Tenet Healthcare was able to pull off a $94 million profit in the first quarter despite the punishing financial blow COVID-19 dealt to health systems.
That was 89 cents per diluted share, up from a net loss of $20 million—or 19 cents a diluted share—in the first quarter of 2019. The company's revenue dipped slightly to $3.83 billion, down from $3.86 billion in the same quarter a year earlier.
Officials at the Dallas-based health system giant pointed to what was a strong operating performance through mid-March when hospitals began canceling revenue-generating procedures while scrambling to find adequate supplies to handle potential surges of COVID-19 patients.
That one-two punch suppressed otherwise solid financial results and lowered net income by an estimated $73 million, or 69 cents per diluted share.
In the wake of the COVID-19 pandemic—which has caused revenue generation from elective surgeries as well as outpatient and ER volume to drop—Tenet announced in early April it would withdraw the previously announced first-quarter and full-year financial outlook for 2020.
It also said it would furlough about 500 full-time corporate, non-patient-care employees and flex down its costs across the company as a result of the softening patient volumes.
“We acted swiftly to mitigate the impact of significant volume reductions in our hospitals and surgery centers, enhance our operational and financial flexibility and redirect resources to Page 2 critical operations," said CEO Ronald Rittenmeyer in a statement. "Simultaneously, we took actions to increase liquidity and defer capital spend and other costs that could be delayed without disrupting our mission."
He said the health system is continuing to operate Conifer and its Global Business Center in Manila in the Philippines while it works to get business back on track.
“We have now shifted our focus to a comprehensive recovery effort across our entire system in compliance with state and local orders," Rittenmeyer said. "We have begun to resume vital elective procedures and methodically re-open, with a detailed plan by physician, our USPI facilities and the hospital departments that were closed as a result of the pandemic."
The health system also listed the federal help it received from aid packages passed by Congress over the last two months.
The company received about $345 million of stimulus funds as a result of the CARES Act.
The company is also expecting an approximately $67 million benefit from the suspension of the 2% Medicare sequestration revenue reductions through the end of 2020, as well as a $60 million benefit from the suspension of the previously scheduled Medicaid disproportionate share revenue reductions mandated under the Affordable Care Act until December 2020.
The company also pointed to the deferral of the 6.2% social security payroll tax match and an increase in Medicare inpatient payment rates of 20% for treating COVID-19 patients as helpful in maintaining liquidity.