is banking once more on a CFO from outside the health care industry to cure its financial woes.
Ending a six-month search, the ailing hospital chain has hired the controller of
to lead its finance department. Biggs Porter will formally assume the duties being performed by acting CFO Tim Pullen on June 5.
Porter currently serves as an acting CFO himself, having been tapped to run Raytheon's finance department after its permanent CFO was ousted in the midst of an accounting scandal earlier this year. Raytheon has gone through four finance chiefs in as many years, according to
The Boston Globe
Porter joined Raytheon after its alleged revenue recognition irregularities took place, however. Porter came to Raytheon from
-- the same utility that Tenet turned to for its last finance chief, a respected executive who returned to the utility within a matter of months.
CRT Capital analyst Sheryl Skolnick sure hopes this CFO lasts longer.
"It's good that they have a CFO," says Skolnick, who has no position in Tenet's stock. "I'm concerned that he's from outside the healthcare industry. ... But let's give the guy a chance, right?"
Skolnick always worries about companies without permanent CFOs. But she remains worried about Tenet, in particular, even though the company has now filled that crucial slot.
Skolnick downgraded Tenet's stock to sell when the Office of Inspector General recently threatened to exclude the company's Alvarado Hospital Medical Center from the Medicare program -- essentially forcing its sale -- after two criminal court cases against the hospital end in mistrials. Given the government's tough stance in that case, Skolnick now fears that Tenet will face a long battle to settle its other issues or will pay dearly to do so.
"The DOJ is holding the gun, and the OIG has the bullets," she says. "That's dangerous."
In the meantime, however, investors expressed some relief about Tenet's ability to finally land a permanent CFO. The company's stock rose 1.8% to $7.73 on Thursday following the announcement.
Still, other experts share Skolnick's concerns.
Notably, Cowen analyst Kemp Dolliver has taken the equivalent of a short position in Tenet's stock because he expects it to fall. In his latest report, published just last week, Dolliver refers to Tenet as "two-time losers" that could face tough negotiations with the government -- and steep fines in the end -- as a result.
"A significant factor shaping our view is Tenet's status as the only company to run afoul of the False Claims Act TWICE on a large scale," Dolliver writes. "We think the government's hardball posture indicates that a settlement likely will cost more than some of our bullish competitors expect."
Dolliver estimates that Tenet will wind up paying a $900 million fine because, in essence, that is all the company can afford. And after that, he feels, the company will have little resources left for a turnaround.
Thus, "we remain uninterested in Tenet Healthcare's stock," Dolliver concludes. And "we would use strength related to progress on the legal front to reduce positions."