Attached files
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| 8-K - 8-K - TENET HEALTHCARE CORP | thc-20180930x8xkearningsre.htm |
Exhibit 99.1
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Tenet Reports Results for the Third Quarter Ended September 30, 2018
• | Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million or $0.09 per diluted share in the third quarter of 2018 compared to a net loss of $366 million or $3.63 per diluted share in the third quarter of 2017. After adjusting for certain items, which totaled $39 million or $0.38 per share in the third quarter of 2018, Tenet reported Adjusted diluted earnings per share from continuing operations of $0.29 in the third quarter of 2018 compared to an Adjusted diluted loss per share of $0.17 in the third quarter of 2017. |
• | Adjusted EBITDA was $577 million in the third quarter of 2018 compared to $507 million in the third quarter of 2017. Adjusted EBITDA in the third quarter of 2018 consisted of $312 million in the Hospital Operations and other segment, $184 million in the Ambulatory Care segment and $81 million in the Conifer segment. |
• | Net cash provided by operating activities was $799 million in the nine months ended September 30, 2018, an increase of $90 million when compared to $709 million in the first nine months of 2017. Free Cash Flow was $395 million, an increase of $178 million compared to $217 million in the first nine months of 2017. Adjusted Free Cash Flow was $512 million, a $204 million increase compared to $308 million in the first nine months of 2017. |
• | Hospital segment same-hospital net patient revenue grew 6.0 percent. Admissions decreased 2.1 percent, adjusted admissions increased 0.3 percent, and revenue per adjusted admission increased 5.7 percent. |
• | Ambulatory Care segment same-facility system-wide revenue grew 6.7 percent, with cases up 5.0 percent and revenue per case up 1.6 percent. Surgical revenue grew 6.6 percent, with cases up 4.0 percent and revenue per surgical case up 2.5 percent. |
• | Conifer segment margins increased 210 basis points as a result of cost reduction actions; revenues decreased 7.5 percent primarily due to client attrition following divestitures by Tenet and other customers. |
• | The Company has revised its Outlook for 2018. Tenet now expects net income from continuing operations available to Tenet common shareholders of $84 million to $144 million, Adjusted EBITDA of $2.525 billion to $2.575 billion, diluted earnings per share from continuing operations of $0.81 to $1.38 and Adjusted diluted earnings per share from continuing operations of $1.44 to $1.83. |
• | Adjusted EBITDA in 2019 expected to be in line with current sell-side consensus expectations; 3 percent to 5 percent Adjusted EBITDA growth anticipated in 2019. |
DALLAS – November 5, 2018 – Tenet Healthcare Corporation (NYSE: THC) reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million in the third
quarter of 2018 compared to a $366 million net loss from continuing operations in the third quarter of 2017. Adjusted EBITDA was $577 million in the third quarter of 2018 compared to $507 million in the third quarter of 2017.
Ronald A. Rittenmeyer, Executive Chairman and CEO, said, “We had a solid quarter of results at both USPI and Conifer. Our hospitals did not meet our expectations and we are focusing on specific areas to address those gaps. Strengthening enterprise operations remains our primary focus – and we will continue moving with urgency to implement targeted growth initiatives, achieve operational efficiencies, make further enhancements to our facility portfolio and instill culture changes to drive accountability.”
Hospital Operations and Other Segment
Net operating revenues in the Hospital Operations and other segment were $3.762 billion, down 2.7 percent from the third quarter of 2017, primarily due to hospital divestitures, partially offset by same-hospital revenue growth.
On a same-hospital basis, net patient revenues after implicit price concessions were $3.432 billion, up 6.0 percent from the third quarter of 2017. Adjusted admissions grew 0.3 percent in the third quarter of 2018 and would have been up approximately 1.3 percent on a same-hospital basis excluding service line closures and declines in Detroit. The Company’s decision to discontinue certain services at selected hospitals lowered same-hospital adjusted admissions by approximately 30 basis points in the third quarter of 2018. In addition, volume declines in Detroit lowered same-hospital adjusted admissions by approximately 70 basis points. Revenue per adjusted admission increased 5.7 percent on a same-hospital basis. Same-hospital revenue included $71 million from the California Provider Fee Program in the third quarter of 2018 compared to no revenue in the third quarter of 2017 since the 2017 program was not approved until December 2017; excluding timing differences related to the California Provider Fee, same-hospital revenue per adjusted admission increased 3.6 percent.
Adjusted EBITDA in Tenet’s hospital segment was $312 million, an increase of $43 million or 16.0 percent as compared to $269 million in the third quarter of 2017. Key items impacting the year-over-year comparison in Adjusted EBITDA include: (i) a $71 million increase in California Provider Fee revenue, (ii) a $13 million decline in EBITDA due to facilities that have been divested; (iii) a $16 million gain in the third quarter of 2018 from the sale of a minority interest investment which was recorded as a reduction in other operating expenses, (iv) a $4 million impact from hurricanes in the third quarter of 2018 compared to a $20 million impact in the third quarter of 2017, (v) an unanticipated $21 million loss on risk-based contracts in California in the third quarter of 2018 compared to $2 million of EBITDA in the third quarter of 2017, (vi) $11 million of negative EBITDA in the third quarter of 2018 from three hospitals that are being divested compared to $2 million of negative EBITDA in the third quarter of 2017, and (vii) a $1 million decline in electronic health
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record incentives. After normalizing for these items, Adjusted EBITDA in the hospital segment declined by $10 million, or 2.9 percent.
Tenet’s health plan business recognized $8 million of revenue and $9 million of Adjusted EBITDA in the third quarter of 2018 versus $10 million of revenue and negative $6 million of Adjusted EBITDA in the third quarter of 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.
Selected operating expenses in the hospital segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 3.9 percent on a per adjusted admission basis in the third quarter of 2018. Salaries, wages and benefits and supply expense were well managed, increasing 0.9 percent and 4.6 percent per adjusted admission, respectively. Other operating expenses increased 9.5 percent per adjusted admission primarily due to the aforementioned losses on risk-based contracts in California and an increase in malpractice expense, partially offset by the aforementioned $16 million gain on the sale of an asset.
Exchanges
Tenet’s same-hospital exchange outpatient visits increased 8.1 percent to 51,539 in the third quarter of 2018. Same-hospital exchange admissions were 4,577 in the third quarter of 2018, down 4.0 percent from the third quarter of 2017.
Ambulatory Care Segment
During the third quarter of 2018, the Ambulatory segment produced net operating revenues of $502 million, representing an increase of 7.3 percent as compared to $468 million in the third quarter of 2017. In addition, the Ambulatory segment generated Adjusted EBITDA of $184 million, up 15.7 percent from $159 million in the third quarter of 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $116 million, up 11.5 percent from $104 million in the third quarter of 2017.
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 6.7 percent, with cases increasing 5.0 percent and revenue per case increasing 1.6 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory segment, same-facility system-wide revenue grew 6.6 percent, with cases up 4.0 percent and revenue per case up 2.5 percent. In the non-surgical business, same-facility system-wide revenue grew 9.4 percent, with visits up 6.6 percent and revenue per visit up 2.5 percent.
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Conifer Segment
During the third quarter of 2018, primarily due to client attrition following divestitures by Tenet and other customers, Conifer’s revenue decreased 7.5 percent to $371 million, down from $401 million in the third quarter of 2017. Revenue from third party customers declined 10.7 percent to $225 million.
Conifer generated $81 million of Adjusted EBITDA in the third quarter of 2018, up 2.5 percent from $79 million in the third quarter of 2017. Adjusted EBITDA margins increased 210 basis points to 21.8 percent in the third quarter of 2018, up from 19.7 percent in the third quarter of 2017.
Net Income and Earnings Per Share
Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million, or $0.09 per diluted share, in the third quarter of 2018 compared to a net loss of $366 million, or $3.63 per diluted share, in the third quarter of 2017.
As shown on Table #2 at the end of this release, the net loss from continuing operations attributable to Tenet common shareholders of $9 million included: (i) $46 million of pre-tax impairment and restructuring charges and acquisition-related costs including $21 million of employee severance, $5 million of contract and lease termination fees, and $20 million of other items; (ii) $9 million of pre-tax litigation and investigation costs; (iii) $7 million of pre-tax net losses on sales, consolidation and deconsolidation of facilities, and, (iv) $9 million of income from divested and closed businesses. These items collectively lowered pre-tax income by $53 million, after-tax income by $39 million and diluted earnings per share by $0.38.
After adjusting for the items listed above and on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $30 million, or $0.29 per diluted share, during the third quarter of 2018, as compared to an Adjusted net loss from continuing operations attributable to Tenet common shareholders of $17 million, or $0.17 per diluted share, in the third quarter of 2017.
A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations is contained in Table #2 at the end of this release.
Cash Flow and Liquidity
Cash and cash equivalents were $500 million at September 30, 2018 compared to $403 million at June 30, 2018. The Company had no outstanding borrowings on its $1 billion credit line as of September 30, 2018. Accounts receivable days outstanding from continuing operations were 56.3 at September 30, 2018 compared to 55.1 at June 30, 2018 and 55.8 at December 31, 2017.
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Net cash provided by operating activities was $799 in the nine months ended September 30, 2018, representing a $90 million increase compared to $709 million in the first nine months of 2017. After subtracting $404 million and $492 million of capital expenditures in the first nine months of 2018 and 2017, respectively, Free Cash Flow was $395 million in the first nine months of 2018, an increase of $178 million compared to $217 million in the first nine months of 2017. Adjusted Free Cash Flow was $512 million in the first nine months of 2018, representing a $204 million increase from $308 million in the first nine months of 2017.
Net cash provided by investing activities was $120 million in the first nine months of 2018 compared to $227 million in the first nine months of 2017. The 2018 period included $663 million of proceeds from the sales of facilities, long-term investments and other assets, primarily from the sale of the Company’s two hospitals in the Philadelphia area, MacNeal Hospital, Des Peres Hospital, the Company’s minority interests in four Dallas-area hospitals and the sale of Aspen in the United Kingdom. The 2018 period also included $140 million of purchases of businesses, joint ventures and equity investments, primarily related to USPI’s acquisition program.
