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Tenet Healthcare Corp.$22.87$1.426.62%

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 Tenet Reports Results for the Fourth Quarter and Year Ended December 31, 2018 and Issues Outlook for 2019
   Monday, February 25, 2019 4:15:00 PM ET
  • Tenet reported net income from continuing operations attributable to Tenet common shareholders of $108 million or $1.04 per diluted share in 2018. In the fourth quarter of 2018, Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $5 million or $0.05 per diluted share.
  • Adjusted diluted earnings per share from continuing operations was $1.86 in 2018, above the Company’s Outlook range of $1.44 to $1.83 and an increase of 130 percent over 2017. In the fourth quarter, Adjusted diluted earnings per share from continuing operations was $0.51.
  • Adjusted EBITDA was $2.560 billion in 2018, above the midpoint of the Company’s Outlook and an increase of 4.7 percent over 2017. Adjusted EBITDA in 2018 consisted of $1.411 billion in the Hospital Operations and other segment, $792 million in the Ambulatory Care segment and $357 million in the Conifer segment. In the fourth quarter of 2018, Adjusted EBITDA was $684 million. After normalizing for divestitures and other items, Adjusted EBITDA grew 9.0 percent in 2018 and 7.4 percent in the fourth quarter of 2018.
  • Hospital segment same-hospital net patient revenue grew 3.6 percent in 2018: revenue per adjusted admission increased 3.6 percent; adjusted admissions were essentially unchanged; and admissions decreased 1.7 percent. In the fourth quarter of 2018, same-hospital net patient revenue declined 1.3 percent and increased 4.6 percent after adjusting for California Provider Fee revenues in both periods. Revenue per adjusted admission declined 0.6 percent in the fourth quarter of 2018 and increased 5.4 percent after adjusting for California Provider Fee revenues. Adjusted admissions declined 0.8 percent in the fourth quarter of 2018 and admissions declined 2.7 percent.
  • Ambulatory Care segment same-facility system-wide revenue grew 5.1 percent in 2018, with cases up 3.4 percent and revenue per case up 1.6 percent. In the fourth quarter of 2018, same-facility system-wide revenue grew 3.8 percent, with cases up 0.9 percent and revenue per case up 2.8 percent.
  • Conifer segment revenues decreased 4.0 percent in 2018 and 5.6 percent in the fourth quarter of 2018 following divestitures by Tenet and other customers.
  • Outlook for 2019 includes net operating revenues of $18.0 billion to $18.4 billion, net income from continuing operations available to Tenet common shareholders of $15 million to $115 million, Adjusted EBITDA of $2.650 billion to $2.750 billion (an increase of 4 percent to 7 percent over 2018), diluted earnings per share from continuing operations of $0.14 to $1.08 and Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59 (an increase of 12 percent to 39 percent over 2018).


DALLAS--(BUSINESS WIRE)-- Tenet Healthcare Corporation (NYSE: THC) reported net income from continuing operations attributable to Tenet common shareholders of $108 million in 2018 compared to a $704 million net loss from continuing operations in 2017. In the fourth quarter of 2018, the Company reported a $5 million net loss from continuing operations attributable to Tenet common shareholders compared to a net loss of $230 million in the fourth quarter of 2017. Adjusted EBITDA was $2.560 billion in 2018, up 4.7 percent from $2.444 billion in 2017. In the fourth quarter, Adjusted EBITDA was $684 million compared to $840 million in the fourth quarter of 2017; timing differences associated with the California Provider Fee program impact year-over-year comparability in the fourth quarter but do not impact the comparability of full year results.

“We delivered strong results in the fourth quarter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS,” said Ronald A. Rittenmeyer, Executive Chairman and CEO. “2018 was a year of significant change for the company. We meaningfully improved our financial results, and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consistency in execution. We expect to make additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth.”

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were $3.843 billion in the fourth quarter of 2018, down 8.4 percent from the fourth quarter of 2017. The decline in revenue was primarily due to hospital divestitures, partially offset by same-hospital revenue growth. The Company’s hospitals in California also faced a difficult comparison in the fourth quarter due to the California Provider Fee program: in the fourth quarter of 2018, the Company recognized $64 million of net revenues from the California Provider Fee program compared to $267 million recognized in the fourth quarter of 2017 due to CMS’ approval of program in December of 2017, which resulted in the full year 2017 revenues all being recognized in the fourth quarter of 2017.

On a same-hospital basis, net patient revenues after implicit price concessions were $3.561 billion in the fourth quarter of 2018, down 1.3 percent from the fourth quarter of 2017. After excluding California Provider Fee revenues in both periods, net patient revenue after implicit price concessions increased 4.6 percent. Adjusted admissions declined 0.8 percent on a same-hospital basis in the fourth quarter of 2018. Revenue per adjusted admission decreased 0.6 percent on a same-hospital basis and increased 5.4 percent after excluding California Provider Fee revenues in both periods.

Adjusted EBITDA in Tenet’s hospital segment was $352 million in the fourth quarter of 2018, a decrease of $186 million or 34.6 percent compared to $538 million in the fourth quarter of 2017. The $186 million decline was primarily due to the $203 million decrease in California Provider Fee revenues discussed above, partially offset by other items. After normalizing for the California Provider Fee program as well as other items that are outlined in an accompanying slide presentation, Adjusted EBITDA in the hospital segment increased by $1 million, or 0.3 percent, in the fourth quarter of 2018; for additional details, please see the investor presentation dated February 25, 2019 that will be accessible through the Company’s website at www.tenethealth.com/investors .

Tenet’s health plan business recognized no revenue or Adjusted EBITDA in the fourth quarter of 2018 versus $10 million of revenue and no Adjusted EBITDA in the fourth quarter of 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the Hospital Operations and other segment increased 3.5 percent on a per adjusted admission basis in the fourth quarter of 2018 and increased 2.2 percent excluding a $44 million increase in malpractice expense in the hospital segment. Salaries, wages and benefits increased 2.3 percent and supply expense increased 1.0 percent per adjusted admission in the fourth quarter of 2018. Other operating expenses increased 7.9 percent per adjusted admission in the fourth quarter of 2018 and increased 2.7 percent per adjusted admission excluding the increase in malpractice expense.

Ambulatory Care Segment

The Ambulatory Care segment produced net operating revenues of $554 million in the fourth quarter of 2018, an increase of 1.7 percent compared to $545 million in the fourth quarter of 2017. In addition, the Ambulatory Care segment generated Adjusted EBITDA of $245 million in the fourth quarter of 2018, up 9.9 percent from $223 million in the fourth quarter of 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $151 million, up 4.1 percent from $145 million in the fourth quarter of 2017. After normalizing for the divestiture of Aspen, Adjusted EBITDA less facility-level noncontrolling interest expense increased 7.1 percent in the fourth quarter of 2018; Aspen was divested on August 17, 2018 and generated $4 million of EBITDA less facility-level noncontrolling interest in the fourth quarter of 2017.

The results of many of the facilities in which the Ambulatory Care segment has an investment are not consolidated by Tenet (of the 337 facilities at December 31, 2018, the results of 110 were accounted for under the equity method for unconsolidated affiliates). To help analyze the segment’s results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities. On a same-facility system-wide basis, revenue in the Ambulatory Care segment increased 3.8 percent in the fourth quarter of 2018, with cases increasing 0.9 percent and revenue per case increasing 2.8 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory segment, same-facility system-wide revenue grew 3.7 percent in the fourth quarter of 2018, with cases up 1.1 percent and revenue per case up 2.6 percent.

Conifer Segment

During the fourth quarter of 2018, Conifer’s revenue declined 5.6 percent to $372 million, primarily due to client attrition following divestitures by Tenet and other customers, down from $394 million in the fourth quarter of 2017. Revenue from third party customers declined 7.1 percent to $222 million in the fourth quarter of 2018.

Conifer generated $87 million of Adjusted EBITDA in the fourth quarter of 2018, up 10.1 percent from $79 million in the fourth quarter of 2017, with Adjusted EBITDA margins increasing 330 basis points to 23.4 percent.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $5 million, or $0.05 per diluted share, in the fourth quarter of 2018 compared to a net loss of $230 million, or $2.28 per diluted share, in the fourth quarter of 2017.

After adjusting for the items listed on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $53 million, or $0.51 per diluted share, in the fourth quarter of 2018, compared to Adjusted net income from continuing operations attributable to Tenet common shareholders of $143 million, or $1.40 per diluted share, in the fourth quarter of 2017.

A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations is contained in Table #2 at the end of this release.

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were $15.285 billion in 2018, down 6.0 percent from 2017. The decline in revenue was primarily due to hospital divestitures, partially offset by same-hospital revenue growth. Revenue from the California Provider Fee program did not impact year-over-year comparability with $262 million of revenue recognized in 2018 compared to $267 million recognized in 2017.

On a same-hospital basis, net patient revenues after implicit price concessions were $13.995 billion in 2018, up 3.6 percent from 2017. Adjusted admissions were essentially unchanged in 2018 on a same-hospital basis. Revenue per adjusted admission increased 3.6 percent on a same-hospital basis in 2018.

