Tenet Healthcare Posts 41% ‘Surge’ in Profit, 15% Increase in Revenue in Third Quarter
Tenet Healthcare Corp., the nation's second-largest for-profit hospital chain, yesterday reported that the company's third-quarter profit in fiscal year 2002 "surged" 41% from a year earlier to $288 million, or an increase of 86 cents per share, Reuters/Los Angeles Times reports. In addition, Tenet reported that third-quarter revenue rose 15% from a year earlier to $3.48 million. Analysts attributed the increases in third-quarter profit and revenue to "rising admissions and higher revenue per patient" at Tenet hospitals (Reuters/Los Angeles Times, 4/3). Third-quarter patient admissions at Tenet hospitals rose 7.4% from a year earlier (Pasztor, Wall Street Journal, 4/3). Tenet yesterday also predicted earnings of $3.20 per share in FY 2002, which ends May 31, and fourth-quarter earnings of 90 cents per share. In FY 2001, Tenet posted earnings of $2.30 per share and fourth-quarter earnings of 68 cents per share (Reuters/Los Angeles Times, 4/3). Over the past several quarters, Tenet has posted a "string of double-digit" increases in earnings, as well as profit margins, cash flow and cost controls, that have "outpaced" estimates from analysts. However, some investors and analysts have raised concerns that Tenet's earnings may "taper off" as a result of "continued heavy investment to upgrade recently acquired hospitals." Tenet Chair and CEO Jeffrey Barbakow said that the company has benefited from "years spent developing a strong portfolio of hospitals and honing our internal processes," which has allowed Tenet to "reinvest a record amount." He added that Tenet expects capital expenditures to reach about $800 million in FY 2002 (Wall Street Journal, 4/3).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.