Tenet Healthcare Q1 Profit Misses View, But Revenues Top; Backs 2014 Outlook

(RTTNews) - Hospital operator Tenet Healthcare Corp. (THC) reported Monday a loss for the first quarter that sharply narrowed from last year, despite lower operating margins, reflecting strong double-digit revenue growth. Adjusted earnings per share from continuing operations missed analysts' expectations, while quarterly revenues topped their estimates. The company also reaffirmed its guidance for the full-year 2014.

"Aided by our extensive preparations to serve the newly insured patient populations under the Affordable Care Act, we achieved a broadly-based improvement in our admissions trend in the first quarter, with a 0.3 percent increase in adjusted admissions and a 0.9 percent admissions decline on a pro forma basis," President and CEO Trevor Fetter said in a statement.

The Dallas, Texas-based health-care services company reported a net loss of $32 million or $0.33 per share in the first quarter, narrower than $88 million or $0.85 per share in the prior-year quarter.

Loss from continuing operations for the quarter sharply narrowed to $0.28 per share from $0.83 per share in the year-ago quarter.

Excluding items, adjusted income from continuing operations was $0.12 per share, compared to $0.33 per share in the year ago.

On average, 21 analysts polled by Thomson Reuters expected the company to report a loss of $0.14 per share for the quarter. Analysts' estimates typically exclude one-time items.

Adjusted EBITDA for the quarter was $387 million, compared to $274 million last year.

Net operating revenues for the quarter surged 64.5 percent to $3.93 billion from $2.39 billion in the same quarter last year, and topped eighteen Wall Street analysts' consensus estimate of $3.91 billion by a whisker.

However, operating margins contracted 180 basis points to 4.3 percent from last year's 6.1 percent as other operating expenses as a percentage of net revenues increased 170 basis points from last year.

Net patient revenue per adjusted admission was $12,334 an increase of 3.8 percent from a year ago. Commercial managed care revenue increased 5.5 percent per admission, and 0.2 percent per outpatient visit.

Total same-hospital admissions declined 1.2 percent, while total admissions in the legacy Vanguard markets declined 0.5 percent. Adjusted outpatient visits increased 4.6 percent and 2.5 percent on a same-hospital basis. More than 40 percent of the adjusted outpatient growth was organic.

Adjusted surgeries grew by 7.7 percent and 13.1 percent on a same-hospital basis. Adjusted emergency department visits declined 0.7 percent, but grew 2.7 percent on a same-hospital basis.

"The strengthening volume trend was particularly pronounced in the states that expanded their Medicaid programs. In these four states our Medicaid admissions grew by 17 percent and uninsured plus charity admissions declined by 33 percent," Fetter added.

Looking ahead to the second quarter, the company expects normalized results between a loss of $0.39 per share and earnings of $0.12 per share, on projected net operating revenues between $3.80 billion and $4.0 billion, and adjusted EBITDA of $375 million to $425 million.

Analysts currently expect second-quarter earnings of $0.36 per share on quarterly revenues of $3.99 billion.

For fiscal 2014, Tenet continues to anticipate normalized earnings from continuing operations in a range of $0.49 to $1.67 per share, on projected net operating revenues between $15.70 billion and $16.0 billion, and adjusted EBITDA of $1.80 billion to $1.90 billion.

Street is looking for full-year 2014 earnings of $1.30 per share on annual revenues of $16.05 billion.

THC closed Monday's regular trading session at $45.36, down $0.05 or 0.11% on a volume of 2.55 million shares.