Tenet Lowering Bar on Asset Sales

Shove has grown more confident that Tenet can profitably operate the 69 core hospitals that will remain in its portfolio after the asset sales conclude. He also believes that Tenet's improved cash balance -- up $123 million to $466 million since the end of the year -- should "lay to rest concerns over Tenet's liquidity" and signal an escape from the looming cash crunch that even he once feared. Meanwhile, he seems less concerned about the "unquantifiable" liabilities from government probes that have bothered him so much in the past.

Young believes such confidence -- especially in Tenet's latest quarterly results -- could be misplaced, however.

"The numbers are down from what was a bad quarter in the industry last year," Young noted. "The operational numbers say performance is moving down, not improving ... [and] the situation will not get better in the slower quarters."

Looking ahead, Tenet still faces challenges beyond its operations. The company remains under investigation by multiple government agencies for, among other things, allegedly profiting from unnecessary surgeries and defrauding Medicare in the process.

Granted, Shove now estimates Tenet's total exposure at less than $1 billion -- and possibly even half that amount -- for its alleged misconduct. But Eddleman is far more cautious. He believes that Tenet could face close to $3 billion in lawsuit claims and government penalties.

Eddleman also doubts the company can shield itself from exposure to Redding Medical Center -- where many questionable heart procedures took place -- by treating the hospital as a subsidiary responsible for its own liabilities.

"Nice try, guys," he said. "But I don't think it will fly. ... With all of its legal problems and its level of liabilities, I don't know how this company is going to survive."

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