Exhibit 99.1

 

Tenet Reports Results for the First Quarter Ended March 31, 2016

 

•

Generated Adjusted EBITDA of $613 million, a $0.56 loss per share from continuing operations, and, after adjusting for certain items, Adjusted diluted EPS of $0.45 during the first quarter of 2016.

 

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Same-hospital patient revenue grew 6.0% in the first quarter, driven by 2.2% growth in adjusted admissions and 3.7% growth in revenue per adjusted admission. Hospital segment Adjusted EBITDA totaled $414 million.

 

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Ambulatory segment revenue increased 11.0% on a pro forma same-facility system-wide basis in the first quarter, with cases increasing 8.6% and revenue per case increasing 2.2%. Adjusted EBITDA for the ambulatory segment was $136 million, a 44.7% increase on a pro forma basis.

 

•

Revenue from Conifer Health Solutions increased 12.6% in the first quarter with revenue from third parties increasing 19.8%. Conifer generated $63 million of Adjusted EBITDA in the first quarter, representing a margin of 16.4%.

 

•

Net cash provided by operating activities was $147 million, a $204 million improvement when compared to $57 million of cash used by operating activities in the first quarter of 2015. Adjusted Free Cash Flow was $11 million in the first quarter of 2016, a $215 million increase when compared to a $204 million outflow in the first quarter of 2015.

 

•

The results for the first quarter of 2016 include $173 million of litigation and investigation costs which are described further below.

 

•

Reiterated 2016 Outlook, which includes Adjusted EBITDA of $2.4 billion to $2.5 billion.

DALLAS – May 2, 2016 – Tenet Healthcare Corporation (NYSE:THC) reported Adjusted EBITDA of $613 million for the first quarter of 2016, an increase of $84 million, or 15.9 percent, compared to $529 million in the first quarter of 2015.

“I am delighted with Tenet’s very strong start to 2016. Our hospitals and outpatient centers generated strong growth, and the benefits of our diversified strategy are becoming increasingly evident,” said Trevor Fetter, chairman and chief executive officer. “Adjusted EBITDA was ahead of our Outlook range for the first quarter, putting us on a solid path to deliver our 2016 Outlook.”

Hospital Operations and Other Segment

Net operating revenue in the hospital operations and other segment increased to $4.397 billion, up 5.9 percent from $4.151 billion in the first quarter of 2015. On a same-hospital basis, patient revenue increased to $4.016 billion, up 6.0 percent from $3.790 billion in the first quarter of 2015. The increase was driven by a 2.2 percent increase in adjusted patient admissions and a 3.7 percent increase in net patient revenue per adjusted admission.

 

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Adjusted EBITDA in Tenet’s hospital segment was $414 million, representing a decline of 1.0 percent as compared to $418 million in the first quarter of 2015. The decline was primarily driven by divestitures and a decline in electronic health record incentives, and was partially offset by acquisitions. After adjusting for these items, hospital segment EBITDA increased approximately 8 percent.

Total hospital segment selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.5 percent per adjusted admission in the quarter.

Exchanges

Tenet’s same-hospital exchange admissions were 5,351 in the first quarter of 2016, up 27.6 percent from the first quarter of 2015. Same-hospital exchange outpatient visits were 46,058, up 45.9% from the first quarter of 2015.

Uncompensated Care

Tenet’s bad debt expense ratio was 6.9 percent of revenues before bad debt in the first quarter of 2016, down from 7.6 percent in the first quarter of 2015. Uncompensated care represented 20.6 percent of adjusted revenue in the first quarter of 2016, down from 21.8 percent in the first quarter of 2015. Tenet’s uncompensated care cost was $1.309 billion and $1.236 billion in the first quarters of 2016 and 2015, respectively, including $933 million and $873 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Nearly all of Tenet’s uncompensated care is associated with the hospital segment.

Uninsured plus charity admissions declined by 374 admissions, or 3.8 percent on a same-hospital basis in the first quarter of 2016 compared to the first quarter of 2015. Uninsured plus charity outpatient visits increased by 2,093 visits, or 1.5 percent.

Ambulatory Segment

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze results of operations, management uses system-wide measures which include revenues and cases of both consolidated and unconsolidated facilities. Tenet’s acquisition of a majority interest in USPI and all of Aspen on June 16, 2015 makes the year-over-year comparisons less meaningful since they were not owned for the entire year. In order to improve comparability, Tenet is presenting the results for the ambulatory segment on a pro forma basis, including the results of USPI and Aspen in each comparable period.

During the first quarter of 2016, on a pro forma basis, the ambulatory segment delivered net operating revenue of $429 million, representing an increase of 45.4 percent as compared to $295 million in the first quarter of 2015. On a pro forma same-facility system-wide basis, revenue in the ambulatory segment increased 11.0 percent, with cases increasing 8.6 percent and revenue per case increasing 2.2 percent.

