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

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8-K - FORM 8-K - TENET HEALTHCARE CORP	d326512d8k.htm

Exhibit 99.1

LOGO

Tenet Reports Results for the Fourth Quarter Ended December 31, 2016 and Issues Outlook for 2017

•

Reported a net loss from continuing operations of $187 million or $1.88 per share in 2016 and a net loss from continuing operations of $79 million or $0.79 per share in the fourth quarter.

•

Adjusted EBITDA was $2.413 billion in 2016 and $613 million in the fourth quarter. Adjusted diluted earnings per share from continuing operations was $1.04 in 2016 and $0.06 in the fourth quarter.

•

Same-hospital patient revenue grew 3.2% in the fourth quarter and reflects a 3.7% increase in revenue per adjusted admission partially offset by a 0.5% decline in adjusted admissions. Hospital segment Adjusted EBITDA totaled $358 million in the quarter.

•

Ambulatory Care segment revenue increased 5.9% on a same-facility system-wide basis in the fourth quarter, with cases increasing 1.7% and revenue per case increasing 4.1%. Adjusted EBITDA for the ambulatory segment was $183 million in the fourth quarter, a 15.8% increase, and representing a margin of 38.3%.

•

Revenue from Conifer Health Solutions increased 4.7% in the fourth quarter with revenue from third parties increasing 16.0%. Conifer generated $72 million of Adjusted EBITDA in the fourth quarter, an 18.0% increase, and representing a margin of 17.9%.

•

Net cash provided by operating activities during 2016 was $558 million, a $468 million decline when compared to $1.026 billion in 2015, and was primarily impacted by the payment related to the resolution of the Clinica de la Mama matter in the fourth quarter of 2016. Adjusted Free Cash Flow was $380 million in 2016, a $25 million decline when compared to $405 million in 2015.

•

Issues Outlook for 2017; includes net income from continuing operations attributable to Tenet common shareholders of $105 million to $135 million and Adjusted EBITDA of $2.5 billion to $2.6 billion.

DALLAS – February 27, 2017 – Tenet Healthcare Corporation (NYSE:THC) reported a net loss from continuing operations of $79 million in the fourth quarter of 2016, a $21 million improvement when compared to a $100 million net loss from continuing operations in the fourth quarter of 2015. Adjusted EBITDA was $613 million in both the fourth quarters of 2016 and 2015.

Trevor Fetter, chairman and chief executive officer, stated, “Demand for higher acuity services in our hospitals drove growth in same-hospital patient revenue and revenue per adjusted admission in the fourth quarter. Our Ambulatory and Conifer Health businesses delivered strong revenue and Adjusted EBITDA growth. Our expectations for continued growth in 2017 reflect confidence in our strategy to strengthen our hospital portfolio, expand our network of ambulatory facilities, and solidify Conifer’s leadership in healthcare business services.”

Page 1

Hospital Operations and Other Segment

Net operating revenue in the Hospital Operations and other segment was $4.143 billion, down 6.3 percent from $4.423 billion in the fourth quarter of 2015 due to hospitals that have been divested since that time. On a same-hospital basis, patient revenue increased to $3.782 billion, up 3.2 percent from $3.666 billion in the fourth quarter of 2015. The increase included growth of 3.7 percent in net patient revenue per adjusted admission, offset by a 0.5 percent decrease in adjusted patient admissions.

Adjusted EBITDA in Tenet’s hospital segment was $358 million, representing a decline of 9.1 percent as compared to $394 million in the fourth quarter of 2015. The decline was driven by divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives, and was partially offset by acquisitions in 2015.

Tenet’s health plan business lowered Adjusted EBITDA by $29 million in the fourth quarter of 2016. For the full year, the health plan business lowered Adjusted EBITDA by $37 million, whereas the Company had anticipated at the outset of 2016 that the results for its health plans would be essentially breakeven. As previously announced, the Company has begun the process of selling or otherwise exiting its health plan business.

Total hospital segment selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.8 percent on a per adjusted admission basis in the quarter. Approximately one-third of the increase was attributable to an increase in claim costs of Tenet’s health plans due to an increase in covered lives in 2016.

Exchanges

Tenet’s same-hospital exchange admissions were 4,916 in the fourth quarter of 2016, up 13.6 percent from the fourth quarter of 2015. Same-hospital exchange outpatient visits were 48,435 up 26.4 percent from the fourth quarter of 2015.

Uncompensated Care

Tenet’s provision for doubtful accounts was $354 million in the fourth quarter of 2016, representing a ratio of 6.8 percent of revenues before bad debt, as compared to $391 million in the fourth quarter of 2015, or 7.2 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 $1.332 billion and $1.420 billion in the fourth quarters of 2016 and 2015, respectively, including $978 million and $1.029 billion, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care in the fourth quarter of 2016 represented 21.5 percent of revenue before bad debts, uninsured discounts and charity care write-offs, down from 22.0 percent in the fourth quarter of 2015. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.

Page 2

Uninsured plus charity admissions increased by 444 admissions, or 4.9 percent on a same-hospital basis in the fourth quarter of 2016 compared to the fourth quarter of 2015. Uninsured plus charity outpatient visits decreased by 14,330 visits, or 11.4 percent, on a same-hospital basis.

Ambulatory Care Segment

During the fourth quarter of 2016, the Ambulatory segment produced net operating revenue of $478 million, representing an increase of 20.4 percent as compared to $397 million in the fourth quarter of 2015. In addition, the Ambulatory segment generated Adjusted EBITDA of $183 million, up 15.8 percent from $158 million in the fourth 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 5.9 percent, with cases increasing 1.7 percent and revenue per case increasing 4.1 percent. One less surgical day lowered revenue growth and case growth in the Ambulatory segment by approximately 1.6 percent in the fourth quarter of 2016.

Conifer Segment

During the fourth quarter of 2016, Conifer’s revenue increased 4.7 percent to $402 million, up from $384 million in the fourth quarter of 2015. Revenue from third party customers increased 16.0 percent to $239 million. Conifer generated $72 million of Adjusted EBITDA in the fourth quarter of 2016, up 18.0 percent from $61 million in the fourth quarter of 2015.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations of $79 million, or $0.79 per share, in the fourth quarter of 2016 compared to a net loss of $100 million, or $1.01 per share, in the fourth quarter of 2015.

