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Tenet Healthcare Corp. Reports Operating Results (10-Q)

November 07, 2012 | About:
10qk

10qk

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Tenet Healthcare Corp. (THC) filed Quarterly Report for the period ended 2012-09-30.

Tenet Healthcare Corp has a market cap of $2.43 billion; its shares were traded at around $24.95 with a P/E ratio of 15.8 and P/S ratio of 0.3. Tenet Healthcare Corp had an annual average earning growth of 12.2% over the past 5 years.

Highlight of Business Operations:

The amount of our managed care net patient revenues during the nine months ended September 30, 2012 and 2011 was $4.0 billion and $3.8 billion, respectively. Approximately 62% of our managed care net patient revenues for the nine months ended September 30, 2012 was derived from our top ten managed care payers. National payers generate approximately 45% of our total net managed care revenues. The remainder comes from regional or local payers. At September 30, 2012 and December 31, 2011, approximately 53% and 56%, respectively, of our net accounts receivable related to continuing operations were due from managed care payers.

Our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our self-pay patients for the three months ended September 30, 2012 and 2011 were approximately $109 million and $103 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $331 million and $291 million, respectively. We also provide charity care to patients who are financially unable to pay for the health care services they receive. Most patients who qualify for charity care are charged a per-diem amount for services received, subject to a cap. Except for the per-diem amounts, our policy is not to pursue collection of amounts determined to qualify as charity care; therefore, we do not report these amounts in net operating revenues. Most states include an estimate of the cost of charity care in the determination of a hospitals eligibility for Medicaid DSH payments. Revenues attributable to DSH payments and other state-funded subsidy payments for the three months ended September 30, 2012 and 2011 were approximately $56 million and $40 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $210 million and $196 million, respectively. These payments are intended to mitigate our cost of uncompensated care, as well as reduced Medicaid funding levels. Our estimated costs (based on the selected operating expenses described above) of caring for charity care patients for the three months ended September 30, 2012 and 2011 were approximately $41 million and $31 million, respectively, and for the nine months ended September 30, 2012 and 2011 were approximately $105 million and $90 million, respectively. Our method of measuring the estimated costs uses adjusted self-pay/charity patient days multiplied by selected operating expenses per adjusted patient day. The adjusted self-pay/charity patient days represents actual self-pay/charity patient days adjusted to include self-pay/charity outpatient services by multiplying actual self-pay/charity patient days by the sum of gross self-pay/charity inpatient revenues and gross self-pay/charity outpatient revenues and dividing the results by gross self-pay/charity inpatient revenues.

Net operating revenues from our other operations were $129 million and $84 million in the three months ended September 30, 2012 and 2011, respectively, and $326 million and $219 million in the nine months ended September 30, 2012 and 2011, respectively. The increase in net operating revenues from other operations during 2012 primarily relates to our additional owned physician practices. Equity earnings for unconsolidated affiliates included in our net operating revenues from other operations were $3 million and $2 million for the three months ended September 30, 2012 and 2011, respectively, and $6 million and $5 million for the nine months ended September 30, 2012 and 2011, respectively.

(1) Net inpatient revenues and net outpatient revenues are components of net operating revenues. Net inpatient revenues include self-pay revenues of $70 million and $68 million for the three months ended September 30, 2012 and 2011, respectively, and $198 million and $199 million for the nine months ended September 30, 2012 and 2011, respectively. Net outpatient revenues include self-pay revenues of $94 million and $89 million for the three months ended September 30, 2012 and 2011, respectively, and $273 million and $251 million for the nine months ended September 30, 2012 and 2011, respectively.

Salaries, wages and benefits expense as a percentage of net operating revenues increased 0.4% for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011. Salaries, wages and benefits per adjusted patient admission increased 3.5% in the nine months ended September 30, 2012 compared to the same period in 2011. This increase is primarily due an increase in the number of physicians we employ, annual merit and contractual wage increases for our employees, an increase in employee headcount at our Conifer subsidiary, increased health benefits costs and increased workers compensation expense, partially offset by a decrease in overtime costs. Salaries, wages and benefits expense in the 2012 period included an unfavorable impact of approximately $1 million due to a 31 basis point decrease in the interest rate used to estimate the discounted present value of projected future workers compensation liabilities, compared to an unfavorable adjustment of approximately $4 million as a result of a 128 basis point decrease in the interest rate in the nine months ended September 30, 2011. Salaries, wages and benefits expense for the nine months ended September 30, 2012 and 2011 included stock-based compensation expense of $24 million and $17 million, respectively.

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