DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE:THC) reported a net loss from continuing operations attributable to Tenet shareholders of $56 million in the second quarter of 2017 compared to a $44 million net loss from continuing operations in the second quarter of 2016. Adjusted EBITDA was $570 million in the second quarter of 2017 compared to $629 million in the second quarter of 2016.
“While we experienced a softer volume environment in the second quarter, our teams responded well with solid performance on cost control, which mitigated the impact on our results,” said Trevor Fetter, chairman and chief executive officer. “We are continuing to invest in targeted service lines and have largely completed four significant construction projects that will strengthen our position in four strategic hospital markets. We are also making progress on portfolio refinement, including completing the sale of our Houston-based hospitals and affiliated outpatient centers and redeploying that capital to increase our ownership position in USPI.”
Adjusted EBITDA of $570 million in the second quarter of 2017 represents a $59 million decline from $629 million of Adjusted EBITDA in the second quarter of 2016. The decline was primarily attributable to two items that were factored into the Company’s second quarter Outlook:
(i) a $55 million decline in California Provider Fee revenue, with no revenue being recorded under the program in the second quarter of 2017 versus $55 million in the second quarter of 2016 since the 2017 program has not yet been approved by the Centers for Medicare and Medicaid Services (CMS); and,
(ii) a $15 million decline in electronic health record incentives, with $6 million of incentives recorded in the second quarter of 2017 versus $21 million in the second quarter of 2016.
Note that the $629 million of Adjusted EBITDA in the second quarter of 2016 was revised and equals: (i) $617 million of Adjusted EBITDA that was originally reported for the second quarter of 2016, plus (ii) $7 million due to a change in pension accounting which lowered Salaries, Wages and Benefits by this amount, and (iii) excludes the negative impact of $5 million of losses generated in the second quarter of 2016 by the Company’s health plan business, which the Company is exiting.
Hospital Operations and Other Segment
Net operating revenue in the Hospital Operations and other segment was $4.060 billion, down 0.1 percent from $4.066 billion in the second quarter of 2016; these revenue figures exclude revenue generated by the Company’s health plans in both periods. The decline was primarily due to a decline in adjusted admissions and the Company not being able to record revenue under the California Provider Fee Program in the second quarter of 2017.
On a same-hospital basis, patient revenue increased to $4.036 billion, up 0.4 percent from $4.019 billion in the second quarter of 2016. The increase was primarily due to a 1.9 percent increase in net patient revenue per adjusted admission partially offset by a 1.4 percent decline in adjusted admissions. The Company’s same-hospital revenue per adjusted admission was lowered by approximately 140 basis points due to the lack of CMS approval of the California Provider Fee Program. In addition, excluding patients that were insured by Humana in both periods, same-hospital adjusted admissions increased 0.1 percent. As previously announced, the Company reached a new multi-year agreement with Humana to restore in-network access for all Tenet providers effective June 1, 2017.
Adjusted EBITDA in Tenet’s hospital segment was $346 million, representing a decline of $81 million or 19.0 percent as compared to $427 million in the second quarter of 2016. The $81 million decline in Adjusted EBITDA in the hospital segment was primarily driven by the $55 million decline in revenue from the California Provider Fee program and a $15 million decline in electronic health record incentives. In addition, a $25 million increase in same-hospital uninsured net revenues contributed to a $31 million increase in the provision for doubtful accounts on a same hospital basis, from $327 million in the second quarter of 2016 to $358 million in the second quarter of 2017, which placed pressure on the year-over-year EBITDA comparison.
Tenet’s health plan business generated losses of $19 million in the second quarter of 2017 versus a loss of $5 million on the EBITDA line in the second quarter of 2016. 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 segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.3 percent on a per adjusted admission basis in the second quarter of 2017. During the second quarter of 2017, other operating expenses included: (i) a $23 million gain, primarily from the sale of the Company’s home health and hospice assets, which was recorded as a reduction to the Company’s other operating expenses, and (ii) a $27 million increase in malpractice expense.
Exchanges
Tenet’s same-hospital exchange admissions were 5,488 in the second quarter of 2017, down 2.2 percent from the second quarter of 2016. Same-hospital exchange outpatient visits were 58,873 in the second quarter of 2017, up 10.1 percent from the second quarter of 2016.
Uncompensated Care
Tenet’s provision for doubtful accounts was $371 million in the second quarter of 2017, representing a ratio of 7.2 percent of revenues before bad debt, as compared to $352 million in the second quarter of 2016, or 6.7 percent of revenues before bad debt. The increase in the bad debt ratio was primarily attributable to a $26 million increase in uninsured revenues.
Tenet’s uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, were $1.375 billion and $1.210 billion in the second quarters of 2017 and 2016, respectively, including $1.004 billion and $858 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care in the second quarter of 2017 represented 22.3 percent of revenue before bad debts, uninsured discounts and charity care write-offs, up from 19.9 percent in the second quarter of 2016. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.
Uninsured plus charity admissions increased by 67 admissions, or 0.7 percent on a same-hospital basis in the second quarter of 2017 compared to the second quarter of 2016. Uninsured plus charity outpatient visits decreased by 14,580 visits, or 10.3 percent, on a same-hospital basis.
Ambulatory Care Segment
During the second quarter of 2017, the Ambulatory segment produced net operating revenues of $472 million, representing an increase of 6.8 percent as compared to $442 million in the second quarter of 2016. In addition, the Ambulatory segment generated Adjusted EBITDA of $164 million, up 18.0 percent from $139 million in the second quarter of 2016 and Adjusted EBITDA less facility-level noncontrolling interest was $105 million, up 20.7% from $87 million in the second quarter of 2016.
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 3.8 percent, with cases decreasing 0.5 percent and revenue per case increasing 4.3 percent. Excluding patients insured by Humana in both periods, same-facility system-wide cases increased 1.3 percent in the second quarter of 2017.
Conifer Segment
During the second quarter of 2017, Conifer’s revenue increased 3.6 percent to $400 million, up from $386 million in the second quarter of 2016. Revenue from third party customers increased 9.4 percent to $245 million. Conifer generated $60 million of Adjusted EBITDA in the second quarter of 2017, down 4.8 percent from $63 million in the second quarter of 2016.
Net Income and Earnings Per Share
Tenet reported a net loss from continuing operations attributable to Tenet shareholders of $56 million, or $0.56 per diluted share, in the second quarter of 2017 compared to a net loss of $44 million, or $0.44 per diluted share, in the second quarter of 2016.
After adjusting for certain items which are listed on Table #2, Tenet recorded an Adjusted net loss from continuing operations attributable to Tenet shareholders of $17 million, or $0.17 per diluted share, during the second quarter of 2017, as compared to Adjusted net income from continuing operations attributable to Tenet shareholders of $40 million, or $0.40 per diluted share, in the second quarter of 2016.
A reconciliation of GAAP net income (loss) attributable to Tenet shareholders to Adjusted net income from continuing operations and Adjusted diluted earnings per share from continuing operations attributable to Tenet shareholders is contained in Table #2 at the end of this release.
Cash Flow and Liquidity
Cash and cash equivalents were $475 million at June 30, 2017 compared to $572 million at March 31, 2017. The Company had no outstanding borrowings on its $1 billion credit line as of June 30, 2017. Accounts receivable days outstanding from continuing operations were 53.6 at June 30, 2017 compared to 56.1 at March 31, 2017 and 56.7 at December 31, 2016. The calculation of accounts receivable days outstanding from continuing operations includes the accounts receivable of the Company’s Houston-area facilities that have been classified in assets held for sale on the Condensed Consolidated Balance Sheet at June 30, 2017, excludes our health plan revenues and excludes California Provider Fee revenue from the 2016 period.
Net cash provided by operating activities for the six months ended June 30, 2017 was $401 million, representing a $181 million decrease compared to $582 million in the first half of 2016. After subtracting $348 million and $413 million of capital expenditures in the six months ended June 30, 2017 and June 30, 2016, respectively, Free Cash Flow was $53 million in the six months ended June 30, 2017, representing a $116 million decline compared to $169 million in the comparable period in 2016. Adjusted Free Cash Flow was $117 million in the six months ended June 30, 2017, representing a $151 million decline from $268 million in the comparable period in 2016. The primary reasons for the decline in cash flow from operations, Free Cash Flow and Adjusted Free Cash Flow during the six months ended June 30, 2017 versus the comparable period in 2016 include lower earnings in the 2017 period, negative cash flows from our health plan businesses in 2017, and the timing of other working capital items.
Net cash used in investing activities was $308 million in the six months ended June 30, 2017 compared to $54 million of net cash provided by investing activities in the comparable period in 2016. The 2016 period included $573 million of proceeds from the sale of the Company’s hospitals and related outpatient facilities in Georgia.
Net cash used by financing activities was $334 million in the six months ended June 30, 2017 compared to $336 million of net cash used in financing activities in the comparable period in 2016.
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 revised Outlook for 2017 includes:
- Revenue of $19.1 billion to $19.4 billion,
- Net income from continuing operations attributable to Tenet common shareholders ranging from a loss of $115 million to a loss of $90 million,
- Adjusted EBITDA of $2.450 billion to $2.550 billion,
- Net cash provided by operating activities of $1.2 billion to $1.4 billion,
- Adjusted Free Cash Flow of $525 million to $725 million,
- Diluted earnings per share from continuing operations attributable to Tenet shareholders ranging from a loss of $1.14 to a loss of $0.89, and
- Adjusted diluted earnings per share from continuing operations attributable to Tenet shareholders of $0.69 to $0.99.
The Company is lowering its 2017 Adjusted EBITDA Outlook range by $75 million to reflect: (i) a reduction of approximately $30 million due to the completion of the previously announced sale of the Company’s hospitals in Houston, which was effective on August 1, 2017; (ii) a reduction of approximately $35 million related to lower expectations for the Company’s Hospital Operations and other segment in 2017, primarily due to lower volume projections and greater uncompensated care expense; (iii) a reduction of approximately $15 million for the Conifer segment primarily due to lower than previously anticipated revenues at Tenet’s hospitals, which negatively affects Conifer’s revenue, additional expenses that Conifer is incurring to improve cash flow performance for Tenet and other customers, and start-up costs on new contracts; and, (iv) a $5 million increase in Ambulatory Care segment EBITDA.
