DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE:THC) reported a net loss from continuing operations of $9 million in the third quarter of 2016, a $19 million improvement when compared to a $28 million net loss from continuing operations in the third quarter of 2015. Adjusted EBITDA was $570 million in the third quarter of 2016, an increase of $4 million, or 0.7 percent, compared to $566 million in the third quarter of 2015.
“Our focus on high-acuity service lines continues to drive growth in our hospitals and contributed to the 5.3% increase in same-hospital patient revenues this quarter. Adjusted EBITDA in our hospital segment increased by a similar amount after adjusting for acquisitions, divestitures and electronic health record incentives,” said Trevor Fetter, chairman and chief executive officer. “Conifer and USPI delivered another outstanding quarter, and our three business segments continue to work together to enhance our long-term growth.”
Hospital Operations and Other Segment
Net operating revenue in the Hospital Operations and other segment was $4.162 billion, down 0.4 percent from $4.179 billion in the third quarter of 2015 due to hospitals that have been divested since that time. On a same-hospital basis, patient revenue increased to $3.768 billion, up 5.3 percent from $3.577 billion in the third quarter of 2015. The increase was driven by a 1.4 percent increase in adjusted patient admissions and a 3.9 percent increase in net patient revenue per adjusted admission.
Adjusted EBITDA in Tenet’s hospital segment was $334 million, representing a decline of 12.8 percent as compared to $383 million in the third quarter of 2015. The decline was primarily driven by divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives, and was partially offset by acquisitions in 2015. In addition, Tenet’s health plan business lowered EBITDA in the segment by approximately $5 million.
Total hospital segment selected operating expenses, 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 the quarter. Approximately one-third of the increase was attributable to an increase in expense at Tenet’s health plans, which was substantially offset by an increase in health plan revenues as a result of additional covered lives in 2016.
Exchanges
Tenet’s same-hospital exchange admissions were 5,465 in the third quarter of 2016, up 16.9 percent from the third quarter of 2015. Same-hospital exchange outpatient visits were 51,015, up 32.0 percent from the third quarter of 2015.
Uncompensated Care
Tenet’s provision for doubtful accounts was $367 million in the third quarter of 2016, representing a ratio of 7.0 percent of revenues before bad debt, as compared to $371 million in the third quarter of 2015, or 7.3 percent of revenues before bad debt. Tenet’s uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, was $1.318 billion and $1.303 billion in the third quarters of 2016 and 2015, respectively, including $951 million and $932 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care represented 21.4 percent of revenue before bad debts, uninsured discounts and charity care write-offs in the third quarter of 2016, down from 21.7 percent in the third quarter of 2015. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.
Uninsured plus charity admissions increased by 985 admissions, or 10.5 percent on a same-hospital basis in the third quarter of 2016 compared to the third quarter of 2015. Uninsured plus charity outpatient visits decreased by 3,733 visits, or 2.8 percent, on a same-hospital basis.
Ambulatory Care Segment
During the third quarter of 2016, the Ambulatory segment produced net operating revenue of $448 million, representing an increase of 36.2 percent as compared to $329 million in the third quarter of 2015. In addition, the Ambulatory segment generated Adjusted EBITDA of $157 million, up 28.7 percent from $122 million in the third quarter of 2015
The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. 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 segment increased 9.7 percent, with cases increasing 4.0 percent and revenue per case increasing 5.5 percent.
Conifer Segment
During the third quarter of 2016, Conifer’s revenue increased 14.7 percent to $398 million, up from $347 million in the third quarter of 2015, and Conifer’s revenue from third party customers increased by 29.9 percent to $239 million. Conifer generated $79 million of Adjusted EBITDA in the third quarter of 2016, up 29.5 percent from $61 million in the third quarter of 2015. Conifer’s results for the third quarter of 2016 included $9 million of annual customer incentives. These incentives may be achieved again in future years, but will not recur at these levels in the fourth quarter of 2016.
Net Income and Earnings Per Share
Tenet reported a net loss from continuing operations of $9 million, or $0.09 per share, in the third quarter of 2016 compared to a net loss of $28 million, or $0.28 per share, in the third quarter of 2015.
After adjusting for certain items which are listed on Table #2, Tenet generated Adjusted net income from continuing operations of $16 million, or $0.16 per diluted share, during the third quarter of 2016, as compared to Adjusted net income from continuing operations of $30 million, or $0.29 per diluted share, in the third quarter of 2015.
A reconciliation of GAAP net income available (loss attributable) to Tenet Healthcare Corporation common shareholders to Adjusted net income from continuing operations and Adjusted diluted earnings per share from continuing operations is contained in Table #2 at the end of this release.
Cash Flow and Liquidity
Cash and cash equivalents were $649 million at September 30, 2016 compared to $656 million at June 30, 2016. The Company had no outstanding borrowings on its $1 billion credit line as of September 30, 2016. Accounts receivable days outstanding were 52.9 at September 30, 2016 compared to 51.1 at June 30, 2016 and 49.5 at December 31, 2015.
Net cash provided by operating activities in the nine months ended September 30, 2016 was $851 million, representing a $16 million improvement compared to $835 million in the comparable period in 2015. After subtracting $614 million and $566 million of capital expenditures in the nine months ended September 30, 2016 and September 30, 2015, respectively, Free Cash Flow was $237 million in the nine months ended September 30, 2016, representing a $32 million decline compared to $269 million in the comparable period in 2015. Adjusted Free Cash Flow was $368 million in the nine months ended September 30, 2016, representing a $76 million decline from $444 million in the comparable period in 2015.
Net cash used in investing activities was $150 million in the nine months ended September 30, 2016 compared to $1.272 billion of net cash used in investing activities in the comparable period in 2015. Net cash used in financing activities was $408 million in the nine months ended September 30, 2016 compared to $694 million of net cash provided by financing activities in the comparable period in 2015.
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.
Outlook
The Company’s Outlook for 2016 includes:
- Revenue of $19.650 billion to $19.800 billion,
- Net loss from continuing operations ranging from a loss of $99 million to a loss of $94 million,
- Adjusted EBITDA of $2.400 billion to $2.450 billion,
- Net cash provided by operating activities of $1.2 billion to $1.3 billion,
- Adjusted Free Cash Flow of $400 million to $600 million,
- Loss per share from continuing operations ranging from a loss of $1.00 to a loss of $0.95 per basic share, and
- Adjusted diluted earnings per share from continuing operations of $1.16 to $1.21.
The Outlook for calendar year 2016 assumes equity in earnings of unconsolidated affiliates of $120 million to $130 million, electronic health record incentives of $30 million to $35 million, net income attributable to noncontrolling interests of $340 million to $360 million (excluding an additional $19 million of noncontrolling interests recorded by USPI in the first nine months of 2016 related to gains on consolidation) and an average diluted share count of 101 million.
The Company’s Outlook for the fourth quarter of 2016 includes:
- Revenue of $4.9 billion to $5.0 billion,
- Net income from continuing operations of $9 million to $14 million,
- Adjusted EBITDA of $600 million to $650 million,
- Earnings per diluted share from continuing operations of $0.09 to $0.14, and
- Adjusted diluted earnings per share from continuing operations of $0.17 to $0.22.
The Outlook for the fourth quarter assumes equity in earnings of unconsolidated affiliates of approximately $40 million, electronic health record incentives of approximately $10 million, net income attributable to noncontrolling interests of $94 million to $114 million and an average diluted share count of 102 million.
Additional details on Tenet’s Outlook for both the fourth quarter and calendar year 2016 are available in Tables 4 and 5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.
Management’s Webcast Discussion of Third Quarter Results
Tenet management will discuss the Company’s third quarter 2016 results on a webcast scheduled for 10:00 a.m. EDT (9:00 a.m. CDT) on November 1, 2016. Investors can access the webcast through Tenet’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is 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-Q report for the three months ended September 30, 2016, which will be filed with the Securities and Exchange Commission and posted on the Tenet website before the webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income from continuing operations, Adjusted diluted earnings per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measure are contained in the tables at the end of this release.
Tenet Healthcare Corporation is a diversified healthcare services company with 130,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International, the Company operates 79 general acute care hospitals, 20 short-stay surgical hospitals and approximately 470 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet’s Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans. 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,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” 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, 2015, Form 10-Q for the quarterly period ended September 30, 2016 and other filings with the Securities and Exchange Commission. Among other things, these factors include adverse regulatory developments, government investigations or litigation.
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.
