just keeps getting smaller.
The nation's No. 2 hospital chain rolled out its latest plan to bounce back from the Medicare billing scandal that nearly brought it to its knees more than a year ago. The company said Wednesday morning that it would sell 27 hospitals, including 19 in California, in another effort to slim down.
Tenet just recently completed a plan to sell 14 noncore hospitals in states such as Arkansas. But the latest move, which will trigger a $1.4 billion charge and leave the company in the red for 2003 and 2004, offers a stark departure from previous cutbacks in that it reduces Tenet's presence in its biggest market, California.
reported Tuesday that the company was
considering selling a quarter of its hospitals amid rising liquidity challenges.
Even without the big charge, Tenet's operating results won't look pretty. The company, hit hard by bad debts and weak pricing, now expects to simply break even -- before its many charges -- for 2004; analysts surveyed by Thomson First Call had forecast a profit of 50 cents for the year. Meanwhile, the company will also fall short of its fourth-quarter target of 11 cents a share. Tenet projects negative operating cash flow for both the fourth quarter and 2004, and now faces talking with lenders about its liquidity situation.
"Throughout our recent challenges, Tenet's bank group has been supportive of our efforts to turn the company around," CFO Stephen Farber said. "They understand the underlying value of our core hospitals, and we expect to work constructively with them in the coming months to address covenant compliance and any other concerns."
The company's stock -- already hit Tuesday on rumors of the coming asset sales -- plummeted 10% to $14.50 in premarket trading.