Net cash used in financing activities was $1.030 billion in the first nine months of 2018 compared to $1.223 billion of net cash used in financing activities in the first nine months of 2017. The 2018 period included $643 million in purchases of noncontrolling interests, including approximately $630 million in the second quarter of 2018 to increase Tenet’s ownership in USPI to 95 percent, and $114 million of cash to retire $118 million of debt through open market purchases.
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.
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Outlook
The Company’s revised Outlook for 2018 includes a $37 million reduction, at the midpoint, in net income from continuing operations available to Tenet common shareholders and a $50 million reduction, at the midpoint, to Adjusted EBITDA. The Adjusted EBITDA revision reflects the following:
• | Hospital Operations and other segment: Reducing the midpoint of the Adjusted EBITDA Outlook by $60 million to a new range of $1.385 billion to $1.415 billion to include: (i) approximately $25 million of losses on risk-based capitated contracts in California, primarily due to adverse claims experience trends; (ii) lower volume and payer mix expectations; and (iii) increased malpractice expense to settle various cases; the date of loss on many of these cases occurred more than five years ago. |
• | Ambulatory Care segment: Increasing the midpoint of the Adjusted EBITDA Outlook by $10 million to a new range of $790 million to $800 million. |
• | Conifer segment: Maintaining the Adjusted EBITDA Outlook range of $350 million to $360 million. |
Other components of the Company’s Outlook for 2018 include:
• | Revenue of $18.1 billion to $18.3 billion, |
• | Net income from continuing operations available to Tenet common shareholders of $84 million to $144 million, |
• | Adjusted EBITDA of $2.525 billion to $2.575 billion, |
• | Net cash provided by operating activities of $1.060 billion to $1.335 billion, |
• | Adjusted Free Cash Flow of $600 million to $800 million, |
• | Diluted earnings per share from continuing operations of $0.81 to $1.38, and |
• | Adjusted diluted earnings per share from continuing operations of $1.44 to $1.83. |
The Outlook for 2018 assumes equity in earnings of unconsolidated affiliates of $150 million to $160 million, net income available to noncontrolling interests of $365 million to $385 million and an average diluted share count of 104 million.
The Company’s Outlook for the fourth quarter of 2018 includes:
• | Revenue of $4.420 billion to $4.620 billion, |
• | Net income available (loss attributable) from continuing operations to Tenet common shareholders ranging from a loss of $29 million to income of $31 million, |
• | Adjusted EBITDA of $649 million to $699 million, |
• | Diluted earnings (loss) per share from continuing operations ranging from a loss of $0.28 to earnings of $0.30, and |
• | Adjusted diluted earnings per share from continuing operations ranging from $0.10 to $0.48. |
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The Outlook for the fourth quarter assumes equity in earnings of unconsolidated affiliates of $53 million to $63 million, net income available to noncontrolling interests of $117 million to $137 million, and an average diluted share count of 105 million.
Additional details on Tenet’s Outlook for both the fourth quarter and calendar year 2018 are available in Tables #4, #5 and #6 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.
Management’s Webcast Discussion of Third Quarter Results
Tenet management will discuss the Company’s third quarter 2018 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on November 6, 2018. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.
Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-Q report for the period ended September 30, 2018, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.
This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, Adjusted diluted earnings (loss) per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measures are contained in the tables at the end of this release.
Tenet Healthcare Corporation is a diversified healthcare services company with 115,000 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 general acute care and specialty hospitals, ambulatory surgery centers, urgent care centers and other outpatient facilities. 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.
# # #
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Investor Contact Brendan Strong 469-893-6992 investorrelations@tenethealth.com | Media Contact Lesley Bogdanow 469-893-2640 mediarelations@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,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” 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, 2017, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.
Tenet uses its Company website to provide important information to investors about the Company including the posting of important announcements regarding financial performance and corporate developments.
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TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts) | Three Months Ended September 30, | ||||||||||||||||
2018 | % | 2017 | % | Change | |||||||||||||
Net operating revenues: | |||||||||||||||||
Net operating revenues before provision for doubtful accounts | $ | 4,941 | |||||||||||||||
Less: Provision for doubtful accounts | 355 | ||||||||||||||||
Net operating revenues | $ | 4,489 | 100.0 | % | 4,586 | 100.0 | % | (2.1 | )% | ||||||||
Equity in earnings of unconsolidated affiliates | 33 | 0.7 | % | 38 | 0.8 | % | (13.2 | )% | |||||||||
Operating expenses: | |||||||||||||||||
Salaries, wages and benefits | 2,116 | 47.1 | % | 2,264 | 49.4 | % | (6.5 | )% | |||||||||
Supplies | 726 | 16.2 | % | 740 | 16.1 | % | (1.9 | )% | |||||||||
Other operating expenses, net | 1,094 | 24.4 | % | 1,120 | 24.4 | % | (2.3 | )% | |||||||||
Electronic health record incentives | — | — | % | (1 | ) | — | % | (100.0 | )% | ||||||||
Depreciation and amortization | 204 | 4.5 | % | 219 | 4.8 | % | |||||||||||
Impairment and restructuring charges, and acquisition-related costs | 46 | 1.0 | % | 329 | 7.2 | % | |||||||||||
Litigation and investigation costs | 9 | 0.2 | % | 6 | 0.1 | % | |||||||||||
Net losses (gains) on sales, consolidation and deconsolidation of facilities | 7 | 0.2 | % | (104 | ) | (2.3 | )% | ||||||||||
Operating income | 320 | 7.1 | % | 51 | 1.1 | % | |||||||||||
Interest expense | (249 | ) | (257 | ) | |||||||||||||
Other non-operating expense, net | — | (4 | ) | ||||||||||||||
Loss from early extinguishment of debt | — | (138 | ) | ||||||||||||||
Income (loss) from continuing operations, before income taxes | 71 | (348 | ) | ||||||||||||||
Income tax benefit (expense) | (6 | ) | 60 | ||||||||||||||
Income (loss) from continuing operations, before discontinued operations | 65 | (288 | ) | ||||||||||||||
Discontinued operations: | |||||||||||||||||
Income (loss) from operations | — | (1 | ) | ||||||||||||||
Income tax benefit (expense) | — | — | |||||||||||||||
Income (loss) from discontinued operations | — | (1 | ) | ||||||||||||||
Net income (loss) | 65 | (289 | ) | ||||||||||||||
Less: Net income available to noncontrolling interests | 74 | 78 | |||||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (9 | ) | $ | (367 | ) | |||||||||||
Amounts attributable to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
Loss from continuing operations, net of tax | $ | (9 | ) | $ | (366 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | (1 | ) | ||||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (9 | ) | $ | (367 | ) | |||||||||||
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
Basic | |||||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | (3.63 | ) | |||||||||||
Discontinued operations | — | (0.01 | ) | ||||||||||||||
$ | (0.09 | ) | $ | (3.64 | ) | ||||||||||||
Diluted | |||||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | (3.63 | ) | |||||||||||
Discontinued operations | — | (0.01 | ) | ||||||||||||||
$ | (0.09 | ) | $ | (3.64 | ) | ||||||||||||
Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
Basic | 102,402 | 100,812 | |||||||||||||||
Diluted* | 102,402 | 100,812 | |||||||||||||||
*Had we generated income from continuing operations available to common shareholders in the three months ended September 30, 2018 and 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 2,173 thousand and 711 thousand shares, respectively.
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TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts) | Nine Months Ended September 30, | ||||||||||||||||
2018 | % | 2017 | % | Change | |||||||||||||
Net operating revenues: | |||||||||||||||||
Net operating revenues before provision for doubtful accounts | $ | 15,310 | |||||||||||||||
Less: Provision for doubtful accounts | 1,109 | ||||||||||||||||
Net operating revenues | $ | 13,694 | 100.0 | % | 14,201 | 100.0 | % | (3.6 | )% | ||||||||
Equity in earnings of unconsolidated affiliates | 97 | 0.7 | % | 95 | 0.7 | % | 2.1 | % | |||||||||
Operating expenses: | |||||||||||||||||
