Tenet Healthcare Corp. gave investors a glimpse of its first-quarter results last week, and the large quarterly loss the company disclosed still managed to beat analysts' low expectations.
Tenet said it expects to report a loss of $117 million, or 25 cents per share, this week for the first quarter. The company lost $20 million, or 4 cents per share, in the year-earlier period. The expected loss largely reflects the cost of Tenet's massive restructuring, which totals about $140.4 million. Tenet said it had the equivalent of a $98.2 million loss on discontinued operations and a $38.8 million loss on restructuring of its Medical College of Pennsylvania Hospital in Philadelphia. Tenet and state officials are working to find a buyer for the hospital after the company announced plans in December 2003 to close it. Tenet also said it spent about $4.7 million on litigation and investigation costs.
Not including those losses, the Santa Barbara, Calif.-based company said it earned about $23.4 million on continuing operations. Healthcare stock analysts had expected the company to break even on continuing operations, according to estimates by Thomson Financial Network.
Not counting revenue at hospitals it is trying to sell, Tenet said its 2004 first-quarter revenue declined $81 million, or 2.9%, to $2.67 billion. The average of the analysts' expectations for revenue from continuing operations was $2.72 billion.
Tenet said directly controllable costs, such as salaries and supplies, were up 2.6%, but bad-debt expense climbed 29% to $293 million. With lower revenue, however, all of the cost lines were up as a percentage of revenue, with bad-debt expense topping the list, up to 11% of revenue for the quarter vs. 8.3% in the year-ago period. Tenet owns or operates 100 hospitals, including 31 that it plans to divest.
Tenet cautioned investors that, for the rest of 2004, it continues to expect no better than break-even results before considering special charges and losses on discontinued operations. Investors seemed to take that cautious advice to heart, as Tenet's stock barely moved last week, showing minimal effects from the earnings news.
Tenet also said last week that its two hospital building projects are scheduled to open during the second quarter. Tenet's 90-bed St. Francis Hospital-Bartlett (Tenn.) is set to open this month and its 118-bed Centennial Medical Center in Frisco, Texas, a Dallas suburb, is slated to open in June.
While bad debt was a consideration in the first quarter for LifePoint Hospitals and Province Healthcare Co., both based in Brentwood, Tenn., the two rural chains said last week that their profits and profit margin rose for the quarter. Greater same-hospital admissions and control of costs other than bad debt offset the effects of rising bad-debt expense for both companies.
LifePoint said it earned $23.9 million, or 60 cents per share, compared with $17.7 million, or 45 cents per share, in 2003's first quarter. Revenue rose 16.2%, to $256.6 million. LifePoint said its same-hospital equivalent admissions were up 5.5% compared with the year-ago quarter.
Province said it earned $11.6 million, or 23 cents per share, compared with $9.9 million, or 20 cents, in the year-ago quarter, an increase of 17.3%. Revenue was up 9.9%, to $204.9 million. Province also reported a 2.6% rise in adjusted admissions.