After adjusting for certain items which are listed on Table #2, Tenet generated Adjusted net income from continuing operations of $6 million, or $0.06 per diluted share, during the fourth quarter of 2016, as compared to Adjusted net income from continuing operations of $35 million, or $0.35 per diluted share, in the fourth 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 $716 million at December 31, 2016 compared to $649 million at September 30, 2016. On December 1, 2016, the Company completed a private offering of $750 million aggregate principal amount senior secured second lien notes maturing in 2022 (the “notes”). The net proceeds of the notes were used, after payment of fees and expenses, to repay indebtedness outstanding under Tenet’s senior secured revolving credit facility and for general corporate purposes. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2016. Accounts receivable days outstanding were 54.8 at December 31, 2016 compared to 52.9 at September 30, 2016 and 49.5 at December 31, 2015.

Net cash provided by operating activities in the twelve months ended December 31, 2016 was $558 million, representing a $468 million decline compared to $1.026 billion in 2015. After subtracting $875 million and $842 million of capital expenditures in the twelve months ended December 31, 2016 and December 31, 2015, respectively, Free Cash Flow was an outflow of $317 million in the twelve months ended December 31, 2016, representing a $501 million decline compared to $184 million in the comparable period in 2015. This decline was primarily attributable to approximately $517 million of payments related to the resolution of the Clinica de la Mama matter, which were made in the fourth quarter of 2016. Adjusted Free Cash Flow was $380 million in the twelve months ended December 31, 2016, representing a $25 million decline from $405 million in the comparable period in 2015. Adjusted Free Cash Flow was below the Company’s Outlook of $400 million to $600 million in 2016, primarily due to an unanticipated increase in accounts receivable days sales outstanding in the fourth quarter of 2016 and an $80 million delay by the State of California in processing Provider Fee program payments.

Net cash used in investing activities was $430 million in the twelve months ended December 31, 2016 compared to $1.317 billion of net cash used in investing activities in the comparable period in 2015. Net cash provided by financing activities was $232 million in the twelve months ended December 31, 2016 compared to $454 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.

Page 4

Outlook

The Company’s Outlook for 2017 includes:

•

Revenue of $19.7 billion to $20.1 billion,

•

Net income from continuing operations attributable to Tenet common shareholders of $107 million to $133 million,

•

Adjusted EBITDA of $2.5 billion to $2.6 billion,

•

Net cash provided by operating activities of $1.300 billion to $1.550 billion,

•

Adjusted Free Cash Flow of $600 million to $800 million, and

•

Diluted earnings per share and adjusted diluted earnings per share from continuing operations of $1.05 to $1.30 per diluted share.

The Outlook for 2017 assumes equity in earnings of unconsolidated affiliates of $145 million to $155 million, electronic health record incentives of $8 million to $10 million, net income attributable to noncontrolling interests of $390 million to $410 million and an average diluted share count of 102 million. In addition, the Outlook assumes that CMS will approve the proposed California Provider Fee for the 30-month period from January 2017 through June 2019 during the fourth quarter of 2017 and further assumes that the Company will record approximately $220 million to $230 million of revenue and Adjusted EBITDA during 2017 as a result of this program. In 2016, the Company recorded $232 million of revenue under the California Provider Fee program. The Company will not be able to recognize any revenue under the 2017 program during the year until CMS approves the program. Finally, the Outlook includes a full year of financial results from hospitals which may be divested in 2017 and the Adjusted EBITDA Outlook excludes approximately $30 million of losses in 2017 that the Company expects to incur in its health plan business.

The Company’s Outlook for the first quarter of 2017 includes:

•

Revenue of $4.750 billion to $4.950 billion,

•

Net loss from continuing operations attributable to Tenet common shareholders ranging from a loss of $60 million to a loss of $45 million,

•

Adjusted EBITDA of $475 million to $525 million, and

•

A loss per basic share and an adjusted loss per basic share from continuing operations ranging from a loss of $0.60 to a loss of $0.45.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of approximately $25 million, electronic health record incentives of approximately $1 million, net income attributable to noncontrolling interests of $85 million to $95 million and an average share count of 100 million. The Outlook for the first quarter of 2017 does not include any revenue or Adjusted EBITDA associated with the California Provider Fee program, whereas the Company’s results in the first quarter of 2016 included $57 million of revenue and Adjusted EBITDA associated with the program. This difference is expected to lower the Company’s same-hospital revenue per adjusted admission by approximately 1.5 percent in the first quarter of 2017. In addition, the Company’s Adjusted EBITDA in the first quarter of 2016 included approximately $25 million from its hospitals in Georgia, which were divested on March 31, 2016.

Page 5

Additional details on Tenet’s Outlook for both the first quarter and calendar year 2017 are available in Tables 4 and 5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company’s fourth quarter 2016 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 28, 2017. 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-K report for the twelve months ended December 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, 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 80 general acute care hospitals, 20 short-stay surgical hospitals and approximately 470 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet’s Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans. For more information, please visit www.tenethealth.com.

The terms “THC”, “Tenet Healthcare Corporation”, “the Company”, “we”, “us” or “our” refer to Tenet Healthcare Corporation or one or more of its subsidiaries or affiliates as applicable.

###

Corporate Communications

Charles Nicolas

469-893-2640

mediarelations@tenethealth.com

Investor Relations

Brendan Strong

469-893-6992

investorrelations@tenethealth.com

Page 6

This release contains “forward-looking statements” – that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2016 and other filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to investors about the

Company including the posting of important announcements regarding financial

performance and corporate developments.

Page 7

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Three Months Ended December 31,
	2016			%			2015			%			Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	5,214					$	5,417						(3.7	)%
Less: Provision for doubtful accounts		354						391						(9.5	)%

Net operating revenues		4,860			100.0	%		5,026			100.0	%		(3.3	)%
Equity in earnings of unconsolidated affiliates		46			0.9	%		51			1.0	%		(9.8	)%
Operating expenses:
Salaries, wages and benefits		2,324			47.8	%		2,443			48.6	%		(4.9	)%
Supplies		773			15.9	%		817			16.3	%		(5.4	)%
Other operating expenses, net		1,205			24.8	%		1,230			24.5	%		(2.0	)%
Electronic health record incentives		(9	)		(0.2	)%		(26	)		(0.5	)%		(65.4	)%
Depreciation and amortization		218			4.5	%		208			4.1	%
Impairment and restructuring charges, and acquisition-related costs		121			2.5	%		52			1.0	%
Litigation and investigation costs		2			—	%		224			4.4	%
Gains on sales, consolidation and deconsolidation of facilities		—			—	%		(186	)		(3.7	)%

