Tenet Healthcare stock plunged Tuesday after the Dallas-based company lowered its fourth-quarter outlook and reported lower than estimated third-quarter earnings.
In a news release Monday, Tenet reported that net income for the third quarter slid to $28 million, or $0.27 a share, from $40 million, or $0.37 a share in the same period last year. Tenet also moderated its fourth quarter EBITDA outlook to between $400 million to $450 million.
The hospital operator reported that third-quarter earnings fell on costs to integrate its acquisition of Vanguard Health Systems and its lowered fourth-quarter guidance was based on declining inpatient volume, the company said in its news release and an earnings call on Tuesday.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $288 million, 7.1 percent more than the $269 million in the third quarter of 2012.
Net income from continuing operations, excluding restructuring, legal and acquisition-related costs increased to $46 million, or $0.45 a share, compared with $35 million, or $0.33 a share in the third quarter 2012. Net operating revenues grew 8.4 percent to $2.4 billion from $2.2 billion, the company said in the release.
Tenet, which operates 77 hospitals and 176 outpatient centers, said that inpatient admissions declined 2.6 percent, but outpatient visits increased 3.5 percent, with particular growth in outpatient surgeries, and emergency department visits were up 3.1 percent.
The market responded to the earnings news unfavorably. Tenet shares dropped nearly 9 percent in trading Tuesday. Shares reached a low of $41.82 and closed at $44. The pressure was still on Wednesday, with shares trading at $43.85 by mid-morning.