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Tenet Healthcare (THC) Q4 Earnings & Revenues Miss Estimates
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Tenet Healthcare Corp. ((THC - Free Report) ) reported fourth-quarter 2016 operating earnings of 6 cents per share that missed the Zacks Consensus Estimate of 20 cents by 70%. Also, the bottom line deteriorated 62.5% year over year due to lower revenue generation.
Tenet Healthcare reported a net loss from continuing operations of $79 million in the fourth quarter, which narrowed 21% year over year. Adjusted EBITDA of $613 million remained flat year over year in the fourth quarter of 2016.
For 2016, net loss from continuing operations came in at $192 million. The reported loss is 37% wider than a loss of $140 million in 2015.
Operational Update
Fourth-quarter net operating revenue came in at $4.8 billion, down 3.3% from the prior-year quarter. This was primarily due to a 6.3% year-over-year decrease in the top line of Hospital & Other segment of Tenet Healthcare. Revenues also missed the Zacks Consensus Estimate of by 2%. For 2016, the company recorded a 5.3% year-over-year increase in net operating revenue to $19.6 billion.
For the fourth quarter, TenetHealthcare’s provision for doubtful accounts decreased 9.5% year over year to $354 million.
Total operating expenses of $4.6 billion decreased 2.8% year over year due to a substantial decline in depreciation and amortization expenses along with lower salaries, wages and benefits , supplies and electronic health record incentives as well. Uncompensated care costs were down 6.2% year over year to $1.3 billion.
Same-hospital exchange admissions were 4,916 in the fourth quarter, up 13.6% from the last-year quarter. Same-hospital exchange outpatient visits were up 26.4% year over year to 48,435.
Quarterly Segment Details:
Hospital & Other
Net operating revenue in the Hospital Operations and other segment was down 6.3% from the last-year quarter to $4.14 billion. This was mainly because of the hospitals that were divested over this period.
Adjusted EBITDA was $358 million, down 9.1% year over year. This was owing to divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives.
Ambulatory Segment:
The Ambulatory segment generated net operating revenue of $478 million, up 20.4% year over year.
In addition, the segment reported adjusted EBITDA (Earnings before Interest, Taxes, Depriciation and Amortization) of $183 million, up 15.8% year over year.
Conifer Segment:
Conifer’s revenues increased 4.7% from the prior-year quarter to $402 million. Conifer’s revenues from third-party customers jumped 16% to $239 million.
The segment generated $72 million of adjusted EBITDA in the reported quarter, up 18% year over year.
Tenet Healthcare Corporation Price, Consensus and EPS Surprise
As of Dec 31, 2016, Tenet Healthcare had cash and cash equivalents of $716 million, up 101% from year-end 2015.
The company exited the fourth quarter with total assets worth $24.7 billion, up 4.2% from 2015 end.
As of Dec 31, 2016, shareholders’ equity was $417 million, down 32.6% from Dec 31, 2015.
Net operating cash flow for 2016 plunged 46% year over year to $558 million.
2017 Outlook
Tenet Healthcare projects revenues in the range of $19.7–$20.1 billion, adjusted EBITDA of $2.5–$2.6 billion and adjusted earnings per diluted share of $1.05–$1.30.
Tenet Healthcare expects adjusted free cash flow of $600–$800 million.
Net income from continuing operations is estimated in the range of $99–$94 million. Loss per share is expected in the range of $107–$133 million.
First-Quarter 2017 Outlook
For the first quarter, the company expects revenues in the range of $4.75–$4.95 billion, adjusted EBITDA of $475–$525 million. Net loss from continuing operations is expected between $60 million and 45 million.
Among the other firms in the medical sector that have reported fourth-quarter earnings so far, the bottom line at Aetna Inc. , HCA Holdings Inc. (HCA - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.
