Tenet Healthcare’s second-quarter net operating revenue grew 7 percent compared to the same period last year, but company officials have revised yearly expectations due to a 3.5 percent drop in inpatient admissions.
Based on those less-than-expected inpatient volumes for the first half of 2013, Tenet’s new outlook range for 2013 adjusted EBITDA is $1.25 billion to $1.3 billion. The mid-point of this range would still represent a growth of 6 percent compared to the $1.203 billion reported in 2012.
“We grew both outpatient visits and emergency department volumes in the quarter, and we doubled revenues in our Conifer services business,” Tenet president and CEO Trevor Fetter said in a statement. “We are revising our outlook for 2013 adjusted EBITDA to growth of 4 to 8 percent reflecting softer-than-anticipated inpatient volumes.”
Inpatient volume is expected to fall between 2 and 4 percent, Fetter said in a conference call, compared to a projected growth rate of flat to 2 percent. He added that the decline in inpatient admissions is an industry-wide situation, one being felt by peer companies as well as Tenet. The inpatient drop is being off-set by the growth of outpatient visits and the $111 million year-over-year revenue increase at Conifer Health Services, Tenet’s business processing arm, said chief financial officer Dan Cancelmi. Strong growth in neurosurgery, orthopedic surgery, and trauma admissions also helped.
“We expect the second half of the year to not be as robust of a ramp-up as we projected,” Cancelmi said. “But we have tremendous opportunities ahead of us.”
As for the company’s acquisition of Vanguard Health, Fetter said the “approval process is going well.” The Federal Trade Commission waived a Hart-Scott-Rodino Act-mandated waiting period, allowing the companies to proceed from an anti-trust perspective. Fetter added that the acquisition may be completed as early as October.
Dallas-based Tenet is the second-largest for-profit hospital system in the United States. Last week, the largest for-profit system, Nashville-based HCA, announced a 4.2 percent increase in total revenue for the second quarter.