Tenet Healthcare, one of the largest for-profit hospital operators in the U.S., raised its forecast for full-year profit after posting growth in case volumes that boosted revenue and net income in the first quarter.
The company said on Tuesday that quarterly profit climbed 2.9% from a year earlier to $143 million, beating an earlier forecast that net income would range between $90 million and $125 million in the period..
The earnings results also beat Wall Street revenue estimates, according to SVB Securities analysts. Tenet logged $5 billion in revenue, a 5.8% increase compared to the first quarter of 2022.
Profit growth was driven by an increase in case volumes. Same-facility system-wide surgical cases at its ambulatory unit, United Surgical Partners International, or USPI, rose 7.9% compared to the year-earlier quarter. That led to a 23% gain in ambulatory operating revenue from a year earlier.
“The continued migration of procedural services into the ambulatory setting is a sustained and significant tailwind for our business,” Tenet CEO Saum Sutaria on a Tuesday earnings call.
Same-facility adjusted admissions increased by 6.7% year over year, with revenue totaling $4 billion for Tenet’s hospital segment. Still, same-hospital net patient service revenue decreased by 5.2% compared to the year-earlier quarter due to lower COVID-19 volumes and government funding reductions. COVID admissions were 4% of total admissions in Q1 compared to 12% a year earlier.
As a result of volume growth and an increase in quarterly profit and revenue, Tenet boosted its full-year earnings forecast. The operator now expects net income for the year to range from $485 million to $623 million, versus $420 million to $585 million it had forecast in February.
CFO Daniel Cancelmi said on the earnings call that Tenet expected to make more progress on contract labor costs, which battered hospital expense margins during the COVID-19 pandemic, while adding that contract labor costs would not return to pre-pandemic levels this year.
Tenet shares rose 6.2% to $73.31 in late morning trading on Tuesday.