TENET HEALTHCARE CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - TENET HEALTHCARE CORP	d98490d8k.htm

Exhibit 99.1

LOGO

Tenet Reports Results for the Third Quarter

Ended September 30, 2016

•

Reported a net loss from continuing operations of $9 million or $0.09 per share.

•

Adjusted EBITDA was $570 million and Adjusted diluted earnings per share from continuing operations was $0.16.

•

Same-hospital patient revenue grew 5.3% in the third quarter, driven by 1.4% growth in adjusted admissions and 3.9% growth in revenue per adjusted admission. Hospital segment Adjusted EBITDA totaled $334 million.

•

Ambulatory Care segment revenue increased 9.7% on a same-facility system-wide basis in the third quarter, with cases increasing 4.0% and revenue per case increasing 5.5%. Adjusted EBITDA for the ambulatory segment was $157 million, a 28.7% increase, and representing a margin of 35.0%.

•

Revenue from Conifer Health Solutions increased 14.7% in the third quarter with revenue from third parties increasing 29.9%. Conifer generated $79 million of Adjusted EBITDA in the third quarter, a 29.5% increase, and representing a margin of 19.8%.

•

Net cash provided by operating activities during the first nine months of 2016 was $851 million, a $16 million improvement when compared to $835 million of cash provided by operating activities in the first nine months of 2015. Adjusted Free Cash Flow was $368 million in the first nine months of 2016, a $76 million decline when compared to $444 million in the first nine months of 2015.

•

Updated 2016 Outlook, which includes net income from continuing operations of $9 million to $14 million and Adjusted EBITDA of $600 million to $650 million in the fourth quarter.

DALLAS – October 31, 2016 – Tenet Healthcare Corporation (NYSE:THC) reported a net loss from continuing operations of $9 million in the third quarter of 2016, a $19 million improvement when compared to a $28 million net loss from continuing operations in the third quarter of 2015. Adjusted EBITDA was $570 million in the third quarter of 2016, an increase of $4 million, or 0.7 percent, compared to $566 million in the third quarter of 2015.

“Our focus on high-acuity service lines continues to drive growth in our hospitals and contributed to the 5.3% increase in same-hospital patient revenues this quarter. Adjusted EBITDA in our hospital segment increased by a similar amount after adjusting for acquisitions, divestitures and electronic health record incentives,” said Trevor Fetter, chairman and chief executive officer. “Conifer and USPI delivered another outstanding quarter, and our three business segments continue to work together to enhance our long-term growth.”

Page 1

Hospital Operations and Other Segment

Net operating revenue in the Hospital Operations and other segment was $4.162 billion, down 0.4 percent from $4.179 billion in the third quarter of 2015 due to hospitals that have been divested since that time. On a same-hospital basis, patient revenue increased to $3.768 billion, up 5.3 percent from $3.577 billion in the third quarter of 2015. The increase was driven by a 1.4 percent increase in adjusted patient admissions and a 3.9 percent increase in net patient revenue per adjusted admission.

Adjusted EBITDA in Tenet’s hospital segment was $334 million, representing a decline of 12.8 percent as compared to $383 million in the third quarter of 2015. The decline was primarily driven by divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives, and was partially offset by acquisitions in 2015. In addition, Tenet’s health plan business lowered EBITDA in the segment by approximately $5 million.

Total hospital segment selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 3.1 percent on a per adjusted admission basis in the quarter. Approximately one-third of the increase was attributable to an increase in expense at Tenet’s health plans, which was substantially offset by an increase in health plan revenues as a result of additional covered lives in 2016.

Exchanges

Tenet’s same-hospital exchange admissions were 5,465 in the third quarter of 2016, up 16.9 percent from the third quarter of 2015. Same-hospital exchange outpatient visits were 51,015, up 32.0 percent from the third quarter of 2015.

Uncompensated Care

Tenet’s provision for doubtful accounts was $367 million in the third quarter of 2016, representing a ratio of 7.0 percent of revenues before bad debt, as compared to $371 million in the third quarter of 2015, or 7.3 percent of revenues before bad debt. Tenet’s uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, was $1.318 billion and $1.303 billion in the third quarters of 2016 and 2015, respectively, including $951 million and $932 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care represented 21.4 percent of revenue before bad debts, uninsured discounts and charity care write-offs in the third quarter of 2016, down from 21.7 percent in the third quarter of 2015. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.

Uninsured plus charity admissions increased by 985 admissions, or 10.5 percent on a same-hospital basis in the third quarter of 2016 compared to the third quarter of 2015. Uninsured plus charity outpatient visits decreased by 3,733 visits, or 2.8 percent, on a same-hospital basis.

Page 2

Ambulatory Care Segment

During the third quarter of 2016, the Ambulatory segment produced net operating revenue of $448 million, representing an increase of 36.2 percent as compared to $329 million in the third quarter of 2015. In addition, the Ambulatory segment generated Adjusted EBITDA of $157 million, up 28.7 percent from $122 million in the third quarter of 2015

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze the segment’s results of operations, management uses system-wide measures which include revenues and cases of both consolidated and unconsolidated facilities. On a same-facility system-wide basis, revenue in the Ambulatory segment increased 9.7 percent, with cases increasing 4.0 percent and revenue per case increasing 5.5 percent.

Conifer Segment

During the third quarter of 2016, Conifer’s revenue increased 14.7 percent to $398 million, up from $347 million in the third quarter of 2015, and Conifer’s revenue from third party customers increased by 29.9 percent to $239 million. Conifer generated $79 million of Adjusted EBITDA in the third quarter of 2016, up 29.5 percent from $61 million in the third quarter of 2015. Conifer’s results for the third quarter of 2016 included $9 million of annual customer incentives. These incentives may be achieved again in future years, but will not recur at these levels in the fourth quarter of 2016.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations of $9 million, or $0.09 per share, in the third quarter of 2016 compared to a net loss of $28 million, or $0.28 per share, in the third quarter of 2015.

After adjusting for certain items which are listed on Table #2, Tenet generated Adjusted net income from continuing operations of $16 million, or $0.16 per diluted share, during the third quarter of 2016, as compared to Adjusted net income from continuing operations of $30 million, or $0.29 per diluted share, in the third quarter of 2015.

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

Page 3

Cash Flow and Liquidity

Cash and cash equivalents were $649 million at September 30, 2016 compared to $656 million at June 30, 2016. The Company had no outstanding borrowings on its $1 billion credit line as of September 30, 2016. Accounts receivable days outstanding were 52.9 at September 30, 2016 compared to 51.1 at June 30, 2016 and 49.5 at December 31, 2015.

