Tenet 1Q Preview Shows Co Progress, Maybe Industry Stamina
22 4월 2009 - 4:38AM
Dow Jones News
Tenet Healthcare Corp.'s (THC) preview Tuesday of strong
first-quarter results indicates the hospital operator is making
progress in cost-control efforts and adds to evidence the sector
may be holding up OK in the recession.
The Dallas-based company's announcement came a week after
privately held HCA Inc. projected first-quarter results that
sparked a rally in hospital stocks. Tenet shares rose 35%, or 50
cents, recently to $1.92, and earlier broke the $2 mark for the
first time since last year. Other hospital shares climbed
slightly.
Tenet, which has struggled for years to turn itself around,
boosted its 2009 outlook for underlying income and said its
preliminary first-quarter per-share operating earnings far exceeded
Wall Street's average estimate. Projected first-quarter revenue,
though, fell short of analyst views.
"All in all that was an outstanding quarter," said CRT Capital
Group analyst Sheryl Skolnick. Some of Tenet's results probably
signal relatively reassuring industry trends for uncollected
patient bills and admissions, while others reflect company specific
measures to control costs and recruit physicians, she said.
Barclays Capital analyst Adam Feinstein noted that margins were
better than anticipated, at 12.1% versus his 8.9% estimate. Credit
Suisse analysts remained positive on the shares even after the 35%
runup, citing its optimism about volume and expense trends, and
saying Tenet stands to gain market share from nonprofits and to
benefit from health reform.
Following HCA's report last week of a lower patient bad-debt
ratio, Tenet's projection of only a slight increase in that measure
year over year indicates bad debts may not be so bad, said CRT's
Skolnick. In addition, the industry's volumes of profitable
managed-care patients, while lower, don't appear to be disastrous,
she said in an interview.
Tenet's same-hospital admissions declined 1.3% in the first
quarter, with managed-care admissions down 3.2%, while outpatient
visits rose 0.7%. Adjusting for calendar differences, managed-care
volumes probably were down only 2% in the first quarter, compared
with a roughly 3% decline in 2007, Skolnick estimated.
She suspects Tenet didn't see much increase in volumes of
uninsured patients, and said admissions of such patients might have
declined, although the company didn't specify. While it's too early
to tell, Tenet and HCA's reports may indicate that even in the
recession, people are keeping their insurance, perhaps helped by a
newly approved government subsidy for Cobra insurance for those who
lose their jobs in layoffs.
As for company specific progress, Tenet now has many more
doctors, which translates into more patients, which should offset
the negative effects of the economy, according to Skolnick. Tight
cost-controls and savings initiatives appear to be working,
contributing to decent revenue growth, and "they had a very strong
cash flow quarter from operations," she said.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com