Ailing chain looks to cut more costs

Nearly two months after announcing major layoffs, Dallas-based Tenet Healthcare says it is expanding its cost-saving initiative and will cut an additional $100 million by the end of 2018.

In addition to the now $250 million cost reduction effort, Tenet said it is exploring the sale of one of its profitable business segments, Conifer Health Solutions, a Frisco-based debt collection firm that had more than 15,000 people on staff at the end of last year.

With $15 billion in longterm debt logged as of June 30, the company said Tuesday that it is continuing to take “aggressive actions” to improve its financial performance, accelerate growth and eliminate unnecessary costs.

‘Open to all options’

“We remain open to all options that can enhance shareholder value,” said the interim chairman and chief executive, Ronald Rittenmeyer, who took over the organization in September.

Some analysts, in notes to investors, said the possible shedding of Conifer is not a total shock, given the company’s goal to cut costs and the new leadership’s aim to improve overall operations.

The sale of Conifer “makes a lot of sense” because it would help the company significantly de-lever and refocus on the businesses that make up nearly 90 percent of earnings, including hospital operations, said a note from Nephron Research.

Conifer is seen as one of the more profitable business segments for Tenet, but the company has indicated that profit gains may be slowing.

Series of blows

The Conifer announcement follows a series of blows over the past few years for the embattled hospital chain, including financial losses, legal payouts, the exit of its longtime CEO and job cuts.

The organization has also faced mounting pressure from shareholders. The largest such group, Glenview Capital Management, abruptly pulled two of its members off the national hospital operator’s board of directors in August citing “irreconcilable differences.”

Tenet share were up 1.97 percent Tuesday to close at $15.03. The company said adjusted earnings from continuing operations will range between $1.07 and $1.36 per share next year.

FactSet says analysts forecast, on average, earnings of $1.40 per share.

Tenet reported a quarterly loss of $367 million in October.