* Confirms full-year 2013 outlook for adjusted EBITDA
* Profit from continuing operations excluding items beats
* Shares rise 2.5 percent at midday
By Susan Kelly
April 30 Tenet Healthcare Corp on
Tuesday posted a first-quarter net loss on a decline in
admissions, the latest U.S. hospital operator to report a
slowdown in patient visits.
Hospital groups HCA Holdings Inc, Community Health
Systems Inc and Health Management Associates Inc
have all warned that admissions were weak in the first quarter.
The No. 3 for-profit U.S. hospital chain said it quickly
adjusted staffing levels as patient visits weakened in February
and March. Patient volumes rebounded in April, allowing the
company to maintain its full-year earnings outlook.
"It was one of the industry's weakest volume quarters in
memory," Tenet Chief Executive Trevor Fetter said on a
conference call with analysts.
Tenet said its first-quarter earnings from continuing
operations, excluding one-time items, more than doubled as it
reined in costs, beating analysts' average forecast by 3 cents a
The hospital operator confirmed its outlook for full-year
2013 earnings of $1.33 billion to $1.43 billion before tax,
interest, depreciation and amortization, and excluding special
Patients' hospital visits slowed across the industry in the
first quarter as consumers continued to struggle with high
unemployment and higher out-of-pocket expenses for healthcare
coverage under private insurance in the soft economy.
TOWARD AFFORDABLE CARE
Fetter said the shift to high-deductible health plans is
squeezing consumers, who have responded by reducing use of
healthcare services. He defined a high-deductible plan as one in
which an individual is responsible for co-payments and
deductibles in excess of $1,200.
Some features of plans being sold today, including benefits
offered, payment caps and deductibles, do not meet requirements
of the Affordable Care Act, Fetter said.
"Changing these features at the beginning of 2014 is an
important and underappreciated positive impact that the ACA will
have on our ability to get paid for the services we provide,"
Tenet has signed contracts with payers covering 60 percent
of its hospitals for health insurance exchanges that are
scheduled to go on line in 2014 under the ACA. Pricing for those
contracts is running at more than 90 percent of typical
commercial insurance rates, Fetter said.
Sheryl Skolnick, analyst with CRT Capital Markets, said
Tenet's weaker-than-expected patient volumes mirrored a trend
seen at other for-profit hospital operators in the first
quarter. But she said Tenet's cost controls were strong enough
to support a first-quarter EBITDA that was in line with analyst
Total surgeries rose 8.8 percent in the quarter as the
company continued to shift to greater outpatient delivery of
services, she noted.
"Tenet appears to be maturing into a consistent,
well-managed reporter of results that are at or above its peers'
trends," Skolnick said in a note to clients.
Tenet reported a first-quarter net loss of $88 million, or
85 cents a share, compared with year-earlier net income of $58
million, or 53 cents a share. Net operating revenue rose 3.7
percent to $2.39 billion.
Income from continuing operations, excluding restructuring
and acquisition-related costs and a loss on early retirement of
debt, was $34 million, or 33 cents per share. That is up from
$13 million, or 15 cents per share, excluding a Medicare
settlement payment and other one-time items, a year earlier.
On that basis, analysts had expected Tenet to report a
profit of 30 cents per share, according to Thomson Reuters
First-quarter adjusted EBITDA was $274 million, a decrease
of $36 million from a year earlier, when the company benefited
from a one-time industry-wide Medicare payment settlement.
Excluding this item, adjusted EBITDA rose 16.6 percent.
Inpatient admissions fell 4 percent, but the number of
people treated on an outpatient basis increased 2.2 percent. The
combined figure, called "adjusted admissions," declined 2.5
Shares of Dallas-based Tenet rose 2.51 percent to $44.94 in
midday trading on the New York Stock Exchange.