The Outlook for 2017 assumes equity in earnings of unconsolidated affiliates of $145 million to $155 million, electronic health record incentives of $8 million to $10 million, net income attributable to noncontrolling interests of $385 million to $405 million and an average diluted share count of 101 million. In addition, the Outlook assumes that CMS will approve the proposed California Provider Fee for the 30-month period from January 2017 through June 2019 during the fourth quarter of 2017 and further assumes that the Company will record approximately $220 million to $230 million of revenue and Adjusted EBITDA during 2017 as a result of this program. In 2016, the Company recorded $232 million of revenue under the California Provider Fee program. The Company will not be able to recognize any revenue under the 2017 program until CMS approves the program. Finally, the Adjusted EBITDA Outlook excludes approximately $50 million of losses in 2017 that the Company expects to incur in its health plan business.
The Company’s Outlook for the third quarter of 2017 includes:
- Revenue of $4.6 billion to $4.8 billion,
- Net loss from continuing operations attributable to Tenet shareholders ranging from a loss of $157 million to a loss of $147 million,
- Adjusted EBITDA of $500 million to $550 million,
- A loss per diluted share from continuing operations attributable to Tenet shareholders ranging from a loss of $1.55 to a loss of $1.46, and
- An Adjusted loss per diluted share from continuing operations attributable to Tenet shareholders ranging from a loss of $0.35 to a loss of $0.20.
The Outlook for the third quarter assumes equity in earnings of unconsolidated affiliates of approximately $35 million, less than $1 million of electronic health record incentives, net income attributable to noncontrolling interests of $95 million to $105 million and an average diluted share count of 101 million. The Outlook for the third quarter of 2017 does not include any revenue or Adjusted EBITDA associated with the California Provider Fee program, whereas the Company’s results in the third quarter of 2016 included $55 million of revenue and Adjusted EBITDA associated with the program.
Additional details on Tenet’s Outlook for both the third quarter and calendar year 2017 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 Second Quarter Results
Tenet management will discuss the Company’s second quarter 2017 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on August 8, 2017. 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, 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-K report for the twelve months ended December 31, 2016 and Form 10-Q report for the period ended June 30, 2017, which will be filed with the Securities and Exchange Commission and posted on the Company’s website before the webcast.
This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income from continuing operations attributable to Tenet shareholders, Adjusted diluted earnings per share from continuing operations attributable to Tenet shareholders, 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 nearly 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 77 general acute care hospitals, 21 short-stay surgical hospitals and approximately 460 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, 2016 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.
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TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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| (Dollars in millions except per share amounts) | Three Months Ended June 30, | ||||||||||||||||||||||||
| 2017 | % | 2016 | % | Change | |||||||||||||||||||||
| Net operating revenues: | |||||||||||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 5,173 | $ | 5,220 | (0.9 | ) | % | ||||||||||||||||||
| Less: Provision for doubtful accounts | 371 | 352 | 5.4 | % | |||||||||||||||||||||
| Net operating revenues | 4,802 | 100.0 | % | 4,868 | 100.0 | % | (1.4 | ) | % | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 28 | 0.6 | % | 30 | 0.6 | % | (6.7 | ) | % | ||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||
| Salaries, wages and benefits | 2,346 | 48.9 | % | 2,309 | 47.4 | % | 1.6 | % | |||||||||||||||||
| Supplies | 780 | 16.2 | % | 773 | 15.9 | % | 0.9 | % | |||||||||||||||||
| Other operating expenses, net | 1,159 | 24.1 | % | 1,213 | 24.9 | % | (4.5 | ) | % | ||||||||||||||||
| Electronic health record incentives | (6 | ) | (0.1 | ) | % | (21 | ) | (0.4 | ) | % | (71.4 | ) | % | ||||||||||||
| Depreciation and amortization | 222 | 4.6 | % | 215 | 4.4 | % | |||||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 41 | 0.9 | % | 22 | 0.5 | % | |||||||||||||||||||
| Litigation and investigation costs | 1 | 0.0 | % | 114 | 2.3 | % | |||||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (23 | ) | (0.5 | ) | % | (1 | ) | 0.0 | % | ||||||||||||||||
| Operating income | 310 | 6.5 | % | 274 | 5.6 | % | |||||||||||||||||||
| Interest expense | (260 | ) | (244 | ) | |||||||||||||||||||||
| Other non-operating income (expense), net | (5 | ) | (5 | ) | |||||||||||||||||||||
| Loss from early extinguishment of debt | (26 | ) | — | ||||||||||||||||||||||
| Net income from continuing operations, before income taxes | 19 | 25 | |||||||||||||||||||||||
| Income tax benefit | 12 | 16 | |||||||||||||||||||||||
| Net income from continuing operations, before discontinued operations | 31 | 41 | |||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Income (loss) from operations | 2 | (2 | ) | ||||||||||||||||||||||
| Income tax expense | (1 | ) | — | ||||||||||||||||||||||
| Net income (loss) from discontinued operations | 1 | (2 | ) | ||||||||||||||||||||||
| Net income | 32 | 39 | |||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 87 | 85 | |||||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (55 | ) | $ | (46 | ) | |||||||||||||||||||
| Amounts attributable to Tenet Healthcare Corporation common shareholders | |||||||||||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (56 | ) | $ | (44 | ) | |||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 1 | (2 | ) | ||||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (55 | ) | $ | (46 | ) | |||||||||||||||||||
| Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||
| Continuing operations | $ | (0.56 | ) | $ | (0.44 | ) | |||||||||||||||||||
| Discontinued operations | 0.01 | (0.02 | ) | ||||||||||||||||||||||
| $ | (0.55 | ) | $ | (0.46 | ) | ||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||
| Continuing operations | $ | (0.56 | ) | $ | (0.44 | ) | |||||||||||||||||||
| Discontinued operations | 0.01 | (0.02 | ) | ||||||||||||||||||||||
| $ | (0.55 | ) | $ | (0.46 | ) | ||||||||||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||||||||||
| Basic | 100.612 | 99.341 | |||||||||||||||||||||||
| Diluted* | 100.612 | 99.341 | |||||||||||||||||||||||
| * | Had we generated income from continuing operations in the three months ended June 30, 2017 and 2016 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 682 thousand and 1,386 thousand shares, respectively. |
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TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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| (Dollars in millions except per share amounts) | Six Months Ended June 30, | ||||||||||||||||||||||||
| 2017 | % | 2016 | % | Change | |||||||||||||||||||||
| Net operating revenues: | |||||||||||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 10,369 | $ | 10,640 | (2.5 | ) | % | ||||||||||||||||||
| Less: Provision for doubtful accounts | 754 | 728 | 3.6 | % | |||||||||||||||||||||
| Net operating revenues | 9,615 | 100.0 | % | 9,912 | 100.0 | % | (3.0 | ) | % | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 57 | 0.6 | % | 54 | 0.5 | % | 5.6 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||
| Salaries, wages and benefits | 4,726 | 49.2 | % | 4,704 | 47.5 | % | 0.5 | % | |||||||||||||||||
| Supplies | 1,545 | 16.1 | % | 1,584 | 16.0 | % | (2.5 | ) | % | ||||||||||||||||
| Other operating expenses, net | 2,346 | 24.4 | % | 2,455 | 24.8 | % | (4.4 | ) | % | ||||||||||||||||
| Electronic health record incentives | (7 | ) | (0.1 | ) | % | (21 | ) | (0.2 | ) | % | (66.7 | ) | % | ||||||||||||
| Depreciation and amortization | 443 | 4.6 | % | 427 | 4.3 | % | |||||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 74 | 0.8 | % | 50 | 0.5 | % | |||||||||||||||||||
| Litigation and investigation costs | 6 | 0.1 | % | 287 | 2.9 | % | |||||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (38 | ) | (0.4 | ) | % | (148 | ) | (1.5 | ) | % | |||||||||||||||
