THC
Tenet Healthcare Corporation
Healthcare
11/11/2013
Presented
| Date | 11/06/2013 |
| Price | $44.00 |
| Market Cap | $4.37B |
| Ent Value | $10.28B |
| P/E Ratio | 400.84x |
| Book Value | $6.62 |
| Div Yield | N/A |
| Shares O/S | 99.23M |
| Ave Daily Vol | 1,570,000 |
| Short Int | 6.75% |
Current
| Price | $160.25 |
| Market Cap | $15.36B |
| Tenet Healthcare Corporation, an investor-owned health care services company, owns and operates acute care hospitals, ambulatory surgery centers, diagnostic imaging centers, urgent care centers, and related health care facilities in the United States. The company’s general hospitals offer acute care services, operating and recovery rooms, radiology services, respiratory therapy services, clinical laboratories, and pharmacies. It also provides intensive care, critical care and/or coronary care units, physical therapy; and orthopedic, oncology, and outpatient services; tertiary care services, such as open-heart surgery, neonatal intensive care, and neuroscience; quaternary care in areas, including heart, liver, kidney, and bone marrow transplants, as well as burn services; gamma-knife brain surgery; and cyberknife radiation therapy for tumors and lesions in the brain, lung, neck, and spine. In addition, the company offers operational management for patient access, health information management, revenue integrity, and patient financial services; customized patient communications solutions to optimize the relationship between providers and patients; and management services, such as clinical integration, financial risk management, and population health management. As of December 31, 2012, it operated 49 hospitals, including 3 academic medical centers, a children’s hospital, and a critical access hospital, with a total of 13,216 licensed beds, serving primarily urban and suburban communities in 10 states of the United States; a long-term acute care hospital; and 117 free-standing and provider-based outpatient centers in 11 states, including diagnostic imaging centers, ambulatory surgery centers, and urgent care centers. Tenet Healthcare Corporation was founded in 1967 and is headquartered in Dallas, Texas. |
Highlights
The presenter is bullish on the outlook for hospitals, and thinks the risk/ reward on Tenet (THC) at present levels is the most attractive among the peer group. The 10%+ sell off on November 5th (on “disappointing” 3Q earnings) and any further weakness should be viewed as an opportunity for investors to buy shares at a discount. Despite being below Street expectations, THC’s 3rd quarter EPS and EBITDA results were actually reasonably in line with buy side expectations, said the presenter. However, Vanguard’s EBITDA contribution of ~$400-$450 million is below the $490-$500 million range he and others were looking for, so that was a slight disappointment. Aside from earnings, THC ramped up its acquisition of doctors, and the potential ACA benefit hasn’t changed. With the potential to earn over $2 billion in EBITDA per-year in the not-too-distant future, the presenter sees 50%+ upside potential for the stock over the next two years.
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