Tenet Healthcare Corp. on Tuesday reported a net loss of $88 million or $0.85 per share in its first quarter 2013 report based largely on one-time charges and restructuring costs, but after adjustments to earnings it reported a profit of $0.33 per share, significantly beating analysts estimates of $0.28 per share.
The company was able to achieve these results despite a drop in patient admissions, a trend that has been echoed throughout the industry lately by large hospital operators.
“Tenet generated strong earnings growth by rapidly adjusting costs in a soft volume environment in the first quarter,” said Trevor Fetter, president and CEO in an earnings release. “Adjusted EBITDA grew by almost 17 percent, after excluding a non-recurring item, which contributed to last year’s first quarter, and exceeded the mid-point of our outlook range. After making adjustments for non-recurring items, earnings per share more than doubled.”
Fetter noted in a conference call with analysts and reporters that January admissions were solid, but became soft in February and decreased even more in March. In all, the company said total admissions decreased by 2.5 percent in the first quarter and is a combination of increased outpatient admissions, which grew by 2.2 percent, and a drop of 4 percent in inpatient admissions.
The company attributed about half of the 4 percent decline in admissions to calendar related items in the first quarter, the fact that 2012 was a leap year (and hence added a day to the quarter) along with the observance of both Easter and Passover holidays occurring in the first quarter this year.
“The remaining decline … appears to have been caused by consumer caution driven by pocketbook factors like higher co-pays and deductibles, lower paychecks due to the payroll tax and soft economy in general,” said Fetter in the conference call.
Despite the soft admissions, the company noted that admission in April had returned to more normal levels and as a result Tenet reiterated its 2013 EBITDA projections of a range from $1.325 billion to $1.425 billion.
Net operating revenues were $2.387 billion, an increase of $85 million, or 3.7 percent, compared to net operating revenues of $2.302 billion in the first quarter of 2012. The increase in net operating revenues was 7.5 percent excluding the one-time $75 million Rural Floor settlement received from Medicare in the first quarter of 2012.
The market reacted favorably to company’s performance sending shares up $1.50, nearly 3.5 percent, to close at $45.34 in Tuesday trading.