| Operating income | 577 | 6.0 | % | 628 | 6.3 | % | |||||||||||||||||||
| Interest expense | (518 | ) | (487 | ) | |||||||||||||||||||||
| Other non-operating income (expense), net | (10 | ) | (11 | ) | |||||||||||||||||||||
| Loss from early extinguishment of debt | (26 | ) | — | ||||||||||||||||||||||
| Net income from continuing operations, before income taxes | 23 | 130 | |||||||||||||||||||||||
| Income tax benefit (expense) | 45 | (51 | ) | ||||||||||||||||||||||
| Net income from continuing operations, before discontinued operations | 68 | 79 | |||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Loss from operations | — | (7 | ) | ||||||||||||||||||||||
| Income tax benefit | — | 1 | |||||||||||||||||||||||
| Net loss from discontinued operations | — | (6 | ) | ||||||||||||||||||||||
| Net income | 68 | 73 | |||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 176 | 178 | |||||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (108 | ) | $ | (105 | ) | |||||||||||||||||||
| Amounts attributable to Tenet Healthcare Corporation common shareholders | |||||||||||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (108 | ) | $ | (99 | ) | |||||||||||||||||||
| Net loss from discontinued operations, net of tax | — | (6 | ) | ||||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (108 | ) | $ | (105 | ) | |||||||||||||||||||
| Net loss per share attributable to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||
| Continuing operations | $ | (1.08 | ) | $ | (1.00 | ) | |||||||||||||||||||
| Discontinued operations | — | (0.06 | ) | ||||||||||||||||||||||
| $ | (1.08 | ) | $ | (1.06 | ) | ||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||
| Continuing operations | $ | (1.08 | ) | $ | (1.00 | ) | |||||||||||||||||||
| Discontinued operations | — | (0.06 | ) | ||||||||||||||||||||||
| $ | (1.08 | ) | $ | (1.06 | ) | ||||||||||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||||||||||
| Basic | 100.306 | 99.054 | |||||||||||||||||||||||
| Diluted* | 100.306 | 99.054 | |||||||||||||||||||||||
| * | Had we generated income from continuing operations in the six months ended June 30, 2017 and 2016, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 766 thousand and 1,477 thousand shares, respectively. |
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TENET HEALTHCARE CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| June 30, | December 31, | |||||||||
| (Dollars in millions) | 2017 | 2016 | ||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 475 | $ | 716 | ||||||
| Accounts receivable, less allowance for doubtful accounts | 2,706 | 2,897 | ||||||||
| Inventories of supplies, at cost | 316 | 326 | ||||||||
| Income tax receivable | 7 | 4 | ||||||||
| Assets held for sale | 705 | 29 | ||||||||
| Other current assets | 1,173 | 1,285 | ||||||||
| Total current assets | 5,382 | 5,257 | ||||||||
| Investments and other assets | 1,238 | 1,250 | ||||||||
| Deferred income taxes | 1,020 | 871 | ||||||||
| Property and equipment, at cost, less accumulated depreciation and amortization | 7,738 | 8,053 | ||||||||
| Goodwill | 7,157 | 7,425 | ||||||||
| Other intangible assets, at cost, less accumulated amortization | 1,806 | 1,845 | ||||||||
| Total assets | $ | 24,341 | $ | 24,701 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt | $ | 143 | $ | 191 | ||||||
| Accounts payable | 1,086 | 1,329 | ||||||||
| Accrued compensation and benefits | 749 | 872 | ||||||||
| Professional and general liability reserves | 208 | 181 | ||||||||
| Accrued interest payable | 238 | 210 | ||||||||
| Liabilities held for sale | 51 | 9 | ||||||||
| Accrued legal settlement costs | 1 | 8 | ||||||||
| Other current liabilities | 1,861 | 1,234 | ||||||||
| Total current liabilities | 4,337 | 4,034 | ||||||||
| Long-term debt, net of current portion | 15,012 | 15,064 | ||||||||
| Professional and general liability reserves | 644 | 613 | ||||||||
| Defined benefit plan obligations | 618 | 626 | ||||||||
| Deferred income taxes | 296 | 279 | ||||||||
| Other long-term liabilities | 598 | 610 | ||||||||
| Total liabilities | 21,505 | 21,226 | ||||||||
| Commitments and contingencies | ||||||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 1,781 | 2,393 | ||||||||
| Equity: | ||||||||||
| Shareholders’ equity: | ||||||||||
| Common stock | 7 | 7 | ||||||||
| Additional paid-in capital | 4,819 | 4,827 | ||||||||
| Accumulated other comprehensive loss | (242 | ) | (258 | ) | ||||||
| Accumulated deficit | (1,794 | ) | (1,742 | ) | ||||||
| Common stock in treasury, at cost | (2,417 | ) | (2,417 | ) | ||||||
| Total shareholders’ equity | 373 | 417 | ||||||||
| Noncontrolling interests | 682 | 665 | ||||||||
| Total equity | 1,055 | 1,082 | ||||||||
| Total liabilities and equity | $ | 24,341 | $ | 24,701 | ||||||
|
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) |
||||||||||
| Six Months Ended | ||||||||||
| (Dollars in millions) | June 30, | |||||||||
| 2017 | 2016 | |||||||||
| Net Income | $ | 68 | $ | 73 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 443 | 427 | ||||||||
| Provision for doubtful accounts | 754 | 728 | ||||||||
| Deferred income tax expense (benefit) | (81 | ) | 37 | |||||||
| Stock-based compensation expense | 29 | 35 | ||||||||
| Impairment and restructuring charges, and acquisition-related costs | 74 | 50 | ||||||||
| Litigation and investigation costs | 6 | 287 | ||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (38 | ) | (148 | ) | ||||||
| Loss from early extinguishment of debt | 26 | — | ||||||||
| Equity in earnings of unconsolidated affiliates, net of distributions received | 4 | 10 | ||||||||
| Amortization of debt discount and debt issuance costs | 22 | 21 | ||||||||
| Pre-tax loss from discontinued operations | — | 7 | ||||||||
| Other items, net | (25 | ) | (2 | ) | ||||||
| Changes in cash from operating assets and liabilities: | ||||||||||
| Accounts receivable | (673 | ) | (725 | ) | ||||||
| Inventories and other current assets | 160 | (30 | ) | |||||||
| Income taxes | (7 | ) | (17 | ) | ||||||
| Accounts payable, accrued expenses and other current liabilities | (345 | ) | (106 | ) | ||||||
| Other long-term liabilities | 48 | 34 | ||||||||
| Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (62 | ) | (99 | ) | ||||||
| Net cash used in operating activities from discontinued operations, excluding income taxes | (2 | ) | — | |||||||
| Net cash provided by operating activities | 401 | 582 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property and equipment — continuing operations | (348 | ) | (413 | ) | ||||||
| Purchases of businesses or joint venture interests, net of cash acquired | (26 | ) | (94 | ) | ||||||
| Proceeds from sales of facilities and other assets | 74 | 573 | ||||||||
| Proceeds from sales of marketable securities, long-term investments and other assets | 16 | 24 | ||||||||
| Purchases of equity investments | (2 | ) | (35 | ) | ||||||
| Other long-term assets | (12 | ) | (3 | ) | ||||||
| Other items, net | (10 | ) | 2 | |||||||
| Net cash provided by (used in) investing activities | (308 | ) | 54 | |||||||
| Cash flows from financing activities: | ||||||||||
| Repayments of borrowings under credit facility | (100 | ) | (1,195 | ) | ||||||
| Proceeds from borrowings under credit facility | 100 | 1,195 | ||||||||
| Repayments of other borrowings | (1,029 | ) | (76 | ) | ||||||
| Proceeds from other borrowings | 837 | — | ||||||||
| Debt issuance costs | (29 | ) | — | |||||||
| Distributions paid to noncontrolling interests | (123 | ) | (95 | ) | ||||||
| Proceeds from sale of noncontrolling interests | 14 | 15 | ||||||||
| Purchases of noncontrolling interests | (5 | ) | (177 | ) | ||||||
| Proceeds from exercise of stock options and employee stock purchase plan | 3 | 3 | ||||||||
| Other items, net | (2 | ) | (6 | ) | ||||||
| Net cash used in financing activities | (334 | ) | (336 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | (241 | ) | 300 | |||||||
| Cash and cash equivalents at beginning of period | 716 | 356 | ||||||||
| Cash and cash equivalents at end of period | $ | 475 | $ | 656 | ||||||
| Supplemental disclosures: | ||||||||||
| Interest paid, net of capitalized interest | $ | (468 | ) | $ | (467 | ) | ||||
| Income tax payments, net | $ | (44 | ) | $ | (29 | ) | ||||
|
TENET HEALTHCARE CORPORATION SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1) (Unaudited) |
||||||||||||||||||||||||||||||||
|
(Dollars in millions except per patient day, |
||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||||||||||||||||||
