What's in Store for Tenet Healthcare's (THC) Q4 Earnings?

Tenet Healthcare Corporation THC will report fourth-quarter 2019 results on Feb 24, after market close.

The Zacks Consensus Estimate for earnings is pegged at $1.01, indicating a 98% upside from the year-ago reported figure. The consensus mark for revenues stands at $4.7 billion, suggesting a 2.9% rise from the prior-year reported number.

Let’s see how things are shaping up prior to this announcement:

The company’s to-be-reported quarter is likely to have witnessed growth in revenues, mainly driven by its increased contribution from its Hospital and Other Operations as well as Ambulatory segments. The Ambulatory segment has been delivering impressive results for the last few quarters on the back of surgical growth while the Hospital segment has been reflecting organic volume growth.

The Zacks Consensus Estimate for revenues from the Hospital and Other Operations and Ambulatory segments implies an upside of 4% each from the year-ago reported number.

However, contribution from Conifer might likely mirror a downfall in the upcoming quarterly results due to client attrition following certain divestitures. The consensus mark for the same hints at a decline of 8.1% from the year-earlier reported figure.

Moreover, the company’s performance might have been affected by hospital divestitures, causing lower number of general hospitals and admissions. The number of licensed beds would automatically reduce due to divestments. The Zacks Consensus Estimate for the same suggests a 4.1% dip from the year-ago reported figure.

Nevertheless, adjusted patient days are expected to have improved marginally in the quarter. The consensus mark for the same indicates 4.8% growth from the year-ago reported figure.

Further, the company’s USPI segment is likely to have witnessed better surgical and non-surgical volumes, retaining its momentum.

What the Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Tenet Healthcare this season. This is because a stock needs the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which is not the case here.

Earnings ESP: Tenet Healthcare has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.01. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: Tenet Healthcare sports a Zacks Rank of 1, which increases the predictive power of ESP. However, its 0.00% ESP makes surprise prediction difficult for the stock this time around.

Q3 Highlights and Surprise History

Tenet Healthcare’s third-quarter 2019 adjusted net income of 58 cents per share beat the Zacks Consensus Estimate by 107.1% on the back of volume growth and better revenues. Moreover, the bottom line shot up 100% year over year.

Its surprise history is impressive, beating estimates in all the trailing four quarters, the average being 81.7%. This is depicted in the chart below:

Tenet Healthcare Corporation Price and EPS Surprise

Tenet Healthcare Corporation price-eps-surprise | Tenet Healthcare Corporation Quote

Stocks to Consider

Some stocks worth considering from the medical sector with the perfect mix of elements to surpass estimates in the next releases are as follows:

Aduro Biotech, Inc. ADRO is set to report fourth-quarter earnings on Feb 26. The stock has a Zacks Rank of 1 and an Earnings ESP of +23.08%.

Adaptive Biotechnologies Corporation ADPT is slated to announce fourth-quarter earnings on Feb 26. The stock has an Earnings ESP of +9.68% and a Zacks Ranks #3.

Nevro Corp. NVRO is set to report fourth-quarter earnings on Feb 25. It has a Zacks Rank #2 and an Earnings ESP of +3.45%.

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