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TENET HEALTHCARE CORPORATION |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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| (Unaudited) | |||||||||||||||||
| (Dollars in millions except per share amounts) | Three Months Ended September 30, | ||||||||||||||||
| 2016 | % | 2015 | % | Change | |||||||||||||
| Net operating revenues: | |||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 5,216 | $ | 5,063 | 3.0 | % | |||||||||||
| Less: Provision for doubtful accounts | 367 | 371 | (1.1 | )% | |||||||||||||
| Net operating revenues | 4,849 | 100.0 | % | 4,692 | 100.0 | % | 3.3 | % | |||||||||
| Equity in earnings of unconsolidated affiliates | 31 | 0.6 | % | 28 | 0.6 | % | 10.7 | % | |||||||||
| Operating expenses: | |||||||||||||||||
| Salaries, wages and benefits | 2,314 | 47.7 | % | 2,258 | 48.2 | % | 2.5 | % | |||||||||
| Supplies | 767 | 15.8 | % | 752 | 16.0 | % | 2.0 | % | |||||||||
| Other operating expenses, net | 1,231 | 25.4 | % | 1,151 | 24.5 | % | 7.0 | % | |||||||||
| Electronic health record incentives | (2 | ) | — | % | (7 | ) | (0.1 | )% | (71.4 | )% | |||||||
| Depreciation and amortization | 205 | 4.2 | % | 185 | 3.9 | % | |||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 31 | 0.6 | % | 44 | 0.9 | % | |||||||||||
| Litigation and investigation costs | 4 | 0.1 | % | 50 | 1.1 | % | |||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (3 | ) | (0.1 | )% | — | — | % | ||||||||||
| Operating income | 333 | 6.9 | % | 287 | 6.1 | % | |||||||||||
| Interest expense | (243 | ) | (248 | ) | |||||||||||||
| Investment earnings (losses) | (1 | ) | 1 | ||||||||||||||
| Net income from continuing operations, before income taxes | 89 | 40 | |||||||||||||||
| Income tax expense | (10 | ) | (11 | ) | |||||||||||||
| Net income from continuing operations, before discontinued operations | 79 | 29 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| Income (loss) from operations | 2 | (1 | ) | ||||||||||||||
| Income tax expense | (1 | ) | — | ||||||||||||||
| Net income (loss) from discontinued operations | 1 | (1 | ) | ||||||||||||||
| Net income | 80 | 28 | |||||||||||||||
| Less: Net income attributable to noncontrolling interests | 88 | 57 | |||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (8 | ) | $ | (29 | ) | |||||||||||
| Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (9 | ) | $ | (28 | ) | |||||||||||
| Net income (loss) from discontinued operations, net of tax | 1 | (1 | ) | ||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (8 | ) | $ | (29 | ) | |||||||||||
| Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Continuing operations | $ | (0.09 | ) | $ | (0.28 | ) | |||||||||||
| Discontinued operations | 0.01 | (0.01 | ) | ||||||||||||||
| $ | (0.08 | ) | $ | (0.29 | ) | ||||||||||||
| Diluted | |||||||||||||||||
| Continuing operations | $ | (0.09 | ) | $ | (0.28 | ) | |||||||||||
| Discontinued operations | 0.01 | (0.01 | ) | ||||||||||||||
| $ | (0.08 | ) | $ | (0.29 | ) | ||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
| Basic | 99,523 | 99,537 | |||||||||||||||
| Diluted* | 99,523 | 99,537 | |||||||||||||||
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*Had we generated income from continuing operations in the three months ended September 30, 2016 and 2015, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,455 shares and 2,500 shares, respectively. |
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TENET HEALTHCARE CORPORATION |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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| (Unaudited) | |||||||||||||||||
| (Dollars in millions except per share amounts) | Nine Months Ended September 30, | ||||||||||||||||
| 2016 | % | 2015 | % | Change | |||||||||||||
| Net operating revenues: | |||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 15,856 | $ | 14,694 | 7.9 | % | |||||||||||
| Less: Provision for doubtful accounts | 1,095 | 1,086 | 0.8 | % | |||||||||||||
| Net operating revenues | 14,761 | 100.0 | % | 13,608 | 100.0 | % | 8.5 | % | |||||||||
| Equity in earnings of unconsolidated affiliates | 85 | 0.6 | % | 48 | 0.4 | % | 77.1 | % | |||||||||
| Operating expenses: | |||||||||||||||||
| Salaries, wages and benefits | 7,032 | 47.6 | % | 6,568 | 48.3 | % | 7.1 | % | |||||||||
| Supplies | 2,351 | 15.9 | % | 2,146 | 15.8 | % | 9.6 | % | |||||||||
| Other operating expenses, net | 3,686 | 25.0 | % | 3,325 | 24.4 | % | 10.9 | % | |||||||||
| Electronic health record incentives | (23 | ) | (0.2 | )% | (46 | ) | (0.3 | )% | (50.0 | )% | |||||||
| Depreciation and amortization | 632 | 4.3 | % | 589 | 4.3 | % | |||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 81 | 0.6 | % | 266 | 2.0 | % | |||||||||||
| Litigation and investigation costs | 291 | 2.0 | % | 67 | 0.5 | % | |||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (151 | ) | (1.0 | )% | — | — | % | ||||||||||
| Operating income | 947 | 6.4 | % | 741 | 5.4 | % | |||||||||||
| Interest expense | (730 | ) | (664 | ) | |||||||||||||
| Investment earnings (losses) | 2 | — | |||||||||||||||
| Net income from continuing operations, before income taxes | 219 | 77 | |||||||||||||||
| Income tax expense | (61 | ) | — | ||||||||||||||
| Net income from continuing operations, before discontinued operations | 158 | 77 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| Loss from operations | (5 | ) | (1 | ) | |||||||||||||
| Income tax expense | — | — | |||||||||||||||
| Net loss from discontinued operations | (5 | ) | (1 | ) | |||||||||||||
| Net income | 153 | 76 | |||||||||||||||
| Less: Net income attributable to noncontrolling interests | 266 | 119 | |||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (113 | ) | $ | (43 | ) | |||||||||||
| Amounts attributable to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (108 | ) | $ | (42 | ) | |||||||||||
| Net loss from discontinued operations, net of tax | (5 | ) | (1 | ) | |||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (113 | ) | $ | (43 | ) | |||||||||||
| Net loss per share attributable to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Continuing operations | $ | (1.09 | ) | $ | (0.42 | ) | |||||||||||
| Discontinued operations | (0.05 | ) | (0.01 | ) | |||||||||||||
| $ | (1.14 | ) | $ | (0.43 | ) | ||||||||||||
| Diluted | |||||||||||||||||
| Continuing operations | $ | (1.09 | ) | $ | (0.42 | ) | |||||||||||
| Discontinued operations | (0.05 | ) | (0.01 | ) | |||||||||||||
| $ | (1.14 | ) | $ | (0.43 | ) | ||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
| Basic | 99,210 | 99,160 | |||||||||||||||
| Diluted* | 99,210 | 99,160 | |||||||||||||||
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*Had we generated income from continuing operations in the nine months ended September 30, 2016 and 2015, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,470 shares and 2,449 shares, respectively. |
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| TENET HEALTHCARE CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
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(Unaudited) |
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| September 30, | December 31, | |||||||
| (Dollars in millions) | 2016 | 2015 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 649 | $ | 356 | ||||
| Accounts receivable, less allowance for doubtful accounts | 2,786 | 2,704 | ||||||
| Inventories of supplies, at cost | 322 | 309 | ||||||
| Income tax receivable | 11 | 7 | ||||||
| Assets held for sale | 17 | 550 | ||||||
| Other current assets | 1,331 | 1,245 | ||||||
| Total current assets | 5,116 | 5,171 | ||||||
| Investments and other assets | 1,324 | 1,175 | ||||||
