The Dallas-based for-profit hospital operator has received approximately $1.5 billion in Medicare advance payments from CMS.
Tenet Healthcare CEO Ronald Rittenmeyer said the federal stimulus funding his organization received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act was "reasonable, but not complete relief" from the impact of the economic shutdowns during Q2 2020.
"While there is a greater negative financial impact associated with COVID-19 cases, we believe the CARES Act provided reasonable, but not complete relief from the impact of the shutdown and will help with the remaining cases with which we are now engaged," Rittenmeyer said in a statement. "Importantly, the results in June provide clarity that we can perform at or above our expectations once the pandemic is controlled."
Rittenmeyer's comments were released as Tenet unveiled its latest earnings report Monday afternoon, highlighted by $88 million in net income from continuing operations, up $64 million year-over-year, and an adjusted EBITDA of $732 million, an increase of $63 million compared to Q2 2019.
Tenet acknowledged that it has received approximately $1.5 billion in Medicare advance payments from the Centers for Medicare and Medicaid Services along with more than $850 million in grant aid from federal stimulus relief funds.
"The second quarter was a challenge by any measure. April, May and June represented three separate stories of how we operated, with April reflecting the uncertainty of the early days of the pandemic, shutdown of elective surgery, rapid decline of flow into ERs and associated areas while remaining fully open and staffed for a potential surge of hospitalizations," Ronald Rittenmeyer, CEO of Tenet, said in a statement. "In May, a staggered re-opening began with different rules, schedules and protocols dictated by each state. June represented our regaining the cadence of operating our business with greater insights, discipline, awareness, and data-driven decisions that drove much improved performance. Without a doubt, the financial support of the CARES Act provided an important bridge to minimize the financial crisis the pandemic created, allowing uninterrupted care for our patients and communities."
As of Monday afternoon, Tenet had $3.1 billion in available cash and no borrowings under its $1.9 billion line-of-credit facility.
The Dallas-based for-profit hospital operator stated that while it has seen elevated patient volumes in certain markets, the company expects these metrics will, "continue to be erratic until a vaccine is deployed."
Rittenmeyer's comments about the effect CARES Act funding had on the bottom line comes as federal lawmakers debate another large-scale stimulus package amid a surge of new COVID-19 cases across the country.
Fitch Ratings released a comment in late July that the CARES Act grants to hospitals and health systems will "partially offset" the business disruption caused by the COVID-19 pandemic during Q2 2020. Fitch noted that Tenet received $689 million in CARES Act grants.
In early July, Moody's Investors Service published a sector comment indicating that Texas Gov. Greg Abbott's decision to expand the suspension of elective surgeries due to a spike in COVID-19 cases was credit negative for for-profit hospitals, including Tenet.
During the quarter, Tenet recorded net operating revenues of just over $3 billion in its hospital segment, a decline of more than 19% year-over-year.
On a same-hospital basis, Tenet's net patient service revenues fell more than 20% compared to Q2 2019.
For complete financial information, review Tenet's filing with the Securities and Exchange Commission.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.
Photo credit: Milan, Italy - November 1, 2017: Tenet Healthcare logo on the website homepage. - Image / Photo credit: Casimiro PT / Shutterstock.com