Operating income		272			5.6	%		315			6.3	%
Interest expense		(249	)					(248	)
Loss from early extinguishment of debt		—						(1	)
Investment earnings		6						1

Net income from continuing operations, before income taxes		29						67
Income tax expense		(6	)					(68	)

Net income (loss) from continuing operations, before discontinued operations		23						(1	)
Discontinued operations:
Net loss from operations		(1	)					(1	)
Litigation and investigation (costs) benefit		—						5
Income tax expense (benefit)		1						(1	)

Net income from discontinued operations		—						3

Net income		23						2
Less: Net income attributable to noncontrolling interests		102						99

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(79	)				$	(97	)

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(79	)				$	(100	)
Net income from discontinued operations, net of tax		—						3

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(79	)				$	(97	)

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(0.79	)				$	(1.01	)
Discontinued operations		—						0.03

	$	(0.79	)				$	(0.98	)

Diluted
Continuing operations	$	(0.79	)				$	(1.01	)
Discontinued operations		—						0.03

	$	(0.79	)				$	(0.98	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		99,651						99,188
Diluted*		99,651						99,188

Had the Company generated income from continuing operations in the three months ended December 31, 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 1,277 shares and 2,173 shares, respectively.

Page 8

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Years Ended December 31,
	2016			%			2015			%			Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	21,070					$	20,111						4.8	%
Less: Provision for doubtful accounts		1,449						1,477						(1.9	)%

Net operating revenues		19,621			100.0	%		18,634			100.0	%		5.3	%
Equity in earnings of unconsolidated affiliates		131			0.7	%		99			0.5	%		32.3	%
Operating expenses:
Salaries, wages and benefits		9,356			47.7	%		9,011			48.4	%		3.8	%
Supplies		3,124			15.9	%		2,963			15.9	%		5.4	%
Other operating expenses, net		4,891			25.0	%		4,555			24.4	%		7.4	%
Electronic health record incentives		(32	)		(0.2	)%		(72	)		(0.4	)%		(55.6	)%
Depreciation and amortization		850			4.3	%		797			4.3	%
Impairment and restructuring charges, and acquisition-related costs		202			1.1	%		318			1.7	%
Litigation and investigation costs		293			1.5	%		291			1.5	%
Gains on sales, consolidation and deconsolidation of facilities		(151	)		(0.8	)%		(186	)		(1.0	)%

Operating income		1,219			6.2	%		1,056			5.7	%
Interest expense		(979	)					(912	)
Loss from early extinguishment of debt		—						(1	)
Investment earnings		8						1

Net income from continuing operations, before income taxes		248						144
Income tax expense		(67	)					(68	)

Net income from continuing operations, before discontinued operations		181						76
Discontinued operations:
Loss from operations		(6	)					(5	)
Litigation and investigation (costs) benefit		—						8
Income tax benefit (expense)		1						(1	)

Net income (loss) from discontinued operations		(5	)					2

Net income		176						78
Less: Net income attributable to noncontrolling interests		368						218

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(192	)				$	(140	)

Amounts attributable to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(187	)				$	(142	)
Net income (loss) from discontinued operations, net of tax		(5	)					2

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(192	)				$	(140	)

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(1.88	)				$	(1.43	)
Discontinued operations		(0.05	)					0.02

	$	(1.93	)				$	(1.41	)

Diluted
Continuing operations	$	(1.88	)				$	(1.43	)
Discontinued operations		(0.05	)					0.02

	$	(1.93	)				$	(1.41	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		99,321						99,167
Diluted*		99,321						99,167

Had the Company generated income from continuing operations in the years ended December 31 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 1,421 shares and 2,380 shares, respectively.

Page 9

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31,			December 31,
(Dollars in millions)	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	716		$	356
Accounts receivable, less allowance for doubtful accounts		2,897			2,704
Inventories of supplies, at cost		326			309
Income tax receivable		4			7
Assets held for sale		29			550
Other current assets		1,285			1,245

Total current assets		5,257			5,171
Investments and other assets		1,250			1,175
Deferred income taxes		871			776
Property and equipment, at cost, less accumulated depreciation and amortization		8,053			7,915
Goodwill		7,425			6,970
Other intangible assets, at cost, less accumulated amortization		1,845			1,675

Total assets	$	24,701		$	23,682

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	191		$	127
Accounts payable		1,329			1,380
Accrued compensation and benefits		872			880
Professional and general liability reserves		181			177
Accrued interest payable		210			205
Liabilities held for sale		9			101
Accrued legal settlement costs		8			294
Other current liabilities		1,234			1,144

Total current liabilities		4,034			4,308
Long-term debt, net of current portion		15,064			14,383
Professional and general liability reserves		613			578
Defined benefit plan obligations		626			595
Deferred income taxes		279			37
Other long-term liabilities		610			557

Total liabilities		21,226			20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries		2,393			2,266
Equity:
Shareholders’ equity:
Common stock		7			7
Additional paid-in capital		4,827			4,815
Accumulated other comprehensive loss		(258	)		(164	)
Accumulated deficit		(1,742	)		(1,550	)
Common stock in treasury, at cost		(2,417	)		(2,417	)

Total shareholders’ equity		417			691
Noncontrolling interests		665			267

Total equity		1,082			958

Total liabilities and equity	$	24,701		$	23,682

Page 10

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)


(Dollars in millions)	Years Ended December 31,
	2016			2015
Net Income	$	176		$	78
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		850			797
Provision for doubtful accounts		1,449			1,477
Deferred income tax expense		41			42
Stock-based compensation expense		68			69
Impairment and restructuring charges, and acquisition-related costs		202			318
Litigation and investigation costs		293			291
Loss from early extinguishment of debt		—			1
Gains on sales, consolidation and deconsolidation of facilities		(151	)		(186	)
Equity in earnings of unconsolidated affiliates, net of distributions received		(13	)		(99	)
Amortization of debt discount and debt issuance costs		41			41
Pre-tax (income) loss from discontinued operations		6			(3	)
Other items, net		(1	)		59
Changes in cash from operating assets and liabilities:
Accounts receivable		(1,604	)		(1,632	)
Inventories and other current assets		(83	)		(130	)
Income taxes		(8	)		18
Accounts payable, accrued expenses and other current liabilities		(51	)		68
Other long-term liabilities		40			38
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements		(691	)		(200	)
Net cash used in operating activities from discontinued operations, excluding income taxes		(6	)		(21	)