| Number of hospitals (at end of period) | 76 | 75 | 1 | * | 76 | 75 | 1 | * | ||||||||||||||||||||||||
| Total admissions | 190,394 | 193,898 | (1.8 | ) | % | 387,301 | 405,697 | (4.5 | ) | % | ||||||||||||||||||||||
| Adjusted patient admissions | 342,439 | 342,813 | (0.1 | ) | % | 689,589 | 705,632 | (2.3 | ) | % | ||||||||||||||||||||||
| Paying admissions (excludes charity and uninsured) | 179,889 | 183,539 | (2.0 | ) | % | 366,537 | 384,975 | (4.8 | ) | % | ||||||||||||||||||||||
| Charity and uninsured admissions | 10,505 | 10,359 | 1.4 | % | 20,764 | 20,722 | 0.2 | % | ||||||||||||||||||||||||
| Admissions through emergency department | 121,807 | 122,283 | (0.4 | ) | % | 248,280 | 258,339 | (3.9 | ) | % | ||||||||||||||||||||||
| Paying admissions as a percentage of total admissions | 94.5 | % | 94.7 | % | (0.2 | ) | % | * | 94.6 | % | 94.9 | % | (0.3 | ) | % | * | ||||||||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.5 | % | 5.3 | % | 0.2 | % | * | 5.4 | % | 5.1 | % | 0.3 | % | * | ||||||||||||||||||
| Emergency department admissions as a percentage of total admissions | 64.0 | % | 63.1 | % | 0.9 | % | * | 64.1 | % | 63.7 | % | 0.4 | % | * | ||||||||||||||||||
| Surgeries — inpatient | 52,083 | 54,380 | (4.2 | ) | % | 103,883 | 110,134 | (5.7 | ) | % | ||||||||||||||||||||||
| Surgeries — outpatient | 71,366 | 75,821 | (5.9 | ) | % | 140,970 | 152,650 | (7.7 | ) | % | ||||||||||||||||||||||
| Total surgeries | 123,449 | 130,201 | (5.2 | ) | % | 244,853 | 262,784 | (6.8 | ) | % | ||||||||||||||||||||||
| Patient days — total | 874,930 | 897,313 | (2.5 | ) | % | 1,798,269 | 1,907,827 | (5.7 | ) | % | ||||||||||||||||||||||
| Adjusted patient days | 1,552,302 | 1,569,272 | (1.1 | ) | % | 3,156,000 | 3,283,641 | (3.9 | ) | % | ||||||||||||||||||||||
| Average length of stay (days) | 4.60 | 4.63 | (0.6 | ) | % | 4.64 | 4.70 | (1.3 | ) | % | ||||||||||||||||||||||
| Licensed beds (at end of period) | 20,435 | 20,380 | 0.3 | % | 20,435 | 20,380 | 0.3 | % | ||||||||||||||||||||||||
| Average licensed beds | 20,435 | 20,380 | 0.3 | % | 20,437 | 20,953 | (2.5 | ) | % | |||||||||||||||||||||||
| Utilization of licensed beds | 47.0 | % | 48.4 | % | (1.4 | ) | % | * | 48.6 | % | 50.0 | % | (1.4 | ) | % | * | ||||||||||||||||
| Outpatient Visits | ||||||||||||||||||||||||||||||||
| Total visits | 1,981,848 | 2,038,287 | (2.8 | ) | % | 4,021,790 | 4,184,905 | (3.9 | ) | % | ||||||||||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,849,697 | 1,896,394 | (2.5 | ) | % | 3,757,909 | 3,880,909 | (3.2 | ) | % | ||||||||||||||||||||||
| Charity and uninsured visits | 132,151 | 141,893 | (6.9 | ) | % | 263,881 | 303,996 | (13.2 | ) | % | ||||||||||||||||||||||
| Emergency department visits | 724,785 | 715,692 | 1.3 | % | 1,457,836 | 1,505,608 | (3.2 | ) | % | |||||||||||||||||||||||
| Paying visits as a percentage of total visits | 93.3 | % | 93.0 | % | 0.3 | % | * | 93.4 | % | 92.7 | % | 0.7 | % | * | ||||||||||||||||||
| Charity and uninsured visits as a percentage of total visits | 6.7 | % | 7.0 | % | (0.3 | ) | % | * | 6.6 | % | 7.3 | % | (0.7 | ) | % | * | ||||||||||||||||
| Total emergency department admissions and visits | 846,592 | 837,975 | 1.0 | % | 1,706,116 | 1,763,947 | (3.3 | ) | % | |||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Net inpatient revenues | $ | 2,555 | $ | 2,588 | (1.3 | ) | % | $ | 5,164 | $ | 5,369 | (3.8 | ) | % | ||||||||||||||||||
| Net outpatient revenues | $ | 1,511 | $ | 1,460 | 3.5 | % | $ | 2,993 | $ | 2,974 | 0.6 | % | ||||||||||||||||||||
| Total patient revenues | $ | 4,066 | $ | 4,048 | 0.4 | % | $ | 8,157 | $ | 8,343 | (2.2 | ) | % | |||||||||||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||||||||||||||||||
| Net inpatient revenue per admission | $ | 13,420 | $ | 13,347 | 0.5 | % | $ | 13,335 | $ | 13,234 | 0.8 | % | ||||||||||||||||||||
| Net inpatient revenue per patient day | $ | 2,920 | $ | 2,884 | 1.2 | % | $ | 2,872 | $ | 2,814 | 2.1 | % | ||||||||||||||||||||
| Net outpatient revenue per visit | $ | 762 | $ | 716 | 6.4 | % | $ | 744 | $ | 711 | 4.6 | % | ||||||||||||||||||||
| Net patient revenue per adjusted patient admission | $ | 11,874 | $ | 11,808 | 0.6 | % | $ | 11,829 | $ | 11,823 | 0.1 | % | ||||||||||||||||||||
| Net patient revenue per adjusted patient day | $ | 2,619 | $ | 2,580 | 1.5 | % | $ | 2,585 | $ | 2,541 | 1.7 | % | ||||||||||||||||||||
| Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) | $ | 10,394 | $ | 10,157 | 2.3 | % | $ | 10,342 | $ | 10,129 | 2.1 | % | ||||||||||||||||||||
| Net Patient Revenues from: | ||||||||||||||||||||||||||||||||
| Medicare | 20.1 | % | 21.7 | % | (1.6 | ) | % | * | 20.6 | % | 20.8 | % | (0.2 | ) | % | * | ||||||||||||||||
| Medicaid | 6.9 | % | 7.4 | % | (0.5 | ) | % | * | 6.8 | % | 8.0 | % | (1.2 | ) | % | * | ||||||||||||||||
| Managed care | 62.5 | % | 59.4 | % | 3.1 | % | * | 62.4 | % | 60.4 | % | 2.0 | % | * | ||||||||||||||||||
| Indemnity, self-pay and other | 10.5 | % | 11.5 | % | (1.0 | ) | % | * | 10.2 | % | 10.8 | % | (0.6 | ) | % | * | ||||||||||||||||
| (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. |
|
* |
This change is the difference between the 2017 and 2016 amounts shown. |
|
TENET HEALTHCARE CORPORATION SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1) (Unaudited) |
||||||||||||||||||||||||||||||||
|
(Dollars in millions except per patient day, |
||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||||||
| Admissions, Patient Days and Surgeries | ||||||||||||||||||||||||||||||||
| Number of hospitals (at end of period) | 75 | 75 | — | * |
|
75 | 75 | — | * | |||||||||||||||||||||||
| Total admissions | 189,473 | 193,779 | (2.2 | ) | % | 385,655 | 396,652 | (2.8 | ) | % | ||||||||||||||||||||||
| Adjusted patient admissions | 335,915 | 340,792 | (1.4 | ) | % | 675,437 | 689,013 | (2.0 | ) | % | ||||||||||||||||||||||
| Paying admissions (excludes charity and uninsured) | 179,101 | 183,474 | (2.4 | ) | % | 365,180 | 376,760 | (3.1 | ) | % | ||||||||||||||||||||||
| Charity and uninsured admissions | 10,372 | 10,305 | 0.7 | % | 20,475 | 19,892 | 2.9 | % | ||||||||||||||||||||||||
| Admissions through emergency department | 121,212 | 122,239 | (0.8 | ) | % | 247,279 | 251,845 | (1.8 | ) | % | ||||||||||||||||||||||
| Paying admissions as a percentage of total admissions | 94.5 | % | 94.7 | % | (0.2 | ) | % | * | 94.7 | % | 95.0 | % | (0.3 | ) | % | * | ||||||||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.5 | % | 5.3 | % | 0.2 | % | * | 5.3 | % | 5.0 | % | 0.3 | % | * | ||||||||||||||||||
| Emergency department admissions as a percentage of total admissions | 64.0 | % | 63.1 | % | 0.9 | % | * | 64.1 | % | 63.5 | % | 0.6 | % | * | ||||||||||||||||||
| Surgeries — inpatient | 51,913 | 54,376 | (4.5 | ) | % | 103,636 | 108,115 | (4.1 | ) | % | ||||||||||||||||||||||
| Surgeries — outpatient | 71,253 | 75,825 | (6.0 | ) | % | 140,806 | 150,185 | (6.2 | ) | % | ||||||||||||||||||||||
| Total surgeries | 123,166 | 130,201 | (5.4 | ) | % | 244,442 | 258,300 | (5.4 | ) | % | ||||||||||||||||||||||
| Patient days — total | 871,816 | 897,127 | (2.8 | ) | % | 1,792,830 | 1,858,125 | (3.5 | ) | % | ||||||||||||||||||||||
| Adjusted patient days | 1,538,940 | 1,568,680 | (1.9 | ) | % | 3,122,902 | 3,206,088 | (2.6 | ) | % | ||||||||||||||||||||||
| Average length of stay (days) | 4.60 | 4.63 | (0.6 | ) | % | 4.65 | 4.68 | (0.6 | ) | % | ||||||||||||||||||||||
| Licensed beds (at end of period) | 20,329 | 20,380 | (0.3 | ) | % | 20,329 | 20,380 | (0.3 | ) | % | ||||||||||||||||||||||
| Average licensed beds | 20,329 | 20,380 | (0.3 | ) | % | 20,331 | 20,378 | (0.2 | ) | % | ||||||||||||||||||||||
| Utilization of licensed beds | 47.1 | % | 48.4 | % | (1.3 | ) | % | * | 48.7 | % | 50.4 | % | (1.7 | ) | % | * | ||||||||||||||||
| Outpatient Visits | ||||||||||||||||||||||||||||||||
| Total visits | 1,950,251 | 2,025,946 | (3.7 | ) | % | 3,959,659 | 4,078,115 | (2.9 | ) | % | ||||||||||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,823,601 | 1,884,716 | (3.2 | ) | % | 3,706,836 | 3,792,714 | (2.3 | ) | % | ||||||||||||||||||||||
| Charity and uninsured visits | 126,650 | 141,230 | (10.3 | ) | % | 252,823 | 285,401 | (11.4 | ) | % | ||||||||||||||||||||||
| Emergency department visits | 694,213 | 703,276 | (1.3 | ) | % | 1,397,248 | 1,437,032 | (2.8 | ) | % | ||||||||||||||||||||||
| Paying visits as a percentage of total visits | 93.5 | % | 93.0 | % | 0.5 | % | * | 93.6 | % | 93.0 | % | 0.6 | % | * | ||||||||||||||||||
| Charity and uninsured visits as a percentage of total visits | 6.5 | % | 7.0 | % | (0.5 | ) | % | * | 6.4 | % | 7.0 | % | (0.6 | ) | % | * | ||||||||||||||||