| Deferred income taxes | 840 | 776 | ||||||
| Property and equipment, at cost, less accumulated depreciation and amortization | 7,965 | 7,915 | ||||||
| Goodwill | 7,376 | 6,970 | ||||||
| Other intangible assets, at cost, less accumulated amortization | 1,853 | 1,675 | ||||||
| Total assets | $ | 24,474 | $ | 23,682 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 184 | $ | 127 | ||||
| Accounts payable | 1,228 | 1,380 | ||||||
| Accrued compensation and benefits | 809 | 880 | ||||||
| Professional and general liability reserves | 185 | 177 | ||||||
| Accrued interest payable | 308 | 205 | ||||||
| Liabilities held for sale | 13 | 101 | ||||||
| Accrued legal settlement costs | 527 | 294 | ||||||
| Other current liabilities | 1,293 | 1,144 | ||||||
| Total current liabilities | 4,547 | 4,308 | ||||||
| Long-term debt, net of current portion | 14,323 | 14,383 | ||||||
| Professional and general liability reserves | 620 | 578 | ||||||
| Defined benefit plan obligations | 586 | 595 | ||||||
| Deferred income taxes | 320 | 37 | ||||||
| Other long-term liabilities | 606 | 557 | ||||||
| Total liabilities | 21,002 | 20,458 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 2,307 | 2,266 | ||||||
| Equity: | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock | 7 | 7 | ||||||
| Additional paid-in capital | 4,801 | 4,815 | ||||||
| Accumulated other comprehensive loss | (200 | ) | (164 | ) | ||||
| Accumulated deficit | (1,663 | ) | (1,550 | ) | ||||
| Common stock in treasury, at cost | (2,417 | ) | (2,417 | ) | ||||
| Total shareholders’ equity | 528 | 691 | ||||||
| Noncontrolling interests | 637 | 267 | ||||||
| Total equity | 1,165 | 958 | ||||||
| Total liabilities and equity | $ | 24,474 | $ | 23,682 | ||||
| TENET HEALTHCARE CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||
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(Unaudited) |
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| Nine Months Ended | ||||||||
| (Dollars in millions) | September 30, | |||||||
| 2016 | 2015 | |||||||
| Net Income | $ | 153 | $ | 76 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 632 | 589 | ||||||
| Provision for doubtful accounts | 1,095 | 1,086 | ||||||
| Deferred income tax expense (benefit) | 32 | (10 | ) | |||||
| Stock-based compensation expense | 51 | 50 | ||||||
| Impairment and restructuring charges, and acquisition-related costs | 81 | 266 | ||||||
| Litigation and investigation costs | 291 | 67 | ||||||
| Gains on sales, consolidation and deconsolidation of facilities | (151 | ) | — | |||||
| Equity in earnings of unconsolidated affiliates, net of distributions received | 2 | (48 | ) | |||||
| Amortization of debt discount and debt issuance costs | 33 | 32 | ||||||
| Pre-tax loss from discontinued operations | 5 | 1 | ||||||
| Other items, net | (3 | ) | 22 | |||||
| Changes in cash from operating assets and liabilities: | ||||||||
| Accounts receivable | (1,156 | ) | (1,124 | ) | ||||
| Inventories and other current assets | (95 | ) | (62 | ) | ||||
| Income taxes | (1 | ) | (5 | ) | ||||
| Accounts payable, accrued expenses and other current liabilities | (35 | ) | 39 | |||||
| Other long-term liabilities | 48 | 31 | ||||||
| Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (132 | ) | (157 | ) | ||||
| Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes | 1 | (18 | ) | |||||
| Net cash provided by operating activities | 851 | 835 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment — continuing operations | (614 | ) | (566 | ) | ||||
| Purchases of businesses or joint venture interests, net of cash acquired | (96 | ) | (720 | ) | ||||
| Proceeds from sales of facilities and other assets | 573 | 28 | ||||||
| Proceeds from sales of marketable securities, long-term investments and other assets | 36 | 18 | ||||||
| Purchases of equity investments | (37 | ) | (18 | ) | ||||
| Other long-term assets | (15 | ) | (6 | ) | ||||
| Other items, net | 3 | (8 | ) | |||||
| Net cash used in investing activities | (150 | ) | (1,272 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of borrowings under credit facility | (1,195 | ) | (1,880 | ) | ||||
| Proceeds from borrowings under credit facility | 1,195 | 1,770 | ||||||
| Repayments of other borrowings | (112 | ) | (2,011 | ) | ||||
| Proceeds from other borrowings | 4 | 3,208 | ||||||
| Debt issuance costs | (1 | ) | (76 | ) | ||||
| Distributions paid to noncontrolling interests | (151 | ) | (65 | ) | ||||
| Proceeds from sale of noncontrolling interests | 19 | 4 | ||||||
| Purchase of noncontrolling interests | (180 | ) | (254 | ) | ||||
| Proceeds from exercise of stock options | 4 | 15 | ||||||
| Other items, net | 9 | (17 | ) | |||||
| Net cash provided by (used in) financing activities | (408 | ) | 694 | |||||
| Net increase in cash and cash equivalents | 293 | 257 | ||||||
| Cash and cash equivalents at beginning of period | 356 | 193 | ||||||
| Cash and cash equivalents at end of period | $ | 649 | $ | 450 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid, net of capitalized interest | $ | (596 | ) | $ | (519 | ) | ||
| Income tax payments, net | $ | (33 | ) | $ | (6 | ) | ||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||||||||||
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SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS (1) |
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(Unaudited) |
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(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||||||||||
| Number of hospitals (at end of period) | 75 | 83 | (8 | ) | * | 75 | 83 | (8 | ) | * | ||||||||||||||
| Total admissions | 194,342 | 201,870 | (3.7 | )% | 600,039 | 612,111 | (2.0 | )% | ||||||||||||||||
| Adjusted patient admissions | 345,207 | 352,352 | (2.0 | )% | 1,050,839 | 1,050,594 | — | % | ||||||||||||||||
| Paying admissions (excludes charity and uninsured) | 183,042 | 190,548 | (3.9 | )% | 568,017 | 579,304 | (1.9 | )% | ||||||||||||||||
| Charity and uninsured admissions | 11,300 | 11,322 | (0.2 | )% | 32,022 | 32,807 | (2.4 | )% | ||||||||||||||||
| Admissions through emergency department | 120,447 | 126,050 | (4.4 | )% | 378,786 | 388,164 | (2.4 | )% | ||||||||||||||||
| Paying admissions as a percentage of total admissions | 94.2 | % | 94.4 | % | (0.2 | )% | * | 94.7 | % | 94.6 | % | 0.1 | % | * | ||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.8 | % | 5.6 | % | 0.2 | % | * | 5.3 | % | 5.4 | % | (0.1 | )% | * | ||||||||||
| Emergency department admissions as a percentage of total admissions | 62.0 | % | 62.4 | % | (0.4 | )% | * | 63.1 | % | 63.4 | % | (0.3 | )% | * | ||||||||||
| Surgeries — inpatient | 54,701 | 55,977 | (2.3 | )% | 164,835 | 164,969 | (0.1 | )% | ||||||||||||||||
| Surgeries — outpatient | 72,646 | 73,960 | (1.8 | )% | 225,296 | 213,894 | 5.3 | % | ||||||||||||||||
| Total surgeries | 127,346 | 129,937 | (2.0 | )% | 390,131 | 378,863 | 3.0 | % | ||||||||||||||||
| Patient days — total | 894,323 | 927,964 | (3.6 | )% | 2,802,150 | 2,833,716 | (1.1 | )% | ||||||||||||||||
| Adjusted patient days | 1,567,894 | 1,601,494 | (2.1 | )% | 4,851,535 | 4,809,669 | 0.9 | % | ||||||||||||||||
| Average length of stay (days) | 4.60 | 4.60 | — | % | 4.67 | 4.63 | 0.9 | % | ||||||||||||||||
| Licensed beds (at end of period) | 20,340 | 21,527 | (5.5 | )% | 20,340 | 21,527 | (5.5 | )% | ||||||||||||||||
| Average licensed beds | 20,367 | 21,122 | (3.6 | )% | 20,757 | 20,924 | (0.8 | )% | ||||||||||||||||
| Utilization of licensed beds | 47.7 | % | 47.8 | % | (0.1 | )% | * | 49.3 | % | 49.6 | % | (0.3 | )% | * | ||||||||||
| Outpatient Visits | ||||||||||||||||||||||||