Net cash provided by operating activities		558			1,026
Cash flows from investing activities:
Purchases of property and equipment — continuing operations		(875	)		(842	)
Purchases of businesses or joint venture interests, net of cash acquired		(117	)		(940	)
Proceeds from sales of facilities and other assets		573			549
Proceeds from sales of marketable securities, long-term investments and other assets		62			60
Purchases of equity investments		(39	)		(134	)
Other assets		(31	)		(4	)
Other items, net		(3	)		(6	)

Net cash used in investing activities		(430	)		(1,317	)
Cash flows from financing activities:
Repayments of borrowings under credit facility		(1,895	)		(2,815	)
Proceeds from borrowings under credit facility		1,895			2,595
Repayments of other borrowings		(154	)		(2,049	)
Proceeds from other borrowings		760			3,158
Repurchases of common stock		—			(40	)
Debt issuance costs		(12	)		(80	)
Distributions paid to noncontrolling interests		(218	)		(110	)
Proceeds from sale of noncontrolling interests		22			11
Purchase of noncontrolling interests		(186	)		(268	)
Proceeds from exercise of stock options		4			15
Other items, net		16			37

Net cash provided by financing activities		232			454

Net increase in cash and cash equivalents		360			163
Cash and cash equivalents at beginning of period		356			193

Cash and cash equivalents at end of period	$	716		$	356

Supplemental disclosures:
Interest paid, net of capitalized interest	$	(932	)	$	(859	)
Income tax payments, net	$	(33	)	$	(7	)

Page 11

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 December 31,										Years Ended December 31,
and per visit amounts)	2016			2015			Change				2016			2015			Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		75			86			(11	)	*		75			86			(11	)	*
Total admissions		192,104			211,991			(9.4	)%			792,143			824,102			(3.9	)%
Adjusted patient admissions		338,929			371,994			(8.9	)%			1,389,768			1,422,588			(2.3	)%
Paying admissions (excludes charity and uninsured)		181,617			200,462			(9.4	)%			749,634			779,766			(3.9	)%
Charity and uninsured admissions		10,487			11,529			(9.0	)%			42,509			44,336			(4.1	)%
Admissions through emergency department		120,549			133,108			(9.4	)%			499,335			521,272			(4.2	)%
Paying admissions as a percentage of total admissions		94.5	%		94.6	%		(0.1	)%	*		94.6	%		94.6	%		—	%	*
Charity and uninsured admissions as a percentage of total admissions		5.5	%		5.4	%		0.1	%	*		5.4	%		5.4	%		—	%	*
Emergency department admissions as a percentage of total admissions		62.8	%		62.8	%		—	%	*		63.0	%		63.3	%		(0.3	)%	*
Surgeries — inpatient		53,071			58,894			(9.9	)%			217,906			223,863			(2.7	)%
Surgeries — outpatient		73,678			79,370			(7.2	)%			298,974			293,264			1.9	%
Total surgeries		126,749			138,264			(8.3	)%			516,880			517,127			—	%
Patient days — total		888,185			983,856			(9.7	)%			3,690,335			3,817,572			(3.3	)%
Adjusted patient days		1,543,490			1,710,620			(9.8	)%			6,395,025			6,520,289			(1.9	)%
Average length of stay (days)		4.62			4.64			(0.4	)%			4.66			4.63			0.6	%
Licensed beds (at end of period)		20,354			22,525			(9.6	)%			20,354			22,525			(9.6	)%
Average licensed beds		20,326			22,549			(9.9	)%			20,651			21,092			(2.1	)%
Utilization of licensed beds		47.5	%		47.4	%		0.1	%	*		48.8	%		49.6	%		(0.8	)%	*
Outpatient Visits
Total visits		1,950,549			2,198,005			(11.3	)%			8,144,473			8,332,139			(2.3	)%
Paying visits (excludes charity and uninsured)		1,834,844			2,024,725			(9.4	)%			7,577,799			7,669,971			(1.2	)%
Charity and uninsured visits		115,705			173,280			(33.2	)%			566,674			662,168			(14.4	)%
Emergency department visits		701,100			778,148			(9.9	)%			2,914,421			3,010,625			(3.2	)%
Paying visits as a percentage of total visits		94.1	%		92.1	%		2.0	%	*		93.0	%		92.1	%		0.9	%	*
Charity and uninsured visits as a percentage of total visits		5.9	%		7.9	%		(2.0	)%	*		7.0	%		7.9	%		(0.9	)%	*
Total emergency department admissions and visits		821,649			911,256			(9.8	)%			3,413,756			3,531,897			(3.3	)%
Revenues
Net inpatient revenues	$	2,606		$	2,736			(4.8	)%		$	10,619		$	10,652			(0.3	)%
Net outpatient revenues	$	1,457		$	1,616			(9.8	)%		$	5,848		$	6,027			(3.0	)%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,566		$	12,906			5.1	%		$	13,405		$	12,926			3.7	%
Net inpatient revenue per patient day	$	2,934		$	2,781			5.5	%		$	2,878		$	2,790			3.2	%
Net outpatient revenue per visit	$	747		$	735			1.6	%		$	718		$	723			(0.7	)%
Net patient revenue per adjusted patient admission	$	11,988		$	11,699			2.5	%		$	11,849		$	11,724			1.1	%
Net patient revenue per adjusted patient day	$	2,632		$	2,544			3.5	%		$	2,575		$	2,558			0.7	%
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission	$	10,743		$	10,451			2.8	%		$	10,651		$	10,351			2.9	%
Net Patient Revenues from:
Medicare		20.4	%		19.3	%		1.1	%	*		20.5	%		20.4	%		0.1	%	*
Medicaid		8.2	%		8.2	%		—	%	*		8.2	%		8.7	%		(0.5	)%	*
Managed care		61.4	%		61.6	%		(0.2	)%	*		61.5	%		60.6	%		0.9	%	*
Indemnity, self-pay and other		10.0	%		10.9	%		(0.9	)%	*		9.8	%		10.3	%		(0.5	)%	*