| Total emergency department admissions and visits | 815,425 | 825,515 | (1.2 | ) | % | 1,644,527 | 1,688,877 | (2.6 | ) | % | ||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Net inpatient revenues | $ | 2,545 | $ | 2,568 | (0.9 | ) | % | $ | 5,150 | $ | 5,231 | (1.5 | ) | % | ||||||||||||||||||
| Net outpatient revenues | $ | 1,491 | $ | 1,451 | 2.8 | % | $ | 2,954 | $ | 2,896 | 2.0 | % | ||||||||||||||||||||
| Total patient revenues | $ | 4,036 | $ | 4,019 | 0.4 | % | $ | 8,104 | $ | 8,127 | (0.3 | ) | % | |||||||||||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | ||||||||||||||||||||||||||||||||
| Net inpatient revenue per admission | $ | 13,432 | $ | 13,252 | 1.4 | % | $ | 13,354 | $ | 13,188 | 1.3 | % | ||||||||||||||||||||
| Net inpatient revenue per patient day | $ | 2,919 | $ | 2,862 | 2.0 | % | $ | 2,873 | $ | 2,815 | 2.1 | % | ||||||||||||||||||||
| Net outpatient revenue per visit | $ | 765 | $ | 716 | 6.8 | % | $ | 746 | $ | 710 | 5.1 | % | ||||||||||||||||||||
| Net patient revenue per adjusted patient admission | $ | 12,015 | $ | 11,793 | 1.9 | % | $ | 11,998 | $ | 11,795 | 1.7 | % | ||||||||||||||||||||
| Net patient revenue per adjusted patient day | $ | 2,623 | $ | 2,562 | 2.4 | % | $ | 2,595 | $ | 2,535 | 2.4 | % | ||||||||||||||||||||
| Net Patient Revenues from: | ||||||||||||||||||||||||||||||||
| Medicare | 20.2 | % | 21.8 | % | (1.6 | ) | % | * | 20.7 | % | 20.9 | % | (0.2 | ) | % | * | ||||||||||||||||
| Medicaid | 6.9 | % | 7.6 | % | (0.7 | ) | % | * | 6.9 | % | 8.1 | % | (1.2 | ) | % | * | ||||||||||||||||
| Managed care | 62.3 | % | 59.6 | % | 2.7 | % | * | 62.2 | % | 60.6 | % | 1.6 | % | * | ||||||||||||||||||
| Indemnity, self-pay and other | 10.6 | % | 11.0 | % | (0.4 | ) | % | * | 10.2 | % | 10.4 | % | (0.2 | ) | % | * | ||||||||||||||||
| (1) | Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 75 hospitals operated throughout the six months ended June 30, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016. |
| * |
This change is the difference between the 2017 and 2016 amounts shown. |
|
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||
| (Dollars in millions except per share amounts) | Three Months Ended | Six months ended | ||||||||||||||
| 3/31/2017 | 6/30/2017 | 6/30/2017 | ||||||||||||||
| Net operating revenues: | ||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 5,196 | $ | 5,173 | $ | 10,369 | ||||||||||
| Less: Provision for doubtful accounts | 383 | 371 | 754 | |||||||||||||
| Net operating revenues | 4,813 | 4,802 | 9,615 | |||||||||||||
| Equity in earnings of unconsolidated affiliates | 29 | 28 | 57 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries, wages and benefits | 2,380 | 2,346 | 4,726 | |||||||||||||
| Supplies | 765 | 780 | 1,545 | |||||||||||||
| Other operating expenses, net | 1,187 | 1,159 | 2,346 | |||||||||||||
| Electronic health record incentives | (1 | ) | (6 | ) | (7 | ) | ||||||||||
| Depreciation and amortization | 221 | 222 | 443 | |||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 33 | 41 | 74 | |||||||||||||
| Litigation and investigation costs | 5 | 1 | 6 | |||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (15 | ) | (23 | ) | (38 | ) | ||||||||||
| Operating income | 267 | 310 | 577 | |||||||||||||
| Interest expense | (258 | ) | (260 | ) | (518 | ) | ||||||||||
| Other non-operating income (expense), net | (5 | ) | (5 | ) | (10 | ) | ||||||||||
| Loss from early extinguishment of debt | — | (26 | ) | (26 | ) | |||||||||||
| Net income from continuing operations, before income taxes | 4 | 19 | 23 | |||||||||||||
| Income tax benefit | 33 | 12 | 45 | |||||||||||||
| Net income from continuing operations, before discontinued operations | 37 | 31 | 68 | |||||||||||||
| Discontinued operations: | ||||||||||||||||
| Income (loss) from operations | (2 | ) | 2 | — | ||||||||||||
| Income tax benefit (expense) | 1 | (1 | ) | — | ||||||||||||
| Net income (loss) from discontinued operations | (1 | ) | 1 | — | ||||||||||||
| Net income | 36 | 32 | 68 | |||||||||||||
| Less: Net income attributable to noncontrolling interests | 89 | 87 | 176 | |||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (108 | ) | |||||||
| Amounts attributable to Tenet Healthcare Corporation common shareholders | ||||||||||||||||
| Net loss from continuing operations, net of tax | $ | (52 | ) | $ | (56 | ) | $ | (108 | ) | |||||||
| Net income (loss) from discontinued operations, net of tax | (1 | ) | 1 | — | ||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (108 | ) | |||||||
| Net loss per share attributable to Tenet Healthcare Corporation common shareholders: | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | (0.52 | ) | $ | (0.56 | ) | $ | (1.08 | ) | |||||||
| Discontinued operations | (0.01 | ) | 0.01 | — | ||||||||||||
| $ | (0.53 | ) | $ | (0.55 | ) | $ | (1.08 | ) | ||||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | (0.52 | ) | $ | (0.56 | ) | $ | (1.08 | ) | |||||||
| Discontinued operations | (0.01 | ) | 0.01 | — | ||||||||||||
| $ | (0.53 | ) | $ | (0.55 | ) | $ | (1.08 | ) | ||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | ||||||||||||||||
| Basic | 100,000 | 100.612 | 100,306 | |||||||||||||
| Diluted | 100,000 | 100.612 | 100,306 | |||||||||||||
|
TENET HEALTHCARE CORPORATION SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1) (Unaudited) |
|||||||||||||||
|
(Dollars in millions except per patient day, |
|||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| 3/31/2017 | 6/30/2017 | 6/30/2017 | |||||||||||||
| Admissions, Patient Days and Surgeries | |||||||||||||||
| Number of hospitals (at end of period) | 76 | 76 | 76 | ||||||||||||
| Total admissions | 196,907 | 190,394 | 387,301 | ||||||||||||
| Adjusted patient admissions | 347,150 | 342,439 | 689,589 | ||||||||||||
| Paying admissions (excludes charity and uninsured) | 186,648 | 179,889 | 366,537 | ||||||||||||
| Charity and uninsured admissions | 10,259 | 10,505 | 20,764 | ||||||||||||
| Admissions through emergency department | 126,473 | 121,807 | 248,280 | ||||||||||||
| Paying admissions as a percentage of total admissions | 94.8 | % | 94.5 | % | 94.6 | % | |||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.2 | % | 5.5 | % | 5.4 | % | |||||||||
| Emergency department admissions as a percentage of total admissions | 64.2 | % | 64.0 | % | 64.1 | % | |||||||||
| Surgeries — inpatient | 51,800 | 52,083 | 103,883 | ||||||||||||
| Surgeries — outpatient | 69,604 | 71,366 | 140,970 | ||||||||||||
| Total surgeries | 121,404 | 123,449 | 244,853 | ||||||||||||
| Patient days — total | 923,339 | 874,930 | 1,798,269 | ||||||||||||
| Adjusted patient days | 1,603,698 | 1,552,302 | 3,156,000 | ||||||||||||
| Average length of stay (days) | 4.69 | 4.60 | 4.64 | ||||||||||||
| Licensed beds (at end of period) | 20,439 | 20,435 | 20,435 | ||||||||||||
| Average licensed beds | 20,440 | 20,435 | 20,437 | ||||||||||||
| Utilization of licensed beds | 50.2 | % | 47.0 | % | 48.6 | % | |||||||||
| Outpatient Visits | |||||||||||||||
| Total visits | 2,039,942 | 1,981,848 | 4,021,790 | ||||||||||||
| Paying visits (excludes charity and uninsured) | 1,908,212 | 1,849,697 | 3,757,909 | ||||||||||||
| Charity and uninsured visits | 131,730 | 132,151 | 263,881 | ||||||||||||
| Emergency department visits | 733,051 | 724,785 | 1,457,836 | ||||||||||||
| Paying visits as a percentage of total visits | 93.5 | % | 93.3 | % | 93.4 | % | |||||||||
| Charity and uninsured visits as a percentage of total visits | 6.5 | % | 6.7 | % | 6.6 | % | |||||||||
| Total emergency department admissions and visits | 859,524 | 846,592 | 1,706,116 | ||||||||||||
| Revenues | |||||||||||||||
| Net inpatient revenues | $ | 2,609 | $ | 2,555 | $ | 5,164 | |||||||||
| Net outpatient revenues | $ | 1,482 | $ | 1,511 | $ | 2,993 | |||||||||
| Total patient revenues | $ | 4,091 | $ | 4,066 | $ | 8,157 | |||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | |||||||||||||||
| Net inpatient revenue per admission | $ | 13,250 | $ | 13,420 | $ | 13,335 | |||||||||
| Net inpatient revenue per patient day | $ | 2,826 | $ | 2,920 | $ | 2,872 | |||||||||
| Net outpatient revenue per visit | $ | 726 | $ | 762 | $ | 744 | |||||||||
| Net patient revenue per adjusted patient admission | $ | 11,785 | $ | 11,874 | $ | 11,829 | |||||||||
| Net patient revenue per adjusted patient day | $ | 2,551 | $ | 2,619 | $ | 2,585 | |||||||||
| Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) | $ | 10,290 | $ | 10,394 | $ | 10,342 | |||||||||
| Net Patient Revenues from: | |||||||||||||||
