- Tenet Healthcare closed out the 2019 fiscal year with a net loss of $243 million, just one year after reporting profit of $108 million.
- The for-profit hospital operator did see volume growth in the fourth quarter, however, a bright spot for the company. Tenet has now reported hospital adjusted admissions gains for four consecutive quarters.
- Revenue of $4.81 billion, up more than 4% year over year, also beat Wall Street expectations, though Dallas-based Tenet skated just below earnings forecasts in its quarterly results released aftermarket Monday.
Tenet's strategy of selectively trimming its hospital portfolio and investing in high-acuity lines of care has righted a ship some worried was sinking just two years ago. Late in the fourth quarter, Tenet decided to sell its two remaining Tennessee-based acute care hospitals to Memphis-based nonprofit Methodist Le Bonheur Healthcare for $350 million as it continues to divest underperforming facilities.
"While we have not yet declared victory, we are today an entirely different company," CEO Ron Rittenmeyer said on a call with investors Tuesday morning.
The nine-state, 65-hospital chain chalked up the net yearly loss to debt refinancing, restructuring and acquisition-related costs. Other factors included lower-than-anticipated revenue due in part to Affordable Care Act-mandated cuts to disproportionate share hospitals and lower Medicaid payments in some states, expenses related to Hurricane Dorian and higher contract labor costs following a strike by roughly 6,500 union nurses at Tenet hospitals in Florida, California and Arizona in the third quarter of the year.
Tenet reported a profit of $2 million in the quarter, swinging from a $5 million loss a year earlier, driven by higher net operating revenue from increased patient volume and ongoing cost reduction initiatives.
Same-store admissions and adjusted admissions grew 2.6% and 1.9% respectively for the quarter, while ambulatory same-facility surgical cases grew 3.4%. The flu was not a major driver of inpatient activity, according to COO Saum Sutaria, though it may have helped with lower acuity business.
Tenet does not break out payer mix, but executives said it's focused on retaining and expanding lucrative commercial volume.
"We're pleased with the fact that the prior, multi-year trend of commercial decline has stemmed at this point in a market where commercial business isn't necessarily growing," Sutaria said.
Hospital surgeries grew slightly by 0.2%, and increased 3.5% including surgeries performed at Tenet's ambulatory care business, United Surgical Partners International.
Tenet plans to aggressively expand USPI by allocating between $150 and $175 million annually to snap up ambulatory surgery centers across the country, seeing opportunity in the highly fragmented market, its CEO said January at the J.P. Morgan Healthcare Conference in San Francisco.
Tenet still anticipates spinning off struggling revenue services arm Conifer into an independent publicly traded company by the end of the second quarter next year. The division brought Tenet operating revenue of $332 million for the quarter and $1.4 billion for the year, both a decline of almost 11% compared to the prior year period due to losing clients following Tenet divestitures.
Also a drag in the quarter, Tenet and its Southern California subsidiary Desert Regional Medical Center in February agreed to shell out $1.41 million to settle a lawsuit alleging it implanted unnecessary cardiac monitors in patients to get higher Medicare reimbursements. The settlement should not affect Tenet's finances beyond 2020, executives said.
For the full 2020 year, Tenet expects to see net operating revenues between $19.1 billion and $19.5 billion and income of $130 million to $245 million. Its stock was up almost 2% in morning trading Tuesday.