What happened

After reporting second-quarter earnings and offering up guidance for 2017, shares of Tenet Healthcare (NYSE:THC) have fallen 14.6% as of 2:30 p.m. EDT on Tuesday.

So what

Tenet Healthcare's year-over-year same-hospital patient revenue improved 0.4% as a 1.9% increase in revenue per adjusted admission was largely offset by a 1.4% drop in adjusted admissions. Tenet Healthcare also reported that bad-debt expense increased over the period as more uninsured patients sought out care.

A man holds his head in his hands as he stares at a screen showing a declining stock price.


Overall, the company's net revenue declined 1.4% in the quarter, to $4.8 billion, and its net loss expanded 19.6%, to 55 million, or $0.55 per share. On an adjusted basis, the net loss per share was $0.17. The company's top and bottom line was shy of what industry watchers were expecting.

In terms of uncompensated care expenses, those costs increased 13.6% year over year, to $1.375 billion.

Now what

The poor quarterly performance led management to adjust its full-year forecast lower. It now expects full-year revenue of between $19.1 billion to $19.4 billion and a net loss of between $90 million to $115 million. On an adjusted basis, the company is forecasting earnings per share (EPS) of between $0.69 to $0.99, a wide range that reflects a lot of uncertainty in the marketplace. Previously, Tenet was guiding for revenue of at least $19.7 billion and adjusted EPS of at least $1.05. 

The lower expectations do little to add confidence to investors that Tenet Healthcare is turning a corner, and that's particularly a problem because decisions in Washington, D.C. could result in more people canceling their health insurance. Until Tenet Healthcare demonstrates that it's right-sized itself, and uncertainty surrounding health insurance markets is resolved, there are probably better investments to make.