Net cash provided by operating activities in the nine months ended September 30, 2016 was $851 million, representing a $16 million improvement compared to $835 million in the comparable period in 2015. After subtracting $614 million and $566 million of capital expenditures in the nine months ended September 30, 2016 and September 30, 2015, respectively, Free Cash Flow was $237 million in the nine months ended September 30, 2016, representing a $32 million decline compared to $269 million in the comparable period in 2015. Adjusted Free Cash Flow was $368 million in the nine months ended September 30, 2016, representing a $76 million decline from $444 million in the comparable period in 2015.

Net cash used in investing activities was $150 million in the nine months ended September 30, 2016 compared to $1.272 billion of net cash used in investing activities in the comparable period in 2015. Net cash used in financing activities was $408 million in the nine months ended September 30, 2016 compared to $694 million of net cash provided by financing activities in the comparable period in 2015.

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

Outlook

The Company’s Outlook for 2016 includes:

•

Revenue of $19.650 billion to $19.800 billion,

•

Net loss from continuing operations ranging from a loss of $99 million to a loss of $94 million,

•

Adjusted EBITDA of $2.400 billion to $2.450 billion,

•

Net cash provided by operating activities of $1.2 billion to $1.3 billion,

•

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

•

Loss per share from continuing operations ranging from a loss of $1.00 to a loss of $0.95 per basic share, and

•

Adjusted diluted earnings per share from continuing operations of $1.16 to $1.21.

The Outlook for calendar year 2016 assumes equity in earnings of unconsolidated affiliates of $120 million to $130 million, electronic health record incentives of $30 million to $35 million, net income attributable to noncontrolling interests of $340 million to $360 million (excluding an additional $19 million of noncontrolling interests recorded by USPI in the first nine months of 2016 related to gains on consolidation) and an average diluted share count of 101 million.

Page 4

The Company’s Outlook for the fourth quarter of 2016 includes:

•

Revenue of $4.9 billion to $5.0 billion,

•

Net income from continuing operations of $9 million to $14 million,

•

Adjusted EBITDA of $600 million to $650 million,

•

Earnings per diluted share from continuing operations of $0.09 to $0.14, and

•

Adjusted diluted earnings per share from continuing operations of $0.17 to $0.22.

The Outlook for the fourth quarter assumes equity in earnings of unconsolidated affiliates of approximately $40 million, electronic health record incentives of approximately $10 million, net income attributable to noncontrolling interests of $94 million to $114 million and an average diluted share count of 102 million.

Additional details on Tenet’s Outlook for both the fourth quarter and calendar year 2016 are available in Tables 4 and 5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of Third Quarter Results

Tenet management will discuss the Company’s third quarter 2016 results on a webcast scheduled for 10:00 a.m. EDT (9:00 a.m. CDT) on November 1, 2016. Investors can access the webcast through Tenet’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-Q report for the three months ended September 30, 2016, which will be filed with the Securities and Exchange Commission and posted on the Tenet website before the webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income from continuing operations, Adjusted diluted earnings per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measure are contained in the tables at the end of this release.

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

Page 5

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.

###

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, Form 10-Q for the quarterly period ended September 30, 2016 and other filings with the Securities and Exchange Commission. Among other things, these factors include adverse regulatory developments, government investigations or litigation.

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

Page 6

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Three Months Ended September 30,
	2016			%			2015			%			Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	5,216					$	5,063						3.0	%
Less: Provision for doubtful accounts		367						371						(1.1	)%

Net operating revenues		4,849			100.0	%		4,692			100.0	%		3.3	%
Equity in earnings of unconsolidated affiliates		31			0.6	%		28			0.6	%		10.7	%
Operating expenses:
Salaries, wages and benefits		2,314			47.7	%		2,258			48.2	%		2.5	%
Supplies		767			15.8	%		752			16.0	%		2.0	%
Other operating expenses, net		1,231			25.4	%		1,151			24.5	%		7.0	%
Electronic health record incentives		(2	)		—	%		(7	)		(0.1	)%		(71.4	)%
Depreciation and amortization		205			4.2	%		185			3.9	%
Impairment and restructuring charges, and acquisition-related costs		31			0.6	%		44			0.9	%
Litigation and investigation costs		4			0.1	%		50			1.1	%
Gains on sales, consolidation and deconsolidation of facilities		(3	)		(0.1	)%		—			—	%

Operating income		333			6.9	%		287			6.1	%
Interest expense		(243	)					(248	)
Investment earnings (losses)		(1	)					1

Net income from continuing operations, before income taxes		89						40
Income tax expense		(10	)					(11	)

Net income from continuing operations, before discontinued operations		79						29
Discontinued operations:
Income (loss) from operations		2						(1	)
Income tax expense		(1	)					—

Net income (loss) from discontinued operations		1						(1	)

Net income		80						28
Less: Net income attributable to noncontrolling interests		88						57

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(8	)				$	(29	)

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(9	)				$	(28	)
Net income (loss) from discontinued operations, net of tax		1						(1	)

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(8	)				$	(29	)

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(0.09	)				$	(0.28	)
Discontinued operations		0.01						(0.01	)

	$	(0.08	)				$	(0.29	)

Diluted
Continuing operations	$	(0.09	)				$	(0.28	)
Discontinued operations		0.01						(0.01	)

	$	(0.08	)				$	(0.29	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		99,523						99,537
Diluted*		99,523						99,537

Had we generated income from continuing operations in the three months ended September 30, 2016 and 2015 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,455 shares and 2,500 shares, respectively.

