Tenet reports $366M loss from hurricanes, Medicaid programs
- Tenet Healthcare took a beating in the 2017 third quarter, with a net loss of $366 million and adjusted EBITDA of $507 million. The company attributed the slump to a $30 million hit from Hurricanes Harvey and Irma plus $10 million lower-than-expected revenues from the Texas Medicaid Waiver and Florida Medicaid programs. In addition, the company name checked a $55 million decline in California Provider Fee revenue.
- Net operating revenues for the third quarter totaled $4.6 billion, down 5.4% from $4.8 billion in the same period a year ago.
- Same-hospital patient revenue fell 2.3%, resulting in segment adjusted EBIDTA of $269 million. Ambulatory revenue rose 0.9% on a same-facility basis, with per case revenue up 3.4%.
In light of the quarter’s results, Tenet said it is revising its 2017 outlook to roughly $19 billion in revenue and a net loss of $372 million to $367 million. The projected revenue excludes about $110 million from the Tenet health plans, which the company is selling.
“Consistent with the announcement that we made in late October, we delivered adjusted EBITDA within our outlook range for the quarter,” Ronald Rittenmeyer, executive chairman and CEO, said in a statement. “Reflecting on the impact of Hurricanes Harvey and Irma and a softer volume environment, we are lowering our full year 2017 adjusted EBITDA outlook to $2.37 billion to $2.42 billion. We are partially offsetting the volume declines with tighter cost controls, but the one-time impacts are difficult to recover in a short period of time.”
Monday’s financial report was no surprise. The company released preliminary Q3 results late last month along with an announcement that it would cut 1,300 jobs. The planned cuts are expected to save $150 million operating expenses and include regional management-level positions.
This has been a tough year for Tenet, a system of 77 hospitals, 460 outpatient centers, 20 short-stay surgical hospitals and 130,000 employees. In September, Tenet announced plans to sell eight U.S hospitals in four markets and nine UK facilities to reduce debt. The divestiture is expected to yield between $900 million and $1 billion. The company is also selling MacNeal Hospital to Loyola Medicine, taking it out of the Chicago market, and closing its Abrazo Maryvale Campus in Phoenix.
Last month, Tenet CEO Trevor Fetter stepped down and resigned from the company’s board of directors, speeding up his departure which was first announced in August. Fetter had said he would stay until next March.
Tenet had reportedly also been exploring selling the company, but that option is off the table following Fetters’ departure. The company is instead focusing on finding a permanent successor. Rittenmeyer is serving as interim CEO while that search takes place.
- Tenet Healthcare Tenet Reports Results for the Third Quarter Ended September 30, 2017