Technical Analysis on Tenet Healthcare and Universal Health: Affordable Care Act

LONDON, February 8, 2013 /PRNewswire/ --

Last year, the Supreme Court upheld President Obama's Affordable Care Act (ACA). The ACA will bring about sweeping changes to the healthcare industry. While healthcare companies are still assessing how the ACA will impact their businesses, for-profit hospitals such as Tenet Healthcare Corporation (NYSE: THC) and Universal Health Services Inc. (NYSE: UHS) could actually benefit from the healthcare reform. StockCall analysts have released the technical research on Tenet Healthcare and Universal Health. These reports are available now for free by signing up at http://www.stockcall.com/signup

Impact of ACA on Hospitals

For-profit hospitals stand to benefit from the ACA. No surprise that for-profit hospital stocks had rallied after the Supreme Court upheld the healthcare reform last year.

Of course, the biggest benefit for hospitals from ACA will be a substantial increase in the insured patient population. The ACA is likely to result in 32 million additional insured individuals by 2019. In a paper entitled "How Will Hospitals Be Affected by Health Care Reform? Timely Analysis of Immediate Health Policy Issues," Robert Berenson and Stephen Zuckerman of The Urban Institute estimated that the newly insured individuals will generate nearly $40 billion in revenue for hospitals.

Hospitals Still Uncertain

Although the ACA is likely to benefit for-profit hospitals, the industry is not yet certain how much of an impact ACA will have. In a conference call earlier this week, R. Milton Johnson, President and CFO of U.S. largest for-profit hospital chain HCA Holdings, said that it is too early to determine the impact of ACA since there are so many unknowns.

Consolidation

One of the major trends in the hospital industry in the recent past has been consolidation. Hospital companies have been consolidating in order to reduce costs, boost their market shares and improve profitability.

Back in 2012, Universal Health Services had announced the acquisition of Ascend Health Corporation for $500 million in cash. The acquisition would allow Universal Health Services to improve its industry-leading presence in the behavioral health care services sector. Sign up today and download the free report on Universal Health at http://www.StockCall.com/UHS020813.pdf

Alan B. Miller, CEO of Universal Health Services, said last year that the company expects the acquisition to be immediately accretive to earnings and provide organic growth and expansion opportunities.

Universal Health Services completed the acquisition of Ascend in October last year.

Tenet and Universal's Results Eyed

HCA Holdings, the largest for-profit hospital chain in the U.S., has already reported its quarterly results. The company reported net income of $314 million, or $0.68 per share for the fourth quarter, down from $1.9 billion, or $4.25 per share reported for the same period in the previous year.

Investors are now waiting for Tenet Healthcare and Universal Health Services to release their quarterly results. Tenet will release its quarterly results on February 26, while Universal Health reports on February 28. Register with us and have access to the free analysis on Tenet Healthcare at http://www.StockCall.com/THC020813.pdf

In the third quarter of 2012, Tenet Healthcare had reported adjusted EBITDA of $269 million, up 40% over the same period in the previous year. The company's net income for the third quarter of 2012 was $40 million, or $0.37 per share, compared to $6 million, or $0.05 per share, reported in the third quarter of 2011.

Universal Health had reported third quarter net income of $71.8 million, or $0.73 per share.  

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