(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 12

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 December 31,										Years Ended December 31,
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		175,672			176,051			(0.2	)%			715,502			717,218			(0.2	)%
Adjusted patient admissions		303,912			305,436			(0.5	)%			1,239,324			1,228,039			0.9	%
Paying admissions (excludes charity and uninsured)		166,139			166,962			(0.5	)%			677,361			680,837			(0.5	)%
Charity and uninsured admissions		9,533			9,089			4.9	%			38,141			36,381			4.8	%
Admissions through emergency department		110,674			110,291			0.3	%			451,785			452,593			(0.2	)%
Paying admissions as a percentage of total admissions		94.6	%		94.8	%		(0.2	)%	*		94.7	%		94.9	%		(0.2	)%	*
Charity and uninsured admissions as a percentage of total admissions		5.4	%		5.2	%		0.2	%	*		5.3	%		5.1	%		0.2	%	*
Emergency department admissions as a percentage of total admissions		63.0	%		62.6	%		0.4	%	*		63.1	%		63.1	%		—	%	*
Surgeries — inpatient		48,264			49,239			(2.0	)%			195,641			196,352			(0.4	)%
Surgeries — outpatient		64,053			65,046			(1.5	)%			256,301			254,932			0.5	%
Total surgeries		112,317			114,285			(1.7	)%			451,942			451,284			0.1	%
Patient days — total		798,205			803,037			(0.6	)%			3,269,558			3,286,026			(0.5	)%
Adjusted patient days		1,370,960			1,379,612			(0.6	)%			5,612,240			5,567,041			0.8	%
Average length of stay (days)		4.54			4.56			(0.4	)%			4.57			4.58			(0.2	)%
Licensed beds (at end of period)		18,118			18,130			(0.1	)%			18,118			18,130			(0.1	)%
Average licensed beds		18,090			18,154			(0.4	)%			18,127			18,217			(0.5	)%
Utilization of licensed beds		48.0	%		48.1	%		(0.1	)%	*		49.4	%		49.4	%		—	%	*
Outpatient Visits
Total visits		1,782,614			1,806,125			(1.3	)%			7,273,671			7,176,650			1.4	%
Paying visits (excludes charity and uninsured)		1,671,428			1,680,609			(0.5	)%			6,784,173			6,670,711			1.7	%
Charity and uninsured visits		111,186			125,516			(11.4	)%			489,498			505,939			(3.2	)%
Emergency department visits		620,622			626,280			(0.9	)%			2,560,308			2,520,481			1.6	%
Paying visits as a percentage of total visits		93.8	%		93.1	%		0.7	%	*		93.3	%		93.0	%		0.3	%	*
Charity and uninsured visits as a percentage of total visits		6.2	%		6.9	%		(0.7	)%	*		6.7	%		7.0	%		(0.3	)%	*
Total emergency department admissions and visits		731,296			736,571			(0.7	)%			3,012,093			2,973,074			1.3	%
Revenues
Net inpatient revenues	$	2,442		$	2,358			3.6	%		$	9,776		$	9,334			4.7	%
Net outpatient revenues	$	1,340		$	1,308			2.4	%		$	5,347		$	5,103			4.8	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,901		$	13,394			3.8	%		$	13,663		$	13,014			5.0	%
Net inpatient revenue per patient day	$	3,059		$	2,936			4.2	%		$	2,990		$	2,841			5.2	%
Net outpatient revenue per visit	$	752		$	724			3.9	%		$	735		$	711			3.4	%
Net patient revenue per adjusted patient admission	$	12,444		$	12,003			3.7	%		$	12,203		$	11,756			3.8	%
Net patient revenue per adjusted patient day	$	2,759		$	2,657			3.8	%		$	2,695		$	2,593			3.9	%
Net Patient Revenues from:
Medicare		19.9	%		19.9	%		—	%	*		20.1	%		20.7	%		(0.6	)%	*
Medicaid		8.1	%		8.3	%		(0.2	)%	*		8.2	%		8.7	%		(0.5	)%	*
Managed care		61.4	%		61.8	%		(0.4	)%	*		61.7	%		61.1	%		0.6	%	*
Indemnity, self-pay and other		10.6	%		10.0	%		0.6	%	*		10.0	%		9.5	%		0.5	%	*

(1)

Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the years ended December 31, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals Tenet divested, since January 1, 2015.

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

Page 13

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in millions except per share amounts)	Three Months Ended												Year Ended
	3/31/2016			6/30/2016			9/30/2016			12/31/2016			12/31/2016
Net operating revenues:
Net operating revenues before provision for doubtful accounts	$	5,420		$	5,220		$	5,216		$	5,214		$	21,070
Less: Provision for doubtful accounts		376			352			367			354			1,449

Net operating revenues		5,044			4,868			4,849			4,860			19,621
Equity in earnings of unconsolidated affiliates		24			30			31			46			131
Operating expenses:
Salaries, wages and benefits		2,402			2,316			2,314			2,324			9,356
Supplies		811			773			767			773			3,124
Other operating expenses, net		1,242			1,213			1,231			1,205			4,891
Electronic health record incentives		—			(21	)		(2	)		(9	)		(32	)
Depreciation and amortization		212			215			205			218			850
Impairment and restructuring charges, and acquisition-related costs		28			22			31			121			202
Litigation and investigation costs		173			114			4			2			293
Gains on sales, consolidation and deconsolidation of facilities		(147	)		(1	)		(3	)		—			(151	)

Operating income		347			267			333			272			1,219
Interest expense		(243	)		(244	)		(243	)		(249	)		(979	)
Investment earnings (loss)		1			2			(1	)		6			8

Net income from continuing operations, before income taxes		105			25			89			29			248
Income tax benefit (expense)		(67	)		16			(10	)		(6	)		(67	)

Net income from continuing operations, before discontinued operations		38			41			79			23			181
Discontinued operations:
Income (loss) from operations		(5	)		(2	)		2			(1	)		(6	)
Income tax benefit (expense)		1			—			(1	)		1			1

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

Net income		34			39			80			23			176
Less: Net income attributable to noncontrolling interests		93			85			88			102			368

Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(59	)	$	(46	)	$	(8	)	$	(79	)	$	(192	)

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax	$	(55	)	$	(44	)	$	(9	)	$	(79	)	$	(187	)
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	)	$	(79	)	$	(192	)

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations	$	(0.56	)	$	(0.44	)	$	(0.09	)	$	(0.79	)	$	(1.88	)
Discontinued operations		(0.04	)		(0.02	)		0.01			—			(0.05	)

	$	(0.60	)	$	(0.46	)	$	(0.08	)	$	(0.79	)	$	(1.93	)

Diluted
Continuing operations	$	(0.56	)	$	(0.44	)	$	(0.09	)	$	(0.79	)	$	(1.88	)
Discontinued operations		(0.04	)		(0.02	)		0.01			—			(0.05	)

	$	(0.60	)	$	(0.46	)	$	(0.08	)	$	(0.79	)	$	(1.93	)

Weighted average shares and dilutive securities outstanding (in thousands):
Basic		98,768			99,341			99,523			99,651			99,321
Diluted		98,768			99,341			99,523			99,651			99,321