Page 7

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Nine Months Ended September 30,
	2016			%			2015			%			Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	15,856					$	14,694						7.9	%
Less: Provision for doubtful accounts		1,095						1,086						0.8	%

Net operating revenues		14,761			100.0	%		13,608			100.0	%		8.5	%
Equity in earnings of unconsolidated affiliates		85			0.6	%		48			0.4	%		77.1	%
Operating expenses:
Salaries, wages and benefits		7,032			47.6	%		6,568			48.3	%		7.1	%
Supplies		2,351			15.9	%		2,146			15.8	%		9.6	%
Other operating expenses, net		3,686			25.0	%		3,325			24.4	%		10.9	%
Electronic health record incentives		(23	)		(0.2	)%		(46	)		(0.3	)%		(50.0	)%
Depreciation and amortization		632			4.3	%		589			4.3	%
Impairment and restructuring charges, and acquisition-related costs		81			0.6	%		266			2.0	%
Litigation and investigation costs		291			2.0	%		67			0.5	%
Gains on sales, consolidation and deconsolidation of facilities		(151	)		(1.0	)%		—			—	%

Operating income		947			6.4	%		741			5.4	%
Interest expense		(730	)					(664	)
Investment earnings (losses)		2						—

Net income from continuing operations, before income taxes		219						77
Income tax expense		(61	)					—

Net income from continuing operations, before discontinued operations		158						77
Discontinued operations:
Loss from operations		(5	)					(1	)
Income tax expense		—						—

Net loss from discontinued operations		(5	)					(1	)

Net income		153						76
Less: Net income attributable to noncontrolling interests		266						119

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(113	)				$	(43	)

Amounts attributable to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(108	)				$	(42	)
Net loss from discontinued operations, net of tax		(5	)					(1	)

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(113	)				$	(43	)

Net loss per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(1.09	)				$	(0.42	)
Discontinued operations		(0.05	)					(0.01	)

	$	(1.14	)				$	(0.43	)

Diluted
Continuing operations	$	(1.09	)				$	(0.42	)
Discontinued operations		(0.05	)					(0.01	)

	$	(1.14	)				$	(0.43	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		99,210						99,160
Diluted*		99,210						99,160

Had we generated income from continuing operations in the nine months ended September 30, 2016 and 2015 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,470 shares and 2,449 shares, respectively.

Page 8

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30,			December 31,
(Dollars in millions)	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	649		$	356
Accounts receivable, less allowance for doubtful accounts		2,786			2,704
Inventories of supplies, at cost		322			309
Income tax receivable		11			7
Assets held for sale		17			550
Other current assets		1,331			1,245

Total current assets		5,116			5,171
Investments and other assets		1,324			1,175
Deferred income taxes		840			776
Property and equipment, at cost, less accumulated depreciation and amortization		7,965			7,915
Goodwill		7,376			6,970
Other intangible assets, at cost, less accumulated amortization		1,853			1,675

Total assets	$	24,474		$	23,682

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	184		$	127
Accounts payable		1,228			1,380
Accrued compensation and benefits		809			880
Professional and general liability reserves		185			177
Accrued interest payable		308			205
Liabilities held for sale		13			101
Accrued legal settlement costs		527			294
Other current liabilities		1,293			1,144

Total current liabilities		4,547			4,308
Long-term debt, net of current portion		14,323			14,383
Professional and general liability reserves		620			578
Defined benefit plan obligations		586			595
Deferred income taxes		320			37
Other long-term liabilities		606			557

Total liabilities		21,002			20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries		2,307			2,266
Equity:
Shareholders’ equity:
Common stock		7			7
Additional paid-in capital		4,801			4,815
Accumulated other comprehensive loss		(200	)		(164	)
Accumulated deficit		(1,663	)		(1,550	)
Common stock in treasury, at cost		(2,417	)		(2,417	)

Total shareholders’ equity		528			691
Noncontrolling interests		637			267

Total equity		1,165			958

Total liabilities and equity	$	24,474		$	23,682

Page 9

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)


	Nine Months Ended
(Dollars in millions)	September 30,
	2016			2015
Net Income	$	153		$	76
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		632			589
Provision for doubtful accounts		1,095			1,086
Deferred income tax expense (benefit)		32			(10	)
Stock-based compensation expense		51			50
Impairment and restructuring charges, and acquisition-related costs		81			266
Litigation and investigation costs		291			67
Gains on sales, consolidation and deconsolidation of facilities		(151	)		—
Equity in earnings of unconsolidated affiliates, net of distributions received		2			(48	)
Amortization of debt discount and debt issuance costs		33			32
Pre-tax loss from discontinued operations		5			1
Other items, net		(3	)		22
Changes in cash from operating assets and liabilities:
Accounts receivable		(1,156	)		(1,124	)
Inventories and other current assets		(95	)		(62	)
Income taxes		(1	)		(5	)
Accounts payable, accrued expenses and other current liabilities		(35	)		39
Other long-term liabilities		48			31
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements		(132	)		(157	)
Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes		1			(18	)

Net cash provided by operating activities		851			835
Cash flows from investing activities:
Purchases of property and equipment — continuing operations		(614	)		(566	)
Purchases of businesses or joint venture interests, net of cash acquired		(96	)		(720	)
Proceeds from sales of facilities and other assets		573			28
Proceeds from sales of marketable securities, long-term investments and other assets		36			18
Purchases of equity investments		(37	)		(18	)
Other long-term assets		(15	)		(6	)
Other items, net		3			(8	)

Net cash used in investing activities		(150	)		(1,272	)
Cash flows from financing activities:
Repayments of borrowings under credit facility		(1,195	)		(1,880	)
Proceeds from borrowings under credit facility		1,195			1,770
Repayments of other borrowings		(112	)		(2,011	)
Proceeds from other borrowings		4			3,208
Debt issuance costs		(1	)		(76	)
Distributions paid to noncontrolling interests		(151	)		(65	)
Proceeds from sale of noncontrolling interests		19			4
Purchase of noncontrolling interests		(180	)		(254	)
Proceeds from exercise of stock options		4			15
Other items, net		9			(17	)

Net cash provided by (used in) financing activities		(408	)		694

Net increase in cash and cash equivalents		293			257
Cash and cash equivalents at beginning of period		356			193

Cash and cash equivalents at end of period	$	649		$	450

Supplemental disclosures:
Interest paid, net of capitalized interest	$	(596	)	$	(519	)
Income tax payments, net	$	(33	)	$	(6	)