Adjusted EBITDA in Tenet’s hospital segment was $1.411 billion in 2018, a decrease of $51 million or 3.5 percent compared to $1.462 billion in 2017. The $51 million decline was primarily due to an $88 million decline related to divestitures, partially offset by other items. As a group, divested facilities generated Adjusted EBITDA of negative $37 million in 2018 compared to positive $51 million in 2017. After normalizing for divestitures as well as other items that are outlined in an accompanying slide presentation, Adjusted EBITDA in the hospital segment increased by $34 million, or 2.4 percent, in 2018; for additional details, please see the investor presentation dated February 25, 2019 that will be accessible through the Company’s website at www.tenethealth.com/investors .

Tenet’s health plan business recognized $14 million of revenue and $9 million of Adjusted EBITDA in 2018 versus $110 million of revenue and negative $41 million of Adjusted EBITDA in 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the Hospital Operations and other segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 3.1 percent on a per adjusted admission basis in 2018 and increased 2.4 percent excluding an $85 million increase in malpractice expense in the hospital segment. Salaries, wages and benefits increased 1.3 percent and supply expense increased 4.5 percent per adjusted admission in 2018. Other operating expenses increased 5.6 percent per adjusted admission and increased 3.1 percent excluding the increase in malpractice expense.

Ambulatory Care Segment

The Ambulatory Care segment produced net operating revenues of $2.085 billion in 2018, an increase of 7.5 percent compared to $1.940 billion in 2017. In addition, the Ambulatory Care segment generated Adjusted EBITDA of $792 million, up 13.3 percent from $699 million in 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $504 million, up 10.8 percent from $455 million in 2017. After normalizing for the divestiture of Aspen, Adjusted EBITDA less facility-level noncontrolling interest expense increased 12.7 percent in 2018; Aspen was divested on August 17, 2018 and generated $16 million and $22 million of EBITDA less facility-level noncontrolling interest in 2018 and 2017, respectively.

On a same-facility system-wide basis, revenue in the Ambulatory Care segment increased 5.1 percent in 2018, with cases increasing 3.4 percent and revenue per case increasing 1.6 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory Care segment, same-facility system-wide revenue grew 4.9 percent in 2018, with cases up 2.1 percent and revenue per case up 2.7 percent.

Conifer Segment

During 2018, Conifer’s revenue decreased 4.0 percent to $1.533 billion, primarily due to client attrition following divestitures by Tenet and other customers, down from $1.597 billion in 2017. Revenue from third party customers declined 3.7 percent to $943 million in 2018.

Conifer generated $357 million of Adjusted EBITDA in 2018, up 26.1 percent from $283 million in 2017, with Adjusted EBITDA margins increasing 560 basis points to 23.3 percent.

Net Income and Earnings Per Share

Tenet reported net income from continuing operations attributable to Tenet common shareholders of $108 million, or $1.04 per diluted share, in 2018 compared to a net loss of $704 million, or $7.00 per diluted share, in 2017.

After adjusting for the items listed on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $193 million, or $1.86 per diluted share, in 2018, compared to Adjusted net income from continuing operations attributable to Tenet common shareholders of $82 million, or $0.81 per diluted share, in 2017.

A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations is contained in Table #2 at the end of this release.

Cash and cash equivalents were $411 million at December 31, 2018 compared to $500 million at September 30, 2018. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2018. Accounts receivable days outstanding from continuing operations were 56.8 at December 31, 2018 compared to 56.3 at September 30, 2018 and 55.8 at December 31, 2017.

Net cash provided by operating activities was $1.049 billion in 2018, representing a $151 million decrease compared to $1.200 billion in 2017. After subtracting $617 million and $707 million of capital expenditures in 2018 and 2017, respectively, Free Cash Flow was $432 million in 2018, a decrease of $61 million compared to $493 million in 2017. Adjusted Free Cash Flow was $600 million in 2018, representing a $23 million decrease from $623 million in 2017.

Net cash used in investing activities was $115 million in 2018 compared to $21 million of net cash provided by investing activities in 2017. The 2018 period included $742 million of proceeds from the sales of facilities, long-term investments and other assets (note that Company received an additional $42 million in the first quarter of 2019 from the sale of three Chicago-area hospitals, which represents the completion of the previously announced divestiture program). The 2018 period also included $240 million of purchases of businesses, joint ventures and equity investments, primarily related to USPI’s acquisition program.

Net cash used in financing activities was $1.134 billion in 2018 compared to $1.326 billion in 2017. The 2018 period included $647 million in purchases of noncontrolling interests (including approximately $630 million in the second quarter of 2018 to increase Tenet’s ownership in USPI to 95 percent, up from 80 percent), $288 million of distributions paid to noncontrolling interests and $145 million of cash to retire $150 million of debt through open market purchases.

Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.

The Company’s Outlook for 2019 includes:

  • Revenue of $18.0 billion to $18.4 billion,
  • Net income from continuing operations available to Tenet common shareholders of $15 million to $115 million,
  • Adjusted EBITDA of $2.650 billion to $2.750 billion,
  • Net cash provided by operating activities of $1.070 billion to $1.375 billion,
  • Adjusted Free Cash Flow of $600 million to $800 million,
  • Diluted earnings per share from continuing operations of $0.14 to $1.08, and
  • Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59.

The Outlook for 2019 assumes equity in earnings of unconsolidated affiliates of $180 million to $190 million, depreciation and amortization expense of $805 million to $825 million, interest expense of $985 million to $995 million, net income available to noncontrolling interests of $425 million to $445 million and an average diluted share count of 106 million.

The Company’s Outlook for the first quarter of 2019 includes:

  • Revenue of $4.300 billion to $4.600 billion,
  • Net income available (loss attributable) from continuing operations to Tenet common shareholders ranging from a loss of $70 million to a loss of $25 million,
  • Adjusted EBITDA of $575 million to $625 million,
  • Diluted earnings (loss) per share from continuing operations ranging from a loss of $0.68 to a loss of $0.24, and
  • Adjusted diluted earnings per share from continuing operations ranging from $0.10 to $0.43.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of $30 million to $35 million, depreciation and amortization expense of $200 million to $205 million, interest expense of $250 million to $260 million, net income available to noncontrolling interests of $80 million to $90 million, and an average diluted share count of 104 million.

Additional details on Tenet’s Outlook for both the first quarter and calendar year 2019 are available in Tables #4, #5 and #6 at the end of this press release and in an accompanying slide presentation that will be accessible through the Company’s website at www.tenethealth.com/investors .

Tenet management will discuss the Company’s fourth quarter 2018 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 26, 2019. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors . A set of slides, which will be referred to on the conference call, will be available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-K report for the period ended December 31, 2018, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.

This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, Adjusted diluted earnings (loss) per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measures are contained in the tables at the end of this release.

Tenet Healthcare Corporation (NYSE: THC) is a national diversified healthcare services company headquartered in Dallas, TX, with 110,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 500 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care and imaging centers and other outpatient facilities. We also operate Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other customers. At the center of everything we do is a commitment to deliver the right care, in the right place, at the right time, and to continually improve and advance the healthcare delivery system in the markets we serve. For more information, please visit www.tenethealth.com .

The terms “THC”, “Tenet Healthcare Corporation”, “the company”, “we”, “us” or “our” refer to Tenet Healthcare Corporation or one or more of its subsidiaries or affiliates as applicable.

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2018, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to investors about the Company including the posting of important announcements regarding financial performance and corporate developments.

                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 
(Dollars in millions except per share amounts) Three Months Ended December 31,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,303
Less: Provision for doubtful accounts   325  
Net operating revenues $ 4,619 100.0 % 4,978 100.0 % (7.2 )%
Equity in earnings of unconsolidated affiliates 53 1.1 % 49 1.0 % 8.2 %
Operating expenses:
Salaries, wages and benefits 2,156 46.7 % 2,284 45.9 % (5.6 )%
Supplies 756 16.4 % 800 16.1 % (5.5 )%
Other operating expenses, net 1,078 23.3 % 1,104 22.1 % (2.4 )%
Electronic health record incentives (2 ) % (1 ) % 100.0 %
Depreciation and amortization 200 4.3 % 208 4.2 %
Impairment and restructuring charges, and acquisition-related costs 86 1.9 % 138 2.8 %
Litigation and investigation costs 10 0.2 % 11 0.2 %
Net gains on sales, consolidation and deconsolidation of facilities   (16 ) (0.4 )%   (2 ) %
Operating income 404 8.7 % 485 9.7 %
Interest expense (246 ) (253 )
Other non-operating expense, net (3 ) (8 )
Gain (loss) from early extinguishment of debt   3      
Income from continuing operations, before income taxes 158 224
Income tax expense   (56 )   (324 )
Income (loss) from continuing operations, before discontinued operations 102 (100 )
Discontinued operations:
Income from operations 1 1
Income tax benefit (expense)   (1 )    
Income (loss) from discontinued operations       1  
Net income (loss) 102 (99 )
Less: Net income available to noncontrolling interests   107     130  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (5 ) $ (229 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (5 ) $ (230 )
Income (loss) from discontinued operations, net of tax       1  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (5 ) $ (229 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.05 ) $ (2.28 )
Discontinued operations       0.01  
$ (0.05 ) $ (2.27 )
Diluted
Continuing operations $ (0.05 ) $ (2.28 )
Discontinued operations       0.01  
$ (0.05 ) $ (2.27 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,501 100,945
Diluted* 102,501 100,945
 
*   Had we generated income from continuing operations in the three months ended December 31, 2018 and 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,617 thousand and 908 thousand shares, respectively.
 