 

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Tenet’s ambulatory segment generated Adjusted EBITDA of $136 million in the first quarter of 2016, up 44.7 percent from $94 million in the first quarter of 2015 on a pro forma basis. After subtracting $46 million and $27 million of net income attributable to noncontrolling interests in the first quarters of 2016 and 2015, respectively, and prior to subtracting noncontrolling interests expense related to minority shareholders in the Company’s USPI joint venture, Adjusted EBITDA less NCI increased 34.3 percent to $90 million in the first quarter of 2016, up from $67 million in the first quarter of 2015. After subtracting an additional $11 million of noncontrolling interests expense in the first quarter of 2016 and $7 million in the first quarter of 2015 on a pro forma basis related to minority shareholders in the USPI joint venture, Adjusted EBITDA less NCI increased 31.7 percent to $79 million in the first quarter of 2016, up from $60 million in the first quarter of 2015. The above noncontrolling interests amounts in the first quarter of 2016 exclude $18 million of noncontrolling interests expense recorded by USPI related to $29 million of gains on the consolidation of certain businesses and an associated $7 million favorable income tax adjustment.

Conifer Segment

During the first quarter of 2016, Conifer’s revenue increased 12.6 percent to $385 million, up from $342 million in the first quarter of 2015. Excluding revenue from Tenet, Conifer’s revenue from third party customers increased by 19.8 percent to $218 million. Conifer generated $63 million of Adjusted EBITDA in the first quarter of 2016, representing an EBITDA margin of 16.4%. In the first quarter of 2015, Conifer generated $82 million of Adjusted EBITDA which included a non-recurring benefit from the extended and expanded contract with Catholic Health Initiatives.

Net Income and Earnings Per Share

During the first quarter of 2016, Tenet generated Adjusted net income from continuing operations of $45 million, or $0.45 per diluted share. This excludes $100 in after-tax expense for items such as impairment charges, restructuring charges, acquisition-related costs, litigation and investigation costs, gains on sales, consolidation and deconsolidation of facilities, and the related impact on noncontrolling interests. During the first quarter of 2015, the company generated Adjusted net income from continuing operations of $67 million, or $0.67 per diluted share, excluding $21 million of after-tax expense for comparable items.

On a GAAP basis in the first quarter of 2016, including the results of both continuing and discontinued operations, Tenet reported a net loss of $59 million, or $0.60 per share, compared to net income of $47 million, or $0.47 per diluted share, in the first quarter of 2015.

A reconciliation of GAAP net income available (loss attributable) to Tenet Healthcare Corporation common shareholders to Adjusted net income and Adjusted diluted EPS is contained in Table #2.

 

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Cash Flow and Liquidity

Cash and cash equivalents were $728 million at March 31, 2016 compared to $356 million at December 31, 2015. Tenet’s cash and debt balances as of March 31, 2016 reflect the $575 million in cash proceeds that the company received from the sale of our Atlanta-area hospitals which was completed on March 31, 2016. The company had no outstanding borrowings on its $1 billion credit line as of March 31, 2016.

Accounts receivable days outstanding were 50.6 at March 31, 2016 compared to 49.5 at December 31, 2015. The increase in accounts receivable days outstanding is primarily attributable to receivables that were retained from divested hospitals, including the transactions in Atlanta, North Carolina and St. Louis. Adjusted net cash provided by operating activities in the first quarter of 2016 was $219 million, representing a $239 million improvement compared to a $20 million outflow in the first quarter of 2015. After subtracting $208 million and $184 million of capital expenditures in the first quarters of 2016 and 2015, respectively, Adjusted Free Cash Flow was $11 million in the first quarter of 2016, representing a $215 million improvement compared to a $204 million outflow in the first quarter of 2015.

A reconciliation of net cash provided by (used in) operating activities to Adjusted Free Cash Flow from continuing operations is contained in Table #3.

Increase in Litigation Reserves

As previously disclosed, the Company commenced discussions in January 2016 with the U.S. Department of Justice and the State of Georgia regarding potential resolution of the Clinica de la Mama criminal investigation and civil litigation. While these matters remain unresolved, the Company now believes that it has made significant progress toward reaching an agreement in principle on the monetary terms of a global resolution. In the three months ended March 31, 2016, the Company increased its aggregate reserve for the Clinica de la Mama criminal investigation and civil litigation from $238 million to $407 million to reflect an offer made to resolve the matters. This amount is reflected in the consolidated balance sheet as of March 31, 2016 as accrued legal settlement costs. The increase in the reserve and other litigation costs lowered net income by approximately $135 million during the first quarter of 2016. For additional information, see Note 10 to the Consolidated Financial Statements included in the Company’s Form 10-Q for the quarter ended March 31, 2016.

