DOW JONES NEWSWIRES
Tenet Healthcare Corp. (THC) swung to a first-quarter profit,
helped by various gains, cost controls and a smaller decline in
admissions.
It reiterated its 2009 outlook, boosted last month, saying it
remains "cautious" about the softer economy's impact, particularly
on commercial managed-care admissions. Last month, Chief Executive
Trevor Fetter credited the company's cost controls for helping to
produce a "very strong first quarter" and Tenet's highest operating
margin in six years.
Shares rose 20% premarket to $3. The stock has more than doubled
this year.
The results suggest that Tenet could be starting to see some
benefit from its struggle to gain its footing after settling
government probes in 2006 over past pricing plans. It has changed
management, shed hospitals and made improvements that earned it
good-quality ratings from the Department of Health and Human
Services. In the past it has battled high supply costs, delays in
key asset sales and high debt levels.
Tenet swung to a profit of $178 million, or 37 cents a share,
from a year-earlier loss of $31 million, or 6 cents a share. Its
April view was earnings of 37 cents, including a net 29 cents in
gains related to taxes, legal costs and debt extinguishment.
Analysts surveyed by Thomson Reuters expected per-share earnings of
3 cents.
Revenue increased 4.6% to $2.3 billion, in line with the
company's February estimate, which was below analysts' views at the
time.
Hospitals have struggled for years with tepid volumes of
commercially insured patients and large numbers of uninsured
patients who can't pay their medical bills. Now, the credit crisis
has prompted many hospitals to delay capital spending and the
recession threatens to further erode business.
Same-hospital adjusted earnings before interest, taxes,
depreciation and amortization, the industry benchmark used to track
the financial performance of those hospitals under a company's wing
for more than a year, rose 28%.
In April, Tenet said first-quarter same-hospital admissions fell
1.3% as same-hospital managed-care admissions declined 3.2%.
Same-hospital outpatient visits edged up 0.7%.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com