UPDATE 4-Tenet quarterly loss narrows as admissions rise
(Adds CEO comments, outpatient and managed care figures, analyst's comment, byline)
By Deepa Seetharaman
NEW YORK, Aug 5 (Reuters) - Hospital operator Tenet Healthcare Corp (THC.N) reported a narrower quarterly loss on Tuesday, but its shares fell more than 8 percent on disappointing outpatient and commercial managed care admissions.
Tenet reported a net loss of $15 million, or 3 cents a share, for the second quarter, compared with a net loss of $30 million, or 6 cents a share, a year earlier.
Operating revenue rose 6.3 percent to $2.18 billion, while overall admissions rose 1.9 percent at hospitals open more than a year.
Profit from continuing operations in the period was a loss of 4 cents per share, which include charges related to its hospital at the University of Southern California and a Medicare issue in that state.
Excluding those charges, the company posted break-even results, which is ahead of analysts' expectations by a penny per share, according to Reuters Estimates.
But Wall Street analysts were not unified in factoring in those costs to their quarterly estimates, adding to some confusion about the results. Tenet noted that excluding the costs, it met Wall Street expectations.
"Results were messy, considering the removal of the USC hospital and several other recently sold hospitals into discontinued operations," said Raymond James analyst John Ransom in a research note. "That said, it appears the company has begun to gain some traction on its recent initiatives as admissions growth was strong at 1.9 percent during the quarter."
But commercial managed care admissions fell 2.2 percent and total outpatient visits fell 0.3 percent -- two areas traditionally seen as more profitable for publicly traded hospital companies.
"The weakness in outpatient volume growth continues to be a concern," said Longbow Research analyst David Bachman.
Investors focused on these numbers, analysts said. Tenet shares fell 51 cents, or 8.2 percent, to close at $5.72 on the New York Stock Exchange.
Meanwhile, shares of hospital operator Health Management Associates Inc (HMA.N) fell more than 15 percent on Tuesday, a day after it reported second-quarter results that were depressed by weak admissions.
But in an interview with Reuters, Tenet CEO Trevor Fetter countered that outpatient growth was actually a "bright spot."
"Just a few years ago, we had seen outpatients decline by double-digit rates," he said. "This was the first quarter on a reported basis when we came in at break-even."
Also contributing to the stock sell-off was Tenet lowering its forecast for full-year earnings before interest, taxes, depreciation and amortization to a range of $750 million to $825 million, from a previous forecast of $775 million to $850 million.
It cited the reclassification of Tenet's hospital at the University of Southern California to discontinued operations.
Companies such as Tenet continue to face a tough environment, Bachman said. Fuel surcharges and the rising cost of raw materials used in medical supplies, like plastic and paper products, are driving overall prices higher.
Hospital companies also have struggled to increase admissions and reduce debt owed by uninsured patients. Tenet's provision for unpaid patient debt rose 7.7 percent to $153 million at hospitals open at least a year.
To reduce bad debt, Tenet has started hiring one or two full-time financial counselors at each of its 50 hospitals to help the uninsured qualify for Medicaid or Medicare, Fetter said during the earnings call.
The company is also pumping $500 million to $600 million in capital investments across its hospitals, in an effort to retain staff. Until recently, the company was losing physicians on a net basis, Fetter said.
(Reporting by Deepa Seetharaman; editing by John Wallace, Dave Zimmerman, Richard Chang)
