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Tenet Healthcare Corporation (THC - Free Report) delivered fourth-quarter 2020 adjusted net earnings of $1.56, beating the Zacks Consensus Estimate of $1.10 by 41.8%. Further, the bottom line increased 57.6% year over year, mainly owing to better revenues and solid performances by all its segments.
Quarterly Operational Update
Net operating revenues of $4.9 billion increased 2.3% year over year on the back of solid contribution from Hospital operations, Ambulatory as well as Conifer segments. Also, the top line beat the Zacks Consensus Estimate by 1%.
The company reported adjusted net income from continuing operations of $506 million, comparing favorably with the year-ago quarter’s net income of $100 million. In the quarter under review, adjusted EBITDA was $832 million, up 4.1% year over year.
Operating expenses were up 0.9% year over year to $4.2 billion due to higher supplies and other operating costs.
Tenet Healthcare Corporation Price, Consensus and EPS Surprise
Net operating revenues from the Hospital Operations and Other segment totaled $4 billion, up 2.1% year over year. This was on the back of higher patient acuity and rate increases. However, the same was offset by lower patient volumes, induced by the COVID-19 pandemic.
On same-hospital basis, net patient service revenues were $3.7 billion, up 1.7% year over year.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excluding grant income stood at $431 million, up 7.5% year over year.
Ambulatory
The Ambulatory segment generated net operating revenues of $649 million in the fourth quarter, up 2.7% year over year on the back of higher acuity and new service line growth. Other factors include the impact of revenues associated with the SCD portfolio transaction.
Additionally, the segment reported adjusted EBITDA of $330 million, up 8.6% year over year.
Conifer
Conifer’s revenues were up 3.6% from the prior-year quarter to $344 million. This was primarily on the back of services revenue receipt. The segment reported $111 million of adjusted EBITDA in the quarter under review, up 18.1% year over year.
Financial Position
As of Dec 31, 2020, Tenet Healthcare had cash and cash equivalents of $2.4 billion, up from $262 million at 2019 end. The company maintained enough liquidity to meet the COVID-19 pandemic requirements. It doesn’t have any outstanding borrowings under its $1.9 billion line-of-credit facility as of Dec 31, 2020 or Feb 9, 2021.
The company exited 2020 with $15.6 billion of long-term debt, up 6.8% from the level at 2019 end. In 2020, net cash provided by operating activities was $3.4 billion, up 176% year over year.
Business Update
The company closed its buyout of a portfolio of 45 ambulatory surgical centers from SurgCenter Development for a value of $1.1 billion.
2021 Guidance
Following fourth-quarter 2020 results, the company issued its 2021 outlook. For the current year, it expects its net income in the band of $2.09-$3.81 per share.
Net operating revenues are expected in the range of $19.2-$19.6 billion. Adjusted EBITDA is expected from $2.9 billion to $3.1 billion.
Interest expense is expected between $935 million and $945 million. Management expects its EPS within $3.52-$4.81.
Q121 Guidance
The company expects the first-quarter revenues in the range of $4.6-4.8 billion.
Adjusted EBITDA is expected between $625 million and $725 million. Adjusted net income from continuing operations is expected in the range of 23-93 cents per share.
Full-Year Update
Adjusted EPS for the full year came in at $7.92, comparing favorably with the 2019 figure of $2.84. The bottom line also beat the Zacks Consensus Estimate of $4.28 per share.
However, total operating revenues for the year came in at $14.8 billion, down 4.7% year over year.
Among other players from the medical space that have reported fourth-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) and HCA Healthcare Inc. (HCA - Free Report) beat estimates while that of Anthem, Inc. missed the same.
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Tenet Healthcare (THC) Q4 Earnings Beat Estimates, Rise Y/Y
Tenet Healthcare Corporation (THC - Free Report) delivered fourth-quarter 2020 adjusted net earnings of $1.56, beating the Zacks Consensus Estimate of $1.10 by 41.8%. Further, the bottom line increased 57.6% year over year, mainly owing to better revenues and solid performances by all its segments.
Quarterly Operational Update
Net operating revenues of $4.9 billion increased 2.3% year over year on the back of solid contribution from Hospital operations, Ambulatory as well as Conifer segments. Also, the top line beat the Zacks Consensus Estimate by 1%.
The company reported adjusted net income from continuing operations of $506 million, comparing favorably with the year-ago quarter’s net income of $100 million. In the quarter under review, adjusted EBITDA was $832 million, up 4.1% year over year.
Operating expenses were up 0.9% year over year to $4.2 billion due to higher supplies and other operating costs.
Tenet Healthcare Corporation Price, Consensus and EPS Surprise
Tenet Healthcare Corporation price-consensus-eps-surprise-chart | Tenet Healthcare Corporation Quote
Quarterly Segmental Details
Hospital & Other
Net operating revenues from the Hospital Operations and Other segment totaled $4 billion, up 2.1% year over year. This was on the back of higher patient acuity and rate increases. However, the same was offset by lower patient volumes, induced by the COVID-19 pandemic.
On same-hospital basis, net patient service revenues were $3.7 billion, up 1.7% year over year.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excluding grant income stood at $431 million, up 7.5% year over year.
Ambulatory
The Ambulatory segment generated net operating revenues of $649 million in the fourth quarter, up 2.7% year over year on the back of higher acuity and new service line growth. Other factors include the impact of revenues associated with the SCD portfolio transaction.
Additionally, the segment reported adjusted EBITDA of $330 million, up 8.6% year over year.
Conifer
Conifer’s revenues were up 3.6% from the prior-year quarter to $344 million. This was primarily on the back of services revenue receipt.
The segment reported $111 million of adjusted EBITDA in the quarter under review, up 18.1% year over year.
Financial Position
As of Dec 31, 2020, Tenet Healthcare had cash and cash equivalents of $2.4 billion, up from $262 million at 2019 end. The company maintained enough liquidity to meet the COVID-19 pandemic requirements. It doesn’t have any outstanding borrowings under its $1.9 billion line-of-credit facility as of Dec 31, 2020 or Feb 9, 2021.
The company exited 2020 with $15.6 billion of long-term debt, up 6.8% from the level at 2019 end. In 2020, net cash provided by operating activities was $3.4 billion, up 176% year over year.
Business Update
The company closed its buyout of a portfolio of 45 ambulatory surgical centers from SurgCenter Development for a value of $1.1 billion.
2021 Guidance
Following fourth-quarter 2020 results, the company issued its 2021 outlook. For the current year, it expects its net income in the band of $2.09-$3.81 per share.
Net operating revenues are expected in the range of $19.2-$19.6 billion.
Adjusted EBITDA is expected from $2.9 billion to $3.1 billion.
Interest expense is expected between $935 million and $945 million.
Management expects its EPS within $3.52-$4.81.
Q121 Guidance
The company expects the first-quarter revenues in the range of $4.6-4.8 billion.
Adjusted EBITDA is expected between $625 million and $725 million.
Adjusted net income from continuing operations is expected in the range of 23-93 cents per share.
Full-Year Update
Adjusted EPS for the full year came in at $7.92, comparing favorably with the 2019 figure of $2.84. The bottom line also beat the Zacks Consensus Estimate of $4.28 per share.
However, total operating revenues for the year came in at $14.8 billion, down 4.7% year over year.
Zacks Rank and Performance of Others
Tenet Healthcare currently has 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 space that have reported fourth-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) and HCA Healthcare Inc. (HCA - Free Report) beat estimates while that of Anthem, Inc. missed the same.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
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