Yesterday, Credit Suisse said without an industry recovery in volume or patient insurance, Tenet Healthcare (THC) might be required to file for Chapter 11 bankruptcy protection in three years. The company’s stock promptly dropped. The shares had been trading at $3.90 a few day ago, dropped ot $3.29. The shares were over $12 two years ago.
THC took exception to the report. This AM the company released a statement. "We believe we have the financial resources to execute our turnaround," said Biggs C. Porter, Tenet’s chief financial officer. Tenet had $675 million in cash at June 30, 2007 and had no outstanding borrowings on its line of credit which, under its terms, had $500 million in availability as of June 30, 2007. In addition, Tenet has no long-term debt maturing until December 2011.
While bad debt is rising and so is revenue from the uninsured, the company does expect adjusted EBITDA of $675 to $725 million this year.
Not great, but going bankrupt might be a little strong.
Shares opened up 4% at $3.48. The damage appears to have been done.
Douglas A. McIntyre