Tenet Healthcare Q2 Loss Widens, Lowers Full-year Outlook

(RTTNews) - Hospital operator Tenet Healthcare Corp. (THC) on Tuesday reported a loss for the second quarter that widened from last year, as one-time charges and a decline in patient admissions more than offset pricing increases. Looking ahead, the company lowered its revenue as well as adjusted earnings outlook for fiscal 2013, citing softer than anticipated inpatient volumes.

Dallas, Texas-based Tenet Healthcare's second-quarter adjusted earnings before interest, tax, interest, depreciation and amortization or EBITDA declined 17 percent to $336 million from $288 million in the previous-year period.

Trevor Fetter, president and chief executive officer of Tenet Healthcare said, "We grew both outpatient visits and emergency department volumes in the quarter, and we doubled revenues in our Conifer services business. We are revising our Outlook for 2013 Adjusted EBITDA to growth of 4 to 8 percent reflecting softer than anticipated inpatient volumes."

Tenet's adjusted patient admissions for the quarter declined 0.7 percent in the quarter, as 2.5 percent growth in outpatient visits was offset by a 3.5 percent decline in inpatient admissions. Total emergency department visits increased 2.9 percent and surgeries increased by 13.9 percent.

Total net patient revenue per adjusted admission was $12,208, up 2.7 percent from last year. The pricing increase was led by improved terms in the company's contracts with commercial managed care payers.

Tenet's second-quarter net loss was $50 million or $0.49 per share, wider than net loss of $6 million or $0.06 per share in the prior-year period.

Excluding impairments, restructuring charges, acquisition-related costs, litigation and investigation costs, the loss on early extinguishment of debt, and other tax adjustments, adjusted income from continuing operations for the latest quarter was $69 million after-tax or $0.66 per share. This compares to adjusted income from continuing operations of $44 million after-tax or $0.41 per share in the previous-year quarter.

On average, eighteen analysts polled by Thomson Reuters expected the company to report earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude special items.

Net operating revenue for the quarter rose 7 percent to $2.42 billion from $2.27 billion in the year-ago period. Analysts had a consensus revenue estimate of $2.44 billion.

Looking ahead to the second half of fiscal 2013, Tenet forecasts adjusted EBITDA in a range of $640 million to $690 million. The outlook excludes the expected contribution from Vanguard and represents growth of about 9 percent compared to adjusted EBITDA of $610 million in the prior-year period.

For fiscal year 2013, Tenet lowered its outlook for adjusted EBITDA to a range of $1.25 billion to $1.30 billion from the prior range of $1.325 billion to $1.425 billion.

The revised outlook is based on inpatient volumes in the first half of 2013, which were significantly softer than initially projected. The forecast also excludes the impact of the Vanguard acquisition, which may close prior to year-end 2013.

THC closed Monday's trading at $44.66, up $0.73 on a volume of 2.02 million shares.