Why Tenet Healthcare Shares Dropped 14.4% Today

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What happened

After reporting second-quarter earnings and offering up guidance for 2017, shares of Tenet Healthcare (NYSE: THC) have fallen 14.6% as of 2:30 p.m. EDT on Tuesday.

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So what

Tenet Healthcare's year-over-year same-hospital patient revenue improved 0.4% as a 1.9% increase in revenue per adjusted admission was largely offset by a 1.4% drop in adjusted admissions. Tenet Healthcare also reported that bad-debt expense increased over the period as more uninsured patients sought out care.

Overall, the company's net revenue declined 1.4% in the quarter, to $4.8 billion, and its net loss expanded 19.6%, to 55 million, or $0.55 per share. On an adjusted basis, the net loss per share was $0.17. The company's top and bottom line was shy of what industry watchers were expecting.

In terms of uncompensated care expenses, those costs increased 13.6% year over year, to $1.375 billion.

Now what

The poor quarterly performance led management to adjust its full-year forecast lower. It now expects full-year revenue of between $19.1 billion to $19.4 billion and a net loss of between $90 million to $115 million. On an adjusted basis, the company is forecasting earnings per share (EPS) of between $0.69 to $0.99, a wide range that reflects a lot of uncertainty in the marketplace. Previously, Tenet was guiding for revenue of at least $19.7 billion and adjusted EPS of at least $1.05.

The lower expectations do little to add confidence to investors that Tenet Healthcare is turning a corner, and that's particularly a problem because decisions in Washington, D.C. could result in more people canceling their health insurance. Until Tenet Healthcare demonstrates that it's right-sized itself, and uncertainty surrounding health insurance markets is resolved, there are probably better investments to make.

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Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.