THC Tenet Healthcare Corporation New

Tenet Healthcare Corp., one of the largest hospital operators in the U.S., said results for its latest quarter were hurt by a potential larger-than-expected settlement to a whistleblower lawsuit.

The Dallas-based company said it has reached an agreement in principle to pay $514 million to settle a lawsuit that accused the company's hospitals in Georgia of entering into bogus contracts with Hispanic Medical Management Inc., an Atlanta-area operator of clinics treating undocumented Hispanic patients.

Tenet has since sold the Georgia hospitals but retains any potential liabilities from the litigation.

The sum of the proposed settlement is more than the $407 million in reserve that the company said it was setting aside in May to resolve the matter. The hospital operator said it was increasing its reserve linked to the lawsuit to $516 million, which cut into earnings on a per-share basis for the latest quarter by 67 cents.

Tenet said it expects the payment to be in the current third quarter.

Shares of Tenet, down 48% in the past year, fell 6.3% to $27.10 in after-hours trading.

The company also released a dour profit outlook for the current quarter and year. Tenet projected per-share adjusted earnings between 10 cents and 25 cents for the current quarter, below the average analyst estimate of 43 cents. For the year, it forecast per-share adjusted earnings between $1.32 and $1.67, which offers a weaker midpoint than the company's previous guidance of $1.18 to $2.25.

Tenet's revenue outlook was more upbeat. The company sees third-quarter revenue between $4.75 billion and $4.85 billion, above the average estimate of $4.7 billion among analysts surveyed by Thomson Reuters. For the year, Tenet raised its annual revenue guidance to a range of $19.5 billion to $19.8 billion, up from a previous range announced in May of $18.8 billion to $19.2 billion.

For the second quarter, Tenet reported a loss of $46 million, or 46 cents a share, compared with a year-earlier loss of $61 million, or 61 cents a share. Excluding items, such as discontinued operations and the reserve for the lawsuit, Tenet had earnings of 38 cents a share.

Revenue increased 8.4% to $4.87 billion.

The company expected per-share profit of 20 cents to 73 cents and revenue of $4.8 billion to $5.0 billion. Analysts cited by Thomson Reuters had expected revenue of $4.8 billion and profit to drop 31% to 52 cents.

In the latest quarter, on a same-hospital basis, patient revenue improved 4.4% to $3.74 billion, as adjusted admissions increased 0.5% and revenue per adjusted admission improved 3.9%.

Also on a same-hospital basis, uninsured plus charity admissions climbed 7.9%, while uninsured outpatient visits fell by 0.6%. Same-hospital health exchange admissions rose 14.9%, and same-hospital exchange outpatient visits increased 30%.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

August 01, 2016 21:25 ET (01:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.