Tenet shrinks loss to $5M, plans new $200M cost-cutting drive

Dallas-based Tenet Healthcare saw its revenue slide in the fourth quarter of 2018, but its net loss narrowed year over year.

The for-profit hospital operator ended the fourth quarter of 2018 with revenues of $4.62 billion, down from $4.98 billion in the same period a year earlier. Tenet said the decline was primarily due to hospital divestitures and a 76 percent year-over-year decrease in net revenues from the California Provider Fee program. CMS approved the program in December 2017, which resulted in full-year 2017 revenues being recognized in the fourth quarter of that year.

Excluding California Provider Fee revenues, patient revenues climbed 4.6 percent on a same-hospital basis from the fourth quarter of 2017 to the same period of 2018. When adjusted for outpatient activity, same-hospital admissions were down 0.8 percent year over year in the fourth quarter of 2018.

After factoring in operating expenses and one-time costs, Tenet reported a net loss attributable to shareholders of $5 million in the fourth quarter of 2018, compared to the $229 million net loss the company recorded in the same period a year earlier.

"We delivered strong results in the fourth quarter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS," Ronald A. Rittenmeyer, executive chairman and CEO of Tenet, said in an earnings release.

Looking at full-year 2018 results, Tenet reported net income of $108 million on revenues of $18.3 billion. The company posted a net loss of $704 million on revenues of $19.2 billion in 2017.

In December 2017, Tenet expanded a previously announced enterprisewide cost reduction initiative to $250 million. A presentation published with the company's fourth-quarter financial results said Tenet realized $195 million of cost savings from the initiative in 2018 and expects an additional $55 million benefit in 2019 from annualizing the cost savings achieved by the end of last year.

Tenet is continuing its cost-cutting efforts this year by launching a new $200 million cost reduction initiative. The company expects to realize $50 million of savings from the new initiative in 2019, according to the earnings presentation.

"2018 was a year of significant change for the company," Mr. Rittenmeyer said. "We meaningfully improved our financial results and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consistency in execution. We expect to make additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth."

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