Tenet Optimistic on 2012 Earnings - Analyst Blog
January 10 2012 - 9:52AM
Zacks
Yesterday, Tenet Healthcare Corp. (THC)
announced its projection of adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) to be within $1.2–1.3
billion.
Meanwhile, the adjusted EBITDA includes the deductions from
accounting changes to affect some deferred income recognized out of
certain Medicare Healthcare Information Technology (HIT) incentive
payments, which is expected to be about $31 million in 2012.
In November last year, management had reiterated its adjusted
EBITDA projection to be between $1.175 billion and $1.275 billion.
The company expects the upside to appear from cost reduction
through its ongoing Medicare Performance Initiative and an increase
its physicians. The outlook also reflects a growth projection in
Tenet’s Conifer service business.
The growth strategies discussed above are further expected to
negate the adverse effects of government reimbursements and macro
economic volatility. However, Tenet’s adjusted EBITDA dipped 3.9%
year over year to $195 million in the third quarter of 2011.
Adjusted EBITDA is expected to weaken again in the fourth
quarter of 2011, given the deferred recognition of revenues related
to HIT incentive payments worth $12 million, which resulted from a
change in the accounting method. Even an adverse affect of decline
in interest rate is expected to hurt adjusted EBITDA by about $7
million.
However, these will be partially offset by a year-over-year hike
in admissions and a flat growth in outpatient visits. Additionally,
a net favorable impact of $28 million related to the California
Provider Fee Six-Month program is also expected in the fourth
quarter of 2011.
Earnings Review
In November last year, Tenet reported its third-quarter
operating earnings of $16 million or 4 cents per share, beating the
Zacks
Consensus Estimate of 1 cent and operating loss of $14 million or 1
cent per share in the prior-year quarter.
The improved results were due to a growth in admissions,
outpatient visits and surgeries, which were partly offset by the
rise in bad debt and operating expenses.
The Zacks Consensus Estimate for fourth-quarter earnings is
pegged at 14 cents per share, up about 41% from the year-ago
quarter. For 2011, Tenet’s earnings are expected to be 42 cents per
share, growing about 3% from 2010.
Management expects to announce its detailed growth guidance for
2012 on February 28, 2012, when the company is scheduled to release
the results for its fourth quarter and full year 2011.
Tenet competes with HCA Inc. (HCA) and
Community Health Systems Inc. (CYH). The company
carries a Zacks #2 Rank, which implies a short-term Buy rating and
a long term Outperform stance.
On Monday, the shares of Tenet closed at $5.10, up 2.2%, on the
New York Stock Exchange.
COMMNTY HLTH SY (CYH): Free Stock Analysis Report
HCA HOLDINGS (HCA): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Tenet Healthcare (NYSE:THC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Tenet Healthcare (NYSE:THC)
Historical Stock Chart
From Oct 2023 to Oct 2024