Tenet’s Profit Drops 1.6% in Second Quarter

Tenet Healthcare Corp., the second-biggest U.S. hospital chain, said Thursday that its fiscal second-quarter profit fell 1.6%, in line with expectations, as it wrestled with bad debt and a money-losing acquisition.

The Santa Barbara-based company said earnings fell to $125 million, or 40 cents a share, in the quarter ended Nov. 30 from $127 million, or 41 cents, a year earlier, excluding a gain. Tenet was expected to earn 41 cents, the average estimate of analysts polled by First Call Corp.

Tenet shares fell $3.50, or 13%, to close at $23.50 on the New York Stock Exchange. It was its biggest one-day drop since August 1993.

Tenet’s level of bad debt has gone up with a rise in the number of claims for patients on Medicare that aren’t being reimbursed quickly, analysts said. In addition, Tenet’s acquisition of eight bankrupt Philadelphia-area hospitals, completed Nov. 10, hurt profit.

Tenet also said it expects its profit per share for fiscal 1999, ending in May, to range from being unchanged to rising 5% over the year-ago period, or $1.73 a share to $1.82. The company was expected to earn $1.82 in fiscal 1999.

Tenet said admissions at hospitals open more than one year rose about 1.3%. Revenue rose to $2.56 billion from $2.43 billion.