Tenet Healthcare Corp (NYSE:THC) announced Friday that it is laying off more than a thousand employees, or one percent of its total workforce. The layoffs are part of the company’s new $150.0-million cost-cutting initiative. Management expects the enterprise-wide initiative to lower the company’s annual operating expenses.
On Friday, Tenet Healthcare announced its preliminary financial results for the third quarter ended September 30, 2017. The company expects to report net operating revenues of almost $4.6 billion and a net loss from continuing operations of around $366.0 million, or $3.63 per diluted share.
The Dallas-based Tenet expects to report an adjusted net loss from continuing operations of about $17.0 million, or $0.17 per diluted share.
For the most part, though, the company’s press release focused on its new $150.0-million cost-cutting initiative. Tenet, one of the largest U.S. hospital operators, has a long-term debt of around $15.0 billion and has been implementing cost-cutting programs to help turn its business around.
The new cost-reduction initiative is mostly comprised of job cuts and the renegotiation of contracts with suppliers and vendors. The full annualized run-rate savings should be realized by the end of 2018.
Roughly 75% of the savings are expected to come from within the company’s “Hospital Operations” segment, including the elimination of its regional management layer and streamlining other corporate operations. Tenet also expects to realize savings from actions in its “Ambulatory Care” and “Conifer” business segments.
All of this comes at a cost; approximately 1,300 jobs, including contractor positions, will be eliminated permanently. The company expects to incur restructuring costs of $40.0 million in the fourth quarter. Virtually all of these costs are related to employee severance payments.
News of the company’s $150.0-million cost-cutting initiative comes one day after a report stating that the company scrapped a process to sell itself, following the departure of the company’s chief executive, Trevor Fetter, earlier this month.
“Tenet Releases Preliminary Results for the Third Quarter of 2017, Announces $150 Million Cost Reduction Initiative and Appoints New Independent Director,” Tenet Healthcare Corp, October 27, 2017.
“Hospital operator Tenet Healthcare scraps sale plans, sources tell Reuters,” CNBC, October 26, 2017.
“Tenet CEO Trevor Fetter Departs Company as Part of Previously Announced Leadership Transition,” Tenet Healthcare Corp, October 23, 2017.