| Medicare | 21.0 | % | 20.1 | % | 20.6 | % | |||||||||
| Medicaid | 6.7 | % | 6.9 | % | 6.8 | % | |||||||||
| Managed care | 62.3 | % | 62.5 | % | 62.4 | % | |||||||||
| Indemnity, self-pay and other | 10.0 | % | 10.5 | % | 10.2 | % | |||||||||
| (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. |
|
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 | Six Months Ended | ||||||||||||||
| 3/31/2017 | 6/30/2017 | 6/30/2017 | |||||||||||||
| Admissions, Patient Days and Surgeries | |||||||||||||||
| Number of hospitals (at end of period) | 75 | 75 | 75 | ||||||||||||
| Total admissions | 196,182 | 189,473 | 385,655 | ||||||||||||
| Adjusted patient admissions | 339,522 | 335,915 | 675,437 | ||||||||||||
| Paying admissions (excludes charity and uninsured) | 186,079 | 179,101 | 365,180 | ||||||||||||
| Charity and uninsured admissions | 10,103 | 10,372 | 20,475 | ||||||||||||
| Admissions through emergency department | 126,067 | 121,212 | 247,279 | ||||||||||||
| Paying admissions as a percentage of total admissions | 94.9 | % | 94.5 | % | 94.7 | % | |||||||||
| Charity and uninsured admissions as a percentage of total admissions | 5.1 | % | 5.5 | % | 5.3 | % | |||||||||
| Emergency department admissions as a percentage of total admissions | 64.3 | % | 64.0 | % | 64.1 | % | |||||||||
| Surgeries — inpatient | 51,723 | 51,913 | 103,636 | ||||||||||||
| Surgeries — outpatient | 69,553 | 71,253 | 140,806 | ||||||||||||
| Total surgeries | 121,276 | 123,166 | 244,442 | ||||||||||||
| Patient days — total | 921,014 | 871,816 | 1,792,830 | ||||||||||||
| Adjusted patient days | 1,583,962 | 1,538,940 | 3,122,902 | ||||||||||||
| Average length of stay (days) | 4.69 | 4.60 | 4.65 | ||||||||||||
| Licensed beds (at end of period) | 20,333 | 20,329 | 20,329 | ||||||||||||
| Average licensed beds | 20,334 | 20,329 | 20,331 | ||||||||||||
| Utilization of licensed beds | 50.3 | % | 47.1 | % | 48.7 | % | |||||||||
| Outpatient Visits | |||||||||||||||
| Total visits | 2,009,408 | 1,950,251 | 3,959,659 | ||||||||||||
| Paying visits (excludes charity and uninsured) | 1,883,235 | 1,823,601 | 3,706,836 | ||||||||||||
| Charity and uninsured visits | 126,173 | 126,650 | 252,823 | ||||||||||||
| Emergency department visits | 703,035 | 694,213 | 1,397,248 | ||||||||||||
| Paying visits as a percentage of total visits | 93.7 | % | 93.5 | % | 93.6 | % | |||||||||
| Charity and uninsured visits as a percentage of total visits | 6.3 | % | 6.5 | % | 6.4 | % | |||||||||
| Total emergency department admissions and visits | 829,102 | 815,425 | 1,644,527 | ||||||||||||
| Revenues | |||||||||||||||
| Net inpatient revenues | $ | 2,605 | $ | 2,545 | $ | 5,150 | |||||||||
| Net outpatient revenues | $ | 1,463 | $ | 1,491 | $ | 2,954 | |||||||||
| Total patient revenues | $ | 4,068 | $ | 4,036 | $ | 8,104 | |||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | |||||||||||||||
| Net inpatient revenue per admission | $ | 13,278 | $ | 13,432 | $ | 13,354 | |||||||||
| Net inpatient revenue per patient day | $ | 2,828 | $ | 2,919 | $ | 2,873 | |||||||||
| Net outpatient revenue per visit | $ | 728 | $ | 765 | $ | 746 | |||||||||
| Net patient revenue per adjusted patient admission | $ | 11,982 | $ | 12,015 | $ | 11,998 | |||||||||
| Net patient revenue per adjusted patient day | $ | 2,568 | $ | 2,623 | $ | 2,595 | |||||||||
| Net Patient Revenues from: | |||||||||||||||
| Medicare | 21.1 | % | 20.2 | % | 20.7 | % | |||||||||
| Medicaid | 6.8 | % | 6.9 | % | 6.9 | % | |||||||||
| Managed care | 62.0 | % | 62.3 | % | 62.2 | % | |||||||||
| Indemnity, self-pay and other | 10.1 | % | 10.6 | % | 10.2 | % | |||||||||
| (1) | Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 75 hospitals operated throughout the six months ended June 30, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016. |
|
TENET HEALTHCARE CORPORATION SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1) (Unaudited) |
|||||||||||||||||||||||||
|
(Dollars in millions except per patient day, |
Three Months Ended | Year Ended | |||||||||||||||||||||||
|
3/31/2016 |
6/30/2016 | 9/30/2016 | 12/31/2016 | 12/31/2016 | |||||||||||||||||||||
| Admissions, Patient Days and Surgeries | |||||||||||||||||||||||||
| Number of hospitals (at end of period) | 75 | 75 | 75 | 75 | 75 | ||||||||||||||||||||
| Total admissions | 202,873 | 193,779 | 194,179 | 191,910 | 782,741 | ||||||||||||||||||||
| Adjusted patient admissions | 348,221 | 340,792 | 341,665 | 334,268 | 1,364,946 | ||||||||||||||||||||
| Paying admissions (excludes charity and uninsured) | 193,286 | 183,474 | 182,937 | 181,597 | 741,294 | ||||||||||||||||||||
| Charity and uninsured admissions | 9,587 | 10,305 | 11,242 | 10,313 | 41,447 | ||||||||||||||||||||
| Admissions through emergency department | 129,606 | 122,239 | 120,459 | 120,549 | 492,853 | ||||||||||||||||||||
| Paying admissions as a percentage of total admissions | 95.3 | % | 94.7 | % | 94.2 | % | 94.6 | % | 94.7 | % | |||||||||||||||
| Charity and uninsured admissions as a percentage of total admissions | 4.7 | % | 5.3 | % | 5.8 | % | 5.4 | % | 5.3 | % | |||||||||||||||
| Emergency department admissions as a percentage of total admissions | 63.9 | % | 63.1 | % | 62.0 | % | 62.8 | % | 63.0 | % | |||||||||||||||
| Surgeries - inpatient | 53,739 | 54,376 | 54,701 | 53,071 | 215,887 | ||||||||||||||||||||
| Surgeries - outpatient | 74,360 | 75,825 | 72,646 | 73,678 | 296,509 | ||||||||||||||||||||
| Total surgeries | 128,099 | 130,201 | 127,347 | 126,749 | 512,396 | ||||||||||||||||||||
| Patient days - total | 960,998 | 897,127 | 893,990 | 887,840 | 3,639,955 | ||||||||||||||||||||
| Adjusted patient days | 1,637,408 | 1,568,680 | 1,564,827 | 1,539,374 | 6,310,289 | ||||||||||||||||||||
| Average length of stay (days) | 4.74 | 4.63 | 4.60 | 4.63 | 4.65 | ||||||||||||||||||||
| Licensed beds (at end of period) | 20,380 | 20,380 | 20,340 | 20,354 | 20,354 | ||||||||||||||||||||
| Average licensed beds | 20,375 | 20,380 | 20,367 | 20,326 | 18,127 | ||||||||||||||||||||
| Utilization of licensed beds | 52.4 | % | 48.4 | % | 47.7 | % | 47.5 | % | 55.0 | % | |||||||||||||||
| Outpatient Visits | |||||||||||||||||||||||||
| Total visits | 2,052,169 | 2,025,946 | 1,991,999 | 1,928,913 | 7,999,027 | ||||||||||||||||||||
| Paying visits (excludes charity and uninsured) | 1,907,998 | 1,884,716 | 1,847,999 | 1,817,262 | 7,457,975 | ||||||||||||||||||||
| Charity and uninsured visits | 144,171 | 141,230 | 144,000 | 111,651 | 541,052 | ||||||||||||||||||||
| Emergency department visits | 733,756 | 703,276 | 690,692 | 679,463 | 2,807,187 | ||||||||||||||||||||
| Paying visits as a percentage of total visits | 93.0 | % | 93.0 | % | 92.8 | % | 94.2 | % | 93.2 | % | |||||||||||||||
| Charity and uninsured visits as a percentage of total visits | 7.0 | % | 7.0 | % | 7.2 | % | 5.8 | % | 6.8 | % | |||||||||||||||
| Total emergency department admissions and visits | 863,362 | 825,515 | 811,151 | 800,012 | 3,300,040 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||
| Net inpatient revenues | $ | 2,663 | $ | 2,568 | $ | 2,634 | $ | 2,610 | $ | 10,475 | |||||||||||||||
| Net outpatient revenues | $ | 1,445 | $ | 1,451 | $ | 1,404 | $ | 1,445 | $ | 5,745 | |||||||||||||||
| Total patient revenues | $ | 4,108 | $ | 4,019 | $ | 4,038 | $ | 4,055 | $ | 16,220 | |||||||||||||||
| Revenues on a Per Admission, Per Patient Day and Per Visit Basis | |||||||||||||||||||||||||
| Net inpatient revenue per admission | $ | 13,126 | $ | 13,252 | $ | 13,565 | $ | 13,600 | $ | 13,382 | |||||||||||||||
| Net inpatient revenue per patient day | $ | 2,771 | $ | 2,862 | $ | 2,946 | $ | 2,940 | $ | 2,878 | |||||||||||||||
| Net outpatient revenue per visit | $ | 704 | $ | 716 | $ | 705 | $ | 749 | $ | 718 | |||||||||||||||
| Net patient revenue per adjusted patient admission | $ | 11,797 | $ | 11,793 | $ | 11,819 | $ | 12,131 | $ | 11,883 | |||||||||||||||
| Net patient revenue per adjusted patient day | $ | 2,509 | $ | 2,562 | $ | 2,580 | $ | 2,634 | $ | 2,570 | |||||||||||||||
| Net Patient Revenues from: | |||||||||||||||||||||||||
| Medicare | 20.0 | % | 21.8 | % | 20.1 | % | 20.5 | % | 20.6 | % | |||||||||||||||
| Medicaid | 8.6 | % | 7.6 | % | 8.5 | % | 8.2 | % | 8.2 | % | |||||||||||||||
| Managed care | 61.6 | % | 59.6 | % | 64.0 | % | 61.0 | % | 61.6 | % | |||||||||||||||
| Indemnity, self-pay and other | 9.8 | % | 11.0 | % | 7.4 | % | 10.3 | % | 9.6 | % | |||||||||||||||
| (1) | Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 75 hospitals operated throughout the six months ended June 30, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016. |
|