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Tenet Healthcare (THC) Q4 Earnings & Revenues Miss Estimates
Tenet Healthcare Corp. ((THC - Free Report) ) reported fourth-quarter 2016 operating earnings of 6 cents per share that missed the Zacks Consensus Estimate of 20 cents by 70%. Also, the bottom line deteriorated 62.5% year over year due to lower revenue generation.
Tenet Healthcare reported a net loss from continuing operations of $79 million in the fourth quarter, which narrowed 21% year over year. Adjusted EBITDA of $613 million remained flat year over year in the fourth quarter of 2016.
For 2016, net loss from continuing operations came in at $192 million. The reported loss is 37% wider than a loss of $140 million in 2015.
Operational Update
Fourth-quarter net operating revenue came in at $4.8 billion, down 3.3% from the prior-year quarter. This was primarily due to a 6.3% year-over-year decrease in the top line of Hospital & Other segment of Tenet Healthcare. Revenues also missed the Zacks Consensus Estimate of by 2%. For 2016, the company recorded a 5.3% year-over-year increase in net operating revenue to $19.6 billion.
For the fourth quarter, TenetHealthcare’s provision for doubtful accounts decreased 9.5% year over year to $354 million.
Total operating expenses of $4.6 billion decreased 2.8% year over year due to a substantial decline in depreciation and amortization expenses along with lower salaries, wages and benefits , supplies and electronic health record incentives as well. Uncompensated care costs were down 6.2% year over year to $1.3 billion.
Same-hospital exchange admissions were 4,916 in the fourth quarter, up 13.6% from the last-year quarter. Same-hospital exchange outpatient visits were up 26.4% year over year to 48,435.
Quarterly Segment Details:
Hospital & Other
Net operating revenue in the Hospital Operations and other segment was down 6.3% from the last-year quarter to $4.14 billion. This was mainly because of the hospitals that were divested over this period.
Adjusted EBITDA was $358 million, down 9.1% year over year. This was owing to divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives.
Ambulatory Segment:
The Ambulatory segment generated net operating revenue of $478 million, up 20.4% year over year.
In addition, the segment reported adjusted EBITDA (Earnings before Interest, Taxes, Depriciation and Amortization) of $183 million, up 15.8% year over year.
Conifer Segment:
Conifer’s revenues increased 4.7% from the prior-year quarter to $402 million. Conifer’s revenues from third-party customers jumped 16% to $239 million.
The segment generated $72 million of adjusted EBITDA in the reported quarter, up 18% year over year.
Tenet Healthcare Corporation Price, Consensus and EPS Surprise
Tenet Healthcare Corporation Price, Consensus and EPS Surprise | Tenet Healthcare Corporation Quote
Financial Position
As of Dec 31, 2016, Tenet Healthcare had cash and cash equivalents of $716 million, up 101% from year-end 2015.
The company exited the fourth quarter with total assets worth $24.7 billion, up 4.2% from 2015 end.
As of Dec 31, 2016, shareholders’ equity was $417 million, down 32.6% from Dec 31, 2015.
Net operating cash flow for 2016 plunged 46% year over year to $558 million.
2017 Outlook
Tenet Healthcare projects revenues in the range of $19.7–$20.1 billion, adjusted EBITDA of $2.5–$2.6 billion and adjusted earnings per diluted share of $1.05–$1.30.
Tenet Healthcare expects adjusted free cash flow of $600–$800 million.
Net income from continuing operations is estimated in the range of $99–$94 million. Loss per share is expected in the range of $107–$133 million.
First-Quarter 2017 Outlook
For the first quarter, the company expects revenues in the range of $4.75–$4.95 billion, adjusted EBITDA of $475–$525 million. Net loss from continuing operations is expected between $60 million and 45 million.
Zacks Rank and Performance of Other Stocks
Tenet Healthcare presently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other firms in the medical sector that have reported fourth-quarter earnings so far, the bottom line at Aetna Inc. , HCA Holdings Inc. (HCA - Free Report) and UnitedHealth Group Inc. (UNH - Free Report) beat their respective Zacks Consensus Estimate.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>