Page 14

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												Year Ended
and per visit amounts)	3/31/2016			6/30/2016			9/30/2016			12/31/2016			12/31/2016
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		80			75			75			75			75
Total admissions		211,799			193,898			194,342			192,104			792,143
Adjusted patient admissions		362,819			342,813			345,207			338,929			1,389,768
Paying admissions (excludes charity and uninsured)		201,436			183,539			183,042			181,617			749,634
Charity and uninsured admissions		10,363			10,359			11,300			10,487			42,509
Admissions through emergency department		136,056			122,283			120,447			120,549			499,335
Paying admissions as a percentage of total admissions		95.1	%		94.7	%		94.2	%		94.5	%		94.6	%
Charity and uninsured admissions as a percentage of total admissions		4.9	%		5.3	%		5.8	%		5.5	%		5.4	%
Emergency department admissions as a percentage of total admissions		64.2	%		63.1	%		62.0	%		62.8	%		63.0	%
Surgeries — inpatient		55,755			54,379			54,701			53,071			217,906
Surgeries — outpatient		76,829			75,821			72,646			73,678			298,974
Total surgeries		132,584			130,201			127,346			126,749			516,880
Patient days — total		1,010,514			897,313			894,323			888,185			3,690,335
Adjusted patient days		1,714,369			1,569,272			1,567,894			1,543,490			6,395,025
Average length of stay (days)		4.77			4.63			4.60			4.62			4.66
Licensed beds (at end of period)		21,529			20,380			20,340			20,354			20,354
Average licensed beds		21,524			20,380			20,367			20,326			20,651
Utilization of licensed beds		51.6	%		48.4	%		47.7	%		47.5	%		48.8	%
Outpatient Visits
Total visits		2,146,618			2,038,287			2,009,019			1,950,549			8,144,473
Paying visits (excludes charity and uninsured)		1,984,515			1,896,394			1,862,046			1,834,844			7,577,799
Charity and uninsured visits		162,103			141,893			146,973			115,705			566,674
Emergency department visits		789,916			715,692			707,713			701,100			2,914,421
Paying visits as a percentage of total visits		92.4	%		93.0	%		92.7	%		94.1	%		93.0	%
Charity and uninsured visits as a percentage of total visits		7.6	%		7.0	%		7.3	%		5.9	%		7.0	%
Total emergency department admissions and visits		925,972			837,975			828,160			821,649			3,413,756
Revenues
Net inpatient revenues	$	2,781		$	2,588		$	2,644		$	2,606		$	10,619
Net outpatient revenues	$	1,514		$	1,460		$	1,417		$	1,457		$	5,848
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,130		$	13,347		$	13,605		$	13,566		$	13,405
Net inpatient revenue per patient day	$	2,752		$	2,884		$	2,956		$	2,934		$	2,878
Net outpatient revenue per visit	$	705		$	716		$	705		$	747		$	718
Net patient revenue per adjusted patient admission	$	11,838		$	11,808		$	11,764		$	11,988		$	11,849
Net patient revenue per adjusted patient day	$	2,505		$	2,580		$	2,590		$	2,632		$	2,575
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission	$	10,537		$	10,668		$	10,666			10,743		$	10,651
Net Patient Revenues from:
Medicare		20.0	%		21.7	%		19.9	%		20.4	%		20.5	%
Medicaid		8.7	%		7.4	%		8.4	%		8.2	%		8.2	%
Managed care		61.1	%		59.4	%		64.0	%		61.4	%		61.5	%
Indemnity, self-pay and other		10.2	%		11.5	%		7.7	%		10.0	%		9.8	%

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

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)	3/31/2016			6/30/2016			9/30/2016			12/31/2016			12/31/2016
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)		67			67			67			67			67
Total admissions		185,053			177,151			177,626			175,672			715,502
Adjusted patient admissions		315,787			309,372			310,253			303,912			1,239,324
Paying admissions (excludes charity and uninsured)		176,286			167,717			167,219			166,139			677,361
Charity and uninsured admissions		8,767			9,434			10,407			9,533			38,141
Admissions through emergency department		118,578			111,994			110,539			110,674			451,785
Paying admissions as a percentage of total admissions		95.3	%		94.7	%		94.1	%		94.6	%		94.7	%
Charity and uninsured admissions as a percentage of total admissions		4.7	%		5.3	%		5.9	%		5.4	%		5.3	%
Emergency department admissions as a percentage of total admissions		64.1	%		63.2	%		62.2	%		63.0	%		63.1	%
Surgeries — inpatient		48,547			49,222			49,608			48,264			195,641
Surgeries — outpatient		63,999			65,678			62,571			64,053			256,301
Total surgeries		112,546			114,900			112,179			112,317			451,942
Patient days — total		862,138			805,662			803,553			798,205			3,269,558
Adjusted patient days		1,456,580			1,394,486			1,390,214			1,370,960			5,612,240
Average length of stay (days)		4.66			4.55			4.52			4.54			4.57
Licensed beds (at end of period)		18,144			18,144			18,104			18,118			18,118
Average licensed beds		18,139			18,144			18,131			18,090			18,127
Utilization of licensed beds		52.8	%		48.8	%		48.2	%		48.0	%		49.4	%
Outpatient Visits
Total visits		1,854,735			1,830,522			1,805,800			1,782,614			7,273,671
Paying visits (excludes charity and uninsured)		1,728,684			1,707,375			1,676,686			1,671,428			6,784,173
Charity and uninsured visits		126,051			123,147			129,114			111,186			489,498
Emergency department visits		670,678			640,774			628,234			620,622			2,560,308
Paying visits as a percentage of total visits		93.2	%		93.3	%		92.9	%		93.8	%		93.3	%
Charity and uninsured visits as a percentage of total visits		6.8	%		6.7	%		7.1	%		6.2	%		6.7	%
Total emergency department admissions and visits		789,256			752,768			738,773			731,296			3,012,093
Revenues
Net inpatient revenues	$	2,499		$	2,400		$	2,435		$	2,442		$	9,776
Net outpatient revenues	$	1,331		$	1,343		$	1,333		$	1,340		$	5,347
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission	$	13,504		$	13,548		$	13,709		$	13,901		$	13,663
Net inpatient revenue per patient day	$	2,899		$	2,979		$	3,030		$	3,059		$	2,990
Net outpatient revenue per visit	$	718		$	734		$	738		$	752		$	735
Net patient revenue per adjusted patient admission	$	12,128		$	12,099		$	12,145		$	12,444		$	12,203
Net patient revenue per adjusted patient day	$	2,629		$	2,684		$	2,710		$	2,759		$	2,695
Net Patient Revenues from:
Medicare		20.6	%		20.1	%		19.7	%		19.9	%		20.1	%
Medicaid		8.5	%		7.8	%		8.5	%		8.1	%		8.2	%
Managed care		61.5	%		62.1	%		61.7	%		61.4	%		61.7	%
Indemnity, self-pay and other		9.4	%		10.0	%		10.1	%		10.6	%		10.0	%