TENET HEALTHCARE CORPORATION SEGMENT REPORTING (Unaudited) |
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| June 30, | December 31, | |||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| Assets | ||||||||||||||||||||
| Hospital Operations and other | $ | 17,422 | $ | 17,871 | ||||||||||||||||
| Ambulatory Care | 5,792 | 5,722 | ||||||||||||||||||
| Conifer | 1,127 | 1,108 | ||||||||||||||||||
| Total | $ | 24,341 | $ | 24,701 | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Capital expenditures: | ||||||||||||||||||||
| Hospital Operations and other | $ | 136 | $ | 184 | $ | 319 | $ | 375 | ||||||||||||
| Ambulatory Care | 10 | 16 | 21 | 28 | ||||||||||||||||
| Conifer | 4 | 5 | 8 | 10 | ||||||||||||||||
| Total | $ | 150 | $ | 205 | $ | 348 | $ | 413 | ||||||||||||
| Net operating revenues: | ||||||||||||||||||||
| Hospital Operations and other total prior to inter-segment eliminations(1) | $ | 4,085 | $ | 4,202 | $ | 8,200 | $ | 8,599 | ||||||||||||
| Ambulatory Care | 472 | 442 | 927 | 871 | ||||||||||||||||
| Conifer | ||||||||||||||||||||
| Tenet | 155 | 162 | 314 | 329 | ||||||||||||||||
| Other customers | 245 | 224 | 488 | 442 | ||||||||||||||||
| Total Conifer revenues | 400 | 386 | 802 | 771 | ||||||||||||||||
| Inter-segment eliminations | (155 | ) | (162 | ) | (314 | ) | (329 | ) | ||||||||||||
| Total | $ | 4,802 | $ | 4,868 | $ | 9,615 | $ | 9,912 | ||||||||||||
| Equity in earnings of unconsolidated affiliates: | ||||||||||||||||||||
| Hospital Operations and other | $ | (2 | ) | $ | 4 | $ | — | $ | 3 | |||||||||||
| Ambulatory Care | 30 | 26 | 57 | 51 | ||||||||||||||||
| Total | $ | 28 | $ | 30 | $ | 57 | $ | 54 | ||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||
| Hospital Operations and other(2) | $ | 346 | $ | 427 | $ | 655 | $ | 845 | ||||||||||||
| Ambulatory Care | 164 | 139 | 317 | 275 | ||||||||||||||||
| Conifer | 60 | 63 | 125 | 126 | ||||||||||||||||
| Total | $ | 570 | $ | 629 | $ | 1,097 | $ | 1,246 | ||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||
| Hospital Operations and other | $ | 188 | $ | 181 | $ | 375 | $ | 355 | ||||||||||||
| Ambulatory Care | 22 | 22 | 44 | 47 | ||||||||||||||||
| Conifer | 12 | 12 | 24 | 25 | ||||||||||||||||
| Total | $ | 222 | $ | 215 | $ | 443 | $ | 427 | ||||||||||||
| (1) | Hospital Operations and other revenues includes health plan revenues of $25 million and $90 million for the three and six ended June 30, 2017, respectively and $136 million and $263 million for the three and six months ended June 30, 2016, respectively. |
| (2) | Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of $(19) million and $(35) million for the three and six months ended June 30, 2017, respectively and $(5) million and $(2) million for the three and six months ended June 30, 2016, respectively. |
|
TENET HEALTHCARE CORPORATION STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT (Unaudited) |
||||||||||||||||||||
| (Dollars in millions) | Three Months Ended June 30, | |||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
|
Ambulatory |
Unconsolidated |
Ambulatory |
Unconsolidated |
|||||||||||||||||
| Net operating revenues: | ||||||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 483 | $ | 499 | $ | 452 | $ | 505 | ||||||||||||
| Less: Provision for doubtful accounts | (11 | ) | (10 | ) | (10 | ) | (14 | ) | ||||||||||||
| Net operating revenues(1) | 472 | 489 | 442 | 491 | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates(2) | 30 |
— |
26 |
— |
||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Salaries, wages and benefits | 153 | 116 | 147 | 116 | ||||||||||||||||
| Supplies | 96 | 129 | 91 | 128 | ||||||||||||||||
| Other operating expenses, net | 89 | 100 | 91 | 102 | ||||||||||||||||
| Electronic health record incentives | — | — | — | — | ||||||||||||||||
| Depreciation and amortization | 22 | 16 | 22 | 17 | ||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 3 | 1 | 3 | 5 | ||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | — | — | (1 | ) | — | |||||||||||||||
| Operating income | 139 | 127 | 115 | 123 | ||||||||||||||||
| Interest expense | (39 | ) | (5 | ) | (35 | ) | (6 | ) | ||||||||||||
| Other | 2 | — | — | 1 | ||||||||||||||||
| Net income from continuing operations, before income taxes | 102 | 122 | 80 | 118 | ||||||||||||||||
| Income tax expense | (20 | ) | (2 | ) | (11 | ) | (1 | ) | ||||||||||||
| Net income | 82 | $ | 120 | 69 | $ | 117 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | 67 | 60 | ||||||||||||||||||
| Net income attributable to Tenet Healthcare Corporation common shareholders | $ | 15 | $ | 9 | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | 30 | $ | 26 | ||||||||||||||||
| (1) | On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 3.8% during the three months ended June 30, 2017, with cases decreasing 0.5% and revenue per case increasing 4.3%. |
| (2) | At June 30, 2017, 107 of the 326 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 219 facilities and account for these investments as consolidated subsidiaries. |
|
TENET HEALTHCARE CORPORATION STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT (Unaudited) |
||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
|
Ambulatory |
Unconsolidated |
Ambulatory |
Unconsolidated |
|||||||||||||||||
| Net operating revenues: | ||||||||||||||||||||
| Net operating revenues before provision for doubtful accounts | $ | 945 | $ | 974 | $ | 889 | $ | 984 | ||||||||||||
| Less: Provision for doubtful accounts | (18 | ) | (20 | ) | (18 | ) | (28 | ) | ||||||||||||
| Net operating revenues(1) | 927 | 954 | 871 | 956 | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates(2) | 57 | — | 51 | — | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Salaries, wages and benefits | 303 | 230 | 293 | 234 | ||||||||||||||||
| Supplies | 190 | 250 | 177 | 251 | ||||||||||||||||
| Other operating expenses, net | 174 | 197 | 177 | 204 | ||||||||||||||||
| Electronic health record incentives | — | — | — | — | ||||||||||||||||
| Depreciation and amortization | 44 | 32 | 47 | 35 | ||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 8 | 1 | 4 | 5 | ||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | (7 | ) | — | (30 | ) | (4 | ) | |||||||||||||
| Operating income | 272 | 244 | 254 | 231 | ||||||||||||||||
| Interest expense | (74 | ) | (11 | ) | (70 | ) | (12 | ) | ||||||||||||
| Other | 3 | — | — | 1 | ||||||||||||||||
| Net income from continuing operations, before income taxes | 201 | 233 | 184 | 220 | ||||||||||||||||
| Income tax expense | (38 | ) | (4 | ) | (19 | ) | (3 | ) | ||||||||||||
| Net Income | 163 | $ | 229 | 165 | $ | 217 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests(3) | 133 | 135 | ||||||||||||||||||
| Net income attributable to Tenet Healthcare Corporation common shareholders | $ | 30 | $ | 30 | ||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | 57 | $ | 51 | ||||||||||||||||
| (1) | On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 4.9% during the six months ended June 30, 2017, with cases remaining flat and revenue per case increasing 4.9%. |
| (2) | At June 30, 2017, 107 of the 326 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 219 facilities and account for these investments as consolidated subsidiaries. |
| (3) | During the six months ended June 30, 2016, the Company recorded $18 million of noncontrolling interests expense related to a $29 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) other non-operating income (expense), net, (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, (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 (loss) from continuing operations attributable to Tenet Healthcare Corporation common shareholders, 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) loss from early extinguishment of debt, (5) income (loss) from divested operations and closed businesses (6) the associated impact of these five items on taxes and noncontrolling interests, and (7) net income (loss) from discontinued operations. Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP term, is defined by the Company as Adjusted net income (loss) from continuing operations attributable 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 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 six months ended June 30, 2017 and 2016. A reconciliation of Adjusted net income from continuing operations attributable to Tenet Healthcare Corporation common shareholders 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 six months ended June 30, 2017 and 2016. 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 six months ended June 30, 2017 and 2016.