| Total visits | 2,009,019 | 2,076,524 | (3.3 | )% | 6,193,924 | 6,134,134 | 1.0 | % | ||||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,862,046 | 1,904,467 | (2.2 | )% | 5,742,955 | 5,645,246 | 1.7 | % | ||||||||||||||||
| Charity and uninsured visits | 146,973 | 172,057 | (14.6 | )% | 450,969 | 488,888 | (7.8 | )% | ||||||||||||||||
| Emergency department visits | 707,713 | 747,993 | (5.4 | )% | 2,213,321 | 2,232,477 | (0.9 | )% | ||||||||||||||||
| Paying visits as a percentage of total visits | 92.7 | % | 91.7 | % | 1.0 | % | * | 92.7 | % | 92.0 | % | 0.7 | % | * | ||||||||||
| Charity and uninsured visits as a percentage of total visits | 7.3 | % | 8.3 | % | (1.0 | )% | * | 7.3 | % | 8.0 | % | (0.7 | )% | * | ||||||||||
| Revenues | ||||||||||||||||||||||||
| Net inpatient revenues | $ | 2,644 | $ | 2,603 | 1.6 | % | $ | 8,013 | $ | 7,917 | 1.2 | % | ||||||||||||
| Net outpatient revenues | $ | 1,417 | $ | 1,515 | (6.5 | )% | $ | 4,391 | $ | 4,411 | (0.5 | )% | ||||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||||||||||
| Net inpatient revenue per admission | $ | 13,605 | $ | 12,894 | 5.5 | % | $ | 13,354 | $ | 12,934 | 3.2 | % | ||||||||||||
| Net inpatient revenue per patient day | $ | 2,956 | $ | 2,805 | 5.4 | % | $ | 2,860 | $ | 2,794 | 2.4 | % | ||||||||||||
| Net outpatient revenue per visit | $ | 705 | $ | 730 | (3.4 | )% | $ | 709 | $ | 719 | (1.4 | )% | ||||||||||||
| Net patient revenue per adjusted patient admission | $ | 11,764 | $ | 11,688 | 0.7 | % | $ | 11,804 | $ | 11,734 | 0.6 | % | ||||||||||||
| Net patient revenue per adjusted patient day | $ | 2,590 | $ | 2,571 | 0.7 | % | $ | 2,557 | $ | 2,563 | (0.2 | )% | ||||||||||||
| Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission | $ | 10,666 | $ | 10,348 | 3.1 | % | $ | 10,621 | $ | 10,315 | 3.0 | % | ||||||||||||
| Net Patient Revenues from: | ||||||||||||||||||||||||
| Medicare | 19.9 | % | 19.8 | % | 0.1 | % | * | 20.5 | % | 20.8 | % | (0.3 | )% | * | ||||||||||
| Medicaid | 8.4 | % | 8.8 | % | (0.4 | )% | * | 8.2 | % | 8.9 | % | (0.7 | )% | * | ||||||||||
| Managed care | 64.0 | % | 61.1 | % | 2.9 | % | * | 61.5 | % | 60.2 | % | 1.3 | % | * | ||||||||||
| Indemnity, self-pay and other | 7.7 | % | 10.3 | % | (2.6 | )% | * | 9.8 | % | 10.1 | % | (0.3 | )% | * | ||||||||||
| (1) Represents the consolidated results of Tenet’s Hospital Operations and other segment. | ||||||||||||||||||||||||
| * This change is the difference between the 2016 and 2015 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 September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
|
|
2016 | 2015 | Change |
2016 |
2015 | Change | ||||||||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||||||||||
| Number of hospitals (at end of period) | 67 | 67 | — | * | 67 | 67 | — | * | ||||||||||||||||
| Total admissions | 177,626 | 176,885 | 0.4 | % | 539,830 | 541,167 | (0.2 | )% | ||||||||||||||||
| Adjusted patient admissions | 310,253 | 305,916 | 1.4 | % | 935,412 | 922,603 | 1.4 | % | ||||||||||||||||
| Paying admissions (excludes charity and uninsured) | 167,219 | 167,463 | (0.1 | )% | 511,222 | 513,875 | (0.5 | )% | ||||||||||||||||
| Charity and uninsured admissions | 10,407 | 9,422 | 10.5 | % | 28,608 | 27,292 | 4.8 | % | ||||||||||||||||
| Admissions through emergency department | 110,539 | 110,235 | 0.3 | % | 341,111 | 342,302 | (0.3 | )% | ||||||||||||||||
| Paying admissions as a percentage of total admissions | 94.1 | % | 94.7 | % | (0.6 | )% | * | 94.7 | % | 95.0 | % | (0.3 | )% | * | ||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.9 | % | 5.3 | % | 0.6 | % | * | 5.3 | % | 5.0 | % | 0.3 | % | * | ||||||||||
| Emergency department admissions as a percentage of total admissions | 62.2 | % | 62.3 | % | (0.1 | )% | * | 63.2 | % | 63.3 | % | (0.1 | )% | * | ||||||||||
| Surgeries — inpatient | 49,608 | 49,527 | 0.2 | % | 147,377 | 147,113 | 0.2 | % | ||||||||||||||||
| Surgeries — outpatient | 62,571 | 64,985 | (3.7 | )% | 192,248 | 189,886 | 1.2 | % | ||||||||||||||||
| Total surgeries | 112,179 | 114,512 | (2.0 | )% | 339,625 | 336,999 | 0.8 | % | ||||||||||||||||
| Patient days — total | 803,553 | 804,181 | (0.1 | )% | 2,471,353 | 2,482,989 | (0.5 | )% | ||||||||||||||||
| Adjusted patient days | 1,390,214 | 1,374,619 | 1.1 | % | 4,241,280 | 4,187,429 | 1.3 | % | ||||||||||||||||
| Average length of stay (days) | 4.52 | 4.55 | (0.7 | )% | 4.58 | 4.59 | (0.2 | )% | ||||||||||||||||
| Licensed beds (at end of period) | 18,104 | 18,201 | (0.5 | )% | 18,104 | 18,201 | (0.5 | )% | ||||||||||||||||
| Average licensed beds | 18,131 | 18,233 | (0.6 | )% | 18,138 | 18,240 | (0.6 | )% | ||||||||||||||||
| Utilization of licensed beds | 48.2 | % | 47.9 | % | 0.3 | % | * | 49.9 | % | 49.9 | % | — | % | * | ||||||||||
| Outpatient Visits | ||||||||||||||||||||||||
| Total visits | 1,805,800 | 1,792,264 | 0.8 | % | 5,491,057 | 5,370,525 | 2.2 | % | ||||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,676,686 | 1,659,417 | 1.0 | % | 5,112,745 | 4,990,102 | 2.5 | % | ||||||||||||||||
| Charity and uninsured visits | 129,114 | 132,847 | (2.8 | )% | 378,312 | 380,423 | (0.6 | )% | ||||||||||||||||
| Emergency department visits | 628,234 | 624,871 | 0.5 | % | 1,939,686 | 1,894,201 | 2.4 | % | ||||||||||||||||
| Paying visits as a percentage of total visits | 92.9 | % | 92.6 | % | 0.3 | % | * | 93.1 | % | 92.9 | % | 0.2 | % | * | ||||||||||
| Charity and uninsured visits as a percentage of total visits | 7.1 | % | 7.4 | % | (0.3 | )% | * | 6.9 | % | 7.1 | % | (0.2 | )% | * | ||||||||||
| Revenues | ||||||||||||||||||||||||
| Net inpatient revenues | $ | 2,435 | $ | 2,289 | 6.4 | % | $ | 7,334 | $ | 6,976 | 5.1 | % | ||||||||||||
| Net outpatient revenues | $ | 1,333 | $ | 1,288 | 3.5 | % | $ | 4,007 | $ | 3,795 | 5.6 | % | ||||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||||||||||
| Net inpatient revenue per admission | $ | 13,709 | $ | 12,941 | 5.9 | % | $ | 13,586 | $ | 12,891 | 5.4 | % | ||||||||||||
| Net inpatient revenue per patient day | $ | 3,030 | $ | 2,846 | 6.5 | % | $ | 2,968 | $ | 2,810 | 5.6 | % | ||||||||||||
| Net outpatient revenue per visit | $ | 738 | $ | 719 | 2.6 | % | $ | 730 | $ | 707 | 3.3 | % | ||||||||||||
| Net patient revenue per adjusted patient admission | $ | 12,145 | $ | 11,693 | 3.9 | % | $ | 12,124 | $ | 11,675 | 3.8 | % | ||||||||||||
| Net patient revenue per adjusted patient day | $ | 2,710 | $ | 2,602 | 4.2 | % | $ | 2,674 | $ | 2,572 | 4.0 | % | ||||||||||||
| Net Patient Revenues from: | ||||||||||||||||||||||||
| Medicare | 19.7 | % | 20.2 | % | (0.5 | )% | * | 20.2 | % | 21.0 | % | (0.8 | )% | * | ||||||||||
| Medicaid | 8.5 | % | 8.8 | % | (0.3 | )% | * | 8.3 | % | 8.8 | % | (0.5 | )% | * | ||||||||||
| Managed care | 62.1 | % | 61.6 | % | 0.5 | % | * | 61.8 | % | 60.8 | % | 1.0 | % | * | ||||||||||
| Indemnity, self-pay and other | 10.1 | % | 9.3 | % | 0.8 | % | * | 9.7 | % | 9.4 | % | 0.3 | % | * | ||||||||||
|
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the nine months ended September 30, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals that Tenet divested, since January 1, 2015. |
||||||||||||||||||||||||
| * This change is the difference between the 2016 and 2015 amounts shown | ||||||||||||||||||||||||
|
TENET HEALTHCARE CORPORATION |
||||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars in millions except per share amounts) | Three Months Ended | Nine Months Ended | ||||||||||||||
| 3/31/2016 | 6/30/2016 | 9/30/2016 | 9/30/2016 | |||||||||||||
| Net operating revenues: | ||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 5,420 | $ | 5,220 | $ | 5,216 | $ | 15,856 | ||||||||
| Less: Provision for doubtful accounts | 376 | 352 | 367 | 1,095 | ||||||||||||
| Net operating revenues | 5,044 | 4,868 | 4,849 | 14,761 | ||||||||||||
