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Tenet Healthcare (THC) Q4 Earnings Miss Estimates, Rise Y/Y

Zacks Equity Research

Tenet Healthcare Corporation THC delivered fourth-quarter 2019 adjusted net earnings of 99 cents per share, missing the Zacks Consensus Estimate by 2%. However, the same increased 94.1% year over year mainly due to operational improvements in each of the business segments.

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 Operational Update

Net operating revenues were $4.8 billion, up 4% year over year due to improved performances by Ambulatory Care and Hospital segments, offset by poor performance of Conifer segment. Moreover, the top line beat the Zacks Consensus Estimate by 1.1%.

Total visits for the company decreased 1.9% to 1700.7 billion in the fourth quarter of 2019.

The company reported net income from continuing operations of $2 million against the year-ago quarter’s net loss of $5 million. In the quarter under review, adjusted EBITDA was $805 million, up 17.7% year over year.

Full-Year Highlights

Net operating revenues for 2019 increased 1% year over year to $18.5 billion.

The company witnessed net loss from continuing operations of $2.35 per share against net income of $1.06 per share in the year-ago quarter.

Quarterly Segmental Details

Hospital & Other

Net operating revenues for the Hospital Operations and Other segment totaled $3.9 billion, up 3.6% year over year. This uptick was largely attributable to revenue growth on a same-hospital basis. It was partially offset by hospital divestitures.

On a same-hospital basis, net patient revenues were $3.7 billion, up 5.2% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $407 million, up 15.6% year over year.

Ambulatory

The Ambulatory segment generated net operating revenues of $632 million, up 14.1% year over year.

Additionally, the segment reported adjusted EBITDA of $304 million, up 24.1% year over year.

Conifer

Conifer’s revenues decreased 10.8% from the prior-year quarter’s level to $332 million. This was primarily due to client attrition as a result of hospital divestitures by both Tenet and other customers.

The segment reported $94 million of adjusted EBITDA in the quarter under review, up 8% year over year.

Financial Position

As of Dec 31, 2019, Tenet Healthcare had cash and cash equivalents of $262 million, down 36.2% from the end of 2018.

The company exited the fourth quarter with $171 million of long-term debt, down 6% from 2018 end.

For 2019, net cash provided by operating activities was $1.2 billion, up 17.5% year over year.

2020 Guidance

Tenet Healthcare expects net operating revenues of $19.1-$19.5 billion.

Adjusted earnings per share from continuing operations are projected between $2.69 and $3.35.

Adjusted EBITDA is estimated between $2.8 billion and $2.9 billion.

Tenet Healthcare projects adjusted free cash flow of $775-$975 million.

The company expects adjusted net cash provided by operating activities of $1.5-$1.7 billion.

The company assumes interest expense to be in the range of $975-$985 million.

Q1 View

Net operating revenues are expected to be between $4.6 billion and $4.8 billion.

Net income (loss) from continuing operations is expected to be in the range of net loss of $7 million to net income of $37 million.

Adjusted EBITDA is estimated to be between $625 million and $675 million.

Adjusted earnings per share from continuing operations are expected to be 42-75 cents.

The company expects interest expenses to be $240-$250 million in the first quarter.

Zacks Rank and Performance of Other Players

Tenet Healthcare currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other medical sector players that have already reported fourth-quarter earnings, the bottom line of UnitedHealth Group Incorporated UNH and HCA Healthcare, Inc. HCA beat estimates while that of Anthem Inc. ANTM missed the consensus mark.

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