UPDATE: Tenet Swings To 1Q Profit Amid Gains, Cost Controls
05 Mayo 2009 - 12:54PM
Noticias Dow Jones
Tenet Healthcare Corp. (THC) swung to a first-quarter profit,
helped by cost controls, a smaller decline in admissions and debt-
and tax-related gains, and reiterated the 2009 outlook that it
boosted last month.
The hospital concern said it achieved its highest operating
margin in six years and is standing up well in the recession,
although it remains cautious regarding the potential for increasing
pressure from the softer economy.
"The quarter demonstrated that we are in a business that is
really not discretionary, so while you see retailers and other
businesses that sell consumer products with sales that are down
year over year 30%...ours were essentially flat in terms of patient
volume," Chief Executive Trevor Fetter told Dow Jones Newswires
Tuesday.
Trends in total admissions and outpatient visits were stronger
in April than in the first quarter, although profitable commercial
managed-care admissions last month were lower than expected, Tenet
said.
The urban hospital operator saw a 0.1% year-over-year decrease
in same-hospital paying and total admissions in the first quarter,
including a 2% decline in commercial managed-care admissions,
adjusting for an extra weekday in the earlier period because of
Leap Year. Outpatient visits and surgeries increased.
Tenet shares recently were up 4 cents, or 1.6%, to $2.54. They
have more than tripled since the 52-week low of 78 cents reached on
March 6.
The results suggest that Tenet could be starting to see some
benefit from its struggle to gain its footing after settling
government probes in 2006 over past pricing plans. It has over the
past few years changed management, shed hospitals and made
improvements that earned it good-quality ratings from the U.S.
Department of Health and Human Services.
"I think this demonstrates we are very far along" in the
turnaround, Fetter said, noting that Tenet has more than doubled
its underlying earnings margin, or Ebitda margin, in the past
couple of years to 12%, although the company remains behind
hospital-operator peers. Tenet must drive profit and cash flow to
levels in line with peer companies, "and we're getting very close
to that," he said.
If policymakers succeed in enacting health-reform legislation
that extends health-insurance coverage to all Americans, he said,
"that's a really great thing for us." Tenet's profits come from the
27% of patients who have commercial managed-care coverage; it
breaks even on Medicare patients, and loses money, to varying
degrees, on patients with Medicaid coverage, self-paying uninsured
and those who qualify as charity cases, Fetter said.
Tenet's collection rate, specifically, the percentage of
billings collected, has been slipping in the past nine months, he
said.
Tenet swung to a profit of $178 million, or 37 cents a share,
from a year-earlier loss of $31 million, or 6 cents a share. Its
April view was for earnings of 37 cents, including a net 29 cents
in gains related to taxes, legal costs and debt extinguishment.
Analysts surveyed by Thomson Reuters expected per-share earnings of
3 cents.
Revenue increased 4.6% to $2.3 billion, in line with the
company's February estimate, which was below analysts' views at the
time.
Hospitals have struggled for years with tepid volumes of
commercially insured patients and large numbers of uninsured
patients who can't pay their medical bills. Now, the credit crisis
has prompted many hospitals to delay capital spending and the
recession threatens to further erode business.
Same-hospital adjusted earnings before interest, taxes,
depreciation and amortization, the industry benchmark used to track
the financial performance of those hospitals under a company's wing
for more than a year, rose 28%.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com
(Mike Barris contributed to this report.)