Tenet swings to profit in Q1 despite hit from COVID-19

Dallas-based Tenet Healthcare said its 2020 first-quarter growth "hit a wall created by the COVID-19 pandemic," yet it managed to make a profit, according to its recent quarterly earnings report.

In the first quarter of 2020, the 65-hospital system reported revenue of $4.52 billion, down slightly from the $4.55 billion in the same period a year prior. 

In its hospital segment, on a same-hospital basis, Tenet posted net patient service revenue of $3.54 billion in the period ended March 31, a decline of 0.4 percent from $3.56 billion reported in the first quarter of 2019. Its ambulatory segment saw net patient service revenue hit $1.02 billion in the first quarter of this year on a same-facility basis, down about 1.5 percent from the $1.04 billion reported in 2019.

The decrease in overall revenue and patient service revenue was attributed to the COVID-19 pandemic. 

After factoring in operating expenses, Tenet reported a net income from continuing operations attributable to shareholders of $94 million. This compares to a $20 million net loss in the first quarter of 2019. The hospital operator said it was able to swing to a profit due to operational improvements and a favorable income tax benefit of $91 million.

Tenet said that the COVID-19 pandemic lowered its net income from continuing operations attributable to common shareholders by about $73 million. In addition, the pandemic suppressed its adjusted earnings before interest, taxes, depreciation, and amortization by about $125 million.

Overall, Tenet's adjusted EBITDA was $585 million in the first quarter of 2020, down from $623 million posted in the same period in 2019. 

"Our first quarter represents results that were trending above our expectations through early March, and then, in a virtual snap of the finger, hit a wall created by the COVID-19 pandemic and the quick shutdown of elective surgeries and normal patient traffic," said Ronald Rittenmeyer, executive chairman and CEO of Tenet.

Mr. Rittenmeyer said in response to the pandemic, the health system "acted swiftly to mitigate the impact" of the patient volume drop. 

To ease the financial uncertainties of the COVID-19 pandemic, the health system has furloughed workers, boosted liquidity and suspended $300 million worth of capital projects. 

Tenet pulled its 2020 financial guidance, citing uncertainty of the pandemic. 

More articles on healthcare finance:
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UnityPoint Health receives $74M in CARES Act cash



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