Tenet Healthcare (NYSE: THC) reported Q4 EPS of $0.51, $0.23 better than the analyst estimate of $0.28. Revenue for the quarter came in at $4.62 billion versus the consensus estimate of $4.51 billion.

• Tenet reported net income from continuing operations attributable to Tenet common shareholders of $108 million or $1.04 per diluted share in 2018. In the fourth quarter of 2018, Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $5 million or $0.05 per diluted share.
• Adjusted diluted earnings per share from continuing operations was $1.86 in 2018, above the Company’s Outlook range of $1.44 to $1.83 and an increase of 130 percent over 2017. In the fourth quarter, Adjusted diluted earnings per share from continuing operations was $0.51.
• Adjusted EBITDA was $2.560 billion in 2018, above the midpoint of the Company’s Outlook and an increase of 4.7 percent over 2017. Adjusted EBITDA in 2018 consisted of $1.411 billion in the Hospital Operations and other segment, $792 million in the Ambulatory Care segment and $357 million in the Conifer segment. In the fourth quarter of 2018, Adjusted EBITDA was $684 million. After normalizing for divestitures and other items, Adjusted EBITDA grew 9.0 percent in 2018 and 7.4 percent in the fourth quarter of 2018.
• Hospital segment same-hospital net patient revenue grew 3.6 percent in 2018: revenue per adjusted admission increased 3.6 percent; adjusted admissions were essentially unchanged; and admissions decreased 1.7 percent. In the fourth quarter of 2018, same-hospital net patient revenue declined 1.3 percent and increased 4.6 percent after adjusting for California Provider Fee revenues in both periods. Revenue per adjusted admission declined 0.6 percent in the fourth quarter of 2018 and increased 5.4 percent after adjusting for California Provider Fee revenues. Adjusted admissions declined 0.8 percent in the fourth quarter of 2018 and admissions declined 2.7 percent.
• Ambulatory Care segment same-facility system-wide revenue grew 5.1 percent in 2018, with cases up 3.4 percent and revenue per case up 1.6 percent. In the fourth quarter of 2018, same-facility system-wide revenue grew 3.8 percent, with cases up 0.9 percent and revenue per case up 2.8 percent.
• Conifer segment revenues decreased 4.0 percent in 2018 and 5.6 percent in the fourth quarter of 2018 following divestitures by Tenet and other customers.
• Outlook for 2019 includes net operating revenues of $18.0 billion to $18.4 billion, net income from continuing operations available to Tenet common shareholders of $15 million to $115 million, Adjusted EBITDA of $2.650 billion to $2.750 billion (an increase of 4 percent to 7 percent over 2018), diluted earnings per share from continuing operations of $0.14 to $1.08 and Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59 (an increase of 12 percent to 39 percent over 2018).

“We delivered strong results in the fourth quarter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS,” said Ronald A. Rittenmeyer, Executive Chairman and CEO. “2018 was a year of significant change for the company. We meaningfully improved our financial results, and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consistency in execution. We expect to make additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth.”

GUIDANCE:

Tenet Healthcare sees FY2019 EPS of $2.08-$2.59, versus the consensus of $1.94. Tenet Healthcare sees FY2019 revenue of $18-18.4 billion, versus the consensus of $18.06 billion.

Tenet Healthcare sees Q1 2019 EPS of $0.10-$0.43, versus the consensus of $0.41. Tenet Healthcare sees Q1 2019 revenue of $4.3-4.6 billion, versus the consensus of $4.53 billion.

Outlook

The Company’s Outlook for 2019 includes:

• Revenue of $18.0 billion to $18.4 billion,
• Net income from continuing operations available to Tenet common shareholders of $15 million to $115 million,
• Adjusted EBITDA of $2.650 billion to $2.750 billion,
• Net cash provided by operating activities of $1.070 billion to $1.375 billion,
• Adjusted Free Cash Flow of $600 million to $800 million,
• Diluted earnings per share from continuing operations of $0.14 to $1.08, and
• Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59.

The Outlook for 2019 assumes equity in earnings of unconsolidated affiliates of $180 million to $190 million, depreciation and amortization expense of $805 million to $825 million, interest expense of $985 million to $995 million, net income available to noncontrolling interests of $425 million to $445 million and an average diluted share count of 106 million.

The Company’s Outlook for the first quarter of 2019 includes:

• Revenue of $4.300 billion to $4.600 billion,
• Net income available (loss attributable) from continuing operations to Tenet common shareholders ranging from a loss of $70 million to a loss of $25 million,
• Adjusted EBITDA of $575 million to $625 million,
• Diluted earnings (loss) per share from continuing operations ranging from a loss of $0.68 to a loss of $0.24, and
• Adjusted diluted earnings per share from continuing operations ranging from $0.10 to $0.43.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of $30 million to $35 million, depreciation and amortization expense of $200 million to $205 million, interest expense of $250 million to $260 million, net income available to noncontrolling interests of $80 million to $90 million, and an average diluted share count of 104 million.

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