                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 
(Dollars in millions except per share amounts) Years Ended December 31,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 20,613
Less: Provision for doubtful accounts   1,434  
Net operating revenues $ 18,313 100.0 % 19,179 100.0 % (4.5 )%
Equity in earnings of unconsolidated affiliates 150 0.8 % 144 0.8 % 4.2 %
Operating expenses:
Salaries, wages and benefits 8,634 47.1 % 9,274 48.4 % (6.9 )%
Supplies 3,004 16.4 % 3,085 16.1 % (2.6 )%
Other operating expenses, net 4,259 23.3 % 4,570 23.8 % (6.8 )%
Electronic health record incentives (3 ) % (9 ) % (66.7 )%
Depreciation and amortization 802 4.4 % 870 4.5 %
Impairment and restructuring charges, and acquisition-related costs 209 1.1 % 541 2.8 %
Litigation and investigation costs 38 0.2 % 23 0.1 %
Net gains on sales, consolidation and deconsolidation of facilities   (127 ) (0.7 )%   (144 ) (0.7 )%
Operating income 1,647 9.0 % 1,113 5.8 %
Interest expense (1,004 ) (1,028 )
Other non-operating expense, net (5 ) (22 )
Gain (loss) from early extinguishment of debt   1     (164 )
Income (loss) from continuing operations, before income taxes 639 (101 )
Income tax expense   (176 )   (219 )
Income (loss) from continuing operations, before discontinued operations 463 (320 )
Discontinued operations:
Income (loss) from operations 4
Income tax benefit (expense)   (1 )    
Income (loss) from discontinued operations   3      
Net income (loss) 466 (320 )
Less: Net income available to noncontrolling interests   355     384  
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 111   $ (704 )
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax $ 108 $ (704 )
Income (loss) from discontinued operations, net of tax   3      
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 111   $ (704 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ 1.06 $ (7.00 )
Discontinued operations   0.03      
$ 1.09   $ (7.00 )
Diluted
Continuing operations $ 1.04 $ (7.00 )
Discontinued operations   0.03      
$ 1.07   $ (7.00 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,110 100,592
Diluted* 103,881 100,592
 
*   Had we generated income from continuing operations in the twelve months ended December 31, 2017, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 788 thousand shares.
 
       

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
 
December 31, December 31,
(Dollars in millions) 2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 411 $ 611
Accounts receivable, less allowance for doubtful accounts 2,595 2,616
Inventories of supplies, at cost 305 289
Income tax receivable 21 5
Assets held for sale 107 1,017
Other current assets 1,197   1,035  
Total current assets 4,636 5,573
Investments and other assets 1,456 1,543
Deferred income taxes 312 455
Property and equipment, at cost, less accumulated depreciation and amortization 6,993 7,030
Goodwill 7,281 7,018
Other intangible assets, at cost, less accumulated amortization 1,731   1,766  
Total assets $ 22,409   $ 23,385  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 182 $ 146
Accounts payable 1,207 1,175
Accrued compensation and benefits 838 848
Professional and general liability reserves 216 200
Accrued interest payable 240 256
Liabilities held for sale 43 480
Other current liabilities 1,131   1,227  
Total current liabilities 3,857 4,332
Long-term debt, net of current portion 14,644 14,791
Professional and general liability reserves 666 654
Defined benefit plan obligations 521 536
Deferred income taxes 36 36
Other long-term liabilities 578   631  
Total liabilities 20,302 20,980
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 1,420 1,866
Equity:
Shareholders’ equity:
Common stock 7 7
Additional paid-in capital 4,747 4,859
Accumulated other comprehensive loss (223 ) (204 )
Accumulated deficit (2,236 ) (2,390 )
Common stock in treasury, at cost (2,414 ) (2,419 )
Total shareholders’ deficit (119 ) (147 )
Noncontrolling interests 806   686  
Total equity 687   539  
Total liabilities and equity $ 22,409   $ 23,385  
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 
 
Years Ended
(Dollars in millions) December 31,
2018     2017
Net income (loss) $ 466 $ (320 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 802 870
Provision for doubtful accounts 1,434
Deferred income tax expense 150 200
Stock-based compensation expense 46 59
Impairment and restructuring charges, and acquisition-related costs 209 541
Litigation and investigation costs 38 23
Net gains on sales, consolidation and deconsolidation of facilities (127 ) (144 )
Loss (gain) from early extinguishment of debt (1 ) 164
Equity in earnings of unconsolidated affiliates, net of distributions received (12 ) (18 )
Amortization of debt discount and debt issuance costs 45 44
Pre-tax loss (income) from discontinued operations (4 )
Other items, net (21 ) (18 )
Changes in cash from operating assets and liabilities:
Accounts receivable (134 ) (1,448 )
Inventories and other current assets 17 (35 )
Income taxes (3 ) (38 )
Accounts payable, accrued expenses and other current liabilities (152 ) (10 )
Other long-term liabilities (102 ) 26
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (163 ) (125 )
Net cash used in operating activities from discontinued operations, excluding income taxes (5 ) (5 )
Net cash provided by operating activities 1,049 1,200
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (617 ) (707 )
Purchases of businesses or joint venture interests, net of cash acquired (113 ) (50 )
Proceeds from sales of facilities and other assets 543 827
Proceeds from sales of marketable securities, long-term investments and other assets 199 36
Purchases of equity investments (127 ) (68 )
Other long-term assets 15 (10 )
Other items, net (15 ) (7 )
Net cash provided by (used in) investing activities (115 ) 21
Cash flows from financing activities:
Repayments of borrowings under credit facility (950 ) (970 )
Proceeds from borrowings under credit facility 950 970
Repayments of other borrowings (312 ) (4,139 )
Proceeds from other borrowings 23 3,795
Debt issuance costs (62 )
Distributions paid to noncontrolling interests (288 ) (258 )
Proceeds from sale of noncontrolling interests 20 31
Purchases of noncontrolling interests (647 ) (729 )
Proceeds from exercise of stock options and employee stock purchase plan 16 7
Other items, net 54   29  
Net cash used in financing activities (1,134 ) (1,326 )
Net decrease in cash and cash equivalents (200 ) (105 )
Cash and cash equivalents at beginning of period 611   716  
Cash and cash equivalents at end of period $ 411   $ 611  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (976 ) $ (939 )
Income tax payments, net $ (25 ) $ (56 )
 
       

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended December 31, Years Ended December 31,
2018     2017     Change 2018     2017     Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 72 (4 ) * 68 72 (4 ) *
Total admissions 170,407 186,185 (8.5 )% 689,367 758,875 (9.2 )%
Adjusted patient admissions 308,113 332,642 (7.4 )% 1,241,241 1,354,266 (8.3 )%
Paying admissions (excludes charity and uninsured) 160,172 176,158 (9.1 )% 648,071 717,498 (9.7 )%
Charity and uninsured admissions 10,235 10,027 2.1 % 41,296 41,377 (0.2 )%
Admissions through emergency department 120,012 123,887 (3.1 )% 476,851 492,660 (3.2 )%
Paying admissions as a percentage of total admissions 94.0 % 94.6 % (0.6 )% * 94.0 % 94.5 % (0.5 )% *
Charity and uninsured admissions as a percentage of total admissions 6.0 % 5.4 % 0.6 % * 6.0 % 5.5 % 0.5 % *
Emergency department admissions as a percentage of total admissions 70.4 % 66.5 % 3.9 % * 69.2 % 64.9 % 4.3 % *
Surgeries — inpatient 45,897 50,292 (8.7 )% 185,020 205,114 (9.8 )%
Surgeries — outpatient 62,638 68,604 (8.7 )% 250,919 276,895 (9.4 )%
Total surgeries 108,535 118,896 (8.7 )% 435,939 482,009 (9.6 )%
Patient days — total 779,728 857,728 (9.1 )% 3,166,815 3,509,056 (9.8 )%
Adjusted patient days 1,383,372 1,505,130 (8.1 )% 5,608,653 6,163,961 (9.0 )%
Average length of stay (days) 4.58 4.61 (0.7 )% 4.59 4.62 (0.7 )%
Licensed beds (at end of period) 17,937 19,141 (6.3 )% 17,937 19,141 (6.3 )%
Average licensed beds 17,935 19,320 (7.2 )% 18,321 19,995 (8.4 )%
Utilization of licensed beds 47.3 % 48.3 % (1.0 )% * 47.4 % 48.1 % (0.7 )% *
Outpatient Visits
Total visits 1,734,523 1,901,864 (8.8 )% 7,049,201 7,791,125 (9.5 )%
Paying visits (excludes charity and uninsured) 1,617,970 1,777,790 (9.0 )% 6,584,502 7,277,514 (9.5 )%
Charity and uninsured visits 116,553 124,074 (6.1 )% 464,699 513,611 (9.5 )%
Emergency department visits 649,544 711,268 (8.7 )% 2,627,829 2,854,200 (7.9 )%
Paying visits as a percentage of total visits 93.3 % 93.5 % (0.2 )% * 93.4 % 93.4 % 0.0 % *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.5 % 0.2 % * 6.6 % 6.6 % 0.0 % *
Total emergency department admissions and visits 769,556 835,155 (7.9 )% 3,104,680 3,346,860 (7.2 )%
Revenues
Net patient revenues(3) $ 3,561 $ 3,860 (7.7 )% $ 14,081 $ 14,829 (5.0 )%
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(3) per adjusted patient