Page 10

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 September 30,									Nine Months Ended September 30,
and per visit amounts)	2016			2015			Change			2016			2015			Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		75			83			(8	) *		75			83			(8	) *
Total admissions		194,342			201,870			(3.7	)%		600,039			612,111			(2.0	)%
Adjusted patient admissions		345,207			352,352			(2.0	)%		1,050,839			1,050,594			—	%
Paying admissions (excludes charity and uninsured)		183,042			190,548			(3.9	)%		568,017			579,304			(1.9	)%
Charity and uninsured admissions		11,300			11,322			(0.2	)%		32,022			32,807			(2.4	)%
Admissions through emergency department		120,447			126,050			(4.4	)%		378,786			388,164			(2.4	)%
Paying admissions as a percentage of total admissions		94.2	%		94.4	%		(0.2	)% *		94.7	%		94.6	%		0.1	% *
Charity and uninsured admissions as a percentage of total admissions		5.8	%		5.6	%		0.2	% *		5.3	%		5.4	%		(0.1	)% *
Emergency department admissions as a percentage of total admissions		62.0	%		62.4	%		(0.4	)% *		63.1	%		63.4	%		(0.3	)% *
Surgeries — inpatient		54,701			55,977			(2.3	)%		164,835			164,969			(0.1	)%
Surgeries — outpatient		72,646			73,960			(1.8	)%		225,296			213,894			5.3	%
Total surgeries		127,346			129,937			(2.0	)%		390,131			378,863			3.0	%
Patient days — total		894,323			927,964			(3.6	)%		2,802,150			2,833,716			(1.1	)%
Adjusted patient days		1,567,894			1,601,494			(2.1	)%		4,851,535			4,809,669			0.9	%
Average length of stay (days)		4.60			4.60			—	%		4.67			4.63			0.9	%
Licensed beds (at end of period)		20,340			21,527			(5.5	)%		20,340			21,527			(5.5	)%
Average licensed beds		20,367			21,122			(3.6	)%		20,757			20,924			(0.8	)%
Utilization of licensed beds		47.7	%		47.8	%		(0.1	)% *		49.3	%		49.6	%		(0.3	)% *
Outpatient Visits
Total visits		2,009,019			2,076,524			(3.3	)%		6,193,924			6,134,134			1.0	%
Paying visits (excludes charity and uninsured)		1,862,046			1,904,467			(2.2	)%		5,742,955			5,645,246			1.7	%
Charity and uninsured visits		146,973			172,057			(14.6	)%		450,969			488,888			(7.8	)%
Emergency department visits		707,713			747,993			(5.4	)%		2,213,321			2,232,477			(0.9	)%
Paying visits as a percentage of total visits		92.7	%		91.7	%		1.0	% *		92.7	%		92.0	%		0.7	% *
Charity and uninsured visits as a percentage of total visits		7.3	%		8.3	%		(1.0	)% *		7.3	%		8.0	%		(0.7	)% *
Revenues
Net inpatient revenues	$	2,644		$	2,603			1.6	%	$	8,013		$	7,917			1.2	%
Net outpatient revenues	$	1,417		$	1,515			(6.5	)%	$	4,391		$	4,411			(0.5	)%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,605		$	12,894			5.5	%	$	13,354		$	12,934			3.2	%
Net inpatient revenue per patient day	$	2,956		$	2,805			5.4	%	$	2,860		$	2,794			2.4	%
Net outpatient revenue per visit	$	705		$	730			(3.4	)%	$	709		$	719			(1.4	)%
Net patient revenue per adjusted patient admission	$	11,764		$	11,688			0.7	%	$	11,804		$	11,734			0.6	%
Net patient revenue per adjusted patient day	$	2,590		$	2,571			0.7	%	$	2,557		$	2,563			(0.2	)%
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission	$	10,666		$	10,348			3.1	%	$	10,621		$	10,315			3.0	%
Net Patient Revenues from:
Medicare		19.9	%		19.8	%		0.1	% *		20.5	%		20.8	%		(0.3	)% *
Medicaid		8.4	%		8.8	%		(0.4	)% *		8.2	%		8.9	%		(0.7	)% *
Managed care		64.0	%		61.1	%		2.9	% *		61.5	%		60.2	%		1.3	% *
Indemnity, self-pay and other		7.7	%		10.3	%		(2.6	)% *		9.8	%		10.1	%		(0.3	)% *

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

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

Page 11

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 September 30,									Nine Months Ended September 30,
and per visit amounts)	2016			2015			Change			2016			2015			Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		67			67			—	*		67			67			—	*
Total admissions		177,626			176,885			0.4	%		539,830			541,167			(0.2	)%
Adjusted patient admissions		310,253			305,916			1.4	%		935,412			922,603			1.4	%
Paying admissions (excludes charity and uninsured)		167,219			167,463			(0.1	)%		511,222			513,875			(0.5	)%
Charity and uninsured admissions		10,407			9,422			10.5	%		28,608			27,292			4.8	%
Admissions through emergency department		110,539			110,235			0.3	%		341,111			342,302			(0.3	)%
Paying admissions as a percentage of total admissions		94.1	%		94.7	%		(0.6	)% *		94.7	%		95.0	%		(0.3	)% *
Charity and uninsured admissions as a percentage of total admissions		5.9	%		5.3	%		0.6	% *		5.3	%		5.0	%		0.3	% *
Emergency department admissions as a percentage of total admissions		62.2	%		62.3	%		(0.1	)% *		63.2	%		63.3	%		(0.1	)% *
Surgeries — inpatient		49,608			49,527			0.2	%		147,377			147,113			0.2	%
Surgeries — outpatient		62,571			64,985			(3.7	)%		192,248			189,886			1.2	%
Total surgeries		112,179			114,512			(2.0	)%		339,625			336,999			0.8	%
Patient days — total		803,553			804,181			(0.1	)%		2,471,353			2,482,989			(0.5	)%
Adjusted patient days		1,390,214			1,374,619			1.1	%		4,241,280			4,187,429			1.3	%
Average length of stay (days)		4.52			4.55			(0.7	)%		4.58			4.59			(0.2	)%
Licensed beds (at end of period)		18,104			18,201			(0.5	)%		18,104			18,201			(0.5	)%
Average licensed beds		18,131			18,233			(0.6	)%		18,138			18,240			(0.6	)%
Utilization of licensed beds		48.2	%		47.9	%		0.3	% *		49.9	%		49.9	%		—	% *
Outpatient Visits
Total visits		1,805,800			1,792,264			0.8	%		5,491,057			5,370,525			2.2	%
Paying visits (excludes charity and uninsured)		1,676,686			1,659,417			1.0	%		5,112,745			4,990,102			2.5	%
Charity and uninsured visits		129,114			132,847			(2.8	)%		378,312			380,423			(0.6	)%
Emergency department visits		628,234			624,871			0.5	%		1,939,686			1,894,201			2.4	%
Paying visits as a percentage of total visits		92.9	%		92.6	%		0.3	% *		93.1	%		92.9	%		0.2	% *
Charity and uninsured visits as a percentage of total visits		7.1	%		7.4	%		(0.3	)% *		6.9	%		7.1	%		(0.2	)% *
Revenues
Net inpatient revenues	$	2,435		$	2,289			6.4	%	$	7,334		$	6,976			5.1	%
Net outpatient revenues	$	1,333		$	1,288			3.5	%	$	4,007		$	3,795			5.6	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,709		$	12,941			5.9	%	$	13,586		$	12,891			5.4	%
Net inpatient revenue per patient day	$	3,030		$	2,846			6.5	%	$	2,968		$	2,810			5.6	%
Net outpatient revenue per visit	$	738		$	719			2.6	%	$	730		$	707			3.3	%
Net patient revenue per adjusted patient admission	$	12,145		$	11,693			3.9	%	$	12,124		$	11,675			3.8	%
Net patient revenue per adjusted patient day	$	2,710		$	2,602			4.2	%	$	2,674		$	2,572			4.0	%
Net Patient Revenues from:
Medicare		19.7	%		20.2	%		(0.5	)% *		20.2	%		21.0	%		(0.8	)% *
Medicaid		8.5	%		8.8	%		(0.3	)% *		8.3	%		8.8	%		(0.5	)% *
Managed care		62.1	%		61.6	%		0.5	% *		61.8	%		60.8	%		1.0	% *
Indemnity, self-pay and other		10.1	%		9.3	%		0.8	% *		9.7	%		9.4	%		0.3	% *

