THC - Tenet Healthcare ends losing streak despite below-consensus outlook

Unlike its larger rival, HCA Healthcare ( HCA ), hospital operator Tenet Healthcare ( NYSE: THC ) traded higher after its Q4 2022 earnings to end a four-day losing streak even as its guidance fell short of forecasts.

Total Q4 revenue grew ~3% YoY to $5.0B beating the consensus as the Ambulatory segment brought $933M in net operating revenue with ~26% YoY growth. SurgCenter Development acquisition in 2021, service line growth and better pricing yield supported revenue growth.

However, the net revenue from the company's Hospital segment dropped ~2% YoY to $3.8B amid lower COVID-related volumes and acuity. In contrast, net revenue from Tenet's ( THC ) Conifer segment remained flat at $326M.

Driven by one-off charges, net income from continuing operations slumped ~59% YoY to $102M for common shareholders, while adj. EBITDA in the hospital segment fell ~28% YoY to $400M amid higher contract labor costs and premium pay due to the pandemic.

Tenet's ( THC ) Q1 FY23 guidance indicates revenue of $4.7B – $4.9B and adj. EPS of $1.00 – $1.23 compared to ~$5.0B and $1.34 in the consensus, respectively.

The full-year outlook for revenue and adj. EPS at $19.7B - $20.1B and $4.68 – $5.85 also stand below the Street forecasts at ~$20.1B and $5.64, respectively.

"As expected, the 2023 forecast came in below consensus estimates, but we believe investors had already priced that in," SVB Securities analyst Whit Mayo said in response.

In late January, Industry bellwether HCA Healthcare ( HCA ) sent its rivals lower after issuing in-line guidance.

Read: Seeking Alpha contributor Zach Bristow thinks that Tenet's ( THC ) depressed trading multiples "appear to be justified by the lackluster growth and ROIC profile."

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