Tenet Healthcare Q3 Profit Meet View, But Revenues Top; Boosts 2013 Outlook

(RTTNews) - Hospital operator Tenet Healthcare Corp. (THC) reported Monday a profit for the third quarter that declined 32 percent from last year, despite revenue growth, hurt by lower operating margins amid higher expenses. Adjusted earnings per share from continuing operations matched analysts' expectations, while quarterly revenues topped their estimates. The company also raised its guidance for the full-year 2013.

"We achieved another solid earnings increase in the third quarter as we continued to control costs and drive significant revenue growth. We delivered strong growth in outpatient visits, emergency department volumes, and total surgeries in the quarter, all of which are areas of strategic focus," President and CEO Trevor Fetter said in a statement.

The Dallas, Texas-based health-care services company reported net income of $28 million or $0.27 per share in the third quarter, lower than $40 million or $0.37 per share in the prior-year quarter.

Income from continuing operations for the quarter grew to $33 million or $0.32 per share from $30 million or $0.28 per share in the year-ago quarter.

Excluding items, adjusted income from continuing operations was $46 million or $0.45 per share, compared to $35 million or $0.33 per share in the year ago.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude one-time items.

Adjusted EBITDA for the quarter was $288 million, compared to $269 million last year.

Net operating revenues for the quarter grew 8.4 percent to $2.41 billion from $2.22 billion in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate of $2.39 billion.

"In addition, our Conifer services business continues to thrive, reporting a 50 percent increase in EBITDA compared to last year's third quarter. Conifer recorded revenues of $225 million, an increase of 84 percent," Fetter added.

Operating margins declined 80 basis points to 6.1 percent from last year's 6.9 percent as salaries, wages and benefits as a percentage of net revenues increased 140 basis points from last year.

Net patient revenue per adjusted admission was $11,928, an increase of 3.0 percent, reflecting better contracts terms with commercial managed care payers and incremental Medicaid revenues.

Commercial managed care revenue increased 2.3 percent per admission, 3.4 percent per patient day, and 3.7 percent per outpatient visit.

Adjusted admissions edged down 0.5 percent, including a 3.5 percent increase in outpatient visits and a 2.6 percent decline in inpatient admissions. Meanwhile, total emergency department visits increased 3.1 percent.

On October 1, the company completed its acquisition of Vanguard Health Systems in a $4.3 billion deal, which further strengthens its competitive position for future growth. The integration of Vanguard's operations is proceeding smoothly.

Looking ahead to the fourth quarter, the company expects adjusted EBITDA in a range of $400 million to $450 million and normalized earnings from continuing operations in a broad range of $0.01 to $0.46 per share.

For fiscal 2013, Tenet raised its outlook for adjusted EBITDA to a range of $1.298 billion to $1.348 billion from the prior range of $1.25 billion to $1.30 billion. Net operating revenues are now anticipated between $10.95 billion and $11.15 billion, up from the prior forecast between $9.70 billion and $9.90 billion.

THC closed Monday's regular trading session at $48.26, up $1.07 or 2.27% on a volume of 1.96 million shares. However, the stock lost $0.76 or 1.57% in after-hours trading.