Outlook

The company confirmed its existing Outlook for 2016, including:

 

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Revenue of $18.8 billion to $19.2 billion,

 

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Adjusted EBITDA of $2.4 billion to $2.5 billion,

 

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Adjusted Free Cash Flow of $400 million to $600 million, and

 

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Adjusted earnings per diluted share of $1.18 to $2.25.

 

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The Outlook for calendar year 2016 assumes equity in earnings of unconsolidated affiliates of $150 million to $170 million, electronic health record incentives of $25 million to $35 million, net income attributable to noncontrolling interests of $320 million to $340 million (excluding the additional $18 million of noncontrolling interests recorded by USPI in the first quarter of 2016, as discussed above) and an average diluted share count of 102 million.

During the second quarter of 2016, Tenet expects to deliver:

 

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Revenue of $4.8 billion to $5.0 billion,

 

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Adjusted EBITDA of $600 million to $650 million, and

 

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Adjusted earnings per diluted share of $0.20 to $0.73.

The Outlook for the second quarter assumes equity in earnings of unconsolidated affiliates of approximately $30 million, electronic health record incentives of approximately $15 million, net income attributable to noncontrolling interests of $80 million to $90 million and an average diluted share count of 102 million.

Additional details on Tenet’s Outlook for both the second quarter and calendar year 2016 are available in Tables 4, 5 and 6 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 First Quarter Results

Tenet management will discuss the Company’s first quarter 2016 results on a webcast scheduled for 10:00 a.m. EDT (9:00 a.m. CDT) on May 3, 2016. Investors can access the webcast through Tenet’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-Q report for the three months ended March 31, 2016, which will be filed with the Securities and Exchange Commission and posted on the Tenet website before the webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA. A reconciliation of Adjusted EBITDA to net income attributable to Tenet common shareholders is included in the financial tables at the end of this release.

Tenet Healthcare Corporation is a diversified healthcare services company with 130,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International, the company operates 79 general acute care hospitals, 20 short-stay surgical hospitals and over 470 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet’s Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans. For more information, please visit www.tenethealth.com.

 

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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.

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Corporate Communications Charles Nicolas 469-893-2640 mediarelations@tenethealth.com		Investor Relations Brendan Strong 469-893-6992 investorrelations@tenethealth.com

This release contains “forward-looking statements” – that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2015 and other filings with the Securities and Exchange Commission. Among other things, these factors include adverse regulatory developments, government investigations or litigation, including any significant monetary resolution or other undesirable consequences of the Clinica de la Mama qui tam action and criminal investigation described in Note 10 to the Consolidated Financial Statements included in our Form 10-Q for the three months ended March 31, 2016. The terms of a final resolution, if any, of the Clinica de la Mama matter may require us to pay significant fines and penalties and give rise to other costs or adverse consequences that materially exceed the reserve we have established and could have a material adverse effect on our business, financial condition, results of operations or cash flows.

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)

 

(Dollars in millions except per share amounts)		Three Months Ended March 31,
		2016				%				2015				%				Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts		$	5,420							$	4,787								13.2	%
Less: Provision for doubtful accounts			376								363								3.6	%
Net operating revenues			5,044				100.0	%			4,424				100.0	%			14.0	%
Equity in earnings of unconsolidated affiliates			24				0.5	%			4				0.1	%			500.0	%
Operating expenses:
Salaries, wages and benefits			2,402				47.6	%			2,125				48.0	%			13.0	%
Supplies			811				16.1	%			687				15.5	%			18.0	%
Other operating expenses, net			1,242				24.6	%			1,093				24.7	%			13.6	%
Electronic health record incentives			—				—	%			(6	)			(0.2	)%			(100.0	)%
Depreciation and amortization			212				4.2	%			207				4.7	%
Impairment and restructuring charges, and acquisition-related costs			28				0.6	%			29				0.7	%
Litigation and investigation costs			173				3.4	%			3				0.1	%
Gains on sales, consolidation and deconsolidation of facilities			(147	)			(2.9	)%			—				—	%
Operating income			347				6.9	%			290				6.6	%
Interest expense			(243	)							(199	)
Investment earnings			1								—
Net income from continuing operations, before income taxes			105								91
Income tax expense			(67	)							(16	)
Net income from continuing operations, before discontinued operations			38								75
Discontinued operations:
Loss from operations			(5	)							(1	)
Litigation and investigation costs			—								3
Income tax benefit (expense)			1								(1	)
Net income (loss) from discontinued operations			(4	)							1
Net income			34								76
Less: Net income attributable to noncontrolling interests			93								29
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders		$	(59	)						$	47
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net income (loss) from continuing operations, net of tax		$	(55	)						$	46
Net income (loss) from discontinued operations, net of tax			(4	)							1
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders		$	(59	)						$	47
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations		$	(0.56	)						$	0.47
Discontinued operations			(0.04	)							0.01
		$	(0.60	)						$	0.48
Diluted
Continuing operations		$	(0.56	)						$	0.46
Discontinued operations			(0.04	)							0.01
		$	(0.60	)						$	0.47
Weighted average shares and dilutive securities outstanding (in thousands):
Basic			98,768								98,699
Diluted*			98,768								100,872

 

*	Had we generated income from continuing operations in the three months ended March 31, 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 1,567 shares.