admission

$ 11,557 $ 11,604 (0.4 )% $ 11,344 $ 10,950 3.6 %
Net patient revenue(3) per adjusted patient day $ 2,574 $ 2,565 0.4 % $ 2,511 $ 2,406 4.4 %
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) $ 10,861 $ 10,492 3.5 % $ 10,701 $ 10,384 3.1 %
Net Patient Revenues(3) from:
Medicare 20.1 % 20.4 % (0.3 )% * 20.5 % 21.9 % (1.4 )% *
Medicaid 9.1 % 12.9 % (3.8 )% * 9.2 % 8.8 % 0.4 % *
Managed care 65.8 % 61.5 % 4.3 % * 65.4 % 64.6 % 0.8 % *
Self-pay 0.5 % 1.3 % (0.8 )% * 0.7 % 0.6 % 0.1 % *
Indemnity and other 4.5 % 3.9 % 0.6 % * 4.2 % 4.1 % 0.1 % *
 
(1)   Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
 
       

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended December 31, Years Ended December 31,
2018     2017     Change 2018     2017     Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 * 68 68 *
Total admissions 170,407 175,152 (2.7 )% 684,933 696,590 (1.7 )%
Adjusted patient admissions 308,113 310,485 (0.8 )% 1,232,150 1,232,200 %
Paying admissions (excludes charity and uninsured) 160,173 165,400 (3.2 )% 643,828 658,296 (2.2 )%
Charity and uninsured admissions 10,234 9,752 4.9 % 41,105 38,294 7.3 %
Admissions through emergency department 120,012 116,901 2.7 % 474,606 454,364 4.5 %
Paying admissions as a percentage of total admissions 94.0 % 94.4 % (0.4 )% * 94.0 % 94.5 % (0.5 )% *
Charity and uninsured admissions as a percentage of total admissions 6.0 % 5.6 % 0.4 % * 6.0 % 5.5 % 0.5 % *
Emergency department admissions as a percentage of total admissions 70.4 % 66.7 % 3.7 % * 69.3 % 65.2 % 4.1 % *
Surgeries — inpatient 45,897 47,350 (3.1 )% 183,520 188,853 (2.8 )%
Surgeries — outpatient 62,638 63,410 (1.2 )% 248,770 250,726 (0.8 )%
Total surgeries 108,535 110,760 (2.0 )% 432,290 439,579 (1.7 )%
Patient days — total 779,728 805,567 (3.2 )% 3,148,094 3,220,528 (2.2 )%
Adjusted patient days 1,383,372 1,402,038 (1.3 )% 5,569,440 5,605,146 (0.6 )%
Average length of stay (days) 4.58 4.60 (0.4 )% 4.60 4.62 (0.4 )%
Licensed beds (at end of period) 17,937 17,946 (0.1 )% 17,937 17,946 (0.1 )%
Average licensed beds 17,935 17,970 (0.2 )% 17,940 17,980 (0.2 )%
Utilization of licensed beds 47.3 % 48.7 % (1.4 )% * 48.1 % 49.1 % (1.0 )% *
Outpatient Visits
Total visits 1,734,523 1,771,336 (2.1 )% 6,999,028 7,064,412 (0.9 )%
Paying visits (excludes charity and uninsured) 1,617,974 1,653,582 (2.2 )% 6,537,366 6,605,226 (1.0 )%
Charity and uninsured visits 116,549 117,754 (1.0 )% 461,662 459,186 0.5 %
Emergency department visits 649,544 659,617 (1.5 )% 2,613,018 2,583,612 1.1 %
Paying visits as a percentage of total visits 93.3 % 93.4 % (0.1 )% * 93.4 % 93.5 % (0.1 )% *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.6 % 0.1 % * 6.6 % 6.5 % 0.1 % *
Total emergency department admissions and visits 769,556 776,518 (0.9 )% 3,087,624 3,037,976 1.6 %
Revenues
Net patient revenues(2) $ 3,561 $ 3,609 (1.3 )% $ 13,995 $ 13,514 3.6 %
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(2) per adjusted patient

admission

$ 11,557 $ 11,624 (0.6 )% $ 11,358 $ 10,967 3.6 %
Net patient revenue(2) per adjusted patient day $ 2,574 $ 2,574 % $ 2,513 $ 2,411 4.2 %
Net Patient Revenues(2) from:
Medicare 20.1 % 20.3 % (0.2 )% * 20.4 % 21.9 % (1.5 )% *
Medicaid 9.1 % 13.2 % (4.1 )% * 9.2 % 8.7 % 0.5 % *
Managed care 65.9 % 61.0 % 4.9 % * 65.4 % 64.4 % 1.0 % *
Self-pay 0.5 % 1.5 % (1.0 )% * 0.7 % 0.7 % % *
Indemnity and other 4.4 % 4.0 % 0.4 % * 4.3 % 4.3 % % *
 
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the twelve months ended December 31, 2018 and 2017, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
 
                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 

(Dollars in millions except per share amounts)

Three Months Ended Year Ended
3/31/2018 6/30/2018 9/30/2018 12/31/2018 12/31/2018
Net operating revenues $ 4,699 $ 4,506 $ 4,489 $ 4,619 $ 18,313
Equity in earnings of unconsolidated affiliates 25 39 33 53 150
Operating expenses:
Salaries, wages and benefits 2,227 2,135 2,116 2,156 8,634
Supplies 774 748 726 756 3,004
Other operating expenses, net 1,060 1,027 1,094 1,078 4,259
Electronic health record incentives (1 ) (2 ) (3 )
Depreciation and amortization 204 194 204 200 802

Impairment and restructuring charges, and acquisition-related costs

47 30 46 86 209
Litigation and investigation costs 6 13 9 10 38

Net losses (gains) on sales, consolidation and deconsolidation of facilities

(110 ) (8 ) 7   (16 ) (127 )
Operating income 517 406 320 404 1,647
Interest expense (255 ) (254 ) (249 ) (246 ) (1,004 )
Other non-operating expense, net (1 ) (1 ) (3 ) (5 )
Gain (loss) from early extinguishment of debt (1 ) (1 )   3   1  
Income from continuing operations, before income taxes 260 150 71 158 639
Income tax expense (70 ) (44 ) (6 ) (56 ) (176 )
Income from continuing operations, before discontinued operations 190 106 65 102 463
Discontinued operations:
Income from operations 1 2 1 4
Income tax benefit (expense)       (1 ) (1 )
Income from discontinued operations 1   2       3  
Net income 191 108 65 102 466

Less: Net income available to noncontrolling interests

92   82   74   107   355  

Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders

$ 99   $ 26   $ (9 ) $ (5 ) $ 111  

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Income (loss) from continuing operations, net of tax $ 98 $ 24 $ (9 ) $ (5 ) $ 108
Income from discontinued operations, net of tax 1   2       3  

Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders

$ 99   $ 26   $ (9 ) $ (5 ) $ 111  

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:

Basic
Continuing operations $ 0.97 $ 0.23 $ (0.09 ) $ (0.05 ) $ 1.06
Discontinued operations 0.01   0.02       0.03  
$ 0.98   $ 0.25   $ (0.09 ) $ (0.05 ) $ 1.09  
Diluted
Continuing operations $ 0.95 $ 0.23 $ (0.09 ) $ (0.05 ) $ 1.04
Discontinued operations 0.01   0.02       0.03  
$ 0.96   $ 0.25   $ (0.09 ) $ (0.05 ) $ 1.07  
Weighted average shares and dilutive securities outstanding in thousands):
Basic 101,392 102,147 102,402 102,501 102,110
Diluted 102,656 104,177 102,402 102,501 103,881
 
                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 

(Dollars in millions except per share amounts)

Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,196 $ 5,173 $ 4,941 $ 5,303 $ 20,613
Less: Provision for doubtful accounts 383   371   355   325   1,434  
Net operating revenues 4,813 4,802 4,586 4,978 19,179
Equity in earnings of unconsolidated affiliates 29 28 38 49 144
Operating expenses:
Salaries, wages and benefits 2,380 2,346 2,264 2,284 9,274
Supplies 765 780 740 800 3,085
Other operating expenses, net 1,187 1,159 1,120 1,104 4,570
Electronic health record incentives (1 ) (6 ) (1 ) (1 ) (9 )
Depreciation and amortization 221 222 219 208 870
Impairment and restructuring charges, and acquisition-related costs 33 41 329 138 541
Litigation and investigation costs 5 1 6 11 23
Net gains on sales, consolidation and deconsolidation of facilities (15 ) (23 ) (104 ) (2 ) (144 )
Operating income 267 310 51 485 1,113
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Loss from early extinguishment of debt   (26 ) (138 )   (164 )

