(Bloomberg) -- Tenet Healthcare Corp. reported earnings that beat analysts estimates as the hospital company saw increased revenue from higher admissions and fewer uninsured patients under Obamacare.
Tenets net income fell to $9 million after tax, or 9 cents a share, from $28 million, or 27 cents a share, in the third quarter a year earlier, the Dallas-based company said today in a statement. Earnings were hurt by a $95 million increase in pretax interest expense related to the financing of its 2013 acquisition of Vanguard Health Systems and share repurchases.
Revenue rose 6 percent to $4.18 billion compared with Tenet and Vanguard legacy hospitals from a year earlier. The hospital chain benefited from the Patient Protection and Affordable Care Act, spending less on charity care for uninsured patients in states that have expanded Medicaid, the joint state-federal health program for the poor. About a quarter of Tenets patient beds are in states that have expanded Medicaid.
The patient volumes have been terrific, this is our best quarter ever, Tenet Chief Executive Officer Trevor Fetter said in a telephone interview. People would say this is 2014, this is the year of the ACA, of course volume will be strong, but 60 percent of the growth has nothing to do with the ACA. Even excluding the act, this would have been an outstanding quarter.
Tenet, the third-largest publicly traded hospital chain, reported adjusted earnings before interest, taxes, depreciation and amortization of $459 million, topping the average of $441 million from 15 analysts estimates compiled by Bloomberg. Revenue also exceeded analyst estimates by about $179 million.
Community Health Systems Inc., the second largest publicly traded hospital chain, reported profits from continuing operations in the quarter increased to $61 million, or 53 cents a share, from $10 million, or 11 cents a share, a year earlier. This is the second quarter Community Health has reported earnings since its $7.4 billion acquisition of Health Management Associates Inc., which was completed in January. Community Healths earnings excluding one-time items beat by 24 cents cents the average of 23 analysts estimates compiled by Bloomberg.
We have realized incremental benefits of the Affordable Care Act with a decline in uninsured admissions and a favorable shift in payor mix in the third quarter, and we expect this trend to continue, Wayne Smith, chief executive officer of the Franklin, Tennessee-based hospital operator, said in a statement.
An additional 7 million people enrolled in Medicaid this year in the U.S. and 7.3 million more customers as of August had purchased private insurance plans through the insurance exchanges created by Obamacare.
Tenet reported a 3.9 percent increase in third-quarter same-hospital admissions from a year earlier and 4.9 percent growth in adjusted admissions. The company operates 80 hospitals and more than 200 outpatient centers.
From a geographic standpoint, we delivered increases in adjusted admissions in every one of the 14 states in which we operate acute care hospitals, Fetter said in the statement.
Community Health saw a 49 percent increase in total admissions from a year earlier with the addition of the HMA facilities. Excluding HMA, admissions decreased 3.9 percent.
Revenue increased 51 percent to $4.8 billion. Community Health set aside $75 million in the quarter as part of an agreement with the Justice Department to resolve an investigation into whether three of its New Mexico hospitals improperly submitted Medicaid claims.
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