|
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #1 – Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders (Unaudited) |
||||||||||||||||||||||||
| (Dollars in millions) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (55 | ) | $ | (46 | ) | $ | (108 | ) | $ | (105 | ) | ||||||||||||
| Less: Net income attributable to noncontrolling interests | (87 | ) | (85 | ) | (176 | ) | (178 | ) | ||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 1 | (2 | ) | — | (6 | ) | ||||||||||||||||||
| Net income from continuing operations | 31 | 41 | 68 | 79 | ||||||||||||||||||||
| Income tax benefit (expense) | 12 | 16 | 45 | (51 | ) | |||||||||||||||||||
| Loss from early extinguishment of debt | (26 | ) | — | (26 | ) | — | ||||||||||||||||||
| Other non-operating income (expense), net | (5 | ) | (5 | ) | (10 | ) | (11 | ) | ||||||||||||||||
| Interest expense | (260 | ) | (244 | ) | (518 | ) | (487 | ) | ||||||||||||||||
| Operating income | 310 | 274 | 577 | 628 | ||||||||||||||||||||
| Litigation and investigation costs | (1 | ) | (114 | ) | (6 | ) | (287 | ) | ||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities | 23 | 1 | 38 | 148 | ||||||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | (41 | ) | (22 | ) | (74 | ) | (50 | ) | ||||||||||||||||
| Depreciation and amortization | (222 | ) | (215 | ) | (443 | ) | (427 | ) | ||||||||||||||||
| Loss from divested and closed businesses | (19 | ) | (5 | ) | (35 | ) | (2 | ) | ||||||||||||||||
| Adjusted EBITDA | $ | 570 | $ | 629 | $ | 1,097 | $ | 1,246 | ||||||||||||||||
| Net operating revenues |
$ |
4,802 |
$ |
4,868 |
$ |
9,615 |
$ |
9,912 | ||||||||||||||||
| Less: Net operating revenues from health plans | 25 | 136 | 90 | 263 | ||||||||||||||||||||
| Adjusted net operating revenues |
$ |
4,777 |
$ |
4,732 |
$ |
9,525 |
$ |
9,649 | ||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | (1.1 | ) | % | (0.9 | ) | % | (1.1 | ) | % | (1.1 | ) | % | ||||||||||||
| Adjusted EBITDA as % of adjusted net operating revenues (Adjusted EBITDA margin) | 11.9 | % | 13.3 | % | 11.5 | % | 12.9 | % | ||||||||||||||||
|
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) |
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| Three Months Ended | Six Months Ended | |||||||||||||||||||
| (Dollars in millions except per share amounts) | June 30, | June 30, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Adjustments to calculate Adjusted Diluted EPS | (Expense) Income | |||||||||||||||||||
| Impairment and restructuring charges, and acquisition-related costs | $ | (41 | ) | $ | (22 | ) | $ | (74 | ) | $ | (50 | ) | ||||||||
| Litigation and investigation costs | (1 | ) | (114 | ) | (6 | ) | (287 | ) | ||||||||||||
| Gain on sales, consolidation and deconsolidation of facilities | 23 | 1 | 38 | 148 | ||||||||||||||||
| Loss from early extinguishment of debt | (26 | ) | — | (26 | ) | — | ||||||||||||||
| Loss from divested and closed businesses | (19 | ) | (5 | ) | (35 | ) | (2 | ) | ||||||||||||
| Pre-tax impact | $ | (64 | ) | $ | (140 | ) | $ | (103 | ) | $ | (191 | ) | ||||||||
| Tax impact of above items | 25 | 56 | 39 | 25 | ||||||||||||||||
| Total after-tax impact | $ | (39 | ) | $ | (84 | ) | $ | (64 | ) | $ | (166 | ) | ||||||||
| Noncontrolling interests impact | — | — | — | (18 | ) | |||||||||||||||
| Total loss from items above | $ | (39 | ) | $ | (84 | ) | $ | (64 | ) | $ | (184 | ) | ||||||||
| Net loss attributable to common shareholders | $ | (55 | ) | $ | (46 | ) | $ | (108 | ) | $ | (105 | ) | ||||||||
| Less net income (loss) from discontinued operations, net of tax | 1 | (2 | ) | — | (6 | ) | ||||||||||||||
| Net loss from continuing operations, net of tax | $ | (56 | ) | $ | (44 | ) | $ | (108 | ) | $ | (99 | ) | ||||||||
| Net loss from adjustments above | 39 | 84 | 64 | 184 | ||||||||||||||||
| Adjusted net income (loss) from continuing operations attributable to common shareholders | $ | (17 | ) | $ | 40 | $ | (44 | ) | $ | 85 | ||||||||||
| Weighted average dilutive shares outstanding (in thousands) | 100,612 | 100,727 | 100,306 | 100,531 | ||||||||||||||||
| Diluted earnings per share from continuing operations | $ | (0.56 | ) | $ | (0.44 | ) | $ | (1.08 | ) | $ | (1.00 | ) | ||||||||
| Adjusted diluted EPS from continuing operations | $ | (0.17 | ) | $ | 0.40 | $ | (0.44 | ) | $ | 0.85 | ||||||||||
|
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #3 – Reconciliations of Free Cash Flow and Adjusted Free Cash Flow (Unaudited) |
||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| (Dollars in millions) | June 30, | June 30, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Net cash provided by operating activities | $ | 215 | $ | 435 | $ | 401 | $ | 582 | ||||||||||||
| Purchases of property and equipment | (150 | ) | (205 | ) | (348 | ) | (413 | ) | ||||||||||||
| Free cash flow | $ | 65 | $ | 230 | $ | 53 | $ | 169 | ||||||||||||
| Net cash provided by (used in) investing activities | $ | (119 | ) | $ | (266 | ) | $ | (308 | ) | $ | 54 | |||||||||
| Net cash used in financing activities | $ | (193 | ) | $ | (241 | ) | $ | (334 | ) | $ | (336 | ) | ||||||||
| Net cash provided by operating activities | $ | 215 | $ | 435 | $ | 401 | $ | 582 | ||||||||||||
| Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (38 | ) | (30 | ) | (62 | ) | (99 | ) | ||||||||||||
| Net cash (used in) provided by operating activities from discontinued operations | (5 | ) | 3 | (2 | ) | — | ||||||||||||||
| Adjusted net cash provided by operating activities – continuing operations | 258 | 462 | 465 | 681 | ||||||||||||||||
| Purchases of property and equipment – continuing operations | (150 | ) | (205 | ) | (348 | ) | (413 | ) | ||||||||||||
| Adjusted free cash flow – continuing operations | $ | 108 | $ | 257 | $ | 117 | $ | 268 | ||||||||||||
|
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, except per share amounts) | Q3 2017 | 2017 | ||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||
| Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (157 | ) | $ | (147 | ) | $ | (120 | ) | $ | (90 | ) | ||||||||||||
| Less: Net income attributable to noncontrolling interests | (95 | ) | (105 | ) | (385 | ) | (405 | ) | ||||||||||||||||
| Net loss from discontinued operations, net of tax | — | — | (5 | ) | — | |||||||||||||||||||
| Income (loss) from continuing operations | (62 | ) | (42 | ) | 270 | 315 | ||||||||||||||||||
| Income tax expense | (80 | ) | (85 | ) | (160 | ) | (175 | ) | ||||||||||||||||
| Income from continuing operations, before income taxes | 18 | 43 | 430 | 490 | ||||||||||||||||||||
| Interest expense | (250 | ) | (260 | ) | (1,020 | ) | (1,030 | ) | ||||||||||||||||
| Loss on early extinguishment of debt(1) | (132 | ) | (132 | ) | (158 | ) | (158 | ) | ||||||||||||||||
| Other non-operating income (expense), net | (5 | ) | (5 | ) | (20 | ) | (20 | ) | ||||||||||||||||
| Operating income | 405 | 440 | 1,628 | 1,698 | ||||||||||||||||||||
| Gains on sales, consolidation and deconsolidation of facilities(2) | 115 | 115 | 153 | 153 | ||||||||||||||||||||
|
Impairment and restructuring charges, acquisition-related costs
and litigation costs and settlements(3) |
— | — | (80 | ) | (80 | ) | ||||||||||||||||||
| Depreciation and amortization | (200 | ) | (210 | ) | (850 | ) | (870 | ) | ||||||||||||||||
| Income (loss) from divested and closed businesses | (10 | ) | (15 | ) | (45 | ) | (55 | ) | ||||||||||||||||
| Adjusted EBITDA | $ | 500 | $ | 550 | $ | 2,450 | $ | 2,550 | ||||||||||||||||
| Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) | 10.9 | % | 11.5 | % | 12.8 | % | 13.1 | % | ||||||||||||||||
| Net loss from continuing operations | $ | (157 | ) | $ | (147 | ) | $ | (115 | ) | $ | (90 | ) | ||||||||||||
| Net loss from continuing operations as a % of operating revenues | (3.4 | ) | % | (3.1 | ) | % | (0.6 | ) | % | (0.5 | ) | % | ||||||||||||
| Net operating revenues | $ | 4,600 | $ | 4,800 | $ | 19,100 | $ | 19,400 | ||||||||||||||||
| Adjusted EBITDA | $ | 500 | $ | 550 | $ | 2,450 | $ | 2,550 | ||||||||||||||||
| Depreciation and amortization | (200 | ) | (210 | ) | (850 | ) | (870 | ) | ||||||||||||||||
| Interest expense | (250 | ) | (260 | ) | (1,020 | ) | (1,030 | ) | ||||||||||||||||
| Other non-operating income (expense), net | (5 | ) | (5 | ) | (20 | ) | (20 | ) | ||||||||||||||||
| Adjusted income from continuing operations before income taxes | 45 | 75 | 560 | 630 | ||||||||||||||||||||
| Income tax benefit (expense) | 15 | 10 | (105 | ) | (125 | ) | ||||||||||||||||||
| Adjusted income from continuing operations | 60 | 85 | 455 | 505 | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (95 | ) | (105 | ) | (385 | ) | (405 | ) | ||||||||||||||||
| Adjusted net income (loss) attributable to common shareholders | $ | (35 | ) | $ | (20 | ) | $ | 70 | $ | 100 | ||||||||||||||
| Basic weighted average shares outstanding | 101 | 101 | 101 | 101 | ||||||||||||||||||||
| Fully diluted weighted average shares outstanding (in millions) | 101 | 101 | 101 | 101 | ||||||||||||||||||||
| Diluted loss per share from continuing operations | $ | (1.55 | ) | $ | (1.46 | ) | $ | (1.14 | ) | $ | (0.89 | ) | ||||||||||||
| Adjusted diluted earnings (loss) per share from continuing operations | $ | (0.35 | ) | $ | (0.20 | ) | $ | 0.69 | $ | 0.99 | ||||||||||||||
| (1) | Reflects an estimated loss from early extinguishment of debt of approximately $132 million in the three months ended September 30, 2017. |
| (2) | Reflects an estimated pre-tax gain of $115 million ($33 million after-tax loss) in the three months ending September 30, 2017 related to the sale of the Company's Houston hospitals. |
| (3) | 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, 2017 |
||||||||||||||
| (Dollars in millions) | 2017 | |||||||||||||
| Low | High | |||||||||||||
| Net cash provided by operating activities | $ | 1,158 | $ | 1,413 | ||||||||||
| Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1) | (62 | ) | (62 | ) | ||||||||||
| Net cash used in operating activities from discontinued operations | (5 | ) | — | |||||||||||
| Adjusted net cash provided by operating activities – continuing operations | $ | 1,225 | $ | 1,475 | ||||||||||
| Purchases of property and equipment – continuing operations | (700 | ) | (750 | ) | ||||||||||
| Adjusted free cash flow – continuing operations(2) | $ | 525 | $ | 725 | ||||||||||
| (1) | Company does not forecast impairment and 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. |
| (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, (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. |