(1)

Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the nine months ended September 30, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals that Tenet divested, since January 1, 2015.

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

Page 12

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Three Months Ended									Nine Months Ended
	3/31/2016			6/30/2016			9/30/2016			9/30/2016
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	5,420		$	5,220		$	5,216		$	15,856
Less: Provision for doubtful accounts		376			352			367			1,095

Net operating revenues		5,044			4,868			4,849			14,761
Equity in earnings of unconsolidated affiliates		24			30			31			85
Operating expenses:
Salaries, wages and benefits		2,402			2,316			2,314			7,032
Supplies		811			773			767			2,351
Other operating expenses, net		1,242			1,213			1,231			3,686
Electronic health record incentives		—			(21	)		(2	)		(23	)
Depreciation and amortization		212			215			205			632
Impairment and restructuring charges, and acquisition-related costs		28			22			31			81
Litigation and investigation costs		173			114			4			291
Gains on sales, consolidation and deconsolidation of facilities		(147	)		(1	)		(3	)		(151	)

Operating income		347			267			333			947
Interest expense		(243	)		(244	)		(243	)		(730	)
Investment earnings (losses)		1			2			(1	)		2

Net income from continuing operations, before income taxes		105			25			89			219
Income tax benefit (expense)		(67	)		16			(10	)		(61	)

Net income from continuing operations, before discontinued operations		38			41			79			158
Discontinued operations:
Income (loss) from operations		(5	)		(2	)		2			(5	)
Income tax benefit (expense)		1			—			(1	)		—

Net Income (loss) from discontinued operations		(4	)		(2	)		1			(5	)

Net income		34			39			80			153
Less: Net income attributable to noncontrolling interests		93			85			88			266

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(59	)	$	(46	)	$	(8	)	$	(113	)

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(55	)	$	(44	)	$	(9	)	$	(108	)
Net income (loss) from discontinued operations, net of tax		(4	)		(2	)		1			(5	)

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(59	)	$	(46	)	$	(8	)	$	(113	)

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(0.56	)	$	(0.44	)	$	(0.09	)	$	(1.09	)
Discontinued operations		(0.04	)		(0.02	)		0.01			(0.05	)

	$	(0.60	)	$	(0.46	)	$	(0.08	)	$	(1.14	)

Diluted
Continuing operations	$	(0.56	)	$	(0.44	)	$	(0.09	)	$	(1.09	)
Discontinued operations		(0.04	)		(0.02	)		0.01			(0.05	)

	$	(0.60	)	$	(0.46	)	$	(0.08	)	$	(1.14	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		98,768			99,341			99,523			99,210
Diluted		98,768			99,341			99,523			99,210

Page 13

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									Nine Months Ended
and per visit amounts)	3/31/2016			6/30/2016			9/30/2016			9/30/2016
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		80			75			75			75
Total admissions		211,799			193,898			194,342			600,039
Adjusted patient admissions		362,819			342,813			345,207			1,050,839
Paying admissions (excludes charity and uninsured)		201,436			183,539			183,042			568,017
Charity and uninsured admissions		10,363			10,359			11,300			32,022
Admissions through emergency department		136,056			122,283			120,447			378,786
Paying admissions as a percentage of total admissions		95.1	%		94.7	%		94.2	%		94.7	%
Charity and uninsured admissions as a percentage of total admissions		4.9	%		5.3	%		5.8	%		5.3	%
Emergency department admissions as a percentage of total admissions		64.2	%		63.1	%		62.0	%		63.1	%
Surgeries — inpatient		55,755			54,379			54,701			164,835
Surgeries — outpatient		76,829			75,821			72,646			225,296
Total surgeries		132,584			130,201			127,346			390,131
Patient days — total		1,010,514			897,313			894,323			2,802,150
Adjusted patient days		1,714,369			1,569,272			1,567,894			4,851,535
Average length of stay (days)		4.77			4.63			4.60			4.67
Licensed beds (at end of period)		21,529			20,380			20,340			20,340
Average licensed beds		21,524			20,380			20,367			20,757
Utilization of licensed beds		51.6	%		48.4	%		47.7	%		49.3	%
Outpatient Visits
Total visits		2,146,618			2,038,287			2,009,019			6,193,924
Paying visits (excludes charity and uninsured)		1,984,515			1,896,394			1,862,046			5,742,955
Charity and uninsured visits		162,103			141,893			146,973			450,969
Emergency department visits		789,916			715,692			707,713			2,213,321
Paying visits as a percentage of total visits		92.4	%		93.0	%		92.7	%		92.7	%
Charity and uninsured visits as a percentage of total visits		7.6	%		7.0	%		7.3	%		7.3	%
Revenues
Net inpatient revenues	$	2,781		$	2,588		$	2,644		$	8,013
Net outpatient revenues	$	1,514		$	1,460		$	1,417		$	4,391
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,130		$	13,347		$	13,605		$	13,354
Net inpatient revenue per patient day	$	2,752		$	2,884		$	2,956		$	2,860
Net outpatient revenue per visit	$	705		$	716		$	705		$	709
Net patient revenue per adjusted patient admission	$	11,838		$	11,808		$	11,764		$	11,804
Net patient revenue per adjusted patient day	$	2,505		$	2,580		$	2,590		$	2,557
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission	$	10,537		$	10,668		$	10,666		$	10,621
Net Patient Revenues from:
Medicare		20.0	%		21.7	%		19.9	%		20.5	%
Medicaid		8.7	%		7.4	%		8.4	%		8.2	%
Managed care		61.1	%		59.4	%		64.0	%		61.5	%
Indemnity, self-pay and other		10.2	%		11.5	%		7.7	%		9.8	%