| Equity in earnings of unconsolidated affiliates | 24 | 30 | 31 | 85 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries, wages and benefits | 2,402 | 2,316 | 2,314 | 7,032 | ||||||||||||
| Supplies | 811 | 773 | 767 | 2,351 | ||||||||||||
| Other operating expenses, net | 1,242 | 1,213 | 1,231 | 3,686 | ||||||||||||
| Electronic health record incentives | — | (21 | ) | (2 | ) | (23 | ) | |||||||||
| Depreciation and amortization | 212 | 215 | 205 | 632 | ||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 28 | 22 | 31 | 81 | ||||||||||||
| Litigation and investigation costs | 173 | 114 | 4 | 291 | ||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (147 | ) | (1 | ) | (3 | ) | (151 | ) | ||||||||
| Operating income | 347 | 267 | 333 | 947 | ||||||||||||
| Interest expense | (243 | ) | (244 | ) | (243 | ) | (730 | ) | ||||||||
| Investment earnings (losses) | 1 | 2 | (1 | ) | 2 | |||||||||||
| Net income from continuing operations, before income taxes | 105 | 25 | 89 | 219 | ||||||||||||
| Income tax benefit (expense) | (67 | ) | 16 | (10 | ) | (61 | ) | |||||||||
| Net income from continuing operations, before discontinued operations | 38 | 41 | 79 | 158 | ||||||||||||
| Discontinued operations: | ||||||||||||||||
| Income (loss) from operations | (5 | ) | (2 | ) | 2 | (5 | ) | |||||||||
| Income tax benefit (expense) | 1 | — | (1 | ) | — | |||||||||||
| Net Income (loss) from discontinued operations | (4 | ) | (2 | ) | 1 | (5 | ) | |||||||||
| Net income | 34 | 39 | 80 | 153 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 93 | 85 | 88 | 266 | ||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (59 | ) | $ | (46 | ) | $ | (8 | ) | $ | (113 | ) | ||||
| Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | ||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (55 | ) | $ | (44 | ) | $ | (9 | ) | $ | (108 | ) | ||||
| Net income (loss) from discontinued operations, net of tax | (4 | ) | (2 | ) | 1 | (5 | ) | |||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (59 | ) | $ | (46 | ) | $ | (8 | ) | $ | (113 | ) | ||||
| Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | (0.56 | ) | $ | (0.44 | ) | $ | (0.09 | ) | $ | (1.09 | ) | ||||
| Discontinued operations | (0.04 | ) | (0.02 | ) | 0.01 | (0.05 | ) | |||||||||
| $ | (0.60 | ) | $ | (0.46 | ) | $ | (0.08 | ) | $ | (1.14 | ) | |||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | (0.56 | ) | $ | (0.44 | ) | $ | (0.09 | ) | $ | (1.09 | ) | ||||
| Discontinued operations | (0.04 | ) | (0.02 | ) | 0.01 | (0.05 | ) | |||||||||
| $ | (0.60 | ) | $ | (0.46 | ) | $ | (0.08 | ) | $ | (1.14 | ) | |||||
| Weighted average shares and dilutive securities outstanding (in thousands): | ||||||||||||||||
| Basic | 98,768 | 99,341 | 99,523 | 99,210 | ||||||||||||
| Diluted | 98,768 | 99,341 | 99,523 | 99,210 | ||||||||||||
| 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 | Nine Months Ended | ||||||||||||||
|
|
3/31/2016 | 6/30/2016 | 9/30/2016 | 9/30/2016 | ||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||
| Number of hospitals (at end of period) | 80 | 75 | 75 | 75 | ||||||||||||
| Total admissions | 211,799 | 193,898 | 194,342 | 600,039 | ||||||||||||
| Adjusted patient admissions | 362,819 | 342,813 | 345,207 | 1,050,839 | ||||||||||||
| Paying admissions (excludes charity and uninsured) | 201,436 | 183,539 | 183,042 | 568,017 | ||||||||||||
| Charity and uninsured admissions | 10,363 | 10,359 | 11,300 | 32,022 | ||||||||||||
| Admissions through emergency department | 136,056 | 122,283 | 120,447 | 378,786 | ||||||||||||
| Paying admissions as a percentage of total admissions | 95.1 | % | 94.7 | % | 94.2 | % | 94.7 | % | ||||||||
| Charity and uninsured admissions as a percentage of total admissions | 4.9 | % | 5.3 | % | 5.8 | % | 5.3 | % | ||||||||
| Emergency department admissions as a percentage of total admissions | 64.2 | % | 63.1 | % | 62.0 | % | 63.1 | % | ||||||||
| Surgeries — inpatient | 55,755 | 54,379 | 54,701 | 164,835 | ||||||||||||
| Surgeries — outpatient | 76,829 | 75,821 | 72,646 | 225,296 | ||||||||||||
| Total surgeries | 132,584 | 130,201 | 127,346 | 390,131 | ||||||||||||
| Patient days — total | 1,010,514 | 897,313 | 894,323 | 2,802,150 | ||||||||||||
| Adjusted patient days | 1,714,369 | 1,569,272 | 1,567,894 | 4,851,535 | ||||||||||||
| Average length of stay (days) | 4.77 | 4.63 | 4.60 | 4.67 | ||||||||||||
| Licensed beds (at end of period) | 21,529 | 20,380 | 20,340 | 20,340 | ||||||||||||
| Average licensed beds | 21,524 | 20,380 | 20,367 | 20,757 | ||||||||||||
| Utilization of licensed beds | 51.6 | % | 48.4 | % | 47.7 | % | 49.3 | % | ||||||||
| Outpatient Visits | ||||||||||||||||
| Total visits | 2,146,618 | 2,038,287 | 2,009,019 | 6,193,924 | ||||||||||||
| Paying visits (excludes charity and uninsured) | 1,984,515 | 1,896,394 | 1,862,046 | 5,742,955 | ||||||||||||
| Charity and uninsured visits | 162,103 | 141,893 | 146,973 | 450,969 | ||||||||||||
| Emergency department visits | 789,916 | 715,692 | 707,713 | 2,213,321 | ||||||||||||
| Paying visits as a percentage of total visits | 92.4 | % | 93.0 | % | 92.7 | % | 92.7 | % | ||||||||
| Charity and uninsured visits as a percentage of total visits | 7.6 | % | 7.0 | % | 7.3 | % | 7.3 | % | ||||||||
| Revenues | ||||||||||||||||
| Net inpatient revenues | $ | 2,781 | $ | 2,588 | $ | 2,644 | $ | 8,013 | ||||||||
| Net outpatient revenues | $ | 1,514 | $ | 1,460 | $ | 1,417 | $ | 4,391 | ||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||
| Net inpatient revenue per admission | $ | 13,130 | $ | 13,347 | $ | 13,605 | $ | 13,354 | ||||||||
| Net inpatient revenue per patient day | $ | 2,752 | $ | 2,884 | $ | 2,956 | $ | 2,860 | ||||||||
| Net outpatient revenue per visit | $ | 705 | $ | 716 | $ | 705 | $ | 709 | ||||||||
| Net patient revenue per adjusted patient admission | $ | 11,838 | $ | 11,808 | $ | 11,764 | $ | 11,804 | ||||||||
| Net patient revenue per adjusted patient day | $ | 2,505 | $ | 2,580 | $ | 2,590 | $ | 2,557 | ||||||||
| Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission | $ | 10,537 | $ | 10,668 | $ | 10,666 | $ | 10,621 | ||||||||
| Net Patient Revenues from: | ||||||||||||||||
| Medicare | 20.0 | % | 21.7 | % | 19.9 | % | 20.5 | % | ||||||||
| Medicaid | 8.7 | % | 7.4 | % | 8.4 | % | 8.2 | % | ||||||||
| Managed care | 61.1 | % | 59.4 | % | 64.0 | % | 61.5 | % | ||||||||
| Indemnity, self-pay and other | 10.2 | % | 11.5 | % | 7.7 | % | 9.8 | % | ||||||||
|
(1) Represents the consolidated results of Tenet’s Hospital Operations and other segment. |
||||||||||||||||
| 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 | Nine Months Ended | ||||||||||||||
|
|
3/31/2016 | 6/30/2016 | 9/30/2016 | 9/30/2016 | ||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||
| Number of hospitals (at end of period) | 67 | 67 | 67 | 67 | ||||||||||||
| Total admissions | 185,053 | 177,151 | 177,626 | 539,830 | ||||||||||||
| Adjusted patient admissions | 315,787 | 309,372 | 310,253 | 935,412 | ||||||||||||
| Paying admissions (excludes charity and uninsured) | 176,286 | 167,717 | 167,219 | 511,222 | ||||||||||||
| Charity and uninsured admissions | 8,767 | 9,434 | 10,407 | 28,608 | ||||||||||||
| Admissions through emergency department | 118,578 | 111,994 | 110,539 | 341,111 | ||||||||||||
| Paying admissions as a percentage of total admissions | 95.3 | % | 94.7 | % | 94.1 | % | 94.7 | % | ||||||||
| Charity and uninsured admissions as a percentage of total admissions | 4.7 | % | 5.3 | % | 5.9 | % | 5.3 | % | ||||||||
| Emergency department admissions as a percentage of total admissions | 64.1 | % | 63.2 | % | 62.2 | % | 63.2 | % | ||||||||
| Surgeries — inpatient | 48,547 | 49,222 | 49,608 | 147,377 | ||||||||||||