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Page 16

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	%
Total emergency department admissions and visits		755,186			746,211			735,106			736,571			2,973,074
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	%

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Page 17

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)


	December 31,		December 31,
	2016		2015
Assets
Hospital Operations and other	$	17,871	$	17,353
Ambulatory Care		5,722		5,159
Conifer		1,108		1,170

Total	$	24,701	$	23,682


	Three Months Ended						Years Ended
	December 31,						December 31,
	2016			2015			2016			2015
Capital expenditures:
Hospital Operations and other	$	242		$	250		$	799		$	786
Ambulatory Care		9			14			51			28
Conifer		10			12			25			28

Total	$	261		$	276		$	875		$	842

Net operating revenues:
Hospital Operations and other	$	4,143		$	4,423		$	16,904		$	16,928
Ambulatory Care		478			397			1,797			959
Conifer
Tenet		163			178			651			666
Other customers		239			206			920			747

Total Conifer revenues		402			384			1,571			1,413

Intercompany eliminations		(163	)		(178	)		(651	)		(666	)

Total	$	4,860		$	5,026		$	19,621		$	18,634

Equity in earnings of unconsolidated affiliates:
Hospital Operations and other	$	3		$	4		$	9		$	16
Ambulatory Care		43			47			122			83

Total	$	46		$	51		$	131		$	99

Adjusted EBITDA:
Hospital Operations and other	$	358		$	394		$	1,521		$	1,653
Ambulatory Care		183			158			615			358
Conifer		72			61			277			265

Total	$	613		$	613		$	2,413		$	2,276

Depreciation and amortization:
Hospital Operations and other	$	184		$	177		$	709		$	702
Ambulatory Care		22			18			91			46
Conifer		12			13			50			49

Total	$	218		$	208		$	850		$	797

Page 18

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)


(Dollars in millions)	Three Months Ended December 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	$	487		$	582		$	404		$	637
Less: Provision for doubtful accounts		(9	)		(12	)		(7	)		(13	)

Net operating revenues⁽¹⁾		478			570			397			624
Equity in earnings of unconsolidated affiliates⁽²⁾		43			—			47			—
Operating expenses:
Salaries, wages and benefits		157			124			130			135
Supplies		99			145			79			148
Other operating expenses, net		83			101			78			111
Electronic health record incentives		(1	)		—			(1	)		—
Depreciation and amortization		22			17			18			20
Impairment and restructuring charges, and acquisition-related costs		17			—			3			(2	)
(Gains) loss on sales, consolidation and deconsolidation of facilities		—			4			(32	)		—

Operating income		144			179			169			212
Interest expense		(35	)		(6	)		(35	)		(7	)
Other		2			—			—			—

Net income from continuing operations, before income taxes		111			173			134			205
Income tax expense		(17	)		(3	)		(16	)		(3	)

Net income	$	94		$	170		$	118		$	202

Less: Net income attributable to noncontrolling interests⁽³⁾		81						85

Net income attributable to Tenet Healthcare Corporation common shareholders	$	13					$	33

Equity in earnings of unconsolidated affiliates				$	43					$	47

(1)	On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 5.9% during the three months ended December 31, 2016, with cases increasing 1.7% and revenue per case increasing 4.1%.

(2)

At December 31, 2016, 108 of the 323 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. The Company controls its remaining 215 facilities and account for these investments as consolidated subsidiaries.

(3)	During the three months ended December 31, 2016, the Company recorded a $5 million noncontrolling interests benefit related to $17 million of impairment and restructuring charges, and acquisition-related costs not included in Adjusted EBITDA.

Page 19

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS

(Unaudited)


	Years Ended December 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	$	1,833		$	2,073		$	1,366		$	2,213
Less: Provision for doubtful accounts		(36	)		(53	)		(23	)		(53	)

Net operating revenues⁽¹⁾		1,797			2,020			1,343			2,160
Equity in earnings of unconsolidated affiliates⁽²⁾		122			—			126			—
Operating expenses:
Salaries, wages and benefits		594			477			438			514
Supplies		365			520			253			542
Other operating expenses, net		346			404			290			448
Electronic health record incentives		(1	)		—			(1	)		—
Depreciation and amortization		91			68			64			80
Impairment and restructuring charges, and acquisition-related costs		26			1			5			1
(Gains) loss on sales, consolidation and deconsolidation of facilities		(33	)		7			(32	)		—

Operating income		531			543			452			575
Interest expense		(140	)		(24	)		(137	)		(28	)
Other		2			6			—			(2	)

Net income from continuing operations, before income taxes		393			525			315			545
Income tax expense		(54	)		(8	)		(52	)		(8	)

Net Income	$	339		$	517		$	263		$	537

Less: Net income attributable to noncontrolling interests⁽³⁾		285						206

Net income attributable to Tenet Healthcare Corporation common shareholders	$	54					$	57

Equity in earnings of unconsolidated affiliates				$	122					$	126

(1)	On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 9.6% during the year ended December 31, 2016, with cases increasing 5.2% and revenue per case increasing 4.2%.

(2)

(3)

During the year ended December 31, 2016, the Company recorded $14 million of net 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, net of $26 million of impairment and restructuring charges, and acquisition-related costs not included in Adjusted EBITDA.

Page 20

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 include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

A reconciliation of Adjusted EBITDA to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #1 below for the three and twelve months ended December 31, 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 twelve months ended December 31, 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 twelve months ended December 31, 2016 and 2015.

