Tenet Healthcare ( THC) managed to make a $286 million quarterly loss look reasonably good Thursday, but the stock took a hit on a soggy outlook.

The hospital operator, which continues to fight back from three years of trauma, earned 61 cents a share in the three months to Dec. 31, reflecting eight separate items that cut net income by a combined $197 million, or 42 cents a share. Excluding those and adding back an accounting change and stock-options expense, Tenet lost about 8 cents a share from continuing operations in the quarter, about 3 cents more than analysts predicted.

Tenet lost $2.19 billion, or $4.68 a share, in the year-ago quarter, reflecting a slew of writedowns and other items.

Sales fell 4.3% to $2.3 billion, missing the Thomson First Call consensus by about $70 million.

"Tenet achieved another strong quarter of improved pricing and tight cost control strengthening the foundation of our business as we enter 2006," the company said. "Despite this considerable progress on the pricing and cost fronts, our results for the fourth quarter and full-year 2005 were adversely impacted by continuing declines in patient volumes and stubbornly high levels of bad-debt expense. We believe our ability to successfully reverse this volume erosion is limited by the continuing overhang of government litigation and investigation issues. The resolution of these issues remains among our highest priorities."

Tenet said same-hospital admissions were 154,625 in the quarter, down 2.5% from a year ago. It said that roughly 31% of the decline is attributable to non-acute hospital units, including those skilled nursing and rehabilitation units that were closed before Dec. 31, 2004. Same-hospital commercial managed-care admissions declined by 4.7% during the quarter.

On a same-hospital basis, the provision for doubtful accounts fell 15.1% in the fourth quarter from a year ago, while total uncompensated care rose 14.8% to $521 million. Net inpatient revenue per admission rose 6.7% to $9,474.

Tenet said 2006 hospital revenue should be similar to the $9.6 billion it put up in 2005. It said it could break even or lose as much as $100 million before taxes on the year, while net cash flow from operating activity should be $300 million to $400 million.

"During 2005, Tenet experienced volume declines in both admissions and outpatient visits. In 2006, on a same-hospital basis (excludes six hospitals in the Gulf Coast that were impacted by Hurricane Katrina), the company has budgeted admission growth of approximately 1% and growth in outpatient visits of approximately 1/2%. If the company is able to achieve this budgeted volume growth in 2006, with the high degree of operating leverage inherent in the acute hospital industry, this should have a positive impact on Tenet's future results. Conversely, if the negative volume trends of 2005 continue, Tenet is unlikely to achieve its current objectives for operating performance in 2006."

Tenet fell 12 cents to $7.59.

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