* Q3 profit 37 cents/share vs 5 cents a year earlier
* Q3 EBITDA in line with analyst expectations
* Shares up about 8 percent; other hospital stocks also rise
* Hospitals seen benefiting as Obama victory protects health
(Adds analyst comments, CEO remarks)
By Susan Kelly
CHICAGO, Nov 7 Tenet Healthcare Corp
reported higher quarterly earnings on Wednesday as outpatient
surgeries at its hospitals rose, and its shares climbed 8.6
percent as President Barack Obama's re-election ensured survival
of health reform, buoying the sector.
The healthcare reform law aims to expand insurance coverage
to roughly 30 million uninsured Americans beginning in January
2014. Hospitals are expected to see a reduction in bad debt
expenses as more patients are able to pay for their care.
"Last night's election results are encouraging for the full
implementation of the Affordable Care Act," Tenet Chief
Executive Trevor Fetter said on a conference call.
Tenet shares rose about 8 percent in morning trading on the
New York Stock Exchange. Shares of rivals HCA Holdings Inc
climbed about 8 percent, and Community Health Systems
Inc rose 6.3 percent.
"Investors are excited about the prospect of hospitals
seeing improved profitability in 2014," said Jefferies & Co
analyst Brian Tanquilut.
Tenet scaled back its full-year 2012 profit outlook due to a
delayed payment from a California Medicaid program, but forecast
2013 profit above analyst expectations.
HEALTH REFORM IMPACT
Presidential challenger Mitt Romney had pledged to dismantle
the health reform act, so Obama's victory was a relief to a
sector that has been expected to benefit from the extension of
medical insurance coverage to more Americans under the law.
Tenet, which operates 49 hospitals and more than 100
outpatient centers, is anticipating an increase in the number of
patients covered by insurance in all of its markets, Fetter
said. Greater numbers of insured patients should drive earnings
growth over several years, he noted.
While more patients will be eligible for Medicare and
Medicaid coverage, or be required to purchase private insurance
under the health reform law, Tanquilut cautioned that both
government programs and commercial insurers will be looking for
ways to reduce rising costs, putting pressure on hospitals.
Tenet posted third-quarter earnings of $40 million, or 37
cents a share, up from $6 million, or 5 cents a share, a year
Earnings before interest, tax, depreciation and amortization
increased 40 percent to $269 million, in line with analyst
forecasts. Net operating revenue rose 5.8 percent to $2.22
billion, helped by improved terms in contracts with commercial
managed care payers, Tenet said.
The company now expects full-year EBITDA, excluding one-time
items, of $1.2 billion, due to the delayed payment from a
California Medicaid program that will be recognized in 2013. It
previously forecast 2012 EBITDA in a range of $1.25 billion to
For 2013, it forecast EBITDA in a range of about $1.33
billion to $1.43 billion, slightly above analyst consensus
In the third quarter, Dallas-based Tenet said patient
admissions to its facilities open at least one year rose 1.4
percent, with outpatient surgeries up 6.3 percent and emergency
room visits up 4.9 percent.
But bad debt expense as a percentage of revenue rose to 8.5
percent from 8.3 percent a year ago, due to an increase in
uninsured and charity patients.
Tenet shares rose 8.3 percent to $27.02 on the New York
Stock Exchange. HCA shares rose about 8 percent to $33.41, and
Community Health shares were up 6.3 percent at $30.44.
(Reporting by Susan Kelly in Chicago; Editing by Lisa Von Ahn,
John Wallace, Theodore d'Afflisio; and Peter Galloway)