Income (loss) from continuing operations, before income taxes

4 19 (348 ) 224 (101 )
Income tax benefit (expense) 33   12   60   (324 ) (219 )

Income (loss) from continuing operations, before discontinued operations

37 31 (288 ) (100 ) (320 )
Discontinued operations:
Income (loss) from operations (2 ) 2 (1 ) 1
Income tax benefit (expense) 1   (1 )      

Income (loss) from discontinued operations

(1 ) 1   (1 ) 1    
Net income (loss) 36 32 (289 ) (99 ) (320 )
Less: Net income available to noncontrolling interests 89   87   78   130   384  

Net loss attributable to Tenet Healthcare Corporation common shareholders

$ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Loss from continuing operations, net of tax $ (52 ) $ (56 ) $ (366 ) $ (230 ) (704 )

Income (loss) from discontinued operations, net of tax

(1 ) 1   (1 ) 1    

Net loss attributable to Tenet Healthcare Corporation common shareholders

$ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:

Basic
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 ) 0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 ) $ (2.27 ) $ (7.00 )
Diluted
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 ) 0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 ) $ (2.27 ) $ (7.00 )

Weighted average shares and dilutive securities outstanding (in thousands):

Basic 100,000 100,612 100,812 100,945 100,592
Diluted 100,000 100,612 100,812 100,945 100,592
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

       
 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended Year Ended
3/31/2018     6/30/2018     9/30/2018     12/31/2018 12/31/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 69 68 68 68 68
Total admissions 182,306 168,453 168,201 170,407 689,367
Adjusted patient admissions 320,868 306,063 306,197 308,113 1,241,241

Paying admissions (excludes charity and uninsured)

172,490 158,216 157,193 160,172 648,071
Charity and uninsured admissions 9,816 10,237 11,008 10,235 41,296
Admissions through emergency department 125,076 115,036 116,727 120,012 476,851
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 93.5 % 94.0 % 94.0 %

Charity and uninsured admissions as a percentage of total admissions

5.4 % 6.1 % 6.5 % 6.0 % 6.0 %

Emergency department admissions as a percentage of total admissions

68.6 % 68.3 % 69.4 % 70.4 % 69.2 %
Surgeries — inpatient 47,223 46,274 45,626 45,897 185,020
Surgeries — outpatient 63,008 63,805 61,468 62,638 250,919
Total surgeries 110,231 110,079 107,094 108,535 435,939
Patient days — total 858,648 766,519 761,920 779,728 3,166,815
Adjusted patient days 1,486,139 1,373,480 1,365,662 1,383,372 5,608,653
Average length of stay (days) 4.71 4.55 4.53 4.58 4.59
Licensed beds (at end of period) 18,457 18,314 18,302 17,937 17,937
Average licensed beds 18,685 18,362 18,302 17,935 18,321
Utilization of licensed beds 51.1 % 45.9 % 45.3 % 47.3 % 47.4 %
Outpatient Visits
Total visits 1,842,539 1,749,847 1,722,292 1,734,523 7,049,201
Paying visits (excludes charity and uninsured) 1,725,976 1,633,372 1,607,184 1,617,970 6,584,502
Charity and uninsured visits 116,563 116,475 115,108 116,553 464,699
Emergency department visits 697,001 643,036 638,248 649,544 2,627,829
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.3 % 93.3 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.7 % 6.7 % 6.6 %
Total emergency department admissions and visits 822,077 758,072 754,975 769,556 3,104,680
Revenues
Net patient revenues(3) $ 3,643 $ 3,443 $ 3,434 $ 3,561 $ 14,081
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day

Net patient revenue(3) per adjusted patient admission

$ 11,354 $ 11,249 $ 11,215 $ 11,557 $ 11,344
Net patient revenue(3) per adjusted patient day $ 2,451 $ 2,507 $ 2,515 $ 2,574 $ 2,511

Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2)

$ 10,561 $ 10,619 $ 10,771 $ 10,861 $ 10,701
Net Patient Revenues(3) from:
Medicare 21.5 % 20.4 % 19.8 % 20.1 % 20.5 %
Medicaid 8.8 % 9.1 % 9.8 % 9.1 % 9.2 %
Managed care 65.0 % 66.0 % 64.9 % 65.8 % 65.4 %
Self-pay 1.0 % 0.2 % 0.9 % 0.5 % 0.7 %
Indemnity and other 3.7 % 4.3 % 4.6 % 4.5 % 4.2 %
 
(1)   Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
 
       

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended Year Ended
3/31/2017     6/30/2017     9/30/2017     12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 76 76 73 72 72
Total admissions 196,907 190,394 185,389 186,185 758,875
Adjusted patient admissions 347,150 342,439 332,035 332,642 1,354,266

Paying admissions (excludes charity and uninsured)

186,648 179,889 174,803 176,158 717,498
Charity and uninsured admissions 10,259 10,505 10,586 10,027 41,377
Admissions through emergency department 126,473 121,807 120,493 123,887 492,660

Paying admissions as a percentage of total admissions

94.8 % 94.5 % 94.3 % 94.6 % 94.5 %

Charity and uninsured admissions as a percentage of total admissions

5.2 % 5.5 % 5.7 % 5.4 % 5.5 %

Emergency department admissions as a percentage of total admissions

64.2 % 64.0 % 65.0 % 66.5 % 64.9 %
Surgeries — inpatient 51,800 52,083 50,939 50,292 205,114
Surgeries — outpatient 69,604 71,366 67,321 68,604 276,895
Total surgeries 121,404 123,449 118,260 118,896 482,009
Patient days — total 923,339 874,930 853,059 857,728 3,509,056
Adjusted patient days 1,603,698 1,552,302 1,502,831 1,505,130 6,163,961
Average length of stay (days) 4.69 4.60 4.60 4.61 4.62
Licensed beds (at end of period) 20,439 20,435 19,433 19,141 19,141
Average licensed beds 20,440 20,435 19,783 19,320 19,995
Utilization of licensed beds 50.2 % 47.0 % 46.9 % 48.3 % 48.1 %
Outpatient Visits
Total visits 2,039,942 1,981,848 1,867,471 1,901,864 7,791,125
Paying visits (excludes charity and uninsured) 1,908,212 1,849,697 1,741,815 1,777,790 7,277,514
Charity and uninsured visits 131,730 132,151 125,656 124,074 513,611
Emergency department visits 733,051 724,785 685,096 711,268 2,854,200
Paying visits as a percentage of total visits 93.5 % 93.3 % 93.3 % 93.5 % 93.4 %

Charity and uninsured visits as a percentage of total visits

6.5 % 6.7 % 6.7 % 6.5 % 6.6 %

Total emergency department admissions and visits

859,524 846,592 805,589 835,155 3,346,860
Revenues
Net patient revenues(3) $ 3,728 $ 3,719 $ 3,522 $ 3,860 $ 14,829

Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day

Net patient revenue(3) per adjusted patient admission

$ 10,739 $ 10,860 $ 10,607 $ 11,604 $ 10,950

Net patient revenue(3) per adjusted patient day

$ 2,325 $ 2,396 $ 2,344 $ 2,565 $ 2,406

Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2)

$ 10,288 $ 10,394 $ 10,367 $ 10,492 $ 10,384
Net Patient Revenues(3) from:
Medicare 23.1 % 22.0 % 22.0 % 20.4 % 21.9 %
Medicaid 7.4 % 7.5 % 7.1 % 12.9 % 8.8 %
Managed care 65.2 % 65.9 % 66.1 % 61.5 % 64.6 %
Self-pay 0.3 % 0.5 % 0.3 % 1.3 % 0.6 %
Indemnity and other 4.0 % 4.1 % 4.5 % 3.9 % 4.1 %
 
(1)   Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
 
           