 

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TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in millions)		March 31, 2016				December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents		$	728			$	356
Accounts receivable, less allowance for doubtful accounts			2,807				2,704
Inventories of supplies, at cost			312				309
Income tax receivable			—				7
Assets held for sale			2				550
Other current assets			1,280				1,245
Total current assets			5,129				5,171
Investments and other assets			1,142				1,175
Deferred income taxes			726				776
Property and equipment, at cost, less accumulated depreciation and amortization			7,961				7,915
Goodwill			7,122				6,970
Other intangible assets, at cost, less accumulated amortization			1,686				1,675
Total assets		$	23,766			$	23,682
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		$	172			$	127
Accounts payable			1,228				1,380
Accrued compensation and benefits			772				880
Professional and general liability reserves			161				177
Accrued interest payable			307				205
Liabilities held for sale			—				101
Accrued legal settlement costs			423				294
Other current liabilities			1,205				1,144
Total current liabilities			4,268				4,308
Long-term debt, net of current portion			14,350				14,383
Professional and general liability reserves			623				578
Defined benefit plan obligations			593				595
Other long-term liabilities			625				594
Total liabilities			20,459				20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries			2,381				2,266
Equity:
Shareholders’ equity:
Common stock			7				7
Additional paid-in capital			4,804				4,815
Accumulated other comprehensive loss			(160	)			(164	)
Accumulated deficit			(1,609	)			(1,550	)
Common stock in treasury, at cost			(2,417	)			(2,417	)
Total shareholders’ equity			625				691
Noncontrolling interests			301				267
Total equity			926				958
Total liabilities and equity		$	23,766			$	23,682

 

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TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

(Dollars in millions)		Three Months Ended March 31,
		2016				2015
Net Income		$	34			$	76
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			212				207
Provision for doubtful accounts			376				363
Deferred income tax expense			31				12
Stock-based compensation expense			16				15
Impairment and restructuring charges, and acquisition-related costs			28				29
Litigation and investigation costs			173				3
Gains on sales, consolidation and deconsolidation of facilities			(147	)			—
Equity in earnings of unconsolidated affiliates, net of distributions received			12				(4	)
Amortization of debt discount and debt issuance costs			10				7
Pre-tax loss (income) from discontinued operations			5				(2	)
Other items, net			2				(4	)
Changes in cash from operating assets and liabilities:
Accounts receivable			(453	)			(484	)
Inventories and other current assets			(18	)			(74	)
Income taxes			28				8
Accounts payable, accrued expenses and other current liabilities			(114	)			(200	)
Other long-term liabilities			24				28
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements			(69	)			(33	)
Net cash used in operating activities from discontinued operations, excluding income taxes			(3	)			(4	)
Net cash provided by (used in) operating activities			147				(57	)
Cash flows from investing activities:
Purchases of property and equipment — continuing operations			(208	)			(184	)
Purchases of businesses or joint venture interests, net of cash acquired			(29	)			(11	)
Proceeds from sales of facilities and other assets			573				—
Proceeds from sales of marketable securities, long-term investments and other assets			12				6
Purchases of equity investments			(18	)			—
Other long-term assets			(10	)			2
Net cash provided by (used in) investing activities			320				(187	)
Cash flows from financing activities:
Repayments of borrowings under credit facility			(995	)			(690	)
Proceeds from borrowings under credit facility			995				820
Repayments of other borrowings			(38	)			(32	)
Proceeds from other borrowings			1				401
Debt issuance costs			—				(4	)
Distributions paid to noncontrolling interests			(44	)			(11	)
Contributions from noncontrolling interests			—				2
Purchase of noncontrolling interests			—				(254	)
Proceeds from exercise of stock options			—				7
Other items, net			(14	)			(3	)
Net cash provided by (used in) financing activities			(95	)			236
Net increase in cash and cash equivalents			372				(8	)
Cash and cash equivalents at beginning of period			356				193
Cash and cash equivalents at end of period		$	728			$	185
Supplemental disclosures:
Interest paid, net of capitalized interest		$	(132	)		$	(117	)
Income tax refunds (payments), net		$	(6	)		$	1

 

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TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS⁽¹⁾

(Unaudited)

 

