Australia Markets open in 8 hrs 28 mins

Tenet Healthcare (THC) Q2 Earnings Top Estimates & Rise Y/Y

Zacks Equity Research

Tenet Healthcare Corporation THC delivered second-quarter 2019 adjusted net income of 56 cents per share, beating the Zacks Consensus Estimate by 27.3%. This upside is primarily driven by the Hospital & Other segment, volume growth in hospital portfolio and earnings growth at USPI. Moreover, the bottom line was up 14.3% year over year in the quarter under review.

Quarterly Operational Update

Net operating revenues came in at $4.5 billion, up 1.2% year over year. Additionally, the top line beat the Zacks Consensus Estimate by 1.7% on the back of contributions made by the Hospital & Other segment.

Tenet Healthcare’s same-hospital exchange admissions were up 3 % year over year.

Same-hospital exchange outpatient visits were down 3.2% year over year.

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation Price, Consensus and EPS Surprise

Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation Quote

Quarterly Segment Details

Hospital & Other

Net operating revenues in the Hospital Operations and Other segment came in at $3.8 billion, up 2.5% year over year. This upside is mainly attributable to revenue growth on a same-hospital basis. However, the same was partly offset by divestitures.

On same-hospital basis, patient revenues were $3.54 billion, up 5.7% year over year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) were $347 million, up 0.6% year over year.

Ambulatory Segment

The Ambulatory segment generated net operating revenues of $524 million, down 1.3% year over year due to the divestiture of Aspen Healthcare, the company’s former business in the U.K.

Additionally, the segment reported adjusted EBITDA of $207 million, up 8.4% year over year.

Conifer Segment

Conifer’s revenues decreased 8% from the prior-year quarter’s level to $355 million. This was mainly due to the company’s client attrition following certain divestitures.

The segment reported $103 million of adjusted EBITDA in the quarter under review, up 13.2% year over year.

Financial Position

As of Jun 30, 2019, Tenet Healthcare had cash and cash equivalents of $249 million, down 39.4% from the number at 2018 end.

The company exited the second quarter with $14.3 billion of long-term debt, down 2.3% from the count at 2018 end.

Net cash provided by operating activities for the first half of 2019 stands at $294 million, down 36.2% year over year.

2019 Outlook

Adjusted earnings per share are projected between $2.08 and $2.59.

Tenet Healthcare expects revenues in the range of $18-$18.4 billion.

Adjusted EBITDA is estimated between $2.650 billion and $2.750 billion.

Tenet Healthcare anticipates adjusted free cash flow of $600-$800 million. While net cash provided by operating activities is predicted between $1.07 billion and $1.375 billion.

Q319 Guidance

Following second-quarter results, the company provided an outlook for the third quarter.

Tenet Healthcare now anticipates revenues in the range of $4.3-$4.6 billion for the current quarter.

The company now forecasts adjusted EBITDA between $600 million and $650 million.

Adjusted earnings per share from continuing operations are likely to vary between 23 cents and 48 cents.

Zacks Rank and Performance of Other Players

Tenet Healthcare carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the medical sector having reported second-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Anthem Inc. ANTM and Centene Corporation CNC outpaced the respective Zacks Consensus Estimate.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>