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended     Year Ended
3/31/2018     6/30/2018     9/30/2018 12/31/2018 12/31/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 68
Total admissions 178,189 168,135 168,202 170,407 684,933
Adjusted patient admissions 312,297 305,541 306,199 308,113 1,232,150
Paying admissions (excludes charity and uninsured) 168,554 157,904 157,197 160,173 643,828
Charity and uninsured admissions 9,635 10,231 11,005 10,234 41,105
Admissions through emergency department 122,922 114,945 116,727 120,012 474,606
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 93.5 % 94.0 % 94.0 %
Charity and uninsured admissions as a percentage of total admissions 5.4 % 6.1 % 6.5 % 6.0 % 6.0 %
Emergency department admissions as a percentage of total admissions 69.0 % 68.4 % 69.4 % 70.4 % 69.3 %
Surgeries — inpatient 45,940 46,057 45,626 45,897 183,520
Surgeries — outpatient 61,049 63,615 61,468 62,638 248,770
Total surgeries 106,989 109,672 107,094 108,535 432,290
Patient days — total 840,786 765,659 761,921 779,728 3,148,094
Adjusted patient days 1,448,356 1,372,048 1,365,664 1,383,372 5,569,440
Average length of stay (days) 4.72 4.55 4.53 4.58 4.60
Licensed beds (at end of period) 17,946 17,946 17,934 17,937 17,937
Average licensed beds 17,946 17,946 17,934 17,935 17,940
Utilization of licensed beds 52.1 % 46.9 % 46.2 % 47.3 % 48.1 %
Outpatient Visits
Total visits 1,793,901 1,748,312 1,722,292 1,734,523 6,999,028
Paying visits (excludes charity and uninsured) 1,680,249 1,631,963 1,607,180 1,617,974 6,537,366
Charity and uninsured visits 113,652 116,349 115,112 116,549 461,662
Emergency department visits 682,603 642,623 638,248 649,544 2,613,018
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.3 % 93.3 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.7 % 6.7 % 6.6 %
Total emergency department admissions and visits 805,525 757,568 754,975 769,556 3,087,624
Revenues
Net patient revenues(2) $ 3,570 $ 3,432 $ 3,432 $ 3,561 $ 13,995
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day

Net patient revenue(2) per adjusted patient admission

$ 11,431 $ 11,233 $ 11,208 $ 11,557 $ 11,358
Net patient revenue(2) per adjusted patient day $ 2,465 $ 2,501 $ 2,513 $ 2,574 $ 2,513
Net Patient Revenues(2) from:
Medicare 21.3 % 20.4 % 19.8 % 20.1 % 20.4 %
Medicaid 8.8 % 9.1 % 9.8 % 9.1 % 9.2 %
Managed care 64.9 % 66.1 % 64.9 % 65.9 % 65.4 %
Self-pay 1.3 % 0.1 % 0.9 % 0.5 % 0.7 %
Indemnity and other 3.7 % 4.3 % 4.6 % 4.4 % 4.3 %
 
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the twelve months ended December 31, 2018 and 2017, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
 
       

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)

Three Months Ended Year Ended
3/31/2017     6/30/2017     9/30/2017     12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 68
Total admissions 177,624 172,048 171,766 175,152 696,590
Adjusted patient admissions 310,137 306,278 305,300 310,485 1,232,200
Paying admissions (excludes charity and uninsured) 168,523 162,630 161,743 165,400 658,296
Charity and uninsured admissions 9,101 9,418 10,023 9,752 38,294
Admissions through emergency department 114,767 110,486 112,210 116,901 454,364
Paying admissions as a percentage of total admissions 94.9 % 94.5 % 94.2 % 94.4 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.1 % 5.5 % 5.8 % 5.6 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.6 % 64.2 % 65.3 % 66.7 % 65.2 %
Surgeries - inpatient 46,900 47,288 47,315 47,350 188,853
Surgeries - outpatient 62,112 63,642 61,562 63,410 250,726
Total surgeries 109,012 110,930 108,877 110,760 439,579
Patient days - total 833,761 792,160 789,040 805,567 3,220,528
Adjusted patient days 1,433,858 1,390,154 1,379,096 1,402,038 5,605,146
Average length of stay (days) 4.69 4.60 4.59 4.60 4.62
Licensed beds (at end of period) 17,964 17,980 18,006 17,946 17,946
Average licensed beds 17,964 17,980 18,007 17,970 17,980
Utilization of licensed beds 51.6 % 48.4 % 47.6 % 48.7 % 49.1 %
Outpatient Visits
Total visits 1,810,801 1,766,625 1,715,650 1,771,336 7,064,412
Paying visits (excludes charity and uninsured) 1,698,917 1,652,532 1,600,195 1,653,582 6,605,226
Charity and uninsured visits 111,884 114,093 115,455 117,754 459,186
Emergency department visits 650,777 645,803 627,415 659,617 2,583,612
Paying visits as a percentage of total visits 93.8 % 93.5 % 93.3 % 93.4 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.2 % 6.5 % 6.7 % 6.6 % 6.5 %
Total emergency department admissions and visits 765,544 756,289 739,625 776,518 3,037,976
Revenues
Net patient revenues(2) $ 3,343 $ 3,325 $ 3,237 $ 3,609 $ 13,514
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(2) per adjusted patient admission $ 10,780 $ 10,856 $ 10,603 $ 11,624 $ 10,967
Net patient revenue(2) per adjusted patient day $ 2,331 $ 2,392 $ 2,347 $ 2,574 $ 2,411
Net Patient Revenues(2) from:
Medicare 23.5 % 22.3 % 21.9 % 20.3 % 21.9 %
Medicaid 7.0 % 7.1 % 6.8 % 13.2 % 8.7 %
Managed care 65.0 % 65.8 % 66.1 % 61.0 % 64.4 %
Self-pay 0.3 % 0.6 % 0.3 % 1.5 % 0.7 %
Indemnity and other 4.2 % 4.2 % 4.9 % 4.0 % 4.3 %
 
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the twelve months ended December 31, 2018 and 2017, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
 
               

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 
 
(Dollars in millions) December 31, December 31,
2018 2017
Assets
Hospital Operations and other $ 15,684 $ 16,466
Ambulatory Care 5,711 5,822
Conifer 1,014   1,097  
Total $ 22,409   $ 23,385  
 
Three Months Ended Years Ended
December 31, December 31,
2018 2017 2018 2017
Capital expenditures:
Hospital Operations and other $ 184 $ 184 $ 527 $ 625
Ambulatory Care 22 23 68 60
Conifer 7   8   22   22  
Total $ 213   $ 215   $ 617   $ 707  
 
Net operating revenues:
Hospital Operations and other total prior to inter-segment eliminations(1) $ 3,843 $ 4,194 $ 15,285 $ 16,260
Ambulatory Care 554 545 2,085 1,940
Conifer
Tenet 150 155 590 618
Other clients 222   239   943   979  
Total Conifer revenues 372 394 1,533 1,597
Inter-segment eliminations (150 ) (155 ) (590 ) (618 )
Total $ 4,619   $ 4,978   $ 18,313   $ 19,179  
 
Equity in earnings of unconsolidated affiliates:
Hospital Operations and other $ 4 $ $ 10 $ 4
Ambulatory Care 49   49   140   140  
Total $ 53   $ 49   $ 150   $ 144  
 
Adjusted EBITDA:
Hospital Operations and other(2) $ 352 $ 538 $ 1,411 $ 1,462
Ambulatory Care 245 223 792 699
Conifer 87   79   357   283  
Total $ 684   $ 840   $ 2,560   $ 2,444  
 
Depreciation and amortization:
Hospital Operations and other $ 171 $ 176 $ 685 $ 736
Ambulatory Care 17 18 68 84
Conifer 12   14   49   50  
Total $ 200   $ 208   $ 802   $ 870  
 
(1)   Hospital Operations and other revenues includes health plan revenues of less than one million and $14 million for the three and twelve months ended December 31, 2018, respectively and $10 million and $110 million for the three and twelve months ended December 31, 2017, respectively.
(2) Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of less than one million and $9 million for the three and twelve months ended December 31, 2018, respectively and less than one million and $(41) million for the three and twelve months ended December 31, 2017, respectively.
 
               

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

 
 
(Dollars in millions) Three Months Ended December 31,
2018 2017
 

Ambulatory
Care as
Reported
Under
GAAP

Unconsolidated
Affiliates

Ambulatory
Care as
Reported
Under
GAAP

Unconsolidated
Affiliates

Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 556 $ 625
Less: Provision for doubtful accounts (11 ) (10 )
Net operating revenues(1) $ 554 $ 691 545 615
Equity in earnings of unconsolidated affiliates(2) 49 49
Operating expenses:
Salaries, wages and benefits 160 158 165 131
Supplies 114 178 113 157
Other operating expenses, net 84 129 93 104
Depreciation and amortization 17 19 18 16
Impairment and restructuring charges, and acquisition-related costs 8 1 4
Net gains on sales, consolidation and deconsolidation of facilities (7 )   (2 )  
Operating income 227 206 203 207
Interest expense (32 ) (6 ) (36 ) (5 )
Other non-operating income (expense), net 3     1   (1 )
Income from continuing operations, before income taxes 198 200 168 201
Income tax benefit (expense) (18 ) (3 ) 73   (3 )
Net income 180 $ 197   241 $ 198  
Less: Net income available to noncontrolling interests(3) 99   111  
Net income available to Tenet Healthcare Corporation common shareholders $ 81   $ 130  
Equity in earnings of unconsolidated affiliates $ 49 $ 49
 
(1)   On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 3.8% during the three months ended December 31, 2018, with cases increasing 0.9% and revenue per case increasing 2.8%.
(2) At December 31, 2018, 110 of the 337 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 227 facilities and account for these investments as consolidated subsidiaries
(3) During the three months ended December 31, 2017, the Company recorded $22 million of noncontrolling interests expense on a tax benefit of $109 million, as a result of the reduction in the corporate income tax rate from 35% to 21%.
 