(Dollars in millions except per patient day,
per admission, per adjusted admission		Three Months Ended March 31,
and per visit amounts)		2016				2015				Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)			80				80				—	*
Total admissions			211,799				208,333				1.7	%
Adjusted patient admissions			362,819				349,097				3.9	%
Paying admissions (excludes charity and uninsured)			201,436				197,383				2.1	%
Charity and uninsured admissions			10,363				10,950				(5.4	)%
Admissions through emergency department			136,056				133,544				1.9	%
Paying admissions as a percentage of total admissions			95.1				94.7				0.4	% *
Charity and uninsured admissions as a percentage of total admissions			4.9				5.3				(0.4	)% *
Emergency department admissions as a percentage of total admissions			64.2				64.1				0.1	% *
Surgeries — inpatient			55,755				53,710				3.8	%
Surgeries — outpatient			76,829				67,693				13.5	%
Total surgeries			132,584				121,403				9.2	%
Patient days — total			1,010,514				975,912				3.5	%
Adjusted patient days			1,714,369				1,618,516				5.9	%
Average length of stay (days)			4.77				4.68				1.9	%
Licensed beds (at end of period)			21,529				20,826				3.4	%
Average licensed beds			21,524				20,823				3.4	%
Utilization of licensed beds			51.6				52.1				(0.5	)% *
Outpatient Visits
Total visits			2,146,618				1,994,573				7.6	%
Paying visits (excludes charity and uninsured)			1,984,515				1,837,376				8.0	%
Charity and uninsured visits			162,103				157,197				3.1	%
Emergency department visits			789,916				741,533				6.5	%
Paying visits as a percentage of total visits			92.4				92.1				0.3	% *
Charity and uninsured visits as a percentage of total visits			7.6				7.9				(0.3	)% *
Revenues
Net inpatient revenues		$	2,781			$	2,691				3.3	%
Net outpatient revenues		$	1,514			$	1,412				7.2	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission		$	13,130			$	12,917				1.6	%
Net inpatient revenue per patient day		$	2,752			$	2,757				(0.2	)%
Net outpatient revenue per visit		$	705			$	708				(0.4	)%
Net patient revenue per adjusted patient admission		$	11,838			$	11,750				0.7	%
Net patient revenue per adjusted patient day		$	2,505			$	2,534				(1.1	)%
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission		$	10,537			$	10,284				2.5	%
Net Patient Revenues from:
Medicare			20.0	%			21.9	%			(1.9	)% *
Medicaid			8.7	%			9.4	%			(0.7	)% *
Managed care			61.1	%			58.6	%			2.5	% *
Indemnity, self-pay and other			10.2	%			10.1	%			0.1	% *

 

(1)	Represents the results of Tenet’s Hospital Operations and other segment.

*	This change is the difference between the 2016 and 2015 amounts shown

 

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TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS⁽¹⁾

(Unaudited)

 

(Dollars in millions except per patient day,
per admission, per adjusted admission		Three Months Ended March 31,
and per visit amounts)		2016				2015				Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)			72				72				—	*
Total admissions			193,980				194,143				(0.1	)%
Adjusted patient admissions			330,575				323,577				2.2	%
Paying admissions (excludes charity and uninsured)			184,436				184,225				0.1	%
Charity and uninsured admissions			9,544				9,918				(3.8	)%
Admissions through emergency department			125,004				124,492				0.4	%
Paying admissions as a percentage of total admissions			95.1				94.9				0.2	% *
Charity and uninsured admissions as a percentage of total admissions			4.9				5.1				(0.2	)% *
Emergency department admissions as a percentage of total admissions			64.4				64.1				0.3	% *
Surgeries — inpatient			50,563				50,447				0.2	%
Surgeries — outpatient			66,467				62,949				5.6	%
Total surgeries			117,030				113,396				3.2	%
Patient days — total			911,651				909,116				0.3	%
Adjusted patient days			1,537,812				1,499,932				2.5	%
Average length of stay (days)			4.70				4.68				0.4	%
Licensed beds (at end of period)			19,293				19,393				(0.5	)%
Average licensed beds			19,288				19,390				(0.5	)%
Utilization of licensed beds			52.5				52.1				0.4	% *
Outpatient Visits
Total visits			1,949,159				1,852,780				5.2	%
Paying visits (excludes charity and uninsured)			1,804,947				1,710,661				5.5	%
Charity and uninsured visits			144,212				142,119				1.5	%
Emergency department visits			726,730				688,242				5.6	%
Paying visits as a percentage of total visits			92.6				92.3				0.3	% *
Charity and uninsured visits as a percentage of total visits			7.4				7.7				(0.3	)% *
Revenues
Net inpatient revenues		$	2,616			$	2,501				4.6	%
Net outpatient revenues		$	1,400			$	1,289				8.6	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission		$	13,486			$	12,882				4.7	%
Net inpatient revenue per patient day		$	2,870			$	2,751				4.3	%
Net outpatient revenue per visit		$	718			$	696				3.2	%
Net patient revenue per adjusted patient admission		$	12,149			$	11,713				3.7	%
Net patient revenue per adjusted patient day		$	2,612			$	2,527				3.4	%
Net Patient Revenues from:
Medicare			20.6	%			21.8	%			(1.2	)% *
Medicaid			8.2	%			9.0	%			(0.8	)% *
Managed care			61.5	%			59.1	%			2.4	% *
Indemnity, self-pay and other			9.7	%			10.1	%			(0.4	)% *

 

(1)	Represents the results of Tenet’s Hospital Operations and other segment.