Page 21

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Adjusted EBITDA to Loss Attributable

to Tenet Healthcare Corporation Common Shareholders

(Unaudited)


(Dollars in millions)	Three Months Ended						Years Ended
	December 31,						December 31,
	2016			2015			2016			2015
Net loss attributable to Tenet Healthcare Corporation common shareholders	$	(79	)	$	(97	)	$	(192	)	$	(140	)
Less: Net income attributable to noncontrolling interests		(102	)		(99	)		(368	)		(218	)
Net income (loss) from discontinued operations, net of tax		—			3			(5	)		2

Net income (loss) from continuing operations		23			(1	)		181			76
Income tax expense		(6	)		(68	)		(67	)		(68	)
Investment earnings		6			1			8			1
Loss from early extinguishment of debt		—			(1	)		—			(1	)
Interest expense		(249	)		(248	)		(979	)		(912	)

Operating income		272			315			1,219			1,056
Litigation and investigation costs		(2	)		(224	)		(293	)		(291	)
Gains on sales, consolidation and deconsolidation of facilities		—			186			151			186
Impairment and restructuring charges, and acquisition-related costs		(121	)		(52	)		(202	)		(318	)
Depreciation and amortization		(218	)		(208	)		(850	)		(797	)

Adjusted EBITDA	$	613		$	613		$	2,413		$	2,276

Net operating revenues	$	4,860		$	5,026		$	19,621		$	18,634

Net loss from continuing operations as a % of operating revenues		(1.6	)%		(2.0	)%		(1.0	)%		(0.8	)%
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)		12.6	%		12.2	%		12.3	%		12.2	%

Page 22

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						Years Ended
(Dollars in millions except per share amounts)	December 31,						December 31,
	2016			2015			2016			2015
Adjustments to calculate Adjusted Diluted EPS		(Expense) Income
Impairment and restructuring charges, and acquisition-related costs	$	(121	)	$	(52	)	$	(202	)	$	(318	)
Litigation and investigation costs		(2	)		(224	)		(293	)		(291	)
Loss from early extinguishment of debt		—			(1	)		—			(1	)
Gain on sales, consolidation and deconsolidation of facilities		—			186			151			186

Pre-tax impact	$	(123	)	$	(91	)	$	(344	)	$	(424	)

Tax impact of above items	$	33		$	(24	)	$	66		$	94

Total after-tax impact	$	(90	)	$	(115	)	$	(278	)	$	(330	)
Noncontrolling interests impact		5			(20	)		(14	)		(20	)

Total loss from items above	$	(85	)	$	(135	)	$	(292	)	$	(350	)

Net income available (loss attributable) to common shareholders	$	(79	)	$	(97	)	$	(192	)	$	(140	)
Less net income (loss) discontinued operations, net of tax		—			3			(5	)		2

Net loss from continuing operations, net of tax	$	(79	)	$	(100	)	$	(187	)	$	(142	)
Net loss from adjustments above		85			135			292			350

Adjusted net income from continuing operations	$	6		$	35		$	105		$	208

Weighted average dilutive shares outstanding (in thousands)		100,928			101,361			100,742			101,547
Diluted loss per share from continuing operations	$	(0.79	)	$	(1.01	)	$	(1.88	)	$	(1.43	)
Adjusted diluted EPS from continuing operations	$	0.06		$	0.35		$	1.04		$	2.05

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)


	Three Months Ended						Years Ended
(Dollars in millions)	December 31,						December 31,
	2016			2015			2016			2015
Net cash provided by (used in) operating activities	$	(293	)	$	191		$	558		$	1,026
Purchases of property and equipment		(261	)		(276	)		(875	)		(842	)

Free cash flow	$	(554	)	$	(85	)	$	(317	)	$	184

Net cash provided by (used in) investing activities	$	(280	)	$	(45	)	$	(430	)	$	(1,317	)
Net cash provided by (used in) financing activities	$	640		$	(240	)	$	232		$	454
Net cash provided by (used in) operating activities	$	(293	)	$	191		$	558		$	1,026
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements		(559	)		(43	)		(691	)		(200	)
Net cash used in operating activities from discontinued operations		(7	)		(3	)		(6	)		(21	)

Adjusted net cash provided by operating activities – continuing operations		273			237			1,255			1,247
Purchases of property and equipment – continuing operations		(261	)		(276	)		(875	)		(842	)

Adjusted free cash flow – continuing operations	$	12		$	(39	)	$	380		$	405

Page 23

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)	Q1 2017						2017
	Low			High			Low			High
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders	$	(65	)	$	(45	)	$	97		$	133
Less: Net (income) loss attributable to noncontrolling interests		(85	)		(95	)		(390	)		(410	)
Net loss from discontinued operations, net of tax		(5	)		—			(10	)		—

Income from continuing operations		25			50			497			543
Income tax benefit (expense)		15			10			(118	)		(142	)

Income from continuing operations, before income taxes		10			40			615			685
Interest expense		(250	)		(260	)		(1,025	)		(1,035	)

Operating income		260			300			1,640			1,720
Depreciation and amortization		(215	)		(225	)		(860	)		(880	)

Adjusted EBITDA	$	475		$	525		$	2,500		$	2,600

Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)		10.0	%		10.6	%		12.7	%		12.9	%
Net income (loss) from continuing operations	$	(60	)	$	(45	)	$	107		$	133
Net income (loss) from continuing operations as a % of operating revenues		(1.3	)%		(0.9	)%		0.5	%		0.7	%

Net operating revenues	$	4,750		$	4,950		$	19,700		$	20,100

Adjusted EBITDA	$	475		$	525		$	2,500		$	2,600
Depreciation and amortization		(215	)		(225	)		(860	)		(880	)
Interest expense		(250	)		(260	)		(1,025	)		(1,035	)

Adjusted income from continuing operations before income taxes		10			40			615			685
Income tax benefit (expense)		15			10			(118	)		(142	)

Adjusted income from continuing operations		25			50			497			543
Net income attributable to noncontrolling interests		(85	)		(95	)		(390	)		(410	)

Adjusted net income (loss) attributable to common shareholders	$	(60	)	$	(45	)	$	107		$	133

Basic weighted average shares outstanding (in millions)		100			100			100			100
Fully diluted weighted average shares outstanding (in millions)		101			101			102			102
Diluted earnings (loss) per share from continuing operations	$	(0.60	)	$	(0.45	)	$	1.05		$	1.30
Adjusted diluted earnings (loss) per share from continuing operations	$	(0.60	)	$	(0.45	)	$	1.05		$	1.30

The 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.

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TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow

for the Year Ending December 31, 2017


(Dollars in millions)	2017
	Low			High
Net cash provided by operating activities	$	1,295		$	1,550
Less:
Net cash used in operating activities from discontinued operations		(5	)		0

Adjusted net cash provided by operating activities – continuing operations	$	1,300		$	1,550
Purchases of property and equipment – continuing operations		(700	)		(750	)

Adjusted free cash flow – continuing operations⁽¹⁾	$	600		$	800

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

⁽¹⁾

The Company’s definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest.

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