Please ensure Javascript is enabled for purposes of website accessibility

Tenet Healthcare Goes Negative

By Seth Jayson – Updated Apr 10, 2017 at 1:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Just the facts, Fool.

Tenet Healthcare (NYSE: THC) reported earnings on April 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Tenet Healthcare missed slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded slightly. Non-GAAP earnings per share shrank significantly. GAAP earnings per share dropped to a loss.

Gross margins grew, operating margins contracted, net margins dropped.

Revenue details
Tenet Healthcare recorded revenue of $2.59 billion. The 12 analysts polled by S&P Capital IQ looked for a top line of $2.63 billion on the same basis. GAAP reported sales were 13% higher than the prior-year quarter's $2.30 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.33. The 20 earnings estimates compiled by S&P Capital IQ predicted $0.31 per share. Non-GAAP EPS of $0.33 for Q1 were 39% lower than the prior-year quarter's $0.54 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.) GAAP EPS were -$0.85 for Q1 compared to $0.54 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 85.2%, much better than the prior-year quarter. Operating margin was 6.2%, 290 basis points worse than the prior-year quarter. Net margin was -3.4%, 620 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $2.65 billion. On the bottom line, the average EPS estimate is $0.80.

Next year's average estimate for revenue is $10.68 billion. The average EPS estimate is $2.76.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 370 members out of 438 rating the stock outperform, and 68 members rating it underperform. Among 92 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 80 give Tenet Healthcare a green thumbs-up, and 12 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Tenet Healthcare is outperform, with an average price target of $45.14.

Is Tenet Healthcare the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.