Wednesday, January 13, 2016
Shares of for-profit hospital operators fell sharply on Tuesday after Tenet Healthcare Corp said patient admissions to its facilities declined in the fourth quarter, surprising investors.
Tenet shares declined 7.6 percent to $23.86 in afternoon trading, its lowest level in three years, dragging down the stocks of rival HCA Holdings Inc and Community Health Systems Inc. HCA fell 2.8 percent to $65.94 and Community was off 5.7 percent at $21.60.
After HCA said on Friday it expects to report increased fourth-quarter admissions, investors in hospital stocks were caught off guard by Tenet's weaker projection, said Mizuho Securities analyst Sheryl Skolnick.
Tenet's in-patient admissions were soft in December and fell 1.8 percent for the fourth quarter, Chief Executive Trevor Fetter said in remarks at the J.P. Morgan Healthcare Conference in San Francisco.
Tenet also said outpatient visits to its facilities rose about 3 percent in the fourth quarter and confirmed its earlier forecast for full-year 2015 earnings before interest, tax, depreciation and amortization in a range of $2.25 billion to $2.3 billion.
Skolnick said Tenet's patient volumes were fine, given the mild flu season and fourth-quarter comparison to a strong year-ago figure, but the decline in in-patient admissions rattled investors anyway.
"The stocks trade on volume, and the volume was down, and that’s not good," Skolnick said.
Hospital investors have been worried about the potential for a slowdown in patient demand for healthcare services after a surge tied to increased numbers of Americans who obtained insurance through the Affordable Care Act.
reuters.com