               

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

 
 
(Dollars in millions) Years Ended December 31,
2018 2017
 

Ambulatory
Care as
Reported
Under
GAAP

Unconsolidated
Affiliates

Ambulatory
Care as
Reported
Under
GAAP

Unconsolidated
Affiliates

Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 1,978 $ 2,117
Less: Provision for doubtful accounts (38 ) (41 )
Net operating revenues(1) $ 2,085 $ 2,277 1,940 2,076
Equity in earnings of unconsolidated affiliates(2) 140 140
Operating expenses:
Salaries, wages and benefits 644 549 623 483
Supplies 430 595 398 540
Other operating expenses, net 359 462 360 394
Depreciation and amortization 68 70 84 65
Impairment and restructuring charges, and acquisition-related costs 28 1 74 1
Net gains on sales, consolidation and deconsolidation of facilities (8 )   (9 )  
Operating income 704 600 550 593
Interest expense (138 ) (23 ) (145 ) (22 )
Other non-operating income (expense), net 9   1   6   (1 )
Income from continuing operations, before income taxes 575 578 411 570
Income tax benefit (expense) (65 ) (9 ) 15   (9 )
Net Income 510 $ 569   426 $ 561  
Less: Net income available to noncontrolling interests(3) 308   304  
Net income available to Tenet Healthcare Corporation common shareholders $ 202   $ 122  
Equity in earnings of unconsolidated affiliates $ 140 $ 140
 
(1)   On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 5.1% during the twelve months ended December 31, 2018, with cases increasing 3.4% and revenue per case increasing 1.6%.
(2) At December 31, 2018, 110 of the 337 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 227 facilities and account for these investments as consolidated subsidiaries.
(3) During the twelve months ended December 31, 2017, the Company recorded $22 million of noncontrolling interests expense on a tax benefit of $109 million, as a result of the reduction in the corporate income tax rate from 35% to 21%.
 

Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested operations and closed businesses (i.e., the Company’s health plan businesses). Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.

Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) income (loss) from discontinued operations, (2) impairment and restructuring charges, and acquisition-related costs, (3) litigation and investigation costs, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) gain (loss) from early extinguishment of debt, (6) income (loss) from divested operations and closed businesses, and (7) the associated impact of these items on taxes and noncontrolling interests. Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP term, is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders divided by the weighted average primary or diluted shares outstanding in the reporting period.

Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment from continuing operations.

Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations. Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.

The Company believes the foregoing non-GAAP measures are useful to investors and analysts because they present additional information on the Company’s financial performance. Investors, analysts, Company management and the Company’s Board of Directors utilize these non-GAAP measures, in addition to GAAP measures, to track the Company’s financial and operating performance and compare the Company’s performance to its peer companies, which utilize similar non-GAAP measures in their presentations. The Human Resources Committee of the Company’s Board of Directors also uses certain of these measures to evaluate management’s performance for the purpose of determining incentive compensation. Additional information regarding the purpose and utility of specific non-GAAP measures used in this release is set forth below.

The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the estimated fair value of shares of the Company’s common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment. The Company does not use Adjusted EBITDA to measure liquidity, but instead to measure operating performance.

We use, and we believe investors and analysts use, Free Cash Flow and Adjusted Free Cash Flow as supplemental measures to analyze cash flows generated from our operations because we believe it is useful to investors in evaluating our ability to fund distributions paid to noncontrolling interests, acquisitions, purchasing equity interests in joint ventures or repaying debt.

These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in our financial statements, they do not provide a complete measure of our operating performance. For example, the Company’s definitions of Free Cash Flow and Adjusted Free Cash Flow do not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted EBITDA is set forth in Table #1 below for each quarter in 2017 and 2018. A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted net income available (loss attributable) from continuing operations attributable to Tenet Healthcare Corporation common shareholders is set forth in Table #2 below for each quarter in 2017 and 2018. A reconciliation of net cash provided by (used in) operating activities, the most comparable GAAP measure, to Free Cash Flow and Adjusted Free Cash Flow is set forth in Table #3 below for each quarter in 2017 and 2018.

   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2018

(Unaudited)

 
 
(Dollars in millions) 2018
1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     YTD
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 99 $ 26 $ (9 ) $ (5 ) $ 111
Less: Net income available to noncontrolling interests (92 ) (82 ) (74 ) (107 ) (355 )
Income from discontinued operations, net of tax 1   2       3  
Income from continuing operations 190 106 65 102 463
Income tax expense (70 ) (44 ) (6 ) (56 ) (176 )
Gain (loss) from early extinguishment of debt (1 ) (1 ) 3 1
Other non-operating expense, net (1 ) (1 ) (3 ) (5 )
Interest expense (255 ) (254 ) (249 ) (246 ) (1,004 )
Operating income 517 406 320 404 1,647
Litigation and investigation costs (6 ) (13 ) (9 ) (10 ) (38 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 110 8 (7 ) 16 127
Impairment and restructuring charges, and acquisition-related costs (47 ) (30 ) (46 ) (86 ) (209 )
Depreciation and amortization (204 ) (194 ) (204 ) (200 ) (802 )
Income (loss) from divested and closed businesses (1 ) 1   9     9  
Adjusted EBITDA $ 665   $ 634   $ 577   $ 684   $ 2,560  
 
Net operating revenues $ 4,699 $ 4,506 $ 4,489 $ 4,619 $ 18,313
Less: Net operating revenues from health plans 6     8     14  
Adjusted net operating revenues $ 4,693   $ 4,506   $ 4,481   $ 4,619   $ 18,299  
 
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues 2.1 % 0.6 % (0.2 )% (0.1 )% 0.6 %
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) 14.2 % 14.1 % 12.9 % 14.8 % 14.0 %
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2017

(Unaudited)

 
 
(Dollars in millions) 2017
1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Total
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Less: Net income available to noncontrolling interests (89 ) (87 ) (78 ) (130 ) (384 )
Income (loss) from discontinued operations, net of tax (1 ) 1   (1 ) 1    
Income (loss) from continuing operations 37 31 (288 ) (100 ) (320 )
Income tax benefit (expense) 33 12 60 (324 ) (219 )
Loss from early extinguishment of debt (26 ) (138 ) (164 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Operating income 267 310 51 485 1,113
Litigation and investigation costs (5 ) (1 ) (6 ) (11 ) (23 )
Net gains on sales, consolidation and deconsolidation of facilities 15 23 104 2 144
Impairment and restructuring charges, and acquisition-related costs (33 ) (41 ) (329 ) (138 ) (541 )
Depreciation and amortization (221 ) (222 ) (219 ) (208 ) (870 )
Loss from divested and closed businesses (16 ) (19 ) (6 )   (41 )
Adjusted EBITDA $ 527   $ 570   $ 507   $ 840   $ 2,444  
 
Net operating revenues $ 4,813 $ 4,802 $ 4,586 $ 4,978 $ 19,179
Less: Net operating revenues from health plans 65   25   10   10   110  
Adjusted net operating revenues $ 4,748   $ 4,777   $ 4,576   $ 4,968   $ 19,069  
 
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues (1.1 )% (1.1 )% (8.0 )% (4.6 )% (3.7 )%
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) 11.1 % 11.9 % 11.1 % 16.9 % 12.8 %
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliation of Net Income Available (Loss Attributable) to

Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2018

(Unaudited)

 
 
(Dollars in millions except per share amounts) 2018
1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     YTD
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 99 $ 26 $ (9 ) $ (5 ) $ 111
Net income from discontinued operations 1   $ 2       3  
Net income (loss) from continuing operations 98 24 (9 ) (5 ) 108

Less: Impairment and restructuring charges, and acquisition-related costs

(47 ) (30 ) (46 ) (86 ) (209 )
Litigation and investigation costs (6 ) (13 ) (9 ) (10 ) (38 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 110 8 (7 ) 16 127
Gain (loss) from early extinguishment of debt (1 ) (1 ) 3 1
Income (loss) from divested and closed businesses (1 ) 1 9 9
Tax impact of above items (16 ) 8   14   19   25  
Adjusted net income available from continuing operations to common shareholders $ 59   $ 51   $ 30   $ 53   $ 193  
 
Diluted earnings (loss) per share from continuing operations $ 0.95 $ 0.23 $ (0.09 ) $ (0.05 ) $ 1.04

Less: Impairment and restructuring charges, and acquisition-related costs

(0.46 ) (0.29 ) (0.44 ) (0.83 ) (2.01 )
Litigation and investigation costs (0.06 ) (0.12 ) (0.09 ) (0.10 ) (0.37 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 1.08 0.07 (0.07 ) 0.15 1.22
Gain (loss) from early extinguishment of debt (0.01 ) (0.01 ) 0.03 0.01
Income (loss) from divested and closed businesses (0.01 ) 0.01 0.09 0.09
Tax impact of above items (0.16 ) 0.08   0.13   0.18   0.24  
Adjusted diluted earnings per share from continuing operations $ 0.57   $ 0.49   $ 0.29   $ 0.51   $ 1.86  
 