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

Page 14

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									Nine Months Ended
and per visit amounts)	3/31/2016			6/30/2016			9/30/2016			9/30/2016
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		67			67			67			67
Total admissions		185,053			177,151			177,626			539,830
Adjusted patient admissions		315,787			309,372			310,253			935,412
Paying admissions (excludes charity and uninsured)		176,286			167,717			167,219			511,222
Charity and uninsured admissions		8,767			9,434			10,407			28,608
Admissions through emergency department		118,578			111,994			110,539			341,111
Paying admissions as a percentage of total admissions		95.3	%		94.7	%		94.1	%		94.7	%
Charity and uninsured admissions as a percentage of total admissions		4.7	%		5.3	%		5.9	%		5.3	%
Emergency department admissions as a percentage of total admissions		64.1	%		63.2	%		62.2	%		63.2	%
Surgeries — inpatient		48,547			49,222			49,608			147,377
Surgeries — outpatient		63,999			65,678			62,571			192,248
Total surgeries		112,546			114,900			112,179			339,625
Patient days — total		862,138			805,662			803,553			2,471,353
Adjusted patient days		1,456,580			1,394,486			1,390,214			4,241,280
Average length of stay (days)		4.66			4.55			4.52			4.58
Licensed beds (at end of period)		18,144			18,144			18,104			18,104
Average licensed beds		18,139			18,144			18,131			18,138
Utilization of licensed beds		52.8	%		48.8	%		48.2	%		49.9	%
Outpatient Visits
Total visits		1,854,735			1,830,522			1,805,800			5,491,057
Paying visits (excludes charity and uninsured)		1,728,684			1,707,375			1,676,686			5,112,745
Charity and uninsured visits		126,051			123,147			129,114			378,312
Emergency department visits		670,678			640,774			628,234			1,939,686
Paying visits as a percentage of total visits		93.2	%		93.3	%		92.9	%		93.1	%
Charity and uninsured visits as a percentage of total visits		6.8	%		6.7	%		7.1	%		6.9	%
Revenues
Net inpatient revenues	$	2,499		$	2,400		$	2,435		$	7,334
Net outpatient revenues	$	1,331		$	1,343		$	1,333		$	4,007
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,504		$	13,548		$	13,709		$	13,586
Net inpatient revenue per patient day	$	2,899		$	2,979		$	3,030		$	2,968
Net outpatient revenue per visit	$	718		$	734		$	738		$	730
Net patient revenue per adjusted patient admission	$	12,128		$	12,099		$	12,145		$	12,124
Net patient revenue per adjusted patient day	$	2,629		$	2,684		$	2,710		$	2,674
Net Patient Revenues from:
Medicare		20.6	%		20.1	%		19.7	%		20.2	%
Medicaid		8.5	%		7.8	%		8.5	%		8.3	%
Managed care		61.5	%		62.1	%		61.7	%		61.8	%
Indemnity, self-pay and other		9.4	%		10.0	%		10.1	%		9.7	%

(1)

Page 15

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)		67			67			67			67			67
Total admissions		185,147			179,135			176,885			176,051			717,218
Adjusted patient admissions		308,729			307,958			305,916			305,436			1,228,039
Paying admissions (excludes charity and uninsured)		176,023			170,389			167,463			166,962			680,837
Charity and uninsured admissions		9,124			8,746			9,422			9,089			36,381
Admissions through emergency department		118,326			113,741			110,235			110,291			452,593
Paying admissions as a percentage of total admissions		95.1	%		95.1	%		94.7	%		94.8	%		94.9	%
Charity and uninsured admissions as a percentage of total admissions		4.9	%		4.9	%		5.3	%		5.2	%		5.1	%
Emergency department admissions as a percentage of total admissions		63.9	%		63.5	%		62.3	%		62.6	%		63.1	%
Surgeries — inpatient		48,295			49,291			49,527			49,239			196,352
Surgeries — outpatient		60,494			64,407			64,985			65,046			254,932
Total surgeries		108,789			113,698			114,512			114,285			451,284
Patient days — total		860,927			817,881			804,181			803,037			3,286,026
Adjusted patient days		1,421,505			1,391,305			1,374,619			1,379,612			5,567,041
Average length of stay (days)		4.65			4.57			4.55			4.56			4.58
Licensed beds (at end of period)		18,244			18,244			18,201			18,130			18,130
Average licensed beds		18,241			18,244			18,233			18,154			18,217
Utilization of licensed beds		52.4	%		49.3	%		47.9	%		48.1	%		49.4	%
Outpatient Visits
Total visits		1,762,868			1,815,393			1,792,264			1,806,125			7,176,650
Paying visits (excludes charity and uninsured)		1,639,131			1,691,554			1,659,417			1,680,609			6,670,711
Charity and uninsured visits		123,737			123,839			132,847			125,516			505,939
Emergency department visits		636,860			632,470			624,871			626,280			2,520,481
Paying visits as a percentage of total visits		93.0	%		93.2	%		92.6	%		93.1	%		93.0	%
Charity and uninsured visits as a percentage of total visits		7.0	%		6.8	%		7.4	%		6.9	%		7.0	%
Revenues
Net inpatient revenues	$	2,382		$	2,305		$	2,289		$	2,358		$	9,334
Net outpatient revenues	$	1,226		$	1,281		$	1,288		$	1,308		$	5,103
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	12,865		$	12,867		$	12,941		$	13,394		$	13,014
Net inpatient revenue per patient day	$	2,767		$	2,818		$	2,846		$	2,936		$	2,841
Net outpatient revenue per visit	$	695		$	706		$	719		$	724		$	711
Net patient revenue per adjusted patient admission	$	11,687		$	11,644		$	11,693		$	12,003		$	11,756
Net patient revenue per adjusted patient day	$	2,538		$	2,577		$	2,602		$	2,657		$	2,593
Net Patient Revenues from:
Medicare		21.9	%		20.7	%		20.2	%		19.9	%		20.7	%
Medicaid		9.4	%		8.3	%		8.8	%		8.3	%		8.7	%
Managed care		59.1	%		61.6	%		61.7	%		61.8	%		61.1	%
Indemnity, self-pay and other		9.6	%		9.4	%		9.3	%		10.0	%		9.5	%

(1)

