NEW YORK (TheStreet) -- Shares of Tenet Healthcare (THC - Get Report) are down by 7.90% to $30.44 on Thursday morning, as healthcare and health insurance stocks get clobbered by UnitedHealth Group's (UNH) announcement that it is considering withdrawing from the Affordable Care Act's exchanges.
Tenet Healthcare is a Dallas-based healthcare services company operating regionally focused, integrated healthcare delivery networks in large urban and suburban markets.
UnitedHealth is expecting to see significant losses on its business through the Affordable Care Act's exchanges, the Wall Street Journal reports. As a result the company lowered its 2015 full year earnings results.
The company is expecting to report earnings of $6 per share for the year, down from its previous estimate between $6.25 and $6.35 per share.
The announcement by UnitedHealth, the largest health insurer in the U.S., will add to concerns about the sustainability of the law's signature market places, the Journal noted.
Separately, 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 revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- THC's revenue growth has slightly outpaced the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 118.09% to $482.00 million when compared to the same quarter last year. In addition, TENET HEALTHCARE CORP has also vastly surpassed the industry average cash flow growth rate of 11.26%.
- TENET HEALTHCARE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TENET HEALTHCARE CORP turned its bottom line around by earning $0.32 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $0.32).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 422.2% when compared to the same quarter one year ago, falling from $9.00 million to -$29.00 million.
- The debt-to-equity ratio is very high at 18.40 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: THC