*	This change is the difference between the 2016 and 2015 amounts shown

 

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TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS⁽¹⁾

(Unaudited)

 

(Dollars in millions except per patient day,
per admission, per adjusted admission		Three Months Ended																Year Ended
and per visit amounts)		03/31/15				06/30/15				9/30/2015				12/31/2015				12/31/2015
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)			72				72				72				72				72
Total admissions			194,143				187,983				185,752				184,959				752,837
Adjusted patient admissions			323,577				322,882				320,880				320,338				1,287,677
Paying admissions (excludes charity and uninsured)			184,225				178,501				175,537				175,025				713,288
Charity and uninsured admissions			9,918				9,482				10,215				9,934				39,549
Admissions through emergency department			124,492				119,793				116,402				116,573				477,260
Paying admissions as a percentage of total admissions			94.9	%			94.9	%			94.9	%			94.9	%			94.9	%
Charity and uninsured admissions as a percentage of total admissions			5.1	%			5.1	%			5.1	%			5.1	%			5.1	%
Emergency department admissions as a percentage of total admissions			64.1	%			63.7	%			62.7	%			63.0	%			63.4	%
Surgeries — inpatient			50,447				51,618				51,879				51,469				205,413
Surgeries — outpatient			62,949				67,113				67,528				67,806				265,396
Total surgeries			113,396				118,731				119,407				119,275				470,809
Patient days — total			909,116				864,961				850,411				850,561				3,475,049
Adjusted patient days			1,499,932				1,469,406				1,451,654				1,458,288				5,879,280
Average length of stay (days)			4.68	%			4.60	%			4.58	%			4.60	%			4.62	%
Licensed beds (at end of period)			19,393				19,393				19,350				19,279				19,279
Average licensed beds			19,390				19,393				19,382				19,303				19,366
Utilization of licensed beds			52.1	%			49.0	%			47.7	%			47.9	%			49.2	%
Outpatient Visits
Total visits			1,852,780				1,911,152				1,890,417				1,903,228				7,557,577
Paying visits (excludes charity and uninsured)			1,710,661				1,767,482				1,737,062				1,758,284				6,973,489
Charity and uninsured visits			142,119				143,670				153,355				144,944				584,088
Emergency department visits			688,242				687,398				681,754				681,941				2,739,335
Paying visits as a percentage of total visits			92.3	%			92.5	%			91.9	%			92.4	%			92.3	%
Charity and uninsured visits as a percentage of total visits			7.7	%			7.5	%			8.1	%			7.6	%			7.7	%
Revenues
Net inpatient revenues		$	2,501			$	2,430			$	2,408			$	2,477			$	9,816
Net outpatient revenues		$	1,289			$	1,347			$	1,358			$	1,381			$	5,375
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission		$	12,882			$	12,927			$	12,964			$	13,392			$	13,039
Net inpatient revenue per patient day		$	2,751			$	2,809			$	2,832			$	2,912			$	2,825
Net outpatient revenue per visit		$	696			$	705			$	718			$	726			$	711
Net patient revenue per adjusted patient admission		$	11,713			$	11,698			$	11,736			$	12,044			$	11,797
Net patient revenue per adjusted patient day		$	2,527			$	2,570			$	2,594			$	2,646			$	2,584
Net Patient Revenues from:
Medicare			21.8	%			20.7	%			20.1	%			19.9	%			20.6	%
Medicaid			9.0	%			8.1	%			8.4	%			7.8	%			8.3	%
Managed care			59.1	%			61.4	%			61.9	%			61.7	%			61.1	%
Indemnity, self-pay and other			10.1	%			9.8	%			9.6	%			10.6	%			10.0	%

 

(1)	Represents the results of Tenet’s Hospital Operations and other segment.

*	This change is the difference between the 2016 and 2015 amounts shown

 

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TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 

(Dollars in millions)		March 31,				December 31,
		2016				2015
Assets
Hospital Operations and other		$	17,131			$	17,353
Ambulatory Care			5,467				5,159
Conifer			1,168				1,170
Total		$	23,766			$	23,682
		Three Months Ended
		March 31,
		2016				2015
Capital expenditures:
Hospital Operations and other		$	191			$	176
Ambulatory Care			12				4
Conifer			5				4
Total		$	208			$	184
Net operating revenues:
Hospital Operations and other		$	4,397			$	4,151
Ambulatory Care			429				91
Conifer
Tenet			167				160
Other customers			218				182
Total Conifer revenues			385				342
Intercompany eliminations			(167	)			(160	)
Total		$	5,044			$	4,424
Adjusted EBITDA:
Hospital Operations and other		$	414			$	418
Ambulatory Care			136				29
Conifer			63				82
Total		$	613			$	529
Depreciation and amortization:
Hospital Operations and other		$	174			$	192
Ambulatory Care			25				4
Conifer			13				11
Total		$	212			$	207
Adjusted EBITDA		$	613			$	529
Depreciation and amortization			(212	)			(207	)
Impairments and restructuring charges, and acquisition-related costs			(28	)			(29	)
Litigation and investigation costs			(173	)			(3	)
Interest expense			(243	)			(199	)
Gains on sales, consolidation and deconsolidation of facilities			147				—
Investment Earnings			1				—
Income from continuing operations before income taxes		$	105			$	91

