January 22, 2009 / 12:26 PM / 10 years ago

UPDATE 2-Tenet expects 4th-qtr net profit vs year-ago loss

(Recasts, adds details, share rise)

NEW YORK, Jan 22 (Reuters) - Hospital operator Tenet Healthcare Corp (THC.N) said it expects to report a net profit in the fourth quarter, based on preliminary figures, compared to a net loss a year ago.

Tenet’s shares rose 4 percent to $1.29 in morning trading on the New York Stock Exchange.

The company, which expects to present detailed earnings on Feb. 24, said fourth-quarter patient volumes held up reasonably well, and that it benefited from lower expenses, including lower malpractice costs.

The company also said it has begun an offer to exchange up to $1.6 billion of certain outstanding notes for new notes that mature later, in 2014 and 2019.

The new notes will be guaranteed by a pledge of the capital stock and other ownership interests of certain Tenet subsidiaries. The new notes are being offered through a private placement.

“In these difficult and uncertain times, we believe it has become increasingly prudent to implement strategies designed to enhance our financial flexibility and mitigate near-term profitability pressures,” said Trevor Fetter, the company’s chief executive officer, in a statement.

The company said it expects net revenue for hospitals open at least a year to be $2.17 billion in the fourth quarter, up 4.9 percent over the year-ago quarter.

The company expects to post a fourth-quarter net profit of $5 million, compared to a net loss of $75 million a year ago.

Tenet said it expects fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $197 million, compared with $156 million a year ago.

Tenet said it would not comment on its outlook for 2009 until its earnings report at the end of February.

“There is a lack of visibility into demand for healthcare services, payer and patient mix, and other key variables,” Fetter said. “We have previously stated our intention to comment on our 2009 outlook when we release our complete fourth-quarter results in late February. That continues to be our intention.”

The company said it expects to achieve $100 million in cost savings in 2009 to partially offset cost increases such as the higher wage rates, and the effects of broader economic turmoil.

Dallas-based Tenet said hospital admissions and outpatient visits rose 1.6 percent in the fourth quarter.

Paying admissions, which excludes uninsured and charity admissions, grew 0.1 percent in the fourth quarter, while paying outpatient visits grew by 0.9 percent.

The company said bad debt expenses in the fourth quarter are expected to be about $163 million, compared to bad debt expenses of $133 million in the year-ago period, on a same-hospital basis. (Additional reporting by Euan Rocha; Editing by Steve Orlofsky, Dave Zimmerman) (Reporting by Toni Clarke)

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