 million, up 12.6% year over year.

2019 Outlook

Tenet Healthcare expects revenues of $18.0-$18.4 billion.

Net income from continuing operations for 2019 is projected to be between $15 million and $115 million.

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

It also assumes interest expense to be $985-$995 million.

First-Quarter 2019 Outlook

Revenues are expected to be between $4.3 billion and $4.6 billion.

Net loss from continuing operations is expected to be between $25 million and $70 million.

Adjusted EBITDA is estimated to be between $575 million and $625 million.

Adjusted diluted earnings per share from continuing operations are expected to be 10-43 cents.

The company expects interest expenses to be $250-$260 million in the first quarter.

Zacks Rank and Performance of Other Players

Tenet Healthcare currently 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 fourth-quarter earnings so far, the bottom lines of Anthem Inc. ANTM, Centene Corporation CNC and UnitedHealth Group Inc. UNH have surpassed the respective Zacks Consensus Estimate.

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