Page 16

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)


							September 30,			December 31,
							2016			2015
Assets
Hospital Operations and other							$	17,627		$	17,353
Ambulatory Care								5,729			5,159
Conifer								1,118			1,170

Total							$	24,474		$	23,682


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Capital expenditures:
Hospital Operations and other	$	182		$	194		$	557		$	536
Ambulatory Care		14			7			42			14
Conifer		5			6			15			16

Total	$	201		$	207		$	614		$	566

Net operating revenues:
Hospital Operations and other	$	4,162		$	4,179		$	12,761		$	12,505
Ambulatory Care		448			329			1,319			562
Conifer
Tenet		159			163			488			488
Other customers		239			184			681			541

Total Conifer revenues		398			347			1,169			1,029

Intercompany eliminations		(159	)		(163	)		(488	)		(488	)

Total	$	4,849		$	4,692		$	14,761		$	13,608

Equity in earnings of unconsolidated affiliates:
Hospital Operations and other	$	3		$	(2	)	$	6		$	12
Ambulatory Care		28			30			79			36

Total	$	31		$	28		$	85		$	48

Adjusted EBITDA:
Hospital Operations and other	$	334		$	383		$	1,163		$	1,259
Ambulatory Care		157			122			432			200
Conifer		79			61			205			204

Total	$	570		$	566		$	1,800		$	1,663

Depreciation and amortization:
Hospital Operations and other	$	170		$	156		$	525		$	525
Ambulatory Care		22			17			69			28
Conifer		13			12			38			36

Total	$	205		$	185		$	632		$	589

Page 17

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)


(Dollars in millions)	Three Months Ended September 30,
	2016						2015
	Ambulatory Care as Reported Under GAAP			Unconsolidated Affiliates			Ambulatory Care as Reported Under GAAP			Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	457		$	507		$	335		$	556
Less: Provision for doubtful accounts		(9	)		(13	)		(6	)		(14	)

Net operating revenues⁽¹⁾		448			494			329			542
Equity in earnings of unconsolidated affiliates⁽²⁾		28			—			30			—
Operating expenses:
Salaries, wages and benefits		144			119			106			132
Supplies		89			124			64			138
Other operating expenses, net		86			99			67			117
Depreciation and amortization		22			16			17			20
Impairment and restructuring charges, and acquisition-related costs		5			—			2			—
(Gains) loss on sales, consolidation and deconsolidation of facilities		(3	)		3			—			—

Operating income		133			133			103			135
Interest expense		(35	)		(6	)		(34	)		(7	)
Other		—			5			—			(2	)

Net income from continuing operations, before income taxes		98			132			69			126
Income tax expense		(18	)		(2	)		(14	)		(2	)

Net income	$	80		$	130		$	55		$	124

Less: Net income attributable to noncontrolling interests⁽³⁾		69						51

Net income attributable to Tenet Healthcare Corporation common shareholders	$	11					$	4

Equity in earnings of unconsolidated affiliates				$	28					$	30

(1)	On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 9.7% during the three months ended September 30, 2016, with cases increasing 4.0% and revenue per case increasing 5.5%.

(2)

At September 30, 2016, 114 of the 330 facilities in the Company’s newly formed Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 212 facilities and account for these investments as consolidated subsidiaries.

(3)	During the three months ended September 30, 2016, the Company recorded $1 million of noncontrolling interests expense related to a $3 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA).

Page 18

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS

(Unaudited)


	Nine Months Ended September 30,
	2016						2015
	Ambulatory Care as Reported Under GAAP			Unconsolidated Affiliates			Ambulatory Care as Reported Under GAAP			Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	1,346		$	1,491		$	962		$	1,576
Less: Provision for doubtful accounts		(27	)		(41	)		(16	)		(40	)

Net operating revenues⁽¹⁾		1,319			1,450			946			1,536
Equity in earnings of unconsolidated affiliates⁽²⁾		79			—			79			—
Operating expenses:
Salaries, wages and benefits		437			353			308			379
Supplies		266			375			174			394
Other operating expenses, net		263			303			212			337
Depreciation and amortization		69			51			46			60
Impairment and restructuring charges, and acquisition-related costs		9			1			2			3
(Gains) loss on sales, consolidation and deconsolidation of facilities		(33	)		3			—			—

Operating income		387			364			283			363
Interest expense		(105	)		(18	)		(102	)		(21	)
Other		—			6			—			(2	)

Net income from continuing operations, before income taxes		282			352			181			340
Income tax expense		(37	)		(5	)		(36	)		(5	)

Net Income	$	245		$	347		$	145		$	335

Less: Net income attributable to noncontrolling interests⁽³⁾		204						126

Net income attributable to Tenet Healthcare Corporation common shareholders	$	41					$	19

Equity in earnings of unconsolidated affiliates				$	79					$	79

(1)	On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 10.9% during the nine months ended September 30, 2016, with cases increasing 6.0% and revenue per case increasing 4.6%.

(2)

(3)	During the nine months ended September 30, 2016, the Company recorded $19 million of noncontrolling interests expense related to a $33 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA) and an associated $7 million income tax benefit.

Page 19

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

A reconciliation of Adjusted EBITDA to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #1 below for the three and nine months ended September 30, 2016 and 2015. A reconciliation of Adjusted net income from continuing operations to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #2 below for the three and nine months ended September 30, 2016 and 2015. A reconciliation of Free Cash Flow and Adjusted Free Cash Flow to net cash provided by (used in) operating activities, the most comparable GAAP measure, is set forth in Table #3 below for the three and nine months ended September 30, 2016 and 2015.