Salaries, wages and benefits | 6,478 | 47.3 | % | 6,990 | 49.3 | % | (7.3 | )% | |||||||||
Supplies | 2,248 | 16.4 | % | 2,285 | 16.1 | % | (1.6 | )% | |||||||||
Other operating expenses, net | 3,181 | 23.2 | % | 3,466 | 24.4 | % | (8.2 | )% | |||||||||
Electronic health record incentives | (1 | ) | — | % | (8 | ) | (0.1 | )% | (87.5 | )% | |||||||
Depreciation and amortization | 602 | 4.4 | % | 662 | 4.7 | % | |||||||||||
Impairment and restructuring charges, and acquisition-related costs | 123 | 0.9 | % | 403 | 2.8 | % | |||||||||||
Litigation and investigation costs | 28 | 0.2 | % | 12 | 0.1 | % | |||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | (111 | ) | (0.8 | )% | (142 | ) | (1.0 | )% | |||||||||
Operating income | 1,243 | 9.1 | % | 628 | 4.4 | % | |||||||||||
Interest expense | (758 | ) | (775 | ) | |||||||||||||
Other non-operating expense, net | (2 | ) | (14 | ) | |||||||||||||
Loss from early extinguishment of debt | (2 | ) | (164 | ) | |||||||||||||
Income (loss) from continuing operations, before income taxes | 481 | (325 | ) | ||||||||||||||
Income tax benefit (expense) | (120 | ) | 105 | ||||||||||||||
Income (loss) from continuing operations, before discontinued operations | 361 | (220 | ) | ||||||||||||||
Discontinued operations: | |||||||||||||||||
Income (loss) from operations | 3 | (1 | ) | ||||||||||||||
Income tax benefit (expense) | — | — | |||||||||||||||
Income (loss) from discontinued operations | 3 | (1 | ) | ||||||||||||||
Net income (loss) | 364 | (221 | ) | ||||||||||||||
Less: Net income available to noncontrolling interests | 248 | 254 | |||||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 116 | $ | (475 | ) | ||||||||||||
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 113 | $ | (474 | ) | ||||||||||||
Income (loss) from discontinued operations, net of tax | 3 | (1 | ) | ||||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 116 | $ | (475 | ) | ||||||||||||
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
Basic | |||||||||||||||||
Continuing operations | $ | 1.11 | $ | (4.72 | ) | ||||||||||||
Discontinued operations | 0.03 | (0.01 | ) | ||||||||||||||
$ | 1.14 | $ | (4.73 | ) | |||||||||||||
Diluted | |||||||||||||||||
Continuing operations | $ | 1.09 | $ | (4.72 | ) | ||||||||||||
Discontinued operations | 0.03 | (0.01 | ) | ||||||||||||||
$ | 1.12 | $ | (4.73 | ) | |||||||||||||
Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
Basic | 101,980 | 100,475 | |||||||||||||||
Diluted* | 103,802 | 100,475 | |||||||||||||||
* | Had we generated income from continuing operations available to common shareholders in the nine months ended September 30, 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 747 thousand shares. |
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TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, | December 31, | |||||||
(Dollars in millions) | 2018 | 2017 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 500 | $ | 611 | ||||
Accounts receivable, less allowance for doubtful accounts | 2,484 | 2,616 | ||||||
Inventories of supplies, at cost | 307 | 289 | ||||||
Income tax receivable | 27 | 5 | ||||||
Assets held for sale | 128 | 1,017 | ||||||
Other current assets | 1,046 | 1,035 | ||||||
Total current assets | 4,492 | 5,573 | ||||||
Investments and other assets | 1,462 | 1,543 | ||||||
Deferred income taxes | 348 | 455 | ||||||
Property and equipment, at cost, less accumulated depreciation and amortization | 6,888 | 7,030 | ||||||
Goodwill | 7,313 | 7,018 | ||||||
Other intangible assets, at cost, less accumulated amortization | 1,762 | 1,766 | ||||||
Total assets | $ | 22,265 | $ | 23,385 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 672 | $ | 146 | ||||
Accounts payable | 1,065 | 1,175 | ||||||
Accrued compensation and benefits | 814 | 848 | ||||||
Professional and general liability reserves | 230 | 200 | ||||||
Accrued interest payable | 330 | 256 | ||||||
Liabilities held for sale | 71 | 480 | ||||||
Other current liabilities | 1,042 | 1,227 | ||||||
Total current liabilities | 4,224 | 4,332 | ||||||
Long-term debt, net of current portion | 14,178 | 14,791 | ||||||
Professional and general liability reserves | 627 | 654 | ||||||
Defined benefit plan obligations | 476 | 536 | ||||||
Deferred income taxes | 36 | 36 | ||||||
Other long-term liabilities | 622 | 631 | ||||||
Total liabilities | 20,163 | 20,980 | ||||||
Commitments and contingencies | ||||||||
Redeemable noncontrolling interests in equity of consolidated subsidiaries | 1,444 | 1,866 | ||||||
Equity: | ||||||||
Shareholders’ equity: | ||||||||
Common stock | 7 | 7 | ||||||
Additional paid-in capital | 4,733 | 4,859 | ||||||
Accumulated other comprehensive loss | (202) | (204) | ||||||
Accumulated deficit | (2,231) | (2,390) | ||||||
Common stock in treasury, at cost | (2,415) | (2,419) | ||||||
Total shareholders’ deficit | (108) | (147) | ||||||
Noncontrolling interests | 766 | 686 | ||||||
Total equity | 658 | 539 | ||||||
Total liabilities and equity | $ | 22,265 | $ | 23,385 | ||||
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TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Nine Months Ended | ||||||||
(Dollars in millions) | September 30, | |||||||
2018 | 2017 | |||||||
Net income (loss) | $ | 364 | $ | (221 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 602 | 662 | ||||||
Provision for doubtful accounts | — | 1,109 | ||||||
Deferred income tax expense (benefit) | 110 | (145 | ) | |||||
Stock-based compensation expense | 34 | 44 | ||||||
Impairment and restructuring charges, and acquisition-related costs | 123 | 403 | ||||||
Litigation and investigation costs | 28 | 12 | ||||||
Net gains on sales, consolidation and deconsolidation of facilities | (111 | ) | (142 | ) | ||||
Loss from early extinguishment of debt | 2 | 164 | ||||||
Equity in earnings of unconsolidated affiliates, net of distributions received | 9 | (4 | ) | |||||
Amortization of debt discount and debt issuance costs | 33 | 33 | ||||||
Pre-tax loss (income) from discontinued operations | (3 | ) | 1 | |||||
Other items, net | (22 | ) | (19 | ) | ||||
Changes in cash from operating assets and liabilities: | ||||||||
Accounts receivable | (36 | ) | (1,046 | ) | ||||
Inventories and other current assets | 73 | 97 | ||||||
Income taxes | (14 | ) | (14 | ) | ||||
Accounts payable, accrued expenses and other current liabilities | (194 | ) | (141 | ) | ||||
Other long-term liabilities | (82 | ) | 7 | |||||
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (113 | ) | (88 | ) | ||||
Net cash used in operating activities from discontinued operations, excluding income taxes | (4 | ) | (3 | ) | ||||
Net cash provided by operating activities | 799 | 709 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment — continuing operations | (404 | ) | (492 | ) | ||||
Purchases of businesses or joint venture interests, net of cash acquired | (97 | ) | (41 | ) | ||||
Proceeds from sales of facilities and other assets | 498 | 826 | ||||||
Proceeds from sales of marketable securities, long-term investments and other assets | 165 | 20 | ||||||
Purchases of equity investments | (43 | ) | (64 | ) | ||||
Other long-term assets | 5 | (16 | ) | |||||
Other items, net | (4 | ) | (6 | ) | ||||
Net cash provided by investing activities | 120 | 227 | ||||||
Cash flows from financing activities: | ||||||||
Repayments of borrowings under credit facility | (505 | ) | (850 | ) | ||||
Proceeds from borrowings under credit facility | 505 | 850 | ||||||
Repayments of other borrowings | (238 | ) | (4,099 | ) | ||||
Proceeds from other borrowings | 15 | 3,788 | ||||||
Debt issuance costs | — | (62 | ) | |||||
Distributions paid to noncontrolling interests | (217 | ) | (178 | ) | ||||
Proceeds from sale of noncontrolling interests | 14 | 29 | ||||||
Purchases of noncontrolling interests | (643 | ) | (722 | ) | ||||
Proceeds from exercise of stock options and employee stock purchase plan | 15 | 5 | ||||||
Other items, net | 24 | 16 | ||||||
Net cash used in financing activities | (1,030 | ) | (1,223 | ) | ||||
Net decrease in cash and cash equivalents | (111 | ) | (287 | ) | ||||
Cash and cash equivalents at beginning of period | 611 | 716 | ||||||
Cash and cash equivalents at end of period | $ | 500 | $ | 429 | ||||
Supplemental disclosures: | ||||||||
Interest paid, net of capitalized interest | $ | (652 | ) | $ | (617 | ) | ||
Income tax refunds (payments), net | $ | (24 | ) | $ | (54 | ) | ||
Page 12
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
and per adjusted patient admission amounts) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||
Admissions, Patient Days and Surgeries | |||||||||||||||||||||||
Number of hospitals (at end of period) | 68 | 73 | (5 | ) | * | 68 | 73 | (5 | ) | * | |||||||||||||
Total admissions | 168,201 | 185,389 | (9.3 | )% | 518,960 | 572,690 | (9.4 | )% | |||||||||||||||
Adjusted patient admissions | 306,197 | 332,035 | (7.8 | )% | 933,128 | 1,021,624 | (8.7 | )% | |||||||||||||||
Paying admissions (excludes charity and uninsured) | 157,193 | 174,803 | (10.1 | )% | 487,899 | 541,340 | (9.9 | )% | |||||||||||||||
