(Reuters) -Tenet Healthcare Corp on Thursday beat Wall Street estimates for fourth-quarter results as growth in its outpatient service business put concerns around the hospital operator’s weak 2023 forecast at bay.
The Dallas-based company’s shares rose nearly 5%, after initially falling in volatile premarket trade.
The upbeat quarter was also helped by an early onset of the flu season which pushed up patient admissions.
Easing labor contract costs, along with a rise in cases of respiratory syncytial virus (RSV) and COVID-19 during the winter season have benefited hospital operators such as Tenet and larger rival HCA Healthcare Inc.
Tenet reduced its contract labor-related expenses by 23% in the fourth quarter compared with the third quarter, Chief Executive Saum Sutaria said, after the costs peaked in September last year.
HCA Healthcare also recently forecast lower-than-expected 2023 profit, but bet on improved staffing trends and lower labor costs to drive growth for the year.
“As expected, the 2023 forecast came in below consensus estimates, but we believe investors had already priced that in,” SVB Securities analyst Whit Mayo said.
Tenet is betting on growth in its ambulatory care unit, which deals with patients who are not bedridden and don’t require overnight hospitalization. It forecast a 2% to 3% increase in surgical cases volumes for the year.
The company expects to earn adjusted profit in the range of $4.68 to $5.85 per share in 2023, with the midpoint coming in below analysts’ estimates of $5.66, according to Refinitiv IBES data.
On an adjusted basis, Tenet reported a net income of $1.96 per share for the quarter ended Dec. 31, beating estimates of $1.23 per share.
The company posted net operating revenue of $4.99 billion, marginally above estimates of $4.94 billion.
(Reporting by Aditya Samal and Bhanvi Satija in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta)