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Tenet Healthcare's (THC) Earnings Beat in Q3, Improve Y/Y

Zacks Equity Research
·4 min read

Tenet Healthcare Corporation THC delivered third-quarter 2020 adjusted net earnings of 64 cents per share, beating the Zacks Consensus estimate by 94%. Further, the bottom line increased 10.3% year over year, mainly owing to lower costs and a solid Ambulatory segment.

The third quarter was more challenging than the second as COVID positive inpatient census soared by around 64% in late July and August.

Quarterly Operational Update

Net operating revenues of $4.5 billion dipped 0.2% year over year due to weak contribution from Hospital operations as well as Conifer segments. However, the top line beat the Zacks Consensus Estimate by 4.8%.

The company reported adjusted net income from continuing operations of $68 million, comparing favorably with the year-ago quarter’s net income of $67 million. In the quarter under review, adjusted EBITDA was $621 million, up 12.7% year over year.

Operating expenses fell 0.9% year over year to $4.2 billion owing to lower salaries, wages and benefits, and litigation and investigation costs.

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

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

Quarterly Segmental Details

Hospital & Other

Net operating revenues from the Hospital Operations and Other segment totaled $3.8 billion, down 1.2% year over year. This was due to the impact of coronavirus, which shrank patient volumes.

On a same-hospital basis, net patient revenues were $3.5 billion, down 1.7% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $297 million decreased 13.2% year over year.


The Ambulatory segment generated net operating revenues of $565 million in the third quarter, up 8.2% year over year on the back of higher acuity and new service line growth.

Additionally, the segment reported adjusted EBITDA of $228 million, up 10.1% year over year.


Conifer’s revenues dipped 3.3% from the prior-year quarter to $325 million. This was primarily due to client attrition as a result of hospital divestitures by both Tenet and other customers along with the COVID-19 adversity on volumes.

The segment reported $96 million of adjusted EBITDA in the quarter under review, up 6.7% year over year.

Financial Position

As of Sep 30, 2020, Tenet Healthcare had cash and cash equivalents of $3.03 billion, up from $262 million at 2019 end. The company maintained enough liquidity to meet the COVID-19 pandemic requirements. The company doesn’t have any borrowings under its $1.9 billion line-of-credit facility.

The company exited the third quarter with $15.6 billion of long-term debt, up 7.96.7% from the level at 2019 end. At the end of the third quarter, net cash provided by operating activities was $2.9 billion compared with $713 million in the year-ago period.

Zacks Rank

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

Upcoming Medical Sector Releases

Here are some companies worth considering from the healthcare sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Canopy Growth Corporation CGC has an Earnings ESP of +25.16% and a Zacks Rank #3, currently.

CareDx, Inc. CDNA has an Earnings ESP of +16.67% and a Zacks Rank of 2, presently.

Teladoc Health, Inc. TDOC has an Earnings ESP of +9.77% and a Zacks Rank of 3 at present.

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Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
CareDx, Inc. (CDNA) : Free Stock Analysis Report
Canopy Growth Corporation (CGC) : Free Stock Analysis Report
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