Tenet Healthcare (THC) Tops Q3 EPS by 16c, Revenues Beat; Offers FY18 EPS/Revenue Outlook

Tenet Healthcare (NYSE: THC) reported Q3 EPS of $0.29, $0.16 better than the analyst estimate of $0.13. Revenue for the quarter came in at $4.49 billion versus the consensus estimate of $4.38 billion.

• Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million or $0.09 per diluted share in the third quarter of 2018 compared to a net loss of $366 million or $3.63 per diluted share in the third quarter of 2017.
• After adjusting for certain items, which totaled $39 million or $0.38 per share in the third quarter of 2018, Tenet reported Adjusted diluted earnings per share from continuing operations of $0.29 in the third quarter of 2018 compared to an Adjusted diluted loss per share of $0.17 in the third quarter of 2017.
• Adjusted EBITDA was $577 million in the third quarter of 2018 compared to $507 million in the third quarter of 2017. Adjusted EBITDA in the third quarter of 2018 consisted of $312 million in the Hospital Operations and other segment, $184 million in the Ambulatory Care segment and $81 million in the Conifer segment.
• Net cash provided by operating activities was $799 million in the nine months ended September 30, 2018, an increase of $90 million when compared to $709 million in the first nine months of 2017. Free Cash Flow was $395 million, an increase of $178 million compared to $217 million in the first nine months of 2017. Adjusted Free Cash Flow was $512 million, a $204 million increase compared to $308 million in the first nine months of 2017.
• Hospital segment same-hospital net patient revenue grew 6.0 percent. Admissions decreased 2.1 percent, adjusted admissions increased 0.3 percent, and revenue per adjusted admission increased 5.7 percent.
• Ambulatory Care segment same-facility system-wide revenue grew 6.7 percent, with cases up 5.0 percent and revenue per case up 1.6 percent. Surgical revenue grew 6.6 percent, with cases up 4.0 percent and revenue per surgical case up 2.5 percent.
• Conifer segment margins increased 210 basis points as a result of cost reduction actions; revenues decreased 7.5 percent primarily due to client attrition following divestitures by Tenet and other customers.
• The Company has revised its Outlook for 2018. Tenet now expects net income from continuing operations available to Tenet common shareholders of $84 million to $144 million, Adjusted EBITDA of $2.525 billion to $2.575 billion, diluted earnings per share from continuing operations of $0.81 to $1.38 and Adjusted diluted earnings per share from continuing operations of $1.44 to $1.83.
• Adjusted EBITDA in 2019 expected to be in line with current sell-side consensus expectations; 3 percent to 5 percent Adjusted EBITDA growth anticipated in 2019.

Ronald A. Rittenmeyer, Executive Chairman and CEO, said, “We had a solid quarter of results at both USPI and Conifer. Our hospitals did not meet our expectations and we are focusing on specific areas to address those gaps. Strengthening enterprise operations remains our primary focus – and we will continue moving with urgency to implement targeted growth initiatives, achieve operational efficiencies, make further enhancements to our facility portfolio and instill culture changes to drive accountability.”

GUIDANCE:

Tenet Healthcare sees FY2018 EPS of $1.44-$1.83, versus the consensus of $1.74. Tenet Healthcare sees FY2018 revenue of $18.1-18.3 billion, versus the consensus of $18.13 billion.

For earnings history and earnings-related data on Tenet Healthcare (THC) click here.

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