"Stick a fork in Tenet, it's done" RN wishing to remain secret

  1. Link to former Tenet thread:

    Tenet Shares Suffer Steep Decline
    By Jesus Sanchez
    Times Staff Writer

    12:01 PM PDT, June 23, 2003

    Shares of Tenet Healthcare, the nation's second-largest hospital chain, tumbled 25% today after the Santa Barbara-based company said its earnings for the second quarter and the remainder of the year would fall far below expectations.

    Tenet's announcement came amid profit-taking and anxiety on Wall Street in advance of a possible interest rate cut coming out of the Federal Reserve's Open Market Committee meeting later this week. At about 11:30 a.m., the Dow Jones average was down 145.31-or 1.58%-to 9055.45, and the NASDAQ and S&P 500 were also in negative territory.

    "It's a continuation of the profit taking that actually started last Wednesday," said Norm Wolff, market analyst AG Edwards. "The market has had a tremendous run up over the last several months, and we've been talking that it's due for a correction."

    Tenet, which is the target of a federal probe into its Medicare billing procedures, blamed lower than forecast revenues, rising costs and past pricing practices for depressing earnings. Based on partial results, the company projected second quarter earnings per share of two cents, far below the more than 30 cents many industry analysts had been estimating.

    The company's financial health will remain poor for the remainder of 2003 and well into next year, Tenet officials said. The company projected earnings of between 40 cents to 50 cents per share for the second half of 2003, which is a fraction of Wall Street's expectations.

    "Tenet is navigating through a very challenging transitional period," said Trevor Fetter, president and acting chief executive officer, in a statement. "We are dealing with both industry issues and company-specific issues, most importantly past pricing practices that have placed the company in an especially difficult position. We also are facing lower-than-expected revenue trends and increasing cost pressures."

    Fetter added that the company's lower profit projections do not include likely onetime charges related to a corporate restructuring and a review of the value of company assets. Tenet operates more than 100 hospitals nationwide, including 40 in California.

    On the New York Stock Exchange, Tenet shares had recovered a bit from earlier lows but was still down $3.67 to $12.57 in heavy trading. Tenet shares have lost about three-fourths of their value since last fall, when a federal investigation was launched into the company's practice of boosting profit with special payments that Medicare makes for the sickest patients. In recent months, the company has stopped billing Medicare for the special fees, known as outlier payments, put a freeze on hospital charges and agreed to give uninsured patients the same discounted rates as insured.

    In addition, doctors at the Tenet hospital in Redding, Calif. are being investigated amid allegations they performed unnecessary heart surgeries. The chief executive of a San Diego Tenet hospital has been indicted by a federal grand jury for allegedly violating anti-kickback laws by authorizing illegal payments to doctors to win more referrals of Medicare patients.

    Last month, the company's mounting problems forced longtime chief executive Jeffrey C. Barbakow to resign.

    Industry analysts said that Tenet's lower profit projections go beyond its Medicare billing problems and reflect new challenges, such as lower reimbursements from managed care and health maintenance organizations and difficulties in raising prices.

    Other major hospital chains, in contrast, have been able to increase their managed care reimbursements by up to 6%, according to Robert M. Mains, a health care securities analyst for Advest.

    "It isn't just the outliers ... they also have a pricing problem for their managed care reimbursements," Mains said. "Now they are expecting them to go down, in stark contrast to the rest of the industry."
    Tenet Previews Second-Quarter Results and Comments on Longer Term Outlook

    Business Editors

    SANTA BARBARA, Calif.--(BUSINESS WIRE)--June 23, 2003--Tenet Healthcare Corporation (NYSE:THC) today previewed results for its second fiscal quarter ending June 30, 2003, and commented on its longer-term financial outlook.
    "Tenet is navigating through a very challenging transitional period. We are dealing with both industry issues and company-specific issues, most importantly past pricing practices that have placed the company in an especially difficult position. We also are facing lower-than-expected revenue trends and increasing cost pressures," said Trevor Fetter, president and acting chief executive officer. "Based on results for April and May, and the recent completion by our new executive management team of a highly detailed, hospital-by-hospital budget review process, we now believe this transitional period will continue through at least the first half of 2004, and its impact on our financial performance will be more substantial than previously anticipated."
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  3. by   NRSKarenRN
    From the Motley Fool (invesment advice website):
    Tenet Spreads the Pain

    Shares of Tenet Healthcare (NYSE: THC) are coughing up losses of nearly 23% today, as the hospital operator's dire earnings warning is making the market sick.

    Tenet didn't give an exact number for its second-quarter earnings, but noted that through the first two months of the quarter (April and May), income from continuing operations was $0.02 a share. For the full quarter, analysts were expecting $0.34 a share.

    For its third and fourth quarters, the company hopes to make a combined $0.40-$0.50 a share -- below the combined $0.70 analysts were looking for. In the 12-month period beginning July 1, Tenet anticipates earning $0.80-$1.00 a share, a substantially smaller amount than the expected $1.45.

