NEW YORK (TheStreet) -- Tenet Healthcare (THC - Get Report) was falling 9.7% to $43.65 on Tuesday after the company reported a net loss in the fourth quarter chiefly due to financing its acquisition of Vanguard Health Systems, a smaller chain of hospitals.
Tenet purchased Vanguard last fall for $1.8 billion in order to reach into new markets and to benefit from an increase in patients with health insurance under President Barack Obama's healthcare reform. The company announced its adjusted admissions, which include both inpatient and outpatient data, fell 0.5% in the fourth quarter, while inpatient admissions fell 2.3%.
The company report income from continuing operations of $43 million, or 43 cents a share, excluding items, down from $65 million, or 60 cents a share, in the same period one year earlier. Analysts expected a profit of 34 cents a share, according to Thomson Reuters I/B/E/S. The company reported a net loss of $24 million, or 24 cents a share, down year over year from a net income of $49 million, or 45 cents a share. Net operating revenue increased 67% to $3.89 billion. Adjusted EBITDA, excluding items, increased 32.1% year over year to $444 million from $336 million.
TheStreet Ratings team rates TENET HEALTHCARE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TENET HEALTHCARE CORP (THC) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share and revenue growth. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.1%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, TENET HEALTHCARE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 11.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.16% trails that of the industry average.
- You can view the full analysis from the report here: THC Ratings Report