In Q1, Tenet Healthcare 'Hit a Wall' Created by COVID-19

The Dallas-based for-profit hospital operator's earnings report was released days after the Teamsters published an open letter to shareholders.

Despite a promising start to 2020, Tenet Healthcare "hit a wall" caused by the coronavirus disease 2019 (COVID-19) outbreak, according to CEO Ronald Rittenmeyer in the company's earnings report released Monday afternoon.

Tenet reported $94 million in net income during Q1 2020, an improvement compared to a $20 million loss in Q1 2019, but the impact of the global pandemic flattened the company's performance after mid-March. 

According to the earnings report, Tenet's net income from continuing operations declined by $73 million as a result of the outbreak. Similarly, Tenet posted an adjusted EBITDA of $585 million, down just over 6% year-over-year, thanks in large part to the impact of COVID-19.

C-suite perspective: 

"Our first quarter represents results that were trending above our expectations through early March and then, in a virtual snap of the finger, hit a wall created by the COVID-19 pandemic and the quick shutdown of elective surgeries and normal patient traffic," Rittenmeyer said in a statement. "Our team responded quickly, focused on the safety of our patients and staff while ensuring we were caring for the potential and actual surge of COVID patients. This included forward purchasing of PPE and other supplies and equipment regardless of price, implementation of staffing deployment plans tailored to the unique elements of various markets, and the establishment of clear clinical protocols and safety measures standardized across operations."

In early April, Tenet withdrew its full year guidance, citing uncertainties related to the spread of the coronavirus. As of May 1, Tenet was treating 771 patients infected with COVID-19 across its facilities.

Related: For 2019, Tenet Posts $243M Net Loss

The Dallas-based for-profit hospital operator's earnings report was released days after the International Brotherhood of Teamsters published an open letter to shareholders criticizing "lavish" pay packages for top executives.

Related: Teamsters Call Tenet Healthcare's Executive Pay 'Lavish' Amid Pandemic

Related: Tenet Healthcare CEO's Pay Rose $10 Million for Pre-pandemic 2019

The letter to investors came weeks after Tenet furloughed 10% of its workforce due to the loss of revenue associated with the temporary cancelation of elective surgeries.

Hospital surgeries at Tenet facilities in March dropped 21.1% year-over-year, according to the company's earnings report.

Related: Tenet Healthcare Furloughs 10% of Workforce, Citing Coronavirus Cutbacks

Fortunately for Tenet, for-profit hospital companies will benefit from a boost of financial liquidity thanks to an additional $75 billion in relief funding from the federal government, according to a Moody's Investors Service report released last month.

The Moody's report also highlighted the steps for-profit providers have already taken to enhance their strong liquidity, including Tenet's issuance of $700 million in new senior secured debt.

For complete financial information, review Tenet's filing with the Securities and Exchange Commission.