Charity and uninsured admissions | 11,008 | 10,586 | 4.0 | % | 31,061 | 31,350 | (0.9 | )% | |||||||||||||||
Admissions through emergency department | 116,727 | 120,493 | (3.1 | )% | 356,839 | 368,773 | (3.2 | )% | |||||||||||||||
Paying admissions as a percentage of total admissions | 93.5 | % | 94.3 | % | (0.8 | )% | * | 94.0 | % | 94.5 | % | (0.5 | )% | * | |||||||||
Charity and uninsured admissions as a percentage of total admissions | 6.5 | % | 5.7 | % | 0.8 | % | * | 6.0 | % | 5.5 | % | 0.5 | % | * | |||||||||
Emergency department admissions as a percentage of total admissions | 69.4 | % | 65.0 | % | 4.4 | % | * | 68.8 | % | 64.4 | % | 4.4 | % | * | |||||||||
Surgeries — inpatient | 45,626 | 50,939 | (10.4 | )% | 139,123 | 154,822 | (10.1 | )% | |||||||||||||||
Surgeries — outpatient | 61,468 | 67,321 | (8.7 | )% | 188,281 | 208,291 | (9.6 | )% | |||||||||||||||
Total surgeries | 107,094 | 118,260 | (9.4 | )% | 327,404 | 363,113 | (9.8 | )% | |||||||||||||||
Patient days — total | 761,920 | 853,059 | (10.7 | )% | 2,387,087 | 2,651,328 | (10.0 | )% | |||||||||||||||
Adjusted patient days | 1,365,662 | 1,502,831 | (9.1 | )% | 4,225,281 | 4,658,831 | (9.3 | )% | |||||||||||||||
Average length of stay (days) | 4.53 | 4.60 | (1.5 | )% | 4.60 | 4.63 | (0.6 | )% | |||||||||||||||
Licensed beds (at end of period) | 18,302 | 19,433 | (5.8 | )% | 18,302 | 19,433 | (5.8 | )% | |||||||||||||||
Average licensed beds | 18,302 | 19,783 | (7.5 | )% | 18,450 | 20,218 | (8.7 | )% | |||||||||||||||
Utilization of licensed beds | 45.3 | % | 46.9 | % | (1.6 | )% | * | 47.4 | % | 48.1 | % | (0.7 | )% | * | |||||||||
Outpatient Visits | |||||||||||||||||||||||
Total visits | 1,722,292 | 1,867,471 | (7.8 | )% | 5,314,678 | 5,889,261 | (9.8 | )% | |||||||||||||||
Paying visits (excludes charity and uninsured) | 1,607,184 | 1,741,815 | (7.7 | )% | 4,966,532 | 5,499,724 | (9.7 | )% | |||||||||||||||
Charity and uninsured visits | 115,108 | 125,656 | (8.4 | )% | 348,146 | 389,537 | (10.6 | )% | |||||||||||||||
Emergency department visits | 638,248 | 685,096 | (6.8 | )% | 1,978,285 | 2,142,932 | (7.7 | )% | |||||||||||||||
Paying visits as a percentage of total visits | 93.3 | % | 93.3 | % | — | % | * | 93.4 | % | 93.4 | % | — | % | * | |||||||||
Charity and uninsured visits as a percentage of total visits | 6.7 | % | 6.7 | % | — | % | * | 6.6 | % | 6.6 | % | — | % | * | |||||||||
Total emergency department admissions and visits | 754,975 | 805,589 | (6.3 | )% | 2,335,124 | 2,511,705 | (7.0 | )% | |||||||||||||||
Revenues | |||||||||||||||||||||||
Net patient revenues(3) | $ | 3,434 | $ | 3,522 | (2.5 | )% | $ | 10,520 | $ | 10,969 | (4.1 | )% | |||||||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | |||||||||||||||||||||||
Net patient revenue(3) per adjusted patient admission | $ | 11,215 | $ | 10,607 | 5.7 | % | $ | 11,274 | $ | 10,737 | 5.0 | % | |||||||||||
Net patient revenue(3) per adjusted patient day | $ | 2,515 | $ | 2,344 | 7.3 | % | $ | 2,490 | $ | 2,354 | 5.8 | % | |||||||||||
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) | $ | 10,771 | $ | 10,367 | 3.9 | % | $ | 10,648 | $ | 10,348 | 2.9 | % | |||||||||||
Net Patient Revenues(3) from: | |||||||||||||||||||||||
Medicare | 19.8 | % | 22.0 | % | (2.2 | )% | * | 20.6 | % | 22.4 | % | (1.8 | )% | * | |||||||||
Medicaid | 9.8 | % | 7.1 | % | 2.7 | % | * | 9.2 | % | 7.4 | % | 1.8 | % | * | |||||||||
Managed care | 64.9 | % | 66.1 | % | (1.2 | )% | * | 65.3 | % | 65.7 | % | (0.4 | )% | * | |||||||||
Self-pay | 0.9 | % | 0.3 | % | 0.6 | % | * | 0.7 | % | 0.4 | % | 0.3 | % | * | |||||||||
Indemnity and other | 4.6 | % | 4.5 | % | 0.1 | % | * | 4.2 | % | 4.1 | % | 0.1 | % | * | |||||||||
(1) Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
Page 13
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
and per adjusted patient admission amounts) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||
Admissions, Patient Days and Surgeries | |||||||||||||||||||||||
Number of hospitals (at end of period) | 68 | 68 | — | 68 | 68 | — | * | ||||||||||||||||
Total admissions | 168,202 | 171,766 | (2.1 | )% | 514,526 | 521,438 | (1.3 | )% | |||||||||||||||
Adjusted patient admissions | 306,199 | 305,300 | 0.3 | % | 924,037 | 921,715 | 0.3 | % | |||||||||||||||
Paying admissions (excludes charity and uninsured) | 157,197 | 161,743 | (2.8 | )% | 483,655 | 492,896 | (1.9 | )% | |||||||||||||||
Charity and uninsured admissions | 11,005 | 10,023 | 9.8 | % | 30,871 | 28,542 | 8.2 | % | |||||||||||||||
Admissions through emergency department | 116,727 | 112,210 | 4.0 | % | 354,594 | 337,463 | 5.1 | % | |||||||||||||||
Paying admissions as a percentage of total admissions | 93.5 | % | 94.2 | % | (0.7 | )% | 94.0 | % | 94.5 | % | (0.5 | )% | * | ||||||||||
Charity and uninsured admissions as a percentage of total admissions | 6.5 | % | 5.8 | % | 0.7 | % | 6.0 | % | 5.5 | % | 0.5 | % | * | ||||||||||
Emergency department admissions as a percentage of total admissions | 69.4 | % | 65.3 | % | 4.1 | % | 68.9 | % | 64.7 | % | 4.2 | % | * | ||||||||||
Surgeries — inpatient | 45,626 | 47,315 | (3.6 | )% | 137,623 | 141,503 | (2.7 | )% | |||||||||||||||
Surgeries — outpatient | 61,468 | 61,562 | (0.2 | )% | 186,132 | 187,316 | (0.6 | )% | |||||||||||||||
Total surgeries | 107,094 | 108,877 | (1.6 | )% | 323,755 | 328,819 | (1.5 | )% | |||||||||||||||
Patient days — total | 761,921 | 789,040 | (3.4 | )% | 2,368,366 | 2,414,961 | (1.9 | )% | |||||||||||||||
Adjusted patient days | 1,365,664 | 1,379,096 | (1.0 | )% | 4,186,068 | 4,203,108 | (0.4 | )% | |||||||||||||||
Average length of stay (days) | 4.53 | 4.59 | (1.3 | )% | 4.60 | 4.63 | (0.6 | )% | |||||||||||||||
Licensed beds (at end of period) | 17,934 | 18,006 | (0.4 | )% | 17,934 | 18,006 | (0.4 | )% | |||||||||||||||
Average licensed beds | 17,934 | 18,007 | (0.4 | )% | 17,942 | 17,983 | (0.2 | )% | |||||||||||||||
Utilization of licensed beds | 46.2 | % | 47.6 | % | (1.4 | )% | 48.4 | % | 49.2 | % | (0.8 | )% | * | ||||||||||
Outpatient Visits | |||||||||||||||||||||||
Total visits | 1,722,292 | 1,715,650 | 0.4 | % | 5,264,505 | 5,293,076 | (0.5 | )% | |||||||||||||||
Paying visits (excludes charity and uninsured) | 1,607,180 | 1,600,195 | 0.4 | % | 4,919,392 | 4,951,644 | (0.7 | )% | |||||||||||||||
Charity and uninsured visits | 115,112 | 115,455 | (0.3 | )% | 345,113 | 341,432 | 1.1 | % | |||||||||||||||
Emergency department visits | 638,248 | 627,415 | 1.7 | % | 1,963,474 | 1,923,995 | 2.1 | % | |||||||||||||||
Paying visits as a percentage of total visits | 93.3 | % | 93.3 | % | — | % | 93.4 | % | 93.5 | % | (0.1 | )% | * | ||||||||||
Charity and uninsured visits as a percentage of total visits | 6.7 | % | 6.7 | % | — | % | 6.6 | % | 6.5 | % | 0.1 | % | * | ||||||||||
Total emergency department admissions and visits | 754,975 | 739,625 | 2.1 | % | 2,318,068 | 2,261,458 | 2.5 | % | |||||||||||||||
Revenues | |||||||||||||||||||||||
Net patient revenues(2) | $ | 3,432 | $ | 3,237 | 6.0 | % | $ | 10,434 | $ | 9,905 | 5.3 | % | |||||||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | |||||||||||||||||||||||
Net patient revenue(2) per adjusted patient admission | $ | 11,208 | $ | 10,603 | 5.7 | % | $ | 11,292 | $ | 10,746 | 5.1 | % | |||||||||||
Net patient revenue(2) per adjusted patient day | $ | 2,513 | $ | 2,347 | 7.1 | % | $ | 2,493 | $ | 2,357 | 5.8 | % | |||||||||||
Net Patient Revenues(2) from: | |||||||||||||||||||||||
Medicare | 19.8 | % | 21.9 | % | (2.1 | )% | 20.5 | % | 22.6 | % | (2.1 | )% | * | ||||||||||
Medicaid | 9.8 | % | 6.8 | % | 3.0 | % | 9.2 | % | 7.0 | % | 2.2 | % | * | ||||||||||
Managed care | 64.9 | % | 66.1 | % | (1.2 | )% | 65.3 | % | 65.6 | % | (0.3 | )% | * | ||||||||||
Self-pay | 0.9 | % | 0.3 | % | 0.6 | % | 0.8 | % | 0.4 | % | 0.4 | % | * | ||||||||||
Indemnity and other | 4.6 | % | 4.9 | % | (0.3 | )% | 4.2 | % | 4.4 | % | (0.2 | )% | * | ||||||||||
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
Page 14
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts) | Three Months Ended | Nine Months Ended | |||||||||||||
3/31/2018 | 6/30/2018 | 9/30/2018 | 9/30/2018 | ||||||||||||
Net operating revenues | $ | 4,699 | $ | 4,506 | $ | 4,489 | $ | 13,694 | |||||||
Equity in earnings of unconsolidated affiliates | 25 | 39 | 33 | 97 | |||||||||||
Operating expenses: | |||||||||||||||
Salaries, wages and benefits | 2,227 | 2,135 | 2,116 | 6,478 | |||||||||||
Supplies | 774 | 748 | 726 | 2,248 | |||||||||||
Other operating expenses, net | 1,060 | 1,027 | 1,094 | 3,181 | |||||||||||
Electronic health record incentives | (1 | ) | — | — | (1 | ) | |||||||||
Depreciation and amortization | 204 | 194 | 204 | 602 | |||||||||||
Impairment and restructuring charges, and acquisition-related costs | 47 | 30 | 46 | 123 | |||||||||||
Litigation and investigation costs | 6 | 13 | 9 | 28 | |||||||||||
Net losses (gains) on sales, consolidation and deconsolidation of facilities | (110 | ) | (8 | ) | 7 | (111 | ) | ||||||||
Operating income | 517 | 406 | 320 | 1,243 | |||||||||||
Interest expense | (255 | ) | (254 | ) | (249 | ) | (758 | ) | |||||||
Other non-operating expense, net | (1 | ) | (1 | ) | — | (2 | ) | ||||||||
Loss from early extinguishment of debt | (1 | ) | (1 | ) | — | (2 | ) | ||||||||
