UPDATE: Aug. 6, 2019: Tenet executives discussed the second quarter results Tuesday morning with investors. This brief has been updated with information from the call.
- Tenet Healthcare reported $4.56 billion in net operating revenue for the second quarter of this year, a slight bump of 1.2% from the prior-year period, according to financial results posted after market close Monday.
- The Dallas-based hospital operator beat Wall Street expectations on revenue and earnings, driven in part by an increase in hospital operations revenue, which was up 2.5% year over year at $3.83 billion. Net income was at $15 million, down from $24 million in the second quarter of 2018.
- The report comes on the heels of a Tenet announcement nearly two weeks ago that it's spinning off its revenue cycle management arm Conifer. Conifer's revenue was down 8% for the quarter, "primarily due to client attrition following divestitures by Tenet and other customers," the company said.
The chain first said it was looking to potentially sell the subsidiary in December 2017. At about the same time, the health system was pursuing a cost-reduction program following some slow financial performances.
Conifer CEO Stephen Mooney is stepping down and COO Kyle Burnett will serve as interim chief while a permanent replacement is sought.
Along with its earnings, Tenet affirmed its 2019 revenue outlook of $18 billion to $18.4 billion, with the third quarter of this year expected to come in at between $4.3 billion and $4.6 billion.
Same-hospital adjusted admissions were up 2.2%, which Tenet said represented its strongest volume growth since 2014-15. Same-hospital patient revenue increased 5.7%.
On a call with investors Tuesday, executives touted the second quarter performance of Conifer in particular and said cost reduction efforts were beginning to bear fruit.
"We are not declaring victory, nor are we slowing down the transformation," CEO Ron Rittenmeyer said.
Rittenmeyer said paying down debt would be a major goal for the company moving forward and "more emphasis will be on cash and where we spend our money and how we spend it, even at the lowest level."
"That's not something that gets resolved in the next quarter, but we do need now to increase the amount of emphasis and amount of focus across the entire enterprise on a day-to-day cash management basis that I think we could do a better job at," he said.
In response to an analyst question about the price transparency requirement in the recent CMS outpatient payment rule, Rittenmeyer said the company is "certainly supportive of making the experience for our patients as good as possible and enabling our patients to understand the economics associated with any care that will be provided to them."
Other for-profit health systems have had mixed results for the second quarter. HCA executives said revenue growth was slower than it expected despite meeting Wall Street expectations. It missed on earnings. Community Health Systems, also reporting late Monday, had a net loss for the quarter but beat investor estimates.