Early extinguishment of debt leads to Tenet's Q4 loss
Despite increases in revenue and patient admissions, Tenet Healthcare posted a $76 million loss in the company’s 2011 fourth quarter, due largely to an early extinguishment of company debt. In the same period last year, the hospital operator reported income of $74 million or 14 cents per share.
Adjusting for its $117 million pre-tax loss related to the early extinguishment of debt that is part of the company’s strategy to extend the debt maturities and lower future interest expense and other costs, the company reported income of $42 million or 10 cents per diluted share.
[Also: Tenet provides 2012 earnings outlook]
The adjusted earnings missed the average analyst estimates of 14 cents per share, published by Thomson Reuters, and reflected lower-than-expected reimbursement settlements the company expected by year-end.
Tenet had indicated last month that it was expecting these settlements would help offset the one-time charges and accounting changes that would affect fourth quarter earnings.
“People had factored those settlements into their expectations,” said Sheryl Skolnick, an analyst with Stamford, Conn.-based CRT Capital Group in a Bloomberg report. “Am I surprised that they didn’t happen? No. It’s Tenet – things never go their way.”
Despite the miss, the company did show a number of positive signs.
“We recorded our eighth consecutive year of growth in Adjusted EBITDA, which grew to $1.145 billion in 2011, a 9.0 percent increase over 2010,” said Trevor Fetter, Tenet's president and CEO, in the earnings press release. “The growth would have been even stronger had we been able to close some of the favorable payer settlements we have been working on for a number of months. Because the settlements remain likely, we are raising our 2012 Outlook for Adjusted EBITDA to a new range of $1.225 billion to $1.350 billion.”
The company also reported net patient revenue per adjusted admission of $11,633, an increase of 2.3 percent compared with $11,370 in the fourth quarter 2010. The company attributed the increase to more favorable terms in its managed care contracts with commercial payers.