 

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TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS

(Unaudited)

 

(Dollars in millions)		Three Months Ended March 31,
		2016								2015
		Ambulatory Care as Reported Under GAAP				Unconsolidated Affiliates				Ambulatory Care as Reported Under GAAP				Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts		$	437			$	479			$	300			$	486
Less: Provision for doubtful accounts			(8	)			(14	)			(5	)			(12	)
Net operating revenues(1)			429				465				295				474
Equity in earnings of unconsolidated affiliates(2)			25				—				21				—
Operating expenses:
Salaries, wages and benefits			146				118				98				120
Supplies			86				123				51				123
Other operating expenses, net			86				102				73				108
Depreciation and amortization			25				18				13				20
Impairment and restructuring charges, and acquisition-related costs			1				—				—				—
Gains on sales, consolidation and deconsolidation of facilities			(29	)			(4	)			—				—
Operating income			139				108				81				103
Interest expense			(35	)			(6	)			(34	)			(7	)
Net income from continuing operations, before income taxes			104				102				47				96
Income tax expense			(8	)			(2	)			(9	)			(2	)
Net income			96			$	100				38			$	94
Less: Net income attributable to noncontrolling interests(3)			75								34
Net income attributable to Tenet Healthcare Corporation common shareholders		$	21							$	4
Equity in earnings of unconsolidated affiliates						$	25							$	21

 

(1)	On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 11.0% during the three months ended March 31, 2016, with cases increasing 8.6% and revenue per case increasing 2.2%.

(2)

At March 31, 2016, 122 of the 335 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 213 facilities and account for these investments as consolidated subsidiaries.

(3)	During the three months ended March 31, 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.

 

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(1) Reconciliation of Non-GAAP Financial Measurers

Adjusted EBITDA, a non-GAAP term, 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, net of tax, (2) net loss (income) attributable to noncontrolling interests, (3) preferred stock dividends, (4) income (loss) from discontinued operations, net of tax, (5) income tax benefit (expense), (6) investment earnings (loss), (7) gain (loss) from early extinguishment of debt, (8) net gain (loss) on sales of investments, (9) interest expense, (10) litigation and investigation (costs) benefit, net of insurance recoveries, (11) hurricane insurance recoveries, net of costs, (12) net gains (losses) on sales, consolidation and deconsolidation of facilities, (13) impairment and restructuring charges and acquisition-related costs, and (14) depreciation and amortization. The company’s Adjusted EBITDA may not be comparable to EBITDA reported by other companies.

Adjusted Free Cash Flow, a non-GAAP term, 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 is defined 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’s Adjusted Free Cash Flow may not be comparable to free cash flow reported by other companies.

The company provides this information as a supplement to GAAP information to assist itself and investors in understanding the impact of various items on its financial statements, some of which are recurring or involve cash payments. The company uses this information in its analysis of the performance of its business excluding items that it does not consider as relevant in the performance of its continuing operations. The Company and investors also use this information to compare our operating results with other companies in the health care industry. In addition, from time to time the company uses these measures to define certain performance targets under our compensation programs. Neither Adjusted EBITDA nor Adjusted Free Cash Flow are measures of liquidity, but are measures of operating performance that management uses in its business as an alternative to net income (loss) attributable to Tenet Healthcare Corporation common shareholders. Because Adjusted EBITDA and Adjusted Free Cash Flow exclude many items that are included in our financial statements, they do not provide a complete measure of our operating performance. Accordingly, investors are encouraged to use GAAP measures when evaluating the company’s financial performance.