Income from continuing operations, before income taxes | 260 | 150 | 71 | 481 | |||||||||||
Income tax expense | (70 | ) | (44 | ) | (6 | ) | (120 | ) | |||||||
Income from continuing operations, before discontinued operations | 190 | 106 | 65 | 361 | |||||||||||
Discontinued operations: | |||||||||||||||
Income from operations | 1 | 2 | — | 3 | |||||||||||
Income tax benefit (expense) | — | — | — | — | |||||||||||
Income from discontinued operations | 1 | 2 | — | 3 | |||||||||||
Net income | 191 | 108 | 65 | 364 | |||||||||||
Less: Net income available to noncontrolling interests | 92 | 82 | 74 | 248 | |||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 99 | $ | 26 | $ | (9 | ) | $ | 116 | ||||||
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 98 | $ | 24 | $ | (9 | ) | $ | 113 | ||||||
Income from discontinued operations, net of tax | 1 | 2 | — | 3 | |||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 99 | $ | 26 | $ | (9 | ) | $ | 116 | ||||||
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||
Basic | |||||||||||||||
Continuing operations | $ | 0.97 | $ | 0.23 | $ | (0.09 | ) | $ | 1.11 | ||||||
Discontinued operations | 0.01 | 0.02 | — | 0.03 | |||||||||||
$ | 0.98 | $ | 0.25 | $ | (0.09 | ) | $ | 1.14 | |||||||
Diluted | |||||||||||||||
Continuing operations | $ | 0.95 | $ | 0.23 | $ | (0.09 | ) | 1.09 | |||||||
Discontinued operations | 0.01 | 0.02 | — | $ | 0.03 | ||||||||||
$ | 0.96 | $ | 0.25 | $ | (0.09 | ) | $ | 1.12 | |||||||
Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||
Basic | 101,392 | 102,147 | 102,402 | 101,980 | |||||||||||
Diluted | 102,656 | 104,177 | 102,402 | 103,802 | |||||||||||
Page 15
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts) | Three Months Ended | Year Ended | ||||||||||||||||||
3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 12/31/2017 | ||||||||||||||||
Net operating revenues: | ||||||||||||||||||||
Net operating revenues before provision for doubtful accounts | $ | 5,196 | $ | 5,173 | $ | 4,941 | $ | 5,303 | $ | 20,613 | ||||||||||
Less: Provision for doubtful accounts | 383 | 371 | 355 | 325 | 1,434 | |||||||||||||||
Net operating revenues | 4,813 | 4,802 | 4,586 | 4,978 | 19,179 | |||||||||||||||
Equity in earnings of unconsolidated affiliates | 29 | 28 | 38 | 49 | 144 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Salaries, wages and benefits | 2,380 | 2,346 | 2,264 | 2,284 | 9,274 | |||||||||||||||
Supplies | 765 | 780 | 740 | 800 | 3,085 | |||||||||||||||
Other operating expenses, net | 1,187 | 1,159 | 1,120 | 1,104 | 4,570 | |||||||||||||||
Electronic health record incentives | (1 | ) | (6 | ) | (1 | ) | (1 | ) | (9 | ) | ||||||||||
Depreciation and amortization | 221 | 222 | 219 | 208 | 870 | |||||||||||||||
Impairment and restructuring charges, and acquisition-related costs | 33 | 41 | 329 | 138 | 541 | |||||||||||||||
Litigation and investigation costs | 5 | 1 | 6 | 11 | 23 | |||||||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | (15 | ) | (23 | ) | (104 | ) | (2 | ) | (144 | ) | ||||||||||
Operating income | 267 | 310 | 51 | 485 | 1,113 | |||||||||||||||
Interest expense | (258 | ) | (260 | ) | (257 | ) | (253 | ) | (1,028 | ) | ||||||||||
Other non-operating expense, net | (5 | ) | (5 | ) | (4 | ) | (8 | ) | (22 | ) | ||||||||||
Loss from early extinguishment of debt | — | (26 | ) | (138 | ) | — | (164 | ) | ||||||||||||
Income (loss) from continuing operations, before income taxes | 4 | 19 | (348 | ) | 224 | (101 | ) | |||||||||||||
Income tax benefit (expense) | 33 | 12 | 60 | (324 | ) | (219 | ) | |||||||||||||
Income (loss) from continuing operations, before discontinued operations | 37 | 31 | (288 | ) | (100 | ) | (320 | ) | ||||||||||||
Discontinued operations: | ||||||||||||||||||||
Income (loss) from operations | (2 | ) | 2 | (1 | ) | 1 | — | |||||||||||||
Income tax benefit (expense) | 1 | (1 | ) | — | — | — | ||||||||||||||
Income (loss) from discontinued operations | (1 | ) | 1 | (1 | ) | 1 | — | |||||||||||||
Net income (loss) | 36 | 32 | (289 | ) | (99 | ) | (320 | ) | ||||||||||||
Less: Net income available to noncontrolling interests | 89 | 87 | 78 | 130 | 384 | |||||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (367 | ) | $ | (229 | ) | $ | (704 | ) | |||||
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | ||||||||||||||||||||
Loss from continuing operations, net of tax | $ | (52 | ) | $ | (56 | ) | $ | (366 | ) | $ | (230 | ) | $ | (704 | ) | |||||
Income (loss) from discontinued operations, net of tax | (1 | ) | 1 | (1 | ) | 1 | — | |||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (367 | ) | $ | (229 | ) | $ | (704 | ) | |||||
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Continuing operations | $ | (0.52 | ) | $ | (0.56 | ) | $ | (3.63 | ) | $ | (2.28 | ) | $ | (7.00 | ) | |||||
Discontinued operations | (0.01 | ) | 0.01 | (0.01 | ) | 0.01 | — | |||||||||||||
$ | (0.53 | ) | $ | (0.55 | ) | $ | (3.64 | ) | $ | (2.27 | ) | $ | (7.00 | ) | ||||||
Diluted | ||||||||||||||||||||
Continuing operations | $ | (0.52 | ) | $ | (0.56 | ) | $ | (3.63 | ) | $ | (2.28 | ) | $ | (7.00 | ) | |||||
Discontinued operations | (0.01 | ) | 0.01 | (0.01 | ) | 0.01 | — | |||||||||||||
$ | (0.53 | ) | $ | (0.55 | ) | $ | (3.64 | ) | $ | (2.27 | ) | $ | (7.00 | ) | ||||||
Weighted average shares and dilutive securities outstanding (in thousands): | ||||||||||||||||||||
Basic | 100,000 | 100,612 | 100,812 | 100,945 | 100,592 | |||||||||||||||
Diluted | 100,000 | 100,612 | 100,812 | 100,945 | 100,592 | |||||||||||||||
Page 16
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day and per adjusted patient admission amounts) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
3/31/2018 | 6/30/2018 | 9/30/2018 | 09/30/2018 | ||||||||||||
Admissions, Patient Days and Surgeries | |||||||||||||||
Number of hospitals (at end of period) | 69 | 68 | 68 | 68 | |||||||||||
Total admissions | 182,306 | 168,453 | 168,201 | 518,960 | |||||||||||
Adjusted patient admissions | 320,868 | 306,063 | 306,197 | 933,128 | |||||||||||
Paying admissions (excludes charity and uninsured) | 172,490 | 158,216 | 157,193 | 487,899 | |||||||||||
Charity and uninsured admissions | 9,816 | 10,237 | 11,008 | 31,061 | |||||||||||
Admissions through emergency department | 125,076 | 115,036 | 116,727 | 356,839 | |||||||||||
Paying admissions as a percentage of total admissions | 94.6 | % | 93.9 | % | 93.5 | % | 94.0 | % | |||||||
Charity and uninsured admissions as a percentage of total admissions | 5.4 | % | 6.1 | % | 6.5 | % | 6.0 | % | |||||||
Emergency department admissions as a percentage of total admissions | 68.6 | % | 68.3 | % | 69.4 | % | 68.8 | % | |||||||
Surgeries — inpatient | 47,223 | 46,274 | 45,626 | 139,123 | |||||||||||
Surgeries — outpatient | 63,008 | 63,805 | 61,468 | 188,281 | |||||||||||
Total surgeries | 110,231 | 110,079 | 107,094 | 327,404 | |||||||||||
Patient days — total | 858,648 | 766,519 | 761,920 | 2,387,087 | |||||||||||
Adjusted patient days | 1,486,139 | 1,373,480 | 1,365,662 | 4,225,281 | |||||||||||
Average length of stay (days) | 4.71 | 4.55 | 4.53 | 4.60 | |||||||||||
Licensed beds (at end of period) | 18,457 | 18,314 | 18,302 | 18,302 | |||||||||||
Average licensed beds | 18,685 | 18,362 | 18,302 | 18,450 | |||||||||||
Utilization of licensed beds | 51.1 | % | 45.9 | % | 45.3 | % | 47.4 | % | |||||||
Outpatient Visits | |||||||||||||||
Total visits | 1,842,539 | 1,749,847 | 1,722,292 | 5,314,678 | |||||||||||
Paying visits (excludes charity and uninsured) | 1,725,976 | 1,633,372 | 1,607,184 | 4,966,532 | |||||||||||
Charity and uninsured visits | 116,563 | 116,475 | 115,108 | 348,146 | |||||||||||
Emergency department visits | 697,001 | 643,036 | 638,248 | 1,978,285 | |||||||||||
Paying visits as a percentage of total visits | 93.7 | % | 93.3 | % | 93.3 | % | 93.4 | % | |||||||
Charity and uninsured visits as a percentage of total visits | 6.3 | % | 6.7 | % | 6.7 | % | 6.6 | % | |||||||
Total emergency department admissions and visits | 822,077 | 758,072 | 754,975 | 2,335,124 | |||||||||||
Revenues | |||||||||||||||
Net patient revenues(3) | $ | 3,643 | $ | 3,443 | $ | 3,434 | $ | 10,520 | |||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | |||||||||||||||
Net patient revenue(3) per adjusted patient admission | $ | 11,354 | $ | 11,249 | $ | 11,215 | $ | 11,274 | |||||||
Net patient revenue(3) per adjusted patient day | $ | 2,451 | $ | 2,507 | $ | 2,515 | $ | 2,490 | |||||||
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) | $ | 10,561 | $ | 10,619 | $ | 10,771 | $ | 10,648 | |||||||
Net Patient Revenues(3) from: | |||||||||||||||
Medicare | 21.5 | % | 20.4 | % | 19.8 | % | 20.6 | % | |||||||
Medicaid | 8.8 | % | 9.1 | % | 9.8 | % | 9.2 | % | |||||||
Managed care | 65.0 | % | 66.0 | % | 64.9 | % | 65.3 | % | |||||||
Self-pay | 1.0 | % | 0.2 | % | 0.9 | % | 0.7 | % | |||||||
Indemnity and other | 3.7 | % | 4.3 | % | 4.6 | % | 4.2 | % | |||||||
(1) | Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment. |
(2) | Excludes operating expenses from Tenet's health plans. |
(3) Less implicit price concessions and provision for doubtful accounts.
Page 17
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day and per adjusted patient admission amounts) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 12/31/2017 | ||||||||||||||||
Admissions, Patient Days and Surgeries | ||||||||||||||||||||
Number of hospitals (at end of period) | 76 | 76 | 73 | 72 | 72 | |||||||||||||||
Total admissions | 196,907 | 190,394 | 185,389 | 186,185 | 758,875 | |||||||||||||||
Adjusted patient admissions | 347,150 | 342,439 | 332,035 | 332,642 | 1,354,266 | |||||||||||||||
Paying admissions (excludes charity and uninsured) | 186,648 | 179,889 | 174,803 | 176,158 | 717,498 | |||||||||||||||
Charity and uninsured admissions | 10,259 | 10,505 | 10,586 | 10,027 | 41,377 | |||||||||||||||
Admissions through emergency department | 126,473 | 121,807 | 120,493 | 123,887 | 492,660 | |||||||||||||||
Paying admissions as a percentage of total admissions | 94.8 | % | 94.5 | % | 94.3 | % | 94.6 | % | 94.5 | % | ||||||||||
Charity and uninsured admissions as a percentage of total admissions | 5.2 | % | 5.5 | % | 5.7 | % | 5.4 | % | 5.5 | % | ||||||||||
Emergency department admissions as a percentage of total admissions | 64.2 | % | 64.0 | % | 65.0 | % | 66.5 | % | 64.9 | % | ||||||||||
Surgeries — inpatient | 51,800 | 52,083 | 50,939 | 50,292 | 205,114 | |||||||||||||||
Surgeries — outpatient | 69,604 | 71,366 | 67,321 | 68,604 | 276,895 | |||||||||||||||
Total surgeries | 121,404 | 123,449 | 118,260 | 118,896 | 482,009 | |||||||||||||||
Patient days — total | 923,339 | 874,930 | 853,059 | 857,728 | 3,509,056 | |||||||||||||||
Adjusted patient days | 1,603,698 | 1,552,302 | 1,502,831 | 1,505,130 | 6,163,961 | |||||||||||||||
Average length of stay (days) | 4.69 | 4.60 | 4.60 | 4.61 | 4.62 | |||||||||||||||
Licensed beds (at end of period) | 20,439 | 20,435 | 19,433 | 19,141 | 19,141 | |||||||||||||||
Average licensed beds | 20,440 | 20,435 | 19,783 | 19,320 | 19,995 | |||||||||||||||
Utilization of licensed beds | 50.2 | % | 47.0 | % | 46.9 | % | 48.3 | % | 48.1 | % | ||||||||||
Outpatient Visits | ||||||||||||||||||||
Total visits | 2,039,942 | 1,981,848 | 1,867,471 | 1,901,864 | 7,791,125 | |||||||||||||||
Paying visits (excludes charity and uninsured) | 1,908,212 | 1,849,697 | 1,741,815 | 1,777,790 | 7,277,514 | |||||||||||||||
Charity and uninsured visits | 131,730 | 132,151 | 125,656 | 124,074 | 513,611 | |||||||||||||||
Emergency department visits | 733,051 | 724,785 | 685,096 | 711,268 | 2,854,200 | |||||||||||||||
Paying visits as a percentage of total visits | 93.5 | % | 93.3 | % | 93.3 | % | 93.5 | % | 93.4 | % | ||||||||||
Charity and uninsured visits as a percentage of total visits | 6.5 | % | 6.7 | % | 6.7 | % | 6.5 | % | 6.6 | % | ||||||||||
Total emergency department admissions and visits | 859,524 | 846,592 | 805,589 | 835,155 | 3,346,860 | |||||||||||||||
Revenues | ||||||||||||||||||||
Net patient revenues(3) | $ | 3,728 | $ | 3,719 | $ | 3,522 | $ | 3,860 | $ | 14,829 | ||||||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | ||||||||||||||||||||
Net patient revenue(3) per adjusted patient admission | $ | 10,739 | $ | 10,860 | $ | 10,607 | $ | 11,604 | $ | 10,950 | ||||||||||
Net patient revenue(3) per adjusted patient day | $ | 2,325 | $ | 2,396 | $ | 2,344 | $ | 2,565 | $ | 2,406 | ||||||||||
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) | $ | 10,288 | $ | 10,394 | $ | 10,367 | $ | 10,492 | $ | 10,384 | ||||||||||
Net Patient Revenues(3) from: | ||||||||||||||||||||
Medicare | 23.1 | % | 22.0 | % | 22.0 | % | 20.4 | % | 21.9 | % | ||||||||||
Medicaid | 7.4 | % | 7.5 | % | 7.1 | % | 12.9 | % | 8.8 | % | ||||||||||
Managed care | 65.2 | % | 65.9 | % | 66.1 | % | 61.5 | % | 64.6 | % | ||||||||||
Self-pay | 0.3 | % | 0.5 | % | 0.3 | % | 1.3 | % | 0.6 | % | ||||||||||
Indemnity and other | 4.0 | % | 4.1 | % | 4.5 | % | 3.9 | % | 4.1 | % | ||||||||||
(1) | Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment. |
(2) | Excludes operating expenses from Tenet's health plans. |
(3) Less implicit price concessions and provision for doubtful accounts.
Page 18
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day and per adjusted patient admission amounts) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
3/31/2018 | 6/30/2018 | 9/30/2018 | 9/30/2018 | ||||||||||||
Admissions, Patient Days and Surgeries | |||||||||||||||
Number of hospitals (at end of period) | 68 | 68 | 68 | 68 | |||||||||||
Total admissions | 178,189 | 168,135 | 168,202 | 514,526 | |||||||||||
Adjusted patient admissions | 312,297 | 305,541 | 306,199 | 924,037 | |||||||||||
Paying admissions (excludes charity and uninsured) | 168,554 | 157,904 | 157,197 | 483,655 | |||||||||||
Charity and uninsured admissions | 9,635 | 10,231 | 11,005 | 30,871 | |||||||||||
Admissions through emergency department | 122,922 | 114,945 | 116,727 | 354,594 | |||||||||||
Paying admissions as a percentage of total admissions | 94.6 | % | 93.9 | % | 93.5 | % | 94.0 | % | |||||||
Charity and uninsured admissions as a percentage of total admissions | 5.4 | % | 6.1 | % | 6.5 | % | 6.0 | % | |||||||
Emergency department admissions as a percentage of total admissions | 69.0 | % | 68.4 | % | 69.4 | % | 68.9 | % | |||||||
Surgeries — inpatient | 45,940 | 46,057 | 45,626 | 137,623 | |||||||||||
Surgeries — outpatient | 61,049 | 63,615 | 61,468 | 186,132 | |||||||||||
Total surgeries | 106,989 | 109,672 | 107,094 | 323,755 | |||||||||||
Patient days — total | 840,786 | 765,659 | 761,921 | 2,368,366 | |||||||||||
Adjusted patient days | 1,448,356 | 1,372,048 | 1,365,664 | 4,186,068 | |||||||||||
Average length of stay (days) | 4.72 | 4.55 | 4.53 | 4.60 | |||||||||||
Licensed beds (at end of period) | 17,946 | 17,946 | 17,934 | 17,934 | |||||||||||
Average licensed beds | 17,946 | 17,946 | 17,934 | 17,942 | |||||||||||
Utilization of licensed beds | 52.1 | % | 46.9 | % | 46.2 | % | 48.4 | % | |||||||
Outpatient Visits | |||||||||||||||
Total visits | 1,793,901 | 1,748,312 | 1,722,292 | 5,264,505 | |||||||||||
Paying visits (excludes charity and uninsured) | 1,680,249 | 1,631,963 | 1,607,180 | 4,919,392 | |||||||||||
Charity and uninsured visits | 113,652 | 116,349 | 115,112 | 345,113 | |||||||||||
Emergency department visits | 682,603 | 642,623 | 638,248 | 1,963,474 | |||||||||||
Paying visits as a percentage of total visits | 93.7 | % | 93.3 | % | 93.3 | % | 93.4 | % | |||||||
Charity and uninsured visits as a percentage of total visits | 6.3 | % | 6.7 | % | 6.7 | % | 6.6 | % | |||||||
Total emergency department admissions and visits | 805,525 | 757,568 | 754,975 | 2,318,068 | |||||||||||
Revenues | |||||||||||||||
Net patient revenues(2) | $ | 3,570 | $ | 3,432 | $ | 3,432 | $ | 10,434 | |||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | |||||||||||||||
Net patient revenue(2) per adjusted patient admission | $ | 11,431 | $ | 11,233 | $ | 11,208 | $ | 11,292 | |||||||
Net patient revenue(2) per adjusted patient day | $ | 2,465 | $ | 2,501 | $ | 2,513 | $ | 2,493 | |||||||
Net Patient Revenues(2) from: | |||||||||||||||
Medicare | 21.3 | % | 20.4 | % | 19.8 | % | 20.5 | % | |||||||
Medicaid | 8.8 | % | 9.1 | % | 9.8 | % | 9.2 | % | |||||||
Managed care | 64.9 | % | 66.1 | % | 64.9 | % | 65.3 | % | |||||||
Self-pay | 1.3 | % | 0.1 | % | 0.9 | % | 0.8 | % | |||||||
Indemnity and other | 3.7 | % | 4.3 | % | 4.6 | % | 4.2 | % | |||||||
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
Page 19
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)
(Unaudited)
(Dollars in millions except per adjusted patient day and per adjusted patient admission amounts) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 12/31/2017 | ||||||||||||||||
Admissions, Patient Days and Surgeries | ||||||||||||||||||||
Number of hospitals (at end of period) | 68 | 68 | 68 | 68 | 68 | |||||||||||||||
Total admissions | 177,624 | 172,048 | 171,766 | 175,152 | 696,590 | |||||||||||||||
Adjusted patient admissions | 310,137 | 306,278 | 305,300 | 310,485 | 1,232,200 | |||||||||||||||
Paying admissions (excludes charity and uninsured) | 168,523 | 162,630 | 161,743 | 165,400 | 658,296 | |||||||||||||||
Charity and uninsured admissions | 9,101 | 9,418 | 10,023 | 9,752 | 38,294 | |||||||||||||||
Admissions through emergency department | 114,767 | 110,486 | 112,210 | 116,901 | 454,364 | |||||||||||||||
Paying admissions as a percentage of total admissions | 94.9 | % | 94.5 | % | 94.2 | % | 94.4 | % | 94.5 | % | ||||||||||
Charity and uninsured admissions as a percentage of total admissions | 5.1 | % | 5.5 | % | 5.8 | % | 5.6 | % | 5.5 | % | ||||||||||
Emergency department admissions as a percentage of total admissions | 64.6 | % | 64.2 | % | 65.3 | % | 66.7 | % | 65.2 | % | ||||||||||
Surgeries — inpatient | 46,900 | 47,288 | 47,315 | 47,350 | 188,853 | |||||||||||||||
Surgeries — outpatient | 62,112 | 63,642 | 61,562 | 63,410 | 250,726 | |||||||||||||||
Total surgeries | 109,012 | 110,930 | 108,877 | 110,760 | 439,579 | |||||||||||||||
Patient days — total | 833,761 | 792,160 | 789,040 | 805,567 | 3,220,528 | |||||||||||||||
Adjusted patient days | 1,433,858 | 1,390,154 | 1,379,096 | 1,402,038 | 5,605,146 | |||||||||||||||
Average length of stay (days) | 4.69 | 4.60 | 4.59 | 4.60 | 4.62 | |||||||||||||||
Licensed beds (at end of period) | 17,964 | 17,980 | 18,006 | 17,946 | 17,946 | |||||||||||||||
Average licensed beds | 17,964 | 17,980 | 18,007 | 17,970 | 17,980 | |||||||||||||||
Utilization of licensed beds | 51.6 | % | 48.4 | % | 47.6 | % | 48.7 | % | 49.1 | % | ||||||||||
Outpatient Visits | ||||||||||||||||||||
Total visits | 1,810,801 | 1,766,625 | 1,715,650 | 1,771,336 | 7,064,412 | |||||||||||||||
Paying visits (excludes charity and uninsured) | 1,698,917 | 1,652,532 | 1,600,195 | 1,653,581 | 6,605,225 | |||||||||||||||
Charity and uninsured visits | 111,884 | 114,093 | 115,455 | 117,755 | 459,187 | |||||||||||||||
Emergency department visits | 650,777 | 645,803 | 627,415 | 659,617 | 2,583,612 | |||||||||||||||
Paying visits as a percentage of total visits | 93.8 | % | 93.5 | % | 93.3 | % | 93.4 | % | 93.5 | % | ||||||||||
Charity and uninsured visits as a percentage of total visits | 6.2 | % | 6.5 | % | 6.7 | % | 6.6 | % | 6.5 | % | ||||||||||
Total emergency department admissions and visits | 765,544 | 756,289 | 739,625 | 776,518 | 3,037,976 | |||||||||||||||
Revenues | ||||||||||||||||||||
Net patient revenues(2) | $ | 3,343 | $ | 3,325 | $ | 3,237 | $ | 3,609 | $ | 13,514 | ||||||||||
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day | ||||||||||||||||||||
Net patient revenue(2) per adjusted patient admission | $ | 10,780 | $ | 10,856 | $ | 10,603 | $ | 11,624 | $ | 10,967 | ||||||||||
Net patient revenue(2) per adjusted patient day | $ | 2,331 | $ | 2,392 | $ | 2,347 | $ | 2,574 | $ | 2,411 | ||||||||||
Net Patient Revenues(2) from: | ||||||||||||||||||||
Medicare | 23.5 | % | 22.3 | % | 21.9 | % | 20.3 | % | 21.9 | % | ||||||||||
Medicaid | 7.0 | % | 7.1 | % | 6.8 | % | 13.2 | % | 8.7 | % | ||||||||||
Managed care | 65.0 | % | 65.8 | % | 66.1 | % | 61.0 | % | 64.4 | % | ||||||||||
Self-pay | 0.3 | % | 0.6 | % | 0.3 | % | 1.5 | % | 0.7 | % | ||||||||||
Indemnity and other | 4.2 | % | 4.2 | % | 4.9 | % | 4.0 | % | 4.3 | % | ||||||||||
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
Page 20
TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
(Dollars in millions) | September 30, | December 31, | ||||||||||||||
2018 | 2017 | |||||||||||||||
Assets | ||||||||||||||||
Hospital Operations and other | $ | 15,556 | $ | 16,466 | ||||||||||||
Ambulatory Care | 5,640 | 5,822 | ||||||||||||||
Conifer | 1,069 | 1,097 | ||||||||||||||
Total | $ | 22,265 | $ | 23,385 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Capital expenditures: | ||||||||||||||||
Hospital Operations and other | $ | 115 | $ | 122 | $ | 343 | $ | 441 | ||||||||
Ambulatory Care | 18 | 16 | 46 | 37 | ||||||||||||
Conifer | 3 | 6 | 15 | 14 | ||||||||||||
Total | $ | 136 | $ | 144 | $ | 404 | $ | 492 | ||||||||
Net operating revenues: | ||||||||||||||||
Hospital Operations and other total prior to inter-segment eliminations(1) | $ | 3,762 | $ | 3,866 | $ | 11,442 | $ | 12,066 | ||||||||
Ambulatory Care | 502 | 468 | 1,531 | 1,395 | ||||||||||||
Conifer | ||||||||||||||||
Tenet | 146 | 149 | 440 | 463 | ||||||||||||
Other customers | 225 | 252 | 721 | 740 | ||||||||||||
Total Conifer revenues | 371 | 401 | 1,161 | 1,203 | ||||||||||||
Inter-segment eliminations | (146 | ) | (149 | ) | (440 | ) | (463 | ) | ||||||||
Total | $ | 4,489 | $ | 4,586 | $ | 13,694 | $ | 14,201 | ||||||||
Equity in earnings of unconsolidated affiliates: | ||||||||||||||||
Hospital Operations and other | $ | 2 | $ | 4 | $ | 6 | $ | 4 | ||||||||
Ambulatory Care | 31 | 34 | 91 | 91 | ||||||||||||
Total | $ | 33 | $ | 38 | $ | 97 | $ | 95 | ||||||||
Adjusted EBITDA: | ||||||||||||||||
Hospital Operations and other(2) | $ | 312 | $ | 269 | $ | 1,059 | $ | 924 | ||||||||
Ambulatory Care | 184 | 159 | 547 | 476 | ||||||||||||
Conifer | 81 | 79 | 270 | 204 | ||||||||||||
Total | $ | 577 | $ | 507 | $ | 1,876 | $ | 1,604 | ||||||||
Depreciation and amortization: | ||||||||||||||||
Hospital Operations and other | $ | 175 | $ | 185 | $ | 514 | $ | 560 | ||||||||
Ambulatory Care | 17 | 22 | 51 | 66 | ||||||||||||
Conifer | 12 | 12 | 37 | 36 | ||||||||||||
Total | $ | 204 | $ | 219 | $ | 602 | $ | 662 | ||||||||
(1) | Hospital Operations and other revenues includes health plan revenues of $8 million and $14 million for the three and nine months ended September 30, 2018, respectively and $10 million and $100 million for the three and nine months ended September 30, 2017, respectively. |
(2) | Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of $9 million for both of the three and nine month periods ended September 30, 2018 and $(6) million and $(41) million for the three and nine months ended September 30, 2017, respectively. |
Page 21
TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
(Unaudited)
(Dollars in millions) | Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | |||||||||||||||
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 | $ | 477 | $ | 518 | ||||||||||||
Less: Provision for doubtful accounts | 9 | 11 | ||||||||||||||
Net operating revenues(1) | $ | 502 | $ | 546 | 468 | 507 | ||||||||||
Equity in earnings of unconsolidated affiliates(2) | 31 | — | 34 | — | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries, wages and benefits | 157 | 137 | 155 | 122 | ||||||||||||
Supplies | 104 | 143 | 95 | 133 | ||||||||||||
Other operating expenses, net | 88 | 114 | 93 | 93 | ||||||||||||
Depreciation and amortization | 17 | 18 | 22 | 17 | ||||||||||||
Impairment and restructuring charges, and acquisition-related costs | 13 | — | 62 | — | ||||||||||||
Operating income | 154 | 134 | 75 | 142 | ||||||||||||
Interest expense | (33 | ) | (7 | ) | (35 | ) | (6 | ) | ||||||||
Other | 3 | — | 2 | — | ||||||||||||
Net income from continuing operations, before income taxes | 124 | 127 | 42 | 136 | ||||||||||||
Income tax expense | (14 | ) | (2 | ) | (20 | ) | (2 | ) | ||||||||
Net income | 110 | $ | 125 | 22 | $ | 134 | ||||||||||
Less: Net income available to noncontrolling interests | 70 | 61 | ||||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 40 | $ | (39 | ) | |||||||||||
Equity in earnings of unconsolidated affiliates | $ | 31 | $ | 34 | ||||||||||||
(1) | On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 6.7% during the three months ended September 30, 2018, with cases increasing 5.0% and revenue per case increasing 1.6%. |
(2) | At September 30, 2018, 107 of the 335 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 228 facilities and account for these investments as consolidated subsidiaries. |
Page 22
TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
(Unaudited)
(Dollars in millions) | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | |||||||||||||||
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 | $ | 1,422 | $ | 1,492 | ||||||||||||
Less: Provision for doubtful accounts | 27 | 31 | ||||||||||||||
Net operating revenues(1) | $ | 1,531 | $ | 1,586 | 1,395 | 1,461 | ||||||||||
Equity in earnings of unconsolidated affiliates(2) | 91 | — | 91 | — | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries, wages and benefits | 484 | 391 | 458 | 352 | ||||||||||||
Supplies | 316 | 417 | 285 | 383 | ||||||||||||
Other operating expenses, net | 275 | 333 | 267 | 290 | ||||||||||||
Depreciation and amortization | 51 | 51 | 66 | 49 | ||||||||||||
Impairment and restructuring charges, and acquisition-related costs | 20 | — | 70 | 1 | ||||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | (1 | ) | — | (7 | ) | — | ||||||||||
Operating income | 477 | 394 | 347 | 386 | ||||||||||||
Interest expense | (106 | ) | (17 | ) | (109 | ) | (17 | ) | ||||||||
Other | 6 | 1 | 5 | — | ||||||||||||
Net income from continuing operations, before income taxes | 377 | 378 | 243 | 369 | ||||||||||||
Income tax expense | (47 | ) | (6 | ) | (58 | ) | (6 | ) | ||||||||
Net income | 330 | $ | 372 | 185 | $ | 363 | ||||||||||
Less: Net income available to noncontrolling interests | 209 | 193 | ||||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 121 | $ | (8 | ) | |||||||||||
Equity in earnings of unconsolidated affiliates | $ | 91 | $ | 91 | ||||||||||||
(1) | On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 5.6% during the nine months ended September 30, 2018, with cases increasing 4.3% and revenue per case increasing 1.3%. |
(2) | At September 30, 2018, 107 of the 335 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 228 facilities and account for these investments as consolidated subsidiaries. |
Page 23
Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested operations and closed businesses (i.e., the Company’s health plan businesses). Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.
Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) net income (loss) from discontinued operations, (2) impairment and restructuring charges, and acquisition-related costs, (3) litigation and investigation costs, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) gain (loss) from early extinguishment of debt, (6) income (loss) from divested operations and closed businesses, and (7) the associated impact of these items on taxes and noncontrolling interests. Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP term, is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders divided by the weighted average primary or diluted shares outstanding in the reporting period.
Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment from continuing operations.
Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations. Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.
The Company believes the foregoing non-GAAP measures are useful to investors and analysts because they present additional information on the Company’s financial performance. Investors, analysts, Company management and the Company’s Board of Directors utilize these non-GAAP measures, in addition to GAAP measures, to track the Company’s financial and operating performance and compare the Company’s performance to its peer companies, which utilize similar non-GAAP measures in their presentations. The Human Resources Committee of the Company’s Board of Directors also uses certain of these measures to evaluate management’s performance for the purpose of determining incentive compensation. Additional information regarding the purpose and utility of specific non-GAAP measures used in this release is set forth below.
The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the estimated fair value of shares of the Company’s common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment. The Company does not use Adjusted EBITDA to measure liquidity, but instead to measure operating performance.
We use, and we believe investors and analysts use, Free Cash Flow and Adjusted Free Cash Flow as supplemental measures to analyze cash flows generated from our operations because we believe it is useful to investors in evaluating our ability to fund distributions paid to noncontrolling interests, acquisitions, purchasing equity interests in joint ventures or repaying debt.
These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in our financial statements, they do not provide a complete measure of our operating performance. For example, the Company’s definitions of Free Cash Flow and Adjusted Free Cash Flow do not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.
A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted EBITDA is set forth in Table #1 below for each quarter in 2017 and 2018. A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders is set forth in Table #2 below for each quarter in 2017 and 2018. A reconciliation of net cash provided by operating activities, the most comparable GAAP measure, to Free Cash Flow and Adjusted Free Cash Flow is set forth in Table #3 below for each quarter in 2017 and 2018.
Page 24
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2018
(Unaudited)
(Dollars in millions) | 2018 | |||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | YTD | |||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 99 | $ | 26 | $ | (9 | ) | $ | 116 | |||||||
Less: Net income available to noncontrolling interests | (92 | ) | (82 | ) | (74 | ) | (248 | ) | ||||||||
Income from discontinued operations, net of tax | 1 | 2 | — | 3 | ||||||||||||
Income from continuing operations | 190 | 106 | 65 | 361 | ||||||||||||
Income tax expense | (70 | ) | (44 | ) | (6 | ) | (120 | ) | ||||||||
Loss from early extinguishment of debt | (1 | ) | (1 | ) | — | (2 | ) | |||||||||
Other non-operating expense, net | (1 | ) | (1 | ) | — | (2 | ) | |||||||||
Interest expense | (255 | ) | (254 | ) | (249 | ) | (758 | ) | ||||||||
Operating income | 517 | 406 | 320 | 1,243 | ||||||||||||
Litigation and investigation costs | (6 | ) | (13 | ) | (9 | ) | (28 | ) | ||||||||
Net gains (losses) on sales, consolidation and deconsolidation of facilities | 110 | 8 | (7 | ) | 111 | |||||||||||
Impairment and restructuring charges, and acquisition-related costs | (47 | ) | (30 | ) | (46 | ) | (123 | ) | ||||||||
Depreciation and amortization | (204 | ) | (194 | ) | (204 | ) | (602 | ) | ||||||||
Income (loss) from divested and closed businesses | (1 | ) | 1 | 9 | 9 | |||||||||||
Adjusted EBITDA | $ | 665 | $ | 634 | $ | 577 | $ | 1,876 | ||||||||
Net operating revenues | $ | 4,699 | $ | 4,506 | $ | 4,489 | $ | 13,694 | ||||||||
Less: Net operating revenues from health plans | 6 | — | 8 | 14 | ||||||||||||
Adjusted net operating revenues | $ | 4,693 | $ | 4,506 | $ | 4,481 | $ | 13,680 | ||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | 2.1 | % | 0.6 | % | (0.2 | )% | 0.8 | % | ||||||||
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) | 14.2 | % | 14.1 | % | 12.9 | % | 13.7 | % | ||||||||
Page 25
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2017
(Unaudited)
(Dollars in millions) | 2017 | |||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Total | ||||||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (367 | ) | $ | (229 | ) | $ | (704 | ) | |||||
Less: Net income available to noncontrolling interests | (89 | ) | (87 | ) | (78 | ) | (130 | ) | (384 | ) | ||||||||||
Income (loss) from discontinued operations, net of tax | (1 | ) | 1 | (1 | ) | 1 | — | |||||||||||||
Income (loss) from continuing operations | 37 | 31 | (288 | ) | (100 | ) | (320 | ) | ||||||||||||
Income tax benefit (expense) | 33 | 12 | 60 | (324 | ) | (219 | ) | |||||||||||||
Loss from early extinguishment of debt | — | (26 | ) | (138 | ) | — | (164 | ) | ||||||||||||
Other non-operating expense, net | (5 | ) | (5 | ) | (4 | ) | (8 | ) | (22 | ) | ||||||||||
Interest expense | (258 | ) | (260 | ) | (257 | ) | (253 | ) | (1,028 | ) | ||||||||||
Operating income | 267 | 310 | 51 | 485 | 1,113 | |||||||||||||||
Litigation and investigation costs | (5 | ) | (1 | ) | (6 | ) | (11 | ) | (23 | ) | ||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | 15 | 23 | 104 | 2 | 144 | |||||||||||||||
Impairment and restructuring charges, and acquisition-related costs | (33 | ) | (41 | ) | (329 | ) | (138 | ) | (541 | ) | ||||||||||
Depreciation and amortization | (221 | ) | (222 | ) | (219 | ) | (208 | ) | (870 | ) | ||||||||||
Loss from divested and closed businesses | (16 | ) | (19 | ) | (6 | ) | — | (41 | ) | |||||||||||
Adjusted EBITDA | $ | 527 | $ | 570 | $ | 507 | $ | 840 | $ | 2,444 | ||||||||||
Net operating revenues | $ | 4,813 | $ | 4,802 | $ | 4,586 | $ | 4,978 | $ | 19,179 | ||||||||||
Less: Net operating revenues from health plans | 65 | 25 | 10 | 10 | 110 | |||||||||||||||
Adjusted net operating revenues | $ | 4,748 | $ | 4,777 | $ | 4,576 | $ | 4,968 | $ | 19,069 | ||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | (1.1 | )% | (1.1 | )% | (8.0 | )% | (4.6 | )% | (3.7 | )% | ||||||||||
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) | 11.1 | % | 11.9 | % | 11.1 | % | 16.9 | % | 12.8 | % | ||||||||||
Page 26
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #2 – Reconciliation of Net Income Available (Loss Attributable) to
Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2018
(Unaudited)
(Dollars in millions except per share amounts) | 2018 | |||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | YTD | |||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 99 | $ | 26 | $ | (9 | ) | $ | 116 | |||||||
Net income from discontinued operations | 1 | $ | 2 | — | 3 | |||||||||||
Net income (loss) from continuing operations | 98 | 24 | (9 | ) | 113 | |||||||||||
Less: Impairment and restructuring charges, and acquisition-related costs | (47 | ) | (30 | ) | (46 | ) | (123 | ) | ||||||||
Litigation and investigation costs | (6 | ) | (13 | ) | (9 | ) | (28 | ) | ||||||||
Net gains (losses) on sales, consolidation and deconsolidation of facilities | 110 | 8 | (7 | ) | 111 | |||||||||||
Loss from early extinguishment of debt | (1 | ) | (1 | ) | — | (2 | ) | |||||||||
Income (loss) from divested and closed businesses | (1 | ) | 1 | 9 | 9 | |||||||||||
Tax impact of above items | (16 | ) | 8 | 14 | 6 | |||||||||||
Adjusted net income available from continuing operations to common shareholders | $ | 59 | $ | 51 | $ | 30 | $ | 140 | ||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.95 | $ | 0.23 | $ | (0.09 | ) | $ | 1.09 | |||||||
Less: Impairment and restructuring charges, and acquisition-related costs | (0.46 | ) | (0.29 | ) | (0.44 | ) | (1.18 | ) | ||||||||
Litigation and investigation costs | (0.06 | ) | (0.12 | ) | (0.09 | ) | (0.27 | ) | ||||||||
Net gains (losses) on sales, consolidation and deconsolidation of facilities | 1.08 | 0.07 | (0.07 | ) | 1.07 | |||||||||||
Loss from early extinguishment of debt | (0.01 | ) | (0.01 | ) | — | (0.02 | ) | |||||||||
Income (loss) from divested and closed businesses | (0.01 | ) | 0.01 | 0.09 | 0.09 | |||||||||||
Tax impact of above items | (0.16 | ) | 0.08 | 0.13 | 0.06 | |||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 0.57 | $ | 0.49 | $ | 0.29 | $ | 1.35 | ||||||||
Weighted average basic shares outstanding (in thousands) | 101,392 | 102,147 | 102,402 | 101,980 | ||||||||||||
Weighted average dilutive shares outstanding (in thousands) | 102,656 | 104,177 | 104,575 | 103,802 | ||||||||||||
Page 27
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #2 – Reconciliation of Net Loss Attributable to
Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available (Loss Attributable) from Continuing Operations to Common Shareholders for 2017
(Unaudited)
(Dollars in millions except per share amounts) | 2017 | |||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Total | ||||||||||||||||
Net loss attributable to Tenet Healthcare Corporation common shareholders | $ | (53 | ) | $ | (55 | ) | $ | (367 | ) | $ | (