    A month after CEO Jeffrey Barbakow -- who was the highest-paid CEO in the country last year, despite Tenet's drop from $50 a share to $12 -- was forced out, the company is realizing that its self-inflicted pain is going to take some serious time to clear up. Namely, Tenet's aggressive Medicare billing practices, which it voluntarily gave up in January of this year, are making it difficult for the firm to adjust to a world where it doesn't get the bulk of its income from those sky-high outlier payments.

    Additionally, Tenet is still under multiple investigations, related to those Medicare payments as well as other potential troubles within the company. The Internal Revenue Service also says that Tenet owes $269 million in back taxes and interest, a figure that's more than double what the company expected. Tenet's appealing the ruling.

    Increasing costs aren't helping matters, sticking Tenet in the middle of a whirlwind of hurt generated both by industry trends and prior management's poor choices. All this leaves interim CEO Trevor Fetter with a long hard path ahead, as evidenced by his statement that Tenet's "transitional period" will extend into the first half of 2004.

    Shareholders can't be certain that all the bad news is out here, a situation that's enough to make anyone feel a bit nauseous.

  4. by   pickledpepperRN
    Already Battered, Tenet Healthcare Reduces Earnings Forecast

    Tenet Healthcare, the struggling for-profit hospital chain, told investors yesterday to expect significantly lower profits this year than they had anticipated. The company, which is under regulatory scrutiny for its Medicare billing practices, blamed higher costs and its limited success in negotiating more favorable prices with private health plans for care.
    Tenet also said it expected lower reimbursements from Medicare and state governments under Medicaid.
    "We are dealing with both industry issues and company-specific issues, most importantly past pricing practices that have placed the company in an especially difficult position," Trevor Fetter, the acting chief executive, said in a statement. Mr. Fetter took over last month from Jeffrey C. Barbakow, who stepped down under pressure from investors.
    Tenet said it expected what it called the current transitional period to last through the middle of next year. The company said earnings from continuing operations were likely to be around 40 to 50 cents a share for the second half of 2003, compared with Wall Street estimates of around 70 cents.
    Already battered, shares of Tenet tumbled as some Wall Street analysts reduced their recommendations. The stock closed at $12.01 yesterday, down $4.22, or 26 percent, its lowest point in more than three years. Last October, the shares traded for as much as $52.50.
    Tenet's announcement yesterday deepened skepticism among analysts over how quickly the company might be able to turn its fortunes around and just how profitable its business is. Tenet, based in Santa Barbara, Calif., is one of the nation's largest for-profit hospital chains, and executives had recently embarked on a comprehensive review of its operations hospital by hospital.
    In terms of the company's financial outlook, "It's kind of the worst fears realized," said Kemp Dolliver, an analyst at S. G. Cowen.
    Most troubling to analysts was the imbalance between Tenet's rising costs, as it pays more for labor, supplies and malpractice insurance, and its lackluster revenue growth. While Tenet experienced increases in the number of patients treated in recent months, the company had little power with insurers to significantly raise prices.
    "This is a company where costs are growing seven to eight times faster than revenues," said John W. Ransom, an analyst with Raymond James & Associates.
    Although the company has announced plans to cut its costs by about $350 million, Mr. Ransom estimated that Tenet would have to reduce its expenses even more significantly to return to being consistently profitable.
    Tenet plans to continue to identify opportunities to reduce expenses, a company spokesman said.
    Once a darling of Wall Street, Tenet fell out of favor after it became clear that much of its profitability in recent years stemmed from special payments from Medicare. By pursuing a policy of aggressively raising prices at some of its hospitals, Tenet enjoyed an unusual amount of these special payments. Although the company says it did nothing wrong, regulators are looking into these payments, and Tenet said it abandoned the practice.
    In addition to forgoing significant amounts of revenue from Medicare, Tenet's posture appears to have weakened its negotiating prowess with insurers, particularly in California, where the company's hospitals were very aggressive in raising prices, analysts said. In some cases, Tenet said it was forced to lower its prices to keep its contracts, although Mr. Fetter said the company would not enter agreements that were not profitable.
    While some analysts praised the company's openness in discussing its outlook, they were reluctant to predict that the worst was over. In addition to the concern over its Medicare billing, Tenet faces other regulatory investigations at some of its hospitals, and various lawsuits.
    "There are numerous issues still facing the company," including the need for a permanent chief executive, said John F. Hindelong, an analyst with Credit Suisse First Boston.
    What's more, industry pressures could put an additional squeeze on the company, Sheryl R. Skolnick, an analyst with Fulcrum Global Partners, said. The rest of the industry has been experiencing little in the way of growth in the number of patients treated, and Tenet could fall victim to the same trend, she said. Similarly, Tenet may provide an early glimpse into the difficulty other hospital companies will have in containing expenses like labor and supplies.
    Tenet also faces other challenges. To meet its obligation under its bank credit agreement, it must reduce its debt by $500 million by the end of the year. The company is selling a dozen hospitals and says it will use some of that money to reduce its debt.
    "They now just became a fire sale," Ms. Skolnick said.
    "It's going to be very, very tight for them," she said. "There's no room for them to take a misstep."