Tenet Healthcare (THC) Tops Q1 EPS by 58c, Revenues Beat; Raises FY21 EPS Guidance, Offers FY21 Revs. View, 2Q EPS/Revs. Outlook

Tenet Healthcare (NYSE: THC) reported Q1 EPS of $1.30, $0.58 better than the analyst estimate of $0.72. Revenue for the quarter came in at $4.78 billion versus the consensus estimate of $4.76 billion.

• Net income from continuing operations available to common shareholders in 1Q21 of $97 million versus net income from continuing operations of $94 million in 1Q20; the 2020 quarter included a $91 million income tax benefit associated with a change in the deductibility of interest expense
• Consolidated Adjusted EBITDA in 1Q21 of $740 million excluding $37 million of COVID stimulus grant income, or $777 million including the grant income, versus $585 million in 1Q20
• Diluted earnings per share from continuing operations available to common shareholders in 1Q21 of $0.90 compared to $0.89 in 1Q20; Adjusted diluted earnings per share from continuing operations of $1.30 in 1Q21 compared to $1.28 in 1Q20
• Net cash from operating activities of $534 million in 1Q21 versus $129 million in 1Q20. Free cash flow of $413 million in 1Q21 compared to $(53) million in 1Q20
• Hospital segment net patient service revenue per adjusted admission up 19.3% on a same-hospital basis versus 1Q20; Ambulatory segment same-facility system-wide revenue per surgical case up 4.8% versus the prior year's quarter
• Completed early retirement of $478 million of 7% senior unsecured debt in March 2021 resulting in annual cash interest payment savings of ~$33 million
• Signed new multi-year agreement with UnitedHealthcare four months prior to scheduled renewal date

Ronald A. Rittenmeyer, Executive Chairman and Chief Executive Officer, stated, “The results in Q1 were driven by our continued strong business fundamentals throughout the company. We delivered Adjusted EBITDA well above the midpoint of our Outlook, even excluding the grant income we received related to the CARES Act. Substantially all of our hospital markets outperformed their EBITDA budgets and we delivered solid results at USPI, both amidst ongoing pandemic challenges and the severe weather impact of Winter Storm Uri. Conifer continued to generate strong margins while focusing on client wins and the continued build-out of new service offerings. And, consistent with our approach, we maintained discipline with our balance sheet, ending the quarter with a significant improvement in free cash flow generation.”

Rittenmeyer continued, “In line with our stated plans, we continued to make important moves as part of our transformation. We remain focused on building the best emergent and elective, specialty-based platform in the country through our hospitals and USPI. As part of this, USPI will have a singular focus on surgical care with the divestiture of our urgent care centers and the transition of imaging assets to our hospital portfolio. We also further aligned our business and social purposes by elevating our commitment to ESG initiatives, including those in the areas of sustainability, diversity and inclusion and community service. Altogether, we believe our financial performance, coupled with operational enhancements and accountability to our strategic goals, have created a pathway for continued improved financial performance for the balance of 2021.”

GUIDANCE:

Tenet Healthcare sees Q2 2021 EPS of $0.69-$1.39, versus the consensus of $0.81. Tenet Healthcare sees Q2 2021 revenue of $4.65-4.85 billion, versus the consensus of $4.69 billion.

Tenet Healthcare sees FY2021 EPS of $4.12-$5.46, versus the consensus of $4.18. Tenet Healthcare sees FY2021 revenue of $19.4-19.8 billion, versus the consensus of $19.4 billion.

FY 2021 Outlook increased; continues to anticipate recovery from the pandemic and growth from operational improvements:

• Net income from continuing operations available to common shareholders Outlook of $2.98 to $4.69 per diluted share (previously $2.09 to $3.81 per diluted share)
• Adjusted EBITDA Outlook of $3.000 billion to $3.200 billion (previously $2.900 billion to $3.100 billion)
• Adjusted diluted earnings per share Outlook of $4.12 to $5.46 (previously $3.52 to $4.81 per diluted share)

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

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