While third quarter 2018 brought a drop in revenue for Tenet Healthcare Corporation, it also marked a substantial reduction in year-over-year net losses for the system, which has been neck-deep in a $250 million divestiture plan for close to a year.
Tenet reported a net loss from continuing operations attributable to its common shareholders of $9 million in the third quarter of 2018, compared to a $366 million net loss from continuing operations in the third quarter of 2017.
Net operating revenues in the hospital operations and other segment were $3.762 billion, down 2.7 percent from the same period last year. The decrease was due largely to hospital divestitures, partially offset by same-hospital revenue growth, Tenet said in a statement.
WHY IT MATTERS
It has been a challenging year to say the least. In February of this year, it was reported that the system took a financial hit from the Tax Cuts and Jobs Act, recording a $252 million non-cash partial write-down of its deferred tax assets and a $22 million increase in interest expense, which lowered net income by $274 million in the fourth quarter. Tenet also recorded a $99 million after-tax charge related to the write-down of assets for sale in Chicago and employee severance.
In October 2017, Tenet announced a cost reduction plan including staff cuts and contract renegotiations with suppliers and vendors. Ultimately Tenet said they planned to cut 2,000 jobs in the hopes of achieving $250 million in cuts, including a 20 percent reduction of corporate overhead.
The system also started the process of selling its revenue cycle management solutions business Conifer Health Solutions after it was deemed to not be a strategic asset. In August, the system said they were still working to sell the business.
ON THE RECORD
Ronald A. Rittenmeyer, executive chairman and CEO, said, "We had a solid quarter of results at both USPI and Conifer. Our hospitals did not meet our expectations and we are focusing on specific areas to address those gaps. Strengthening enterprise operations remains our primary focus – and we will continue moving with urgency to implement targeted growth initiatives, achieve operational efficiencies, make further enhancements to our facility portfolio and instill culture changes to drive accountability."
WHAT ELSE YOU NEED TO KNOW
Tenet said it has adjusted its outlook for 2018, now forecasting expected net income from continuing operations available to Tenet common shareholders of $84 million to $144 million and diluted earnings per share from continuing operations of $0.81 to $1.38.
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