The reconciliation of net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP term to Adjusted EBITDA, is set forth in the table below for the three months ended March 31, 2016 and 2015.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Non-GAAP Financial Measurers to Net Income Available

(Loss Attributable) to Tenet Healthcare Corporation Common Shareholders

(Unaudited)

 

(Dollars in millions)		Three Months Ended
		March 31,
		2016				2015
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders		$	(59	)		$	47
Less: Net income attributable to noncontrolling interests			(93	)			(29	)
Net income (loss) from discontinued operations, net of tax			(4	)			1
Net income from continuing operations			38				75
Income tax expense			(67	)			(16	)
Investment earnings			1				—
Interest expense			(243	)			(199	)
Operating income			347				290
Litigation and investigation costs			(173	)			(3	)
Gains on sales, consolidation and deconsolidation of facilities			147				—
Impairment and restructuring charges, and acquisition-related costs			(28	)			(29	)
Depreciation and amortization			(212	)			(207	)
Adjusted EBITDA		$	613			$	529
Net operating revenues		$	5,044			$	4,424
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)			12.2	%			12.0	%

 

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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)

 

(Dollars in millions except per share amounts)		Three Months Ended March 31,
		2016				2015
		(Expense) Income
Adjustments to calculate Adjusted Diluted EPS
Impairment and restructuring charges, and acquisition-related costs		$	(28	)		$	(29	)
Litigation and investigation costs			(173	)			(3	)
Gain on sales, consolidation and deconsolidation of facilities			147				—
Pre-tax impact			(54	)			(32	)
Total after-tax impact			(82	)			(21	)
Noncontrolling interests impact			(18	)			—
Total income (loss) from items above		$	(100	)		$	(21	)
Net income available (loss attributable) to common shareholders		$	(59	)		$	47
Less net income (loss) discontinued operations, net of tax			(4	)			1
Net income (loss) from continuing operations, net of tax			(55	)			46
Net loss (income) from adjustments above			100				21
Adjusted net income (loss)		$	45			$	67
Weighted average dilutive shares outstanding (in thousands)			100,335				100,872
Adjusted diluted EPS		$	0.45			$	0.67

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 – Reconciliation of Adjusted Free Cash Flow

(Unaudited)

 

		Three Months Ended
(Dollars in millions)		March 31,
		2016				2015
Net cash provided by (used in) operating activities		$	147			$	(57	)
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements			(69	)			(33	)
Net cash used in operating activities from discontinued operations			(3	)			(4	)
Adjusted net cash provided by operating activities – continuing operations			219				(20	)
Purchases of property and equipment – continuing operations			(208	)			(184	)
Adjusted free cash flow – continuing operations		$	11			$	(204	)

 

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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

for the Year Ending December 31, 2016

(Unaudited)

 

(Dollars in millions)		Q2 2016								2016
		Low				High				Low				High
Net income attributable to Tenet Healthcare Corporation common shareholders		$	18			$	75			$	26			$	141
Less: Net income attributable to noncontrolling interests			(90	)			(80	)			(360	)			(340	)
Net loss from discontinued operations, net of tax			(2	)			—				(10	)			(5	)
Income from continuing operations			110				155				396				486
Income tax expense			(25	)			(60	)			(130	)			(200	)
Income from continuing operations, before income taxes			135				215				526				686
Interest expense			(245	)			(235	)			(970	)			(950	)
Operating income			380				450				1,496				1,636
Gains on sales, consolidation and deconsolidation of facilities(a)			—				—				147				147
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements(a)			—				—				(201	)			(201	)
Depreciation and amortization			(220	)			(200	)			(850	)			(810	)
Adjusted EBITDA		$	600			$	650			$	2,400			$	2,500
Net operating revenues		$	4,800			$	5,000			$	18,800			$	19,200
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)			12.5	%			13.0	%			12.8	%			13.0	%

 

(a)	Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements and gains on sales, consolidation and deconsolidation of facilities.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Adjusted EBITDA to

Outlook Normalized Income from Continuing Operations

for the Year Ending December 31, 2016

(Unaudited)

 

(Dollars in millions except per share amounts)		Q2 2016								2016
		Low				High				Low				High
Adjusted EBITDA		$	600			$	650			$	2,400			$	2,500
Depreciation and amortization			(220	)			(200	)			(850	)			(810	)
Interest expense			(245	)			(235	)			(970	)			(950	)
Normalized income from continuing operations before income taxes			135				215				580				740
Income tax expense			(25	)			(60	)			(120	)			(190	)
Normalized income from continuing operations			110				155				460				550
Net income attributable to noncontrolling interests			(90	)			(80	)			(340	)			(320	)
Normalized net income attributable to common shareholders		$	20			$	75			$	120			$	230
Fully diluted weighted average share outstanding (in millions)			102				102				102				102
Normalized fully diluted earnings per share – continuing operations		$	0.20			$	0.73			$	1.18			$	2.25

 

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TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #6 – Reconciliation of Outlook Adjusted Free Cash Flow

for the Year Ending December 31, 2016

 

(Dollars in millions)		2016
		Low				High
Net cash provided by operating activities		$	1,206			$	1,366
Less:
Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(a)			(69	)			(69	)
Net cash used in operating activities from discontinued operations			(25	)			(15	)
Adjusted net cash provided by operating activities – continuing operations		$	1,300			$	1,450
Purchases of property and equipment – continuing operations			(900	)			(850	)
Adjusted free cash flow – continuing operations		$	400			$	600

 

(a)	Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements

 

Page 18