Tenet Healthcare Corp. missed analysts' earnings estimates and shares plummeted more than 25 percent Tuesday after it reported dismal third-quarter results that were only slightly helped by the sale of some investments.
Tenet shares plunged more than 25 percent to $3.01 during the trading session, their lowest point in a decade.
The hospital management company earned $104 million, or 22 cents per share, after a loss of $59 million, or 12 cents per share, in the year-prior period. Excluding a one-time gain of $140 million from the sale of an investment and other items, the company came out with a loss of 6 cents per share.
Revenues rose 10.0 percent to $2.2 billion.
Tenet is having trouble with patients who can't afford to pay their bills due to the declining American economy. Bad debt, the amount the hospital has to cover when patients are uninsured or underinsured, rose 5.8 percent to $163 million.
"While volume gains and physician recruiting have been positive, Tenet is struggling with deteriorating patient mix, higher bad debt and uncertainty about local economies," said Deustche Bank analyst Darren Lehrich, in a note to investors.
Total admissions at hospitals open at least a year rose 1.7 percent, to 129,576 patients, while commercial admissions - the most lucrative - fell 3.4 percent to about 35,000. Government managed-care admissions rose 13.5 percent, to 27,485 patients.
"This is our fourth consecutive quarter of positive admissions growth and the first quarter in five years in which we have achieved growth in total outpatient visits," said Trevor Fetter, Tenet's chief executive officer. "These are both gratifying results and represent an important measure of our progress."
Tenet cut its 2008 earnings forecast to a range of $700 million to $750 million, from a previous $750 million to $825 million. It added that the $1 billion earnings forecast it gave for 2009 would be too high, considering the weakened economy.
The company continues to expand its medical staff, and has added 900 new physicians so far this year, putting it near its goal of 1,000 additions in 2008. Tenet operated 50 hospitals as of Sept. 30.