UPDATE 3-Tenet profit beats on patient growth, shares rise
* Profit from continuing ops 10 cts/shr, Street view 4 cts
* Confirms full-year adjusted EBITDA outlook
* Shares rise 6 percent
By Susan Kelly
CHICAGO, Aug 7 (Reuters) - Hospital operator Tenet Healthcare Corp posted quarterly earnings on Tuesday that were more than double the average analyst forecast, as it treated more patients, and its shares rose 6 percent.
The third-largest U.S. hospital chain said the number of patients treated in specialties including trauma, neurosurgery, oncology and vascular surgery was especially strong.
"Our fundamental business trends in terms of volume growth, pricing and cost controls remained strong," Chief Executive Trevor Fetter said on a conference call with analysts. He said patient volume growth compared favorably with that of competing hospitals.
Patient volumes at U.S. hospitals in general have remained sluggish due to high unemployment that has left many without health insurance to pay for medical treatment. More people also have sought emergency care out of necessity.
Jefferies analyst Art Henderson said he doesn't foresee a rebound in overall hospital visits anytime soon but noted Tenet's out-patient trends are surpassing its rivals.
"I do not anticipate any volume recovery. The macroeconomic environment remains challenging," he said.
Tenet has been successful in controlling expenses in the weak economy, especially on hospital supply purchases, he said.
Second-quarter income from continuing operations rose to $42 million, or 10 cents per share. That was up from $40 million, or 8 cents per share, a year earlier, and more than double the average forecast of 4 cents per share submitted by analysts polled by Thomson Reuters I/B/E/S.
Net operating revenue climbed 6.2 percent to $2.23 billion.
Analysts on average had expected revenue of $2.27 billion.
Including charges for the expected sale of Creighton University Medical Center, Dallas-based Tenet posted a net loss of $6 million, or 1 cent a share, compared with year-earlier net income of $55 million, or 11 cents a share.
Adjusted earnings before interest, taxes, depreciation and amortization rose 4.7 percent to $288 million.
Tenet said adjusted admissions, which include both in-patient and out-patient, rose 1.5 percent. Total admissions, which reflect only patients admitted for overnight stays, slipped 0.4 percent. Hospitals generally are treating more people on an out-patient basis as patients look to avoid costly hospital stays in a weak economy.
Surgeries increased by 4.9 percent in the quarter, while emergency department visits increased 5 percent, Tenet said.
Tenet's bad debt expense increased to $190 million from $168 million. Hospitals are grappling with rising bad debts as they treat more patients who lack health insurance.
Tenet stood by its forecast for full-year adjusted EBITDA of $1.25 billion to $1.375 billion.
Tenet shares rose 29 cents, or 6.22 percent, to $4.95 in morning trading on the New York Stock Exchange.
Shares of No. 1 hospital operator HCA Holdings Inc rose $1.09, or 4.27 percent, to $26.64, rebounding after sliding as much as 10 percent on Monday, when it disclosed a government probe into cardiology procedures at its hospitals.
Tenet executives, on Tuesday's conference call, said the company has a number of processes in place designed to ensure that cardiac procedures performed are medically necessary.
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