Tenet posts unexpected $59M loss in Q1

Dallas-based Tenet Healthcare reported a net loss of $59 million in the first quarter of fiscal year 2016, down from a net profit of $47 million in the same period a year prior.

Tenet recorded revenue of $5 billion in the first quarter, up 14 percent from $4.4 billion in the same period the year prior. Fueled by 2.2 percent growth in adjusted admissions, same-hospital patient revenue grew 6 percent year over year.

The hospital operator posted strong results in its ambulatory segment in the first quarter of FY 2016. On a pro forma basis, Tenet said net operating revenue increased to $429 million, up 45.4 percent from $295 million in the first quarter of the year prior.

"I am delighted with Tenet's very strong start to 2016," said Tenet Chairman and CEO Trevor Fetter. "Our hospitals and outpatient centers generated strong growth, and the benefits of our diversified strategy are becoming increasingly evident."

However, after accounting for an increase in operating expenses and litigation reserves, Tenet ended the quarter in the red.

The for-profit hospital operator previously disclosed it is the subject of a criminal investigation by the Department of Justice. The criminal lawsuit arose out of a civil lawsuit filed under the qui tam provision of the False Claims Act. The suit alleges four Tenet hospitals paid illegal kickbacks to clinics that referred undocumented pregnant patients to them for Medicaid-paid deliveries. Undocumented patients are not eligible for regular Medicaid coverage. However, they typically qualify for emergency medical assistance when they deliver their babies.

In the first quarter of FY 2016, Tenet increased its reserve for the litigation from $238 million to $407 million.

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