Tenet Healthcare stock up 10 percent after better-than-expected fourth quarter revenue
Health system pointed to heightened expectations for its subsidiary, Conifer, along with additional Medicaid reimbursements as drivers of outlook.
Shares of Tenet Healthcare stock climbed 10 percent after the company revised its outlook for 2018, posting better-than-expected revenues in the fourth quarter of 2017.
That's not to say the news is all rosy. Tenet still posted a loss of $230 million in the quarter, according to its fourth quarter results. By contrast, Tenet lost $79 million in the same quarter in 2016.
[Also: Tenet CEO: New tax law will save us $10 to $20 million every year]
Tenet took a financial hit from the Tax Cuts and Jobs Act. Because of the law, Tenet recorded a $252 million non-cash partial write-down of its deferred tax assets and a $22 million increase in interest expense, which lowered net income by $274 million in the fourth quarter. Tenet also recorded a $99 million after-tax charge related to the write-down of assets for sale in Chicago and employee severance.
As a result, Tenet had the net loss of $230 million for the fourth quarter.
[Also: Tenet Healthcare to slash 700 jobs as cost-reduction plan plows ahead]
Still, it was a better showing than most analysts had predicted. Heightened expectations for its subsidiary, Conifer, along with additional Medicaid reimbursements, resulted in the company raising the midpoint of its previous 2018 adjusted earnings before interest and other items range by $25 million, according to Market Watch.
It has been a rough few months for the Dallas-based juggernaut. Tenet posted a $366 million operating loss in the third quarter of 2017, and shortly thereafter, in October, announced a cost reduction plan that consisted largely of staff cuts and contract renegotiations with suppliers and vendors. In all, Tenet planned to cut 1,300 jobs in an effort to slash $150 million from its operating expenses.
Then, in January, Tenet said it would cut an additional 700 jobs and said its cost-reduction plan was now targeting $250 million in cuts, including a 20 percent reduction of corporate overhead. It initiated a sale of Conifer, which encompasses 800 hospitals in 43 states, due to Executive Chairman Ron Rittenmeyer's assertion that it was not a strategic asset.
Tenet has also divested its non-core markets and assets, plus its health plans and post-acute businesses. All told, the divestiture of non-core markets and assets is expected to yield in excess of $1 billion of proceeds, including over $700 million in cash and approximately $300 million from the elimination of capital leases and related debt.
The company said it expects revenue between $17.9 and $18.3 billion in 2018.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
