HOSPITAL CHAIN HURT IN TRADING TENET FALLS TO 1-YEAR LOW.
Byline: Evan Pondel Staff Writer
Shares of Tenet Healthcare Tenet Healthcare Corporation (THC) is an operating company that owns and operates 57 hospitals in the United States . It is based in Dallas, Texas. Its stock ticker symbol on the New York Stock Exchange is NYSE: THC. Corp. fell 26 percent Monday to a new 52-week low after the hospital operator significantly reduced its quarterly outlook for the rest of the year.
Tenet shares declined $4.22 to close at $12.01 on the New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Stock
Exchange. A year ago, shares traded at $74.75, but in July the company initiated a three-for-two stock split that initially brought shares down to the mid-$40 range.
The Santa Barbara-based company recently completed a budget review that revealed weak revenue trends and increasing cost pressures from past pricing practices.
Tenet is entrenched en·trench also in·trench
v. en·trenched, en·trench·ing, en·trench·es
1. To provide with a trench, especially for the purpose of fortifying or defending.
2. in a lawsuit brought by the U.S. Justice Department on allegations of Medicare fraud Medicare fraud Medifraud Medical practice Any unlawful act which results in the inappropriate billing of Medicare for services by a health care provider–eg, physicians, hospitals and affiliated providers. See Medicare. . The federal scrutiny followed reports that the company may have inflated charges to the Medicare program to bolster revenues.
``The sharks smell blood in the water,'' said Robert Mains The Reverend Robert Main (July 12 1808 – May 9 1878) was a British astronomer.
Born in Kent, he studied mathematics and graduated as sixth wrangler from Queens' College, Cambridge in 1834. , analyst with Advest Inc. in Saratoga Springs Saratoga Springs, resort and residential city (1990 pop. 25,001), Saratoga co., E N.Y.; inc. as a village 1826, as a city 1915. Skidmore College is the largest source of employment, but the city also has light manufacturing. , N.Y. ``Earnings are considerably worse than everyone expected.''
Tenet would not reveal an actual profit target for the second quarter, although the company did say diluted di·lute
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings from continued operations for the first two months of the period were 2 cents a share. Analysts previously expected earnings per share for the quarter of 34 cents, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. a poll conducted by Thomson Financial/First Call.
The company expects third- and fourth-quarter profits combined to total between 40 cents and 50 cents, compared with the combined 70 cents analysts had projected.
For the 12-month period beginning July 1, Tenet anticipates earnings in the range of 80 cents to $1, versus analysts' expectations of $1.40, according to First Call.
``Tenet is navigating through a very challenging transitional period,'' Trevor Fetter, president and acting chief executive, said in a statement. ``The pricing practices pursued by the company's hospitals in recent years are making it difficult for many of our hospitals to obtain managed-care price increases at normal industry levels in 2003.''
Among the other ailments is Tenet's increase in salary and benefit costs as a nursing shortage has forced many hospitals to pay more for services. To exemplify ex·em·pli·fy
tr.v. ex·em·pli·fied, ex·em·pli·fy·ing, ex·em·pli·fies
a. To illustrate by example: exemplify an argument.
b. this increase, Tenet said the company decided last year to increase its 401(k) matching benefit for employees to 5 percent from 3 percent - adding $36 million of annual expense in 2003. The company also said union organizing efforts, particularly in California, continue to squeeze costs.
Mounting expenses have also been coupled with several management changes. Most significant was the recent resignation of Tenet Chairman and Chief Executive Officer Jeffrey Barbakow.
Given the company's current state, Andreas J. Dirnagl, analyst with Gerard Klauer Mattison & Co. in New York, said Tenet is finally coming clean with the public.
`'And despite all of the drama this company has been through, they are not an Enron. They have real assets Real assets
Identifiable assets, such as land and buildings, equipment, patents, and trademarks, as distinguished from a financial investment. , such as their hospitals,'' he said.
Tenet owns and operates 114 acute-care hospitals, including Encino Tarzana Regional Medical Center. ``And because of these hospitals, the company is in no danger of filing for bankruptcy,'' Dirnagl said.
Now under new management, the company is focusing its efforts on communicating with investors. Steven Campanini, a Tenet spokesman, said the company's announcement Monday was difficult, but necessary.
``The announcement was put out to provide a realistic and thorough look as to where the company stands,'' Campanini said.
Some analyst were irked by the company's decision not to host a conference call with the investment community about the earning's estimates. But Campanini said the company thought a statement was far more appropriate because it carefully articulated several details.