Weighted average basic shares outstanding

(in thousands)

101,392 102,147 102,402 102,501 102,110
Weighted average dilutive shares outstanding

(in thousands)

102,656 104,177 104,575 104,118 103,881
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliation of Net Loss Attributable to

Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available (Loss Attributable) from Continuing Operations to Common Shareholders for 2017

(Unaudited)

 
 
(Dollars in millions except per share amounts) 2017
1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Total
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )

Net income (loss) from discontinued operations

(1 ) $ 1   (1 ) 1    
Net loss from continuing operations (52 ) (56 ) (366 ) (230 ) (704 )

Less: Impairment and restructuring charges, and acquisition-related costs

(33 ) (41 ) (329 ) (138 ) (541 )
Litigation and investigation costs (5 ) (1 ) (6 ) (11 ) (23 )
Net gains on sales, consolidation and deconsolidation of facilities 15 23 104 2 144
Loss from early extinguishment of debt (26 ) (138 ) (164 )
Loss from divested and closed businesses (16 ) (19 ) (6 ) (41 )
Tax impact of above items 14 25 26 49 114
Tax reform adjustment (252 ) (252 )
Noncontrolling interests impact of above items       (23 ) (23 )
Adjusted net income available (loss attributable) from continuing operations to common shareholders $ (27 ) $ (17 ) $ (17 ) $ 143   $ 82  
 
Diluted loss per share from continuing operation $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )

Less: Impairment and restructuring charges, and acquisition-related costs

(0.33 ) (0.41 ) (3.26 ) (1.35 ) (5.34 )
Litigation and investigation costs (0.05 ) (0.01 ) (0.06 ) (0.11 ) (0.23 )
Net gains on sales, consolidation and deconsolidation of facilities 0.15 0.23 1.03 0.02 1.42
Loss from early extinguishment of debt (0.26 ) (1.37 ) (1.62 )
Loss from divested and closed businesses (0.16 ) (0.19 ) (0.06 ) (0.40 )
Tax impact of above items 0.14 0.25 0.26 0.48 1.12
Tax reform adjustment (2.47 ) (2.49 )
Noncontrolling interests impact of above items       (0.23 ) (0.23 )

Adjusted diluted earnings (loss) per share from continuing operations

$ (0.27 ) $ (0.17 ) $ (0.17 ) $ 1.40   $ 0.81  
 
Weighted average basic shares outstanding

(in thousands)

100,000 100,612 100,812 100,945 100,592
Weighted average dilutive shares outstanding

(in thousands)

100,848 101,294 101,523 101,853 101,380
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 – Reconciliations of Net Cash Provided By Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations

(Unaudited)

 
 
(Dollars in millions) 2018
1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     YTD
Net cash provided by operating activities $ 113 $ 348 $ 338 $ 250 $ 1,049
Purchases of property and equipment   (143 )   (125 )   (136 )   (213 )   (617 )
Free cash flow $ (30 ) $ 223   $ 202   $ 37   $ 432  
 
Net cash provided by (used in) investing activities $ 373 $ (148 ) $ (105 ) $ (235 ) $ (115 )
Net cash used in financing activities $ (123 ) $ (771 ) $ (136 ) $ (104 ) $ (1,134 )
 
Net cash provided by operating activities $ 113 $ 348 $ 338 $ 250 $ 1,049

Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

(33 ) (30 ) (50 ) (50 ) (163 )

Net cash used in operating activities from discontinued operations

  (1 )   (2 )   (1 )   (1 )   (5 )
Adjusted net cash provided by operating activities from continuing operations 147 380 389 301 1,217
Purchases of property and equipment   (143 )   (125 )   (136 )   (213 )   (617 )
Adjusted free cash flow – continuing operations $ 4   $ 255   $ 253   $ 88   $ 600  
 
 
(Dollars in millions) 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
Net cash provided by operating activities $ 186 $ 215 $ 308 $ 491 $ 1,200
Purchases of property and equipment   (198 )   (150 )   (144 )   (215 )   (707 )
Free cash flow $ (12 ) $ 65   $ 164   $ 276   $ 493  
 
Net cash provided by (used in) investing activities $ (189 ) $ (119 ) $ 535 $ (206 ) $ 21
Net cash used in financing activities $ (141 ) $ (193 ) $ (889 ) $ (103 ) $ (1,326 )
 
Net cash provided by operating activities $ 186 $ 215 $ 308 $ 491 $ 1,200

Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

(24 ) (38 ) (26 ) (37 ) (125 )

Net cash provided by (used in) operating activities from discontinued operations

  2     (4 )   (1 )   (2 )   (5 )
Adjusted net cash provided by operating activities from continuing operations 208 257 335 530 1,330
Purchases of property and equipment   (198 )   (150 )   (144 )   (215 )   (707 )
Adjusted free cash flow – continuing operations $ 10   $ 107   $ 191   $ 315   $ 623  
 
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA

(Unaudited)

 
 
(Dollars in millions) Q1 2019 2019
Low     High Low     High
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ (75 ) $ (25 ) $ 10 $ 115
Less: Net income available to noncontrolling interests (80 ) (90 ) (425 ) (445 )
Net income (loss) from discontinued operations, net of tax (5 ) (5 )
Income tax expense (5 ) (20 ) (165 ) (185 )
Interest expense (260 ) (250 ) (995 ) (985 )
Loss from early extinguishment of debt(1) (50 ) (50 ) (50 ) (50 )
Other non-operating expense, net (5 ) (5 ) (10 ) (15 )

Net gains on sales, consolidation and deconsolidation of facilities(2)

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(1) (40 ) (30 ) (175 ) (125 )
Depreciation and amortization (200 ) (205 ) (805 ) (825 )
Income (loss) from divested and closed businesses (5 )   (10 ) (5 )
Adjusted EBITDA $ 575   $ 625   $ 2,650   $ 2,750  
 
Income (loss) from continuing operations $ (70 ) $ (25 ) $ 15 $ 115
Net operating revenues $ 4,300 $ 4,600 $ 18,000 $ 18,400
Income (loss) from continuing operations as a % of operating revenues (1.6 )% (0.5 )% 0.1 % 0.6 %
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) 13.4 % 13.6 % 14.7 % 14.9 %
 
(1)   The Company has provided an estimate of losses from the early extinguishment of debt and restructuring charges and related payments that it anticipates in 2019. The Company does not generally forecast impairment charges, acquisition-related costs, litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.
(2) The Company does not generally forecast net gains (losses) on sales, consolidation and deconsolidation of facilities because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.
 
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders

(Unaudited)

 
 
(Dollars in millions except per share amounts) Q1 2019 2019
Low     High Low     High

Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders

$ (75 ) $ (25 ) $ 10 $ 115

Net income (loss) from discontinued operations, net of tax

(5 )   (5 )  
Net income (loss) from continuing operations (70 ) (25 ) 15 115

Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements

(40 ) (30 ) (175 ) (125 )
Net gains on sales, consolidation and deconsolidation of facilities
Loss from early extinguishment of debt (50 ) (50 ) (50 ) (50 )
Income (loss) from divested and closed businesses (5 ) (10 ) (5 )
Tax impact of above items 15   10   30   20  
Adjusted net income available from continuing operations to common shareholders $ 10   $ 45   $ 220   $ 275  
 
Diluted earnings (loss) per share from continuing operations $ (0.68 ) $ (0.24 ) $ 0.14 $ 1.08

Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements

(0.38 ) (0.29 ) (1.65 ) (1.18 )

Net gains on sales, consolidation and deconsolidation of facilities

Loss from early extinguishment of debt (0.48 ) (0.48 ) (0.47 ) (0.47 )
Income (loss) from divested and closed businesses (0.05 ) (0.09 ) (0.05 )
Tax impact of above items 0.14   0.10   0.27   0.19  
Adjusted diluted earnings per share from continuing operations $ 0.10   $ 0.43   $ 2.08   $ 2.59  
 
Weighted average basic shares outstanding (in thousands) 103,000 103,000 104,000 104,000
Weighted average dilutive shares outstanding (in thousands) 104,000 104,000 106,000 106,000
 
                 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #6 – Reconciliation of Outlook Net Cash Provided by Operating Activities to Outlook Adjusted Free Cash Flow from Continuing Operations

 
 
(Dollars in millions) 2019
Low High
Net cash provided by operating activities $ 1,070 $ 1,375

Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1)

(175 ) (125 )
Net cash used in operating activities from discontinued operations (5 )  
Adjusted net cash provided by operating activities – continuing operations 1,250 1,500
Purchases of property and equipment – continuing operations (650 ) (700 )
Adjusted free cash flow – continuing operations(2) $ 600   $ 800  
 
(1)   The Company has provided an estimate of payments that it anticipates in 2019 related to restructuring charges. The Company does not generally forecast payments related to acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook.
(2) The Company's definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, and (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interests, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interests.
 

Investor Contact
Brendan Strong
469-893-6992
investorrelations@tenethealth.com

Media Contact
Lesley Bogdanow
469-893-2640
mediarelations@tenethealth.com

Source: Tenet Healthcare Corporation



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