Tenet reports $56M net loss, declining admissions in Q2
- Tenet Health on Monday reported a net loss from continuing operations attributable to shareholders of $56 million in Q2 2017. In Q2 2016, the hospital operator posted a $44 million net loss.
- Total admissions experienced a 4.5% decline for the first six months of 2017 for continuing total hospitals in comparison to the same time period in 2016. The decline was 2% for continuing same hospitals from the first six months of 2017 compared to the same time period in 2016.
- "We are not surprised by these results and view the admissions growth headwinds facing the hospital sector as longer-term issues that will not be solved in the coming quarters," Piper Jaffray analyst Sarah James was quoted saying in Reuters on Monday.
Tenet, which operates more than 70 hospitals, is experiencing what many for-profit hospital operators are experiencing in Q2: weaker-than-expected patient volumes.
For example, Community Health Systems (CHS) earlier in August reported softening markets contributed to its underperformance in Q2 2017, while HCA Healthcare in July reported it missed Q2 estimates due in part to higher expenses and lower-than-expected patient admissions.
Both CHS and HCA can point to growth markets that are thriving for the companies, but their performance alongside Tenet's shows how organic patient growth is slowing and the companies will be rethinking investment and performance strategies over the next quarters.
“While we experienced a softer volume environment in the second quarter, our teams responded well with solid performance on cost control, which mitigated the impact on our results,” said Trevor Fetter, chairman and chief executive officer. “We are continuing to invest in targeted service lines and have largely completed four significant construction projects that will strengthen our position in four strategic hospital markets. We are also making progress on portfolio refinement, including completing the sale of our Houston-based hospitals and affiliated outpatient centers and redeploying that capital to increase our ownership position in USPI.”
Tenet lowered its full-year revenue for the year. In addition, Tenet's uncompensated care in Q2 rose to $1.4 billion, compared to $1.2 billion in Q2 2016.
The disclosures helped send Tenet's stock down on Tuesday, to $15.60 at the open of business compared to $16.69 at the close of business Monday.
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