More Caution at Tenet (THC)

Tenet Healthcare Corporation (NYSE: THC) has never been able to get its stock up off the floor after all this time.  A research report from Zacks shows that nothing good may be changing soon as the research shop has downgraded Tenet’s shares down to Neutral from Outperform. Cited are continuous high operating expenses, rising bad debt, and the notion that Zacks anticipates a rise in collectibles in the coming quarters. Tenet’s high leverage is another factor. (FULL DETAILS HERE)

Tenet recently put EBITDA projection at $1.2 to $1.3 billion for 2012, substantially higher than 2011’s guidance. It has also been steadily expanding its operating capacity via acquisitions and it intends to acquire hospitals and other health care assets.

The downside is high operating expenses, company-specific challenges, decreased volumes, decreased demand for inpatient cardiac procedures, and high levels of bad debt. The high level of uncollectible accounts and rising bad debts impelled the company to increase its provision for doubtful debts substantially over the years and it anticipates high uncollectible debts in the future.

No good deed goes unpunished on Wall Street… At $5.13, Tenet’s 52-week range is $3.46 to $7.70 and its market cap is still about $2.2 billion.

JON C. OGG