Tenet reportedly won’t be sold as it posts $366M loss

One of the largest for-profit hospital operators in the U.S., Tenet Healthcare, has halted plans to sell itself after the early exit of CEO and chairman Trevor Fetter, Reuters reports.

According to two anonymous sources familiar with the matter, the company called off the sale process but is “still exploring a variety of options” to address its $15 billion in debt. Breaking up parts of the company appears to remain a possibility, such as divesting its ambulatory surgery business.

“We never really thought there would be a buyer for the whole company,” Mizuho analysts wrote.

Fetter had originally announced he would be leaving the company in March 2018, but he then abruptly exited on Oct. 23, with the official reason being interim CEO Ronald Rittenmeyer was ready to assume the responsibilities.

The shakeup at Tenet began with it posting a $56 million operating loss in the second quarter. Citing “irreconcilable differences,” two representatives of its largest shareholder, Glenview Capital Management, quit the Tenet board. Tenet responded by adopting a “shareholders’ right plan” to ward off any potential proxy fight.

It has also begun selling off assets, with Fetter saying before his departure sales of eight U.S. hospitals and its nine United Kingdom hospitals and clinics would yield $1 billion for the company. The U.S. divesture has included a $170 million deal to sell two Philadelphia facilities to Paladin Healthcare, unloading MacNeal Hospital in Berywn, Ill. and seeking a buyer for three more hospitals in the Chicago area.

In its preliminary third quarter earnings report, Tenet posted a net loss of $366 million, up from a $9 million loss in the same quarter of 2016. Hospital operations saw a decline in revenue based on a 2.6 percent decline in admissions.

Tenet also announced a $150 million cost reduction initiative which would involve eliminating 1,300 positions and renegotiating contracts with suppliers and vendors, with 75 percent of the expected savings coming from its hospital operations segment. The initiative will cost $40 million in the fourth quarter as Tenet pays out severance to the dismissed employees.

The company didn’t confirm the Reuters report in its earnings report.

“We have and we will continue to review, analyze and pursue all options to enhance shareholder value,” Rittenmeyer said in a press release.