| Surgeries — outpatient | 63,999 | 65,678 | 62,571 | 192,248 | ||||||||||||
| Total surgeries | 112,546 | 114,900 | 112,179 | 339,625 | ||||||||||||
| Patient days — total | 862,138 | 805,662 | 803,553 | 2,471,353 | ||||||||||||
| Adjusted patient days | 1,456,580 | 1,394,486 | 1,390,214 | 4,241,280 | ||||||||||||
| Average length of stay (days) | 4.66 | 4.55 | 4.52 | 4.58 | ||||||||||||
| Licensed beds (at end of period) | 18,144 | 18,144 | 18,104 | 18,104 | ||||||||||||
| Average licensed beds | 18,139 | 18,144 | 18,131 | 18,138 | ||||||||||||
| Utilization of licensed beds | 52.8 | % | 48.8 | % | 48.2 | % | 49.9 | % | ||||||||
| Outpatient Visits | ||||||||||||||||
| Total visits | 1,854,735 | 1,830,522 | 1,805,800 | 5,491,057 | ||||||||||||
| Paying visits (excludes charity and uninsured) | 1,728,684 | 1,707,375 | 1,676,686 | 5,112,745 | ||||||||||||
| Charity and uninsured visits | 126,051 | 123,147 | 129,114 | 378,312 | ||||||||||||
| Emergency department visits | 670,678 | 640,774 | 628,234 | 1,939,686 | ||||||||||||
| Paying visits as a percentage of total visits | 93.2 | % | 93.3 | % | 92.9 | % | 93.1 | % | ||||||||
| Charity and uninsured visits as a percentage of total visits | 6.8 | % | 6.7 | % | 7.1 | % | 6.9 | % | ||||||||
| Revenues | ||||||||||||||||
| Net inpatient revenues | $ | 2,499 | $ | 2,400 | $ | 2,435 | $ | 7,334 | ||||||||
| Net outpatient revenues | $ | 1,331 | $ | 1,343 | $ | 1,333 | $ | 4,007 | ||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||
| Net inpatient revenue per admission | $ | 13,504 | $ | 13,548 | $ | 13,709 | $ | 13,586 | ||||||||
| Net inpatient revenue per patient day | $ | 2,899 | $ | 2,979 | $ | 3,030 | $ | 2,968 | ||||||||
| Net outpatient revenue per visit | $ | 718 | $ | 734 | $ | 738 | $ | 730 | ||||||||
| Net patient revenue per adjusted patient admission | $ | 12,128 | $ | 12,099 | $ | 12,145 | $ | 12,124 | ||||||||
| Net patient revenue per adjusted patient day | $ | 2,629 | $ | 2,684 | $ | 2,710 | $ | 2,674 | ||||||||
| Net Patient Revenues from: | ||||||||||||||||
| Medicare | 20.6 | % | 20.1 | % | 19.7 | % | 20.2 | % | ||||||||
| Medicaid | 8.5 | % | 7.8 | % | 8.5 | % | 8.3 | % | ||||||||
| Managed care | 61.5 | % | 62.1 | % | 61.7 | % | 61.8 | % | ||||||||
| Indemnity, self-pay and other | 9.4 | % | 10.0 | % | 10.1 | % | 9.7 | % | ||||||||
|
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the nine months ended September 30, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals that Tenet divested, since January 1, 2015. |
||||||||||||||||
| 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 | ||||||||||||||||||
|
|
03/31/15 | 06/30/15 | 9/30/2015 | 12/31/2015 | 12/31/2015 | |||||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||||||
| Number of hospitals (at end of period) | 67 | 67 | 67 | 67 | 67 | |||||||||||||||
| Total admissions | 185,147 | 179,135 | 176,885 | 176,051 | 717,218 | |||||||||||||||
| Adjusted patient admissions | 308,729 | 307,958 | 305,916 | 305,436 | 1,228,039 | |||||||||||||||
| Paying admissions (excludes charity and uninsured) | 176,023 | 170,389 | 167,463 | 166,962 | 680,837 | |||||||||||||||
| Charity and uninsured admissions | 9,124 | 8,746 | 9,422 | 9,089 | 36,381 | |||||||||||||||
| Admissions through emergency department | 118,326 | 113,741 | 110,235 | 110,291 | 452,593 | |||||||||||||||
| Paying admissions as a percentage of total admissions | 95.1 | % | 95.1 | % | 94.7 | % | 94.8 | % | 94.9 | % | ||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 4.9 | % | 4.9 | % | 5.3 | % | 5.2 | % | 5.1 | % | ||||||||||
| Emergency department admissions as a percentage of total admissions | 63.9 | % | 63.5 | % | 62.3 | % | 62.6 | % | 63.1 | % | ||||||||||
| Surgeries — inpatient | 48,295 | 49,291 | 49,527 | 49,239 | 196,352 | |||||||||||||||
| Surgeries — outpatient | 60,494 | 64,407 | 64,985 | 65,046 | 254,932 | |||||||||||||||
| Total surgeries | 108,789 | 113,698 | 114,512 | 114,285 | 451,284 | |||||||||||||||
| Patient days — total | 860,927 | 817,881 | 804,181 | 803,037 | 3,286,026 | |||||||||||||||
| Adjusted patient days | 1,421,505 | 1,391,305 | 1,374,619 | 1,379,612 | 5,567,041 | |||||||||||||||
| Average length of stay (days) | 4.65 | 4.57 | 4.55 | 4.56 | 4.58 | |||||||||||||||
| Licensed beds (at end of period) | 18,244 | 18,244 | 18,201 | 18,130 | 18,130 | |||||||||||||||
| Average licensed beds | 18,241 | 18,244 | 18,233 | 18,154 | 18,217 | |||||||||||||||
| Utilization of licensed beds | 52.4 | % | 49.3 | % | 47.9 | % | 48.1 | % | 49.4 | % | ||||||||||
| Outpatient Visits | ||||||||||||||||||||
| Total visits | 1,762,868 | 1,815,393 | 1,792,264 | 1,806,125 | 7,176,650 | |||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,639,131 | 1,691,554 | 1,659,417 | 1,680,609 | 6,670,711 | |||||||||||||||
| Charity and uninsured visits | 123,737 | 123,839 | 132,847 | 125,516 | 505,939 | |||||||||||||||
| Emergency department visits | 636,860 | 632,470 | 624,871 | 626,280 | 2,520,481 | |||||||||||||||
| Paying visits as a percentage of total visits | 93.0 | % | 93.2 | % | 92.6 | % | 93.1 | % | 93.0 | % | ||||||||||
| Charity and uninsured visits as a percentage of total visits | 7.0 | % | 6.8 | % | 7.4 | % | 6.9 | % | 7.0 | % | ||||||||||
| Revenues | ||||||||||||||||||||
| Net inpatient revenues | $ | 2,382 | $ | 2,305 | $ | 2,289 | $ | 2,358 | $ | 9,334 | ||||||||||
| Net outpatient revenues | $ | 1,226 | $ | 1,281 | $ | 1,288 | $ | 1,308 | $ | 5,103 | ||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||||||
| Net inpatient revenue per admission | $ | 12,865 | $ | 12,867 | $ | 12,941 | $ | 13,394 | $ | 13,014 | ||||||||||
| Net inpatient revenue per patient day | $ | 2,767 | $ | 2,818 | $ | 2,846 | $ | 2,936 | $ | 2,841 | ||||||||||
| Net outpatient revenue per visit | $ | 695 | $ | 706 | $ | 719 | $ | 724 | $ | 711 | ||||||||||
| Net patient revenue per adjusted patient admission | $ | 11,687 | $ | 11,644 | $ | 11,693 | $ | 12,003 | $ | 11,756 | ||||||||||
| Net patient revenue per adjusted patient day | $ | 2,538 | $ | 2,577 | $ | 2,602 | $ | 2,657 | $ | 2,593 | ||||||||||
| Net Patient Revenues from: | ||||||||||||||||||||
| Medicare | 21.9 | % | 20.7 | % | 20.2 | % | 19.9 | % | 20.7 | % | ||||||||||
| Medicaid | 9.4 | % | 8.3 | % | 8.8 | % | 8.3 | % | 8.7 | % | ||||||||||
| Managed care | 59.1 | % | 61.6 | % | 61.7 | % | 61.8 | % | 61.1 | % | ||||||||||
| Indemnity, self-pay and other | 9.6 | % | 9.4 | % | 9.3 | % | 10.0 | % | 9.5 | % | ||||||||||
|
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the nine months ended September 30, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals that Tenet divested, since January 1, 2015. |
||||||||||||||||||||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||
| SEGMENT REPORTING | ||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| September 30, | December 31, | |||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Assets | ||||||||||||||||
| Hospital Operations and other | $ | 17,627 | $ | 17,353 | ||||||||||||
| Ambulatory Care | 5,729 | 5,159 | ||||||||||||||
| Conifer | 1,118 | 1,170 | ||||||||||||||
| Total | $ | 24,474 | $ | 23,682 | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Capital expenditures: | ||||||||||||||||
| Hospital Operations and other | $ | 182 | $ | 194 | $ | 557 | $ | 536 | ||||||||
| Ambulatory Care | 14 | 7 | 42 | 14 | ||||||||||||
| Conifer | 5 | 6 | 15 | 16 | ||||||||||||
| Total | $ | 201 | $ | 207 | $ | 614 | $ | 566 | ||||||||
| Net operating revenues: | ||||||||||||||||
| Hospital Operations and other | $ | 4,162 | $ | 4,179 | $ | 12,761 | $ | 12,505 | ||||||||
| Ambulatory Care | 448 | 329 | 1,319 | 562 | ||||||||||||
| Conifer | ||||||||||||||||
