Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - TENET HEALTHCARE CORP | d172178d8k.htm |
| EX-99.1 - EX-99.1 - TENET HEALTHCARE CORP | d172178dex991.htm |
Exhibit 99.2
Unaudited Pro Forma Financial Statements
The following Unaudited Pro Forma Financial Statements are based on the Company’s historical consolidated results of operations and financial position, adjusted to give effect to the Transaction, as defined in Item 2.01 of this Form 8-K, as if it had been completed on December 31, 2015 with respect to the pro forma condensed balance sheet and as of January 1, 2015 with respect to the pro forma condensed statement of operations.
The Unaudited Pro Forma Financial Statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2015, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“Annual Report”). The Unaudited Pro Forma Financial Statements may differ materially from the future financial position or results of operations due to a number of factors described in “Risk Factors” under Item 1A of Part 1 of our Annual Report and “Forward-Looking Statements” under Item 1 of Part 1 of our Annual Report.
1
Tenet Healthcare Corporation
Unaudited Pro Forma Condensed Balance Sheet
December 31, 2015
| (Dollars in millions) | Historical Tenet |
Pro Forma Adjustments |
Pro Forma |
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| ASSETS | ||||||||||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 356 | $ | 575 | (a | ) | $ | 931 | ||||||||
| Accounts receivable, less allowance for doubtful accounts |
2,704 | — | 2,704 | |||||||||||||
| Inventories of supplies, at cost |
309 | — | 309 | |||||||||||||
| Income tax receivable |
7 | — | 7 | |||||||||||||
| Assets held for sale |
550 | (549 | ) | (a | ) | 1 | ||||||||||
| Other current assets |
1,245 | — | 1,245 | |||||||||||||
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| Total current assets |
5,171 | 26 | 5,197 | |||||||||||||
| Investments and other assets |
1,175 | — | 1,175 | |||||||||||||
| Deferred income taxes |
776 | (62 | ) | (a | ) | 714 | ||||||||||
| Property and equipment, at cost, less accumulated depreciation and amortization |
7,915 | — | 7,915 | |||||||||||||
| Goodwill |
6,970 | — | 6,970 | |||||||||||||
| Other intangible assets, at cost, less accumulated amortization |
1,675 | — | 1,675 | |||||||||||||
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| Total assets |
$ | 23,682 | $ | (36 | ) | $ | 23,646 | |||||||||
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| LIABILITIES AND EQUITY |
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| Current liabilities: |
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| Current portion of long-term debt |
$ | 127 | $ | — | $ | 127 | ||||||||||
| Accounts payable |
1,380 | — | 1,380 | |||||||||||||
| Accrued compensation and benefits |
880 | — | 880 | |||||||||||||
| Professional and general liability reserves |
177 | — | 177 | |||||||||||||
| Accrued interest payable |
205 | — | 205 | |||||||||||||
| Liabilities held for sale |
101 | (101 | ) | (a | ) | — | ||||||||||
| Accrued legal settlement costs |
294 | — | 294 | |||||||||||||
| Other current liabilities |
1,144 | 22 | (a | ) | ||||||||||||
| 1 | (b | ) | 1,167 | |||||||||||||
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| Total current liabilities |
4,308 | (78 | ) | 4,230 | ||||||||||||
| Long-term debt, net of current portion |
14,383 | — | 14,383 | |||||||||||||
| Professional and general liability reserves |
578 | — | 578 | |||||||||||||
| Defined benefit plan obligations |
595 | — | 595 | |||||||||||||
| Other long-term liabilities |
594 | 5 | (b | ) | 599 | |||||||||||
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| Total liabilities |
20,458 | (73 | ) | 20,385 | ||||||||||||
| Commitments and contingencies |
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| Redeemable noncontrolling interests in equity of consolidated subsidiaries |
2,266 | — | 2,266 | |||||||||||||
| Equity: |
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| Shareholders’ equity: |
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| Common stock |
7 | — | 7 | |||||||||||||
| Additional paid-in capital |
4,815 | — | 4,815 | |||||||||||||
| Accumulated other comprehensive loss |
(164 | ) | — | (164 | ) | |||||||||||
| Accumulated (deficit) earnings |
(1,550 | ) | 37 | (a | ) | (1,513 | ) | |||||||||
| Common stock in treasury, at cost |
(2,417 | ) | — | (2,417 | ) | |||||||||||
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| Total shareholders’ equity |
691 | 37 | 728 | |||||||||||||
| Noncontrolling interests |
267 | — | 267 | |||||||||||||
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| Total equity |
958 | 37 | 995 | |||||||||||||
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| Total liabilities and equity |
$ | 23,682 | $ | (36 | ) | $ | 23,646 | |||||||||
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2
Notes to Unaudited Pro Forma Condensed
Balance Sheet
| (a) | Records the proceeds from the sale of the Atlanta-area hospitals and related facilities, derecognition of the related assets and liabilities held for sale, and the related after-tax gain on sale, as adjusted for the impact of nondeductible goodwill, using an effective rate of 41%, which includes the federal statutory rate of 35% and the applicable state taxes. |
| (b) | Records the accrual for the obligation to make charitable contributions to buyer-affiliated foundation as specified in the sale agreement. |
3
Tenet Healthcare Corporation
Unaudited Pro Forma Condensed
Statement of Operations
Year Ended December 31, 2015
| (Dollars in millions except per share amounts) | Historical Tenet |
Pro Forma Adjustments |
Pro Forma |
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| Net operating revenues: |
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| Net operating revenues before provision for doubtful accounts |
$ | 20,111 | $ | (799 | ) | (a | ) | $ | 19,312 | |||||||
| Less: provision for doubtful accounts |
1,477 | (96 | ) | (a | ) | 1,381 | ||||||||||
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| Net operating revenues |
18,634 | (703 | ) | 17,931 | ||||||||||||
| Equity in earnings |
99 | — | 99 | |||||||||||||
| Operating expenses: |
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| Salaries, wages and benefits |
9,011 | (308 | ) | (a | ) | 8,703 | ||||||||||
| Supplies |
2,963 | (103 | ) | (a | ) | 2,860 | ||||||||||
| Other operating expenses, net |
4,555 | (189 | ) | (a | ) | 4,366 | ||||||||||
| Electronic health record incentives |
(72 | ) | 3 | (a | ) | (69 | ) | |||||||||
| Depreciation and amortization |
797 | (14 | ) | (a | ) | 783 | ||||||||||
| Impairment and restructuring charges, and acquisition-related costs |
318 | — | 318 | |||||||||||||
| Litigation and investigation costs |
291 | — | 291 | |||||||||||||
| Gain on sales, consolidation and deconsolidation of facilities |
(186 | ) | — | (186 | ) | |||||||||||
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| Operating income |
1,056 | (92 | ) | 964 | ||||||||||||
| Interest expense |
(912 | ) | 8 | (a | ) | (904 | ) | |||||||||
| Loss from early extinguishment of debt |
(1 | ) | — | (1 | ) | |||||||||||
| Investment earnings |
1 | — | 1 | |||||||||||||
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| Net income (loss) from continuing operations, before income taxes |
144 | (84 | ) | 60 | ||||||||||||
| Income tax benefit (expense) |
(68 | ) | 31 | (b | ) | (37 | ) | |||||||||
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| Income (loss) from continuing operations |
76 | (53 | ) | 23 | ||||||||||||
| Less: Net income attributable to noncontrolling interests |
218 | — | 218 | |||||||||||||
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| Net income (loss) from continuing operations attributable to common shareholders |
$ | (142 | ) | $ | (53 | ) | $ | (195 | ) | |||||||
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| Earnings per share from continuing operations attributable to Tenet Healthcare Corporation common shareholders |
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| Basic |
$ | (1.43 | ) | $ | (1.97 | ) | ||||||||||
| Diluted |
$ | (1.43 | ) | $ | (1.97 | ) | ||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): |
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| Basic |
99,167 | 99,167 | ||||||||||||||
| Diluted |
99,167 | 99,167 | ||||||||||||||
4
Notes to Unaudited Pro Forma Condensed
Statement of Operations
| (a) | Eliminates the historical revenue and operating expenses of the divested Atlanta-area hospitals and related facilities. |
| (b) | Reflects the applicable income tax effects of the pro forma adjustments in this column at an effective tax rate of 37%, which includes the federal statutory rate of 35% plus applicable state taxes, adjusted for nondeductible expenses. |
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