Page 20

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Adjusted EBITDA to Net Income Available

(Loss Attributable) to Tenet Healthcare Corporation Common Shareholders

(Unaudited)


(Dollars in millions)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(8	)	$	(29	)	$	(113	)	$	(43	)
Less: Net income attributable to noncontrolling interests		(88	)		(57	)		(266	)		(119	)
Net income (loss) from discontinued operations, net of tax		1			(1	)		(5	)		(1	)

Net income (loss) from continuing operations		79			29			158			77
Income tax benefit (expense)		(10	)		(11	)		(61	)		—
Investment earnings (losses)		(1	)		1			2			—
Interest expense		(243	)		(248	)		(730	)		(664	)

Operating income		333			287			947			741
Litigation and investigation costs		(4	)		(50	)		(291	)		(67	)
Gains on sales, consolidation and deconsolidation of facilities		3			—			151			—
Impairment and restructuring charges, and acquisition-related costs		(31	)		(44	)		(81	)		(266	)
Depreciation and amortization		(205	)		(185	)		(632	)		(589	)

Adjusted EBITDA	$	570		$	566		$	1,800		$	1,663

Net operating revenues	$	4,849		$	4,692		$	14,761		$	13,608

Net loss from continuing operations as a % of operating revenues		(0.2	)%		(0.6	)%		(0.7	)%		(0.3	)%
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)		11.8	%		12.1	%		12.2	%		12.2	%

Page 21

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Pre-Tax, After-Tax and Earnings Per Share Impact of Certain Items

on Continuing Operations

(Unaudited)


	Three Months Ended						Nine Months Ended
(Dollars in millions except per share amounts)	September 30,						September 30,
	2016			2015			2016			2015
	(Expense) Income
Adjustments to calculate Adjusted Diluted EPS
Impairment and restructuring charges, and acquisition-related costs	$	(31	)	$	(44	)	$	(81	)	$	(266	)
Litigation and investigation costs		(4	)		(50	)		(291	)		(67	)
Gain on sales, consolidation and deconsolidation of facilities		3			—			151			—

Pre-tax impact	$	(32	)	$	(94	)	$	(221	)	$	(333	)

Tax impact of above items	$	8		$	36		$	33		$	118

Total after-tax impact	$	(24	)	$	(58	)	$	(188	)	$	(215	)
Noncontrolling interests impact		(1	)		—			(19	)		—

Total income (loss) from items above	$	(25	)	$	(58	)	$	(207	)	$	(215	)

Net income available (loss attributable) to common shareholders	$	(8	)	$	(29	)	$	(113	)	$	(43	)
Less net income (loss) discontinued operations, net of tax		1			(1	)		(5	)		(1	)

Net income (loss) from continuing operations, net of tax	$	(9	)	$	(28	)	$	(108	)	$	(42	)
Net loss (income) from adjustments above		25			58			207			215

Adjusted net income (loss) from continuing operations	$	16		$	30		$	99		$	173

Weighted average dilutive shares outstanding (in thousands)		100,978			102,037			100,680			101,609
Diluted earnings per share from continuing operations	$	(0.09	)	$	(0.28	)	$	(1.09	)	$	(0.42	)
Adjusted diluted EPS from continuing operations	$	0.16		$	0.29		$	0.98		$	1.70

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 – Reconciliations of Free Cash Flow and Adjusted Free Cash Flow

(Unaudited)


	Three Months Ended						Nine Months Ended
(Dollars in millions)	September 30,						September 30,
	2016			2015			2016			2015
Net cash provided by (used in) operating activities	$	269		$	482		$	851		$	835
Purchases of property and equipment		(201	)		(207	)		(614	)		(566	)

Free cash flow	$	68		$	275		$	237		$	269

Net cash provided by (used in) investing activities	$	(204	)	$	(287	)	$	(150	)	$	(1,272	)
Net cash provided by (used in) financing activities	$	(72	)	$	(44	)	$	(408	)	$	694
Net cash provided by (used in) operating activities	$	269		$	482		$	851		$	835
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements		(33	)		(71	)		(132	)		(157	)
Net cash provided by (used in) operating activities from discontinued operations		1			(10	)		1			(18	)

Adjusted net cash provided by operating activities – continuing operations		301			563			982			1,010
Purchases of property and equipment – continuing operations		(201	)		(207	)		(614	)		(566	)

Adjusted free cash flow – continuing operations	$	100		$	356		$	368		$	444

Page 22

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 – Reconciliation of Outlook Adjusted EBITDA to

Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)


(Dollars in millions)	Q4 2016						2016
	Low			High			Low			High
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders	$	4		$	14		$	(109	)	$	(99	)
Less: Net (income) loss attributable to noncontrolling interests		(94	)		(114	)		(360	)		(380	)
Net loss from discontinued operations, net of tax		(5	)		—			(10	)		(5	)

Income from continuing operations		103			128			261			286
Income tax expense		(49	)		(54	)		(110	)		(115	)

Income from continuing operations, before income taxes		152			182			371			401
Investment earnings		—			—			2			2
Interest expense		(240	)		(250	)		(970	)		(980	)

Operating income		392			432			1,339			1,379
Gains on sales, consolidation and deconsolidation of facilities^(a)		—			—			151			151
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements^(a)		—			—			(372	)		(372	)
Depreciation and amortization		(208	)		(218	)		(840	)		(850	)

Adjusted EBITDA	$	600		$	650		$	2,400		$	2,450

Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)		12.3	%		12.9	%		12.2	%		12.4	%
Net income (loss) from continuing operations	$	9		$	14		$	(99	)	$	(94	)
Net income (loss) from continuing operations as a % of operating revenues		0.2	%		0.3	%		(0.5	)%		(0.5	)%

Net operating revenues	$	4,889		$	5,039		$	19,650		$	19,800

Adjusted EBITDA	$	600		$	650		$	2,400		$	2,450
Depreciation and amortization		(208	)		(218	)		(840	)		(850	)
Investment Earnings		—			—			2			2
Interest expense		(240	)		(250	)		(970	)		(980	)

Adjusted income from continuing operations before income taxes		152			182			592			622
Income tax expense		(41	)		(46	)		(135	)		(140	)

Adjusted income from continuing operations		111			136			457			482
Net income attributable to noncontrolling interests		(94	)		(114	)		(340	)		(360	)

Adjusted net income attributable to common shareholders	$	17		$	22		$	117		$	122

Basic weighted average shares outstanding		100			100			99			99
Fully diluted weighted average shares outstanding (in millions)		102			102			101			101
Diluted earnings per share from continuing operations	$	0.09		$	0.14		$	(1.00	)	$	(0.95	)
Adjusted diluted earnings per share from continuing operations	$	0.17		$	0.22		$	1.16		$	1.21

^(a)

Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements and gains on sales, consolidation and deconsolidation of facilities because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

Page 23

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow

for the Year Ending December 31, 2016


(Dollars in millions)	2016
	Low			High
Net cash provided by operating activities	$	1,163		$	1,323
Less:
Payments for restructuring charges, acquisition-related costs and litigation costs and settlements^(a)		(132	)		(132	)
Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes		(5	)		5

Adjusted net cash provided by operating activities – continuing operations	$	1,300		$	1,450
Purchases of property and equipment – continuing operations		(900	)		(850	)

Adjusted free cash flow – continuing operations	$	400		$	600

^(a)

Company does not forecast restructuring charges, acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook.

Page 24

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