- Tenet posted a net loss of $27 million in the first quarter of 2019, improving on the $98 million net loss reported in the first quarter of 2018, according to an earnings report released Monday afternoon. The company beat Wall Street expectations and shares were up roughly 3% after closing bell.
- The Dallas-based hospital operator reported $3.86 billion in net operating revenue, a 2.2% drop compared to the same quarter a year prior. Same-hospital admissions fell 0.1% year over year, though adjusted admissions and revenue per adjusted admission increased 0.6% and 1.3%, respectively. Tenet attributed its net operating revenue slip to those divestitures, as well as revenue losses posted by revenue cycle management subsidiary Conifer Health Solutions.
- A Conifer sale has been in the works for several months, and analysts largely believe the sale of the Conifer unit will be an important step for Tenet as the company tries to recoup recent losses. Executives told shareholders Tuesday morning they "cannot set a date" for the transaction or comment on its progress.
Admissions have been a weak point for Tenet in recent years, in-line with the majority of the industry. CEO Ronald Rittenmeyer told investors earlier this year the company will be focusing on volume growth in 2019. Tenet's volume slump slowed in the beginning of the year, partly due to recent hospital divestitures.
Jefferies analysts noted a lack of "meaningful" same-site volume growth in Tenet's core hospital business in a report issued Monday evening. Net patient service revenues increased 1.9% to $3.56 billion on a same-site basis at Tenet's 65 hospitals.
Rittenmeyer and CFO Dan Cancelmi argued that improvements made in the quarter, especially around volumes and margins, were indeed meaningful. "We had a great quarter," Rittenmeyer said. "We're not sitting back from that."
Executives added that Tenet is looking to expand trauma programs and other high acuity service lines to ramp up surgical volumes.
The hospital operator's adjusted EBITDA fell from $665 million in the first quarter of 2018 to $613 million in the first quarter of 2019, $337 million of which was attributable to its hospital operations segment. Adjusted EBITDA in Tenet's hospital operations segment was $402 million in the first quarter of 2018. The company said the $65 million drop was the result of a $38 million increase in malpractice expense and a weak flu season in 2019.
Tenet's second quarter net income is in the range of a $5 million loss and a $40 million gain. The hospital operator is pushing for a resurgence, maintaining its outlook for nearly every other metric.
That includes adjusted EBITDA, which the company expects will range between $625 million and $675 million for the second quarter and reach as much as $2.75 billion for the year.
Tenet's EBITDA outlook is "more aggressive than not," according to Jefferies, given it includes assumptions about new and unproven cost-cutting measures. Cancelmi told shareholders Tuesday morning that cost actions within the company "are sticking" and "will continue to stick."
Despite badgering from analysts, executives refused to comment on a Conifer sale. Rittenmeyer affirmed he's still bullish on the transaction, but is prohibited from offering details on a prospective deal.