Hospital operator Tenet Healthcare is the IBD Stock of the Day. THC stock is showing resilience vs. the downbound market, and ahead of its Feb. 7 earnings report.
The report arrives as the company grapples with rising Covid cases, costs and labor issues, and after it embarked on a multiyear transformation that has included plans to grow margins, cut costs and sell off some facilities while acquiring others.
Tenet Revises Business Portfolio
Shares of Tenet reversed out of early losses Monday. After falling as much as 3.9%, the stock climbed to a 3% advance, closing at 78.21 on in the stock market today. That hauled the stock back above support at its 50-day moving average, within a shallow, 10-week consolidation that has an 83.79 entry.
The stock's relative strength line is at highs not seen since 2015. Shares have rallied 50% over the past 12 months.
THC stock has an 83 Composite Rating. Its EPS Rating is 98.
The Dallas-based company runs 60 hospitals. Tenet also operates or has an interest in some 550 other health care facilities — including surgical and imaging centers. It is trying to become what management, in a conference this month, called "the uncontested leader" in outpatient surgery.
Last month, Tenet and its subsidiary, United Surgical Partners International, paid $1.1 billion to acquire SurgCenter Development. The deal included that company's ownership interest in 86 outpatient surgery centers and other services. THC stock jumped almost 6% when the deal was announced on Nov. 9.
Tenet in August said it sold off five hospitals in Florida. In April, it announced the sale of its urgent care platform. The company has also made changes to its executive team and board.
THC Stock Jumps After Earnings
THC stock rose to retake support at its 10-week moving average in October, after the company reported third-quarter results that beat expectations. Tenet at that time also raised its full-year outlook.
Those results came before the arrival of the omicron variant, and despite a surge in the coronavirus' delta variant. Management noted it was able to perform elective surgeries in its hospitals despite the spike. But some cancellations persisted, particularly in states with more restrictions.
"Even with Covid spikes in many of our markets, our approach has been very effective in navigating these impacts efficiently across our portfolio," Tenet's new CEO, Saum Sutaria, said in the company's earnings release.
He added that the company was boosting access to critical services and technology in its hospitals and expanding its surgery business.
Still, at a conference this month, he noted that amid the omicron surge, the company was working on approaches to recruit and retain staff.
"We have managed through that every quarter. We've adjusted our capacity, our staffing, our productivity, our length of stay," he said of Covid and labor costs. "We've had analytics that have underpinned that, that help our hospitals manage on a daily basis. And we will manage through this as well, and are managing through it at the same time."
