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Tenet Healthcare (THC) Q4 Earnings: What's in the Offing?

Zacks Equity Research

Tenet Healthcare Corporation THC will report fourth-quarter 2018 results on Feb 25 after market close. In the last reported quarter, the company delivered a positive surprise of 163.6%, primarily driven by the performances of the United Surgical Partners International (USPI) and Conifer Segments.

Let’s see how things are shaping up prior to this announcement:

The Zacks Consensus Estimate for the stock’s earnings stands at 24 cents, down 81.5% year over year. This probable downside is due to lesser licensed beds, thanks to the company’s divestitures, which in turn, resulted in lower admissions.

The consensus mark for the number of licensed beds and admissions in the fourth-quarter of 2018 is down 6.2% and 13% year over year, respectively.

Moreover, revenues of the company might decline due to weak performances by the Conifer and Hospital operations and other segments. Per the consensus estimate, revenues for the Conifer and Hospital operations and other segments are pegged at $367 million and $3.7 billion, respectively, down 6.9% and 29.6% year over year.

The company’s EBITDA is expected to be weak due to the challenges faced by its Hospital segment. In the fourth quarter of 2018, the company expects to incur around $5 million losses on risk-based contracts.

Meanwhile, Tenet Healthcare is anticipated to realize approximately $100 million of proceeds from divestitures in the quarter to be reported and invest roughly $100-$125 million in Ambulatory acquisitions.

The company has likely paid off nearly $30 million of debt through open market repurchases in the fourth quarter, meeting its $70-million target during the second half of the year.

What the Quantitative Model States

Our proven model does not conclusively show that Tenet Healthcare is likely to beat on earnings this to-be-reported quarter. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is not the case here.

Earnings ESP: Tenet Healthcare has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 24 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Tenet Healthcare Corporation Price and EPS Surprise

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

Zacks Rank: Tenet Healthcare carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this reporting cycle.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Adamas Pharmaceuticals, Inc. ADMS is slated to release fourth-quarter earnings figures on Feb 28. This stock has an Earnings ESP of +10.29% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

FibroGen, Inc FGEN has an Earnings ESP of +164.71%. This #3 Ranked company is set to report fourth-quarter financial numbers on Feb 26.

Amicus Therapeutics, Inc. FOLD is scheduled to announce fourth-quarter 2018 earnings performance on Feb 28. The stock has an Earnings ESP of +10.07% and is a Zacks #3 Ranked player.

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