The Dallas-based hospital chain continued to make some progress in the quarter, swinging to a profit from a year-ago loss, but the company still fell short of Wall Street targets. It also scaled back its outlook for the full year and dropped a key promise for 2009, when it had hoped to prove its comeback by generating $1 billion in earnings before interest, taxes, depreciation and amortization.
While Tenet continues to attract more patients to its hospitals, with admissions now rising for the fourth quarter in a row, fewer of those patients enjoy generous health insurance coverage in the tough economy.
Shares of Tenet sunk more than 25% in recent trading to $3.06.Other hospital stocks lost some ground as well. Community Health Systems (CYH - Get Report), the largest and strongest of the group, slipped 1% to $20.14. Universal Health Services (UHS - Get Report), a diversified hospital company with a strong presence in the behavioral health space, fell 2.3% to $43.18. Meanwhile, rural hospital operator LifePoint (LPNT - Get Report) tumbled 3.1% to $24. Tenet said third-quarter revenue came in at $2.14 billion, up 5.2% from a year ago but still shy of the $2.21 billion consensus estimate. Similarly, net income soared to $104 million -- a clear improvement over the $59 million loss posted last year -- but included hefty gains from investments and other one-time benefits. Without that help, the company would have posted an operating loss of $32 million instead.