| Tenet | 159 | 163 | 488 | 488 | ||||||||||||
| Other customers | 239 | 184 | 681 | 541 | ||||||||||||
| Total Conifer revenues | 398 | 347 | 1,169 | 1,029 | ||||||||||||
| Intercompany eliminations | (159 | ) | (163 | ) | (488 | ) | (488 | ) | ||||||||
| Total | $ | 4,849 | $ | 4,692 | $ | 14,761 | $ | 13,608 | ||||||||
| Equity in earnings of unconsolidated affiliates: | ||||||||||||||||
| Hospital Operations and other | $ | 3 | $ | (2 | ) | $ | 6 | $ | 12 | |||||||
| Ambulatory Care | 28 | 30 | 79 | 36 | ||||||||||||
| Total | $ | 31 | $ | 28 | $ | 85 | $ | 48 | ||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Hospital Operations and other | $ | 334 | $ | 383 | $ | 1,163 | $ | 1,259 | ||||||||
| Ambulatory Care | 157 | 122 | 432 | 200 | ||||||||||||
| Conifer | 79 | 61 | 205 | 204 | ||||||||||||
| Total | $ | 570 | $ | 566 | $ | 1,800 | $ | 1,663 | ||||||||
| Depreciation and amortization: | ||||||||||||||||
| Hospital Operations and other | $ | 170 | $ | 156 | $ | 525 | $ | 525 | ||||||||
| Ambulatory Care | 22 | 17 | 69 | 28 | ||||||||||||
| Conifer | 13 | 12 | 38 | 36 | ||||||||||||
| Total | $ | 205 | $ | 185 | $ | 632 | $ | 589 | ||||||||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||
| STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT | ||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| (Dollars in millions) | Three Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | |||||||||||||||
| 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 | $ | 457 | $ | 507 | $ | 335 | $ | 556 | ||||||||
| Less: Provision for doubtful accounts | (9 | ) | (13 | ) | (6 | ) | (14 | ) | ||||||||
| Net operating revenues(1) | 448 | 494 | 329 | 542 | ||||||||||||
| Equity in earnings of unconsolidated affiliates(2) | 28 | — | 30 | — | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries, wages and benefits | 144 | 119 | 106 | 132 | ||||||||||||
| Supplies | 89 | 124 | 64 | 138 | ||||||||||||
| Other operating expenses, net | 86 | 99 | 67 | 117 | ||||||||||||
| Depreciation and amortization | 22 | 16 | 17 | 20 | ||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 5 | — | 2 | — | ||||||||||||
| (Gains) loss on sales, consolidation and deconsolidation of facilities | (3 | ) | 3 | — | — | |||||||||||
| Operating income | 133 | 133 | 103 | 135 | ||||||||||||
| Interest expense | (35 | ) | (6 | ) | (34 | ) | (7 | ) | ||||||||
| Other | — | 5 | — | (2 | ) | |||||||||||
| Net income from continuing operations, before income taxes | 98 | 132 | 69 | 126 | ||||||||||||
| Income tax expense | (18 | ) | (2 | ) | (14 | ) | (2 | ) | ||||||||
| Net income |
$ |
80 |
$ |
130 |
$ |
55 |
$ |
124 | ||||||||
|
Less: Net income attributable to noncontrolling interests(3) |
69 | 51 | ||||||||||||||
| Net income attributable to Tenet Healthcare Corporation common shareholders |
$ |
11 |
$ |
4 | ||||||||||||
| Equity in earnings of unconsolidated affiliates |
$ |
28 |
$ |
30 | ||||||||||||
|
(1) On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 9.7% during the three months ended September 30, 2016, with cases increasing 4.0% and revenue per case increasing 5.5%. |
||||||||||||||||
|
(2) At September 30, 2016, 114 of the 330 facilities in the Company’s newly formed 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 212 facilities and account for these investments as consolidated subsidiaries. |
||||||||||||||||
|
(3) During the three months ended September 30, 2016, the Company recorded $1 million of noncontrolling interests expense related to a $3 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA). |
||||||||||||||||
|
TENET HEALTHCARE CORPORATION |
||||||||||||||||
|
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT |
||||||||||||||||
|
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| 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 | $ | 1,346 | $ | 1,491 | $ | 962 | $ | 1,576 | ||||||||
| Less: Provision for doubtful accounts | (27 | ) | (41 | ) | (16 | ) | (40 | ) | ||||||||
| Net operating revenues(1) | 1,319 | 1,450 | 946 | 1,536 | ||||||||||||
| Equity in earnings of unconsolidated affiliates(2) | 79 | — | 79 | — | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries, wages and benefits | 437 | 353 | 308 | 379 | ||||||||||||
| Supplies | 266 | 375 | 174 | 394 | ||||||||||||
| Other operating expenses, net | 263 | 303 | 212 | 337 | ||||||||||||
| Depreciation and amortization | 69 | 51 | 46 | 60 | ||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 9 | 1 | 2 | 3 | ||||||||||||
| (Gains) loss on sales, consolidation and deconsolidation of facilities | (33 | ) | 3 | — | — | |||||||||||
| Operating income | 387 | 364 | 283 | 363 | ||||||||||||
| Interest expense | (105 | ) | (18 | ) | (102 | ) | (21 | ) | ||||||||
| Other | — | 6 | — | (2 | ) | |||||||||||
| Net income from continuing operations, before income taxes | 282 | 352 | 181 | 340 | ||||||||||||
| Income tax expense | (37 | ) | (5 | ) | (36 | ) | (5 | ) | ||||||||
| Net Income |
$ |
245 |
$ |
347 |
$ |
145 |
$ |
335 | ||||||||
| Less: Net income attributable to noncontrolling interests(3) | 204 | 126 | ||||||||||||||
| Net income attributable to Tenet Healthcare Corporation common shareholders | $ | 41 | $ | 19 | ||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | 79 | $ | 79 | ||||||||||||
|
(1) On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 10.9% during the nine months ended September 30, 2016, with cases increasing 6.0% and revenue per case increasing 4.6%. |
||||||||||||||||
|
(2) At September 30, 2016, 114 of the 330 facilities in the Company’s newly formed 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 212 facilities and account for these investments as consolidated subsidiaries. |
||||||||||||||||
|
(3) During the nine months ended September 30, 2016, the Company recorded $19 million of noncontrolling interests expense related to a $33 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA) and an associated $7 million income tax benefit. |
||||||||||||||||
Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss (income) attributable to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax benefit (expense), (5) investment earnings (losses), (6) gain (loss) from early extinguishment of debt, (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, and (11) depreciation and amortization. Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.
Adjusted net income from continuing operations, a non-GAAP measure, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) impairment and restructuring charges, and acquisition-related costs, (2) litigation and investigation costs, (3) gains on sales, consolidation and deconsolidation of facilities, (4) the associated impact of these three items on taxes and noncontrolling interests, and (5) net income (loss) from discontinued operations. Adjusted diluted earnings per share from continuing operations, a non-GAAP term, is defined by the Company as Adjusted net income from continuing operations divided by the weighted average 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 account for 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 Adjusted EBITDA to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #1 below for the three and nine months ended September 30, 2016 and 2015. A reconciliation of Adjusted net income from continuing operations to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #2 below for the three and nine months ended September 30, 2016 and 2015. A reconciliation of Free Cash Flow and Adjusted Free Cash Flow to net cash provided by (used in) operating activities, the most comparable GAAP measure, is set forth in Table #3 below for the three and nine months ended September 30, 2016 and 2015.
