TENET: First Quarter Earnings up 18%
Tenet Healthcare Corp. announced Wednesday that its fiscal first quarter profits rose 18%, up $20.4 million from the same period last year. Earnings rose from 38 cents a share last year to 44 cents this year, and revenue jumped 9.5% to $2.55 billion, up from $2.33 billion a year earlier. The Philadelphia Inquirer reports that the Santa Barbara-based "hospital operator has continued buying hospitals and holding down costs as its admissions rise" (10/8). Tenet's overall hospital admissions rose 6.6% in the period. Tenet CEO Jeffrey Barbakow said, "We've worked hard to capture market share and hold the line on overhead costs in order to mitigate the effect of significant Medicare cuts." He added that "the company's strategy was to build coordinated networks of hospitals and health care services in specific markets, allowing it to cut excess overhead costs and realize economies of scale."
Tenet agreed last week to pay $345 million for eight Philadelphia-area hospitals at a bankruptcy hearing for the Allegheny Health Education and Research Foundation. Nancy Weaver, an analyst with Stephens Inc., "said the purchase of the Philadelphia hospitals presents Tenet with an opportunity to increase revenue for a low purchase price. But because of the owner's financial problems, Tenet must quickly improve the hospital's performance. She concluded, "It's a great opportunity, but it adds a lot of risks" (Bloomberg News/Los Angeles Times, 10/8).