|
TENET HEALTHCARE CORPORATION |
||||||||||||||||
|
Additional Supplemental Non-GAAP disclosures |
||||||||||||||||
| Table #1 – Reconciliation of Adjusted EBITDA to Net Income Available | ||||||||||||||||
| (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders | ||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| (Dollars in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (8 | ) | $ | (29 | ) | $ | (113 | ) | $ | (43 | ) | ||||
| Less: Net income attributable to noncontrolling interests | (88 | ) | (57 | ) | (266 | ) | (119 | ) | ||||||||
| Net income (loss) from discontinued operations, net of tax | 1 | (1 | ) | (5 | ) | (1 | ) | |||||||||
| Net income (loss) from continuing operations | 79 | 29 | 158 | 77 | ||||||||||||
| Income tax benefit (expense) | (10 | ) | (11 | ) | (61 | ) | — | |||||||||
| Investment earnings (losses) | (1 | ) | 1 | 2 | — | |||||||||||
| Interest expense | (243 | ) | (248 | ) | (730 | ) | (664 | ) | ||||||||
| Operating income | 333 | 287 | 947 | 741 | ||||||||||||
| Litigation and investigation costs | (4 | ) | (50 | ) | (291 | ) | (67 | ) | ||||||||
| Gains on sales, consolidation and deconsolidation of facilities | 3 | — | 151 | — | ||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | (31 | ) | (44 | ) | (81 | ) | (266 | ) | ||||||||
| Depreciation and amortization | (205 | ) | (185 | ) | (632 | ) | (589 | ) | ||||||||
| Adjusted EBITDA | $ | 570 | $ | 566 | $ | 1,800 | $ | 1,663 | ||||||||
| Net operating revenues | $ | 4,849 | $ | 4,692 | $ | 14,761 | $ | 13,608 | ||||||||
| Net loss from continuing operations as a % of operating revenues | (0.2 | )% | (0.6 | )% | (0.7 | )% | (0.3 | )% | ||||||||
| Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) | 11.8 | % | 12.1 | % | 12.2 | % | 12.2 | % | ||||||||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||
| Additional Supplemental Non-GAAP disclosures | ||||||||||||||||
|
Table #2 – Pre-Tax, After-Tax and Earnings Per Share Impact of Certain Items on Continuing Operations |
||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (Dollars in millions except per share amounts) | September 30, | September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Adjustments to calculate Adjusted Diluted EPS | (Expense) Income | |||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | $ | (31 | ) | $ | (44 | ) | $ | (81 | ) | $ | (266 | ) | ||||
| Litigation and investigation costs | (4 | ) | (50 | ) | (291 | ) | (67 | ) | ||||||||
| Gain on sales, consolidation and deconsolidation of facilities | 3 | — | 151 | — | ||||||||||||
| Pre-tax impact | $ | (32 | ) | $ | (94 | ) | $ | (221 | ) | $ | (333 | ) | ||||
| Tax impact of above items | $ | 8 | $ | 36 | $ | 33 | $ | 118 | ||||||||
| Total after-tax impact | $ | (24 | ) | $ | (58 | ) | $ | (188 | ) | $ | (215 | ) | ||||
| Noncontrolling interests impact | (1 | ) | — | (19 | ) | — | ||||||||||
| Total income (loss) from items above | $ | (25 | ) | $ | (58 | ) | $ | (207 | ) | $ | (215 | ) | ||||
| Net income available (loss attributable) to common shareholders | $ | (8 | ) | $ | (29 | ) | $ | (113 | ) | $ | (43 | ) | ||||
| Less net income (loss) discontinued operations, net of tax | 1 | (1 | ) | (5 | ) | (1 | ) | |||||||||
| Net income (loss) from continuing operations, net of tax | $ | (9 | ) | $ | (28 | ) | $ | (108 | ) | $ | (42 | ) | ||||
| Net loss (income) from adjustments above | 25 | 58 | 207 | 215 | ||||||||||||
| Adjusted net income (loss) from continuing operations | $ | 16 | $ | 30 | $ | 99 | $ | 173 | ||||||||
| Weighted average dilutive shares outstanding (in thousands) | 100,978 | 102,037 | 100,680 | 101,609 | ||||||||||||
| Diluted earnings per share from continuing operations | $ | (0.09 | ) | $ | (0.28 | ) | $ | (1.09 | ) | $ | (0.42 | ) | ||||
| Adjusted diluted EPS from continuing operations | $ | 0.16 | $ | 0.29 | $ | 0.98 | $ | 1.70 | ||||||||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||
| Additional Supplemental Non-GAAP disclosures | ||||||||||||||||
|
Table #3 – Reconciliations of Free Cash Flow and Adjusted Free Cash Flow |
||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (Dollars in millions) | September 30, | September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net cash provided by (used in) operating activities | $ | 269 | $ | 482 | $ | 851 | $ | 835 | ||||||||
| Purchases of property and equipment | (201 | ) | (207 | ) | (614 | ) | (566 | ) | ||||||||
| Free cash flow | $ | 68 | $ | 275 | $ | 237 | $ | 269 | ||||||||
| Net cash provided by (used in) investing activities | $ | (204 | ) | $ | (287 | ) | $ | (150 | ) | $ | (1,272 | ) | ||||
| Net cash provided by (used in) financing activities | $ | (72 | ) | $ | (44 | ) | $ | (408 | ) | $ | 694 | |||||
| Net cash provided by (used in) operating activities | $ | 269 | $ | 482 | $ | 851 | $ | 835 | ||||||||
| Less: | ||||||||||||||||
| Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (33 | ) | (71 | ) | (132 | ) | (157 | ) | ||||||||
| Net cash provided by (used in) operating activities from discontinued operations | 1 | (10 | ) | 1 | (18 | ) | ||||||||||
| Adjusted net cash provided by operating activities – continuing operations | 301 | 563 | 982 | 1,010 | ||||||||||||
| Purchases of property and equipment – continuing operations | (201 | ) |
(207 |
) |
(614 | ) | (566 | ) | ||||||||
| Adjusted free cash flow – continuing operations | $ | 100 | $ | 356 | $ | 368 | $ | 444 | ||||||||
| TENET HEALTHCARE CORPORATION | ||||||||||||||||
| Additional Supplemental Non-GAAP disclosures | ||||||||||||||||
|
Table #4 – Reconciliation of Outlook Adjusted EBITDA to Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders |
||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars in millions) | Q4 2016 | 2016 | ||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income (loss) attributable to Tenet Healthcare Corporation common shareholders | $ | 4 | $ | 14 | $ | (109 | ) | $ | (99 | ) | ||||||
| Less: Net (income) loss attributable to noncontrolling interests | (94 | ) | (114 | ) | (360 | ) | (380 | ) | ||||||||
| Net loss from discontinued operations, net of tax | (5 | ) | - | (10 | ) | (5 | ) | |||||||||
| Income from continuing operations | 103 | 128 | 261 | 286 | ||||||||||||
| Income tax expense | (49 | ) | (54 | ) | (110 | ) | (115 | ) | ||||||||
| Income from continuing operations, before income taxes | 152 | 182 | 371 | 401 | ||||||||||||
| Investment earnings | - | - | 2 | 2 | ||||||||||||
| Interest expense | (240 | ) | (250 | ) | (970 | ) | (980 | ) | ||||||||
| Operating income | 392 | 432 | 1,339 | 1,379 | ||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities(a) | - | - | 151 | 151 | ||||||||||||
|
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements(a) |
- | - | (372 | ) | (372 | ) | ||||||||||
| Depreciation and amortization | (208 | ) | (218 | ) | (840 | ) | (850 | ) | ||||||||
| Adjusted EBITDA | $ | 600 | $ | 650 | $ | 2,400 | $ | 2,450 | ||||||||
| Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) | 12.3 | % | 12.9 | % | 12.2 | % | 12.4 | % | ||||||||
| Net income (loss) from continuing operations | $ | 9 | $ | 14 | $ | (99 | ) | $ | (94 | ) | ||||||
| Net income (loss) from continuing operations as a % of operating revenues | 0.2 | % | 0.3 | % | (0.5 | )% | (0.5 | )% | ||||||||
| Net operating revenues | $ | 4,889 | $ | 5,039 | $ | 19,650 | $ | 19,800 | ||||||||
| Adjusted EBITDA | $ | 600 | $ | 650 | $ | 2,400 | $ | 2,450 | ||||||||
| Depreciation and amortization | (208 | ) | (218 | ) | (840 | ) | (850 | ) | ||||||||
| Investment Earnings | - | - | - | 2 | 2 | |||||||||||
| Interest expense | (240 | ) | (250 | ) | (970 | ) | (980 | ) | ||||||||
| Adjusted income from continuing operations before income taxes | 152 | 182 | 592 | 622 | ||||||||||||
| Income tax expense | (41 | ) | (46 | ) | (135 | ) | (140 | ) | ||||||||
| Adjusted income from continuing operations | 111 | 136 | 457 | 482 | ||||||||||||
| Net income attributable to noncontrolling interests | (94 | ) | (114 | ) | (340 | ) | (360 | ) | ||||||||
| Adjusted net income attributable to common shareholders | $ | 17 | $ | 22 | $ | 117 | $ | 122 | ||||||||
| Basic weighted average shares outstanding | 100 | 100 | 99 | 99 | ||||||||||||
| Fully diluted weighted average shares outstanding (in millions) | 102 | 102 | 101 | 101 | ||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.09 | $ | 0.14 | $ | (1.00 | ) | $ | (0.95 | ) | ||||||
| Adjusted diluted earnings per share from continuing operations | $ | 0.17 | $ | 0.22 | $ | 1.16 | $ | 1.21 | ||||||||
|
(a) Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements and gains 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 Adjusted Free Cash Flow for the Year Ending December 31, 2016 |
||||||||
| (Dollars in millions) | 2016 | |||||||
| Low | High | |||||||
| Net cash provided by operating activities | $ | 1,163 | $ | 1,323 | ||||
| Less: | ||||||||
| Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(a) | (132 | ) | (132 | ) | ||||
| Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes | (5 | ) | 5 | |||||
| Adjusted net cash provided by operating activities – continuing operations | $ | 1,300 | $ | 1,450 | ||||
| Purchases of property and equipment – continuing operations | (900 | ) | (850 | ) | ||||
| Adjusted free cash flow – continuing operations | $ | 400 | $ | 600 | ||||
|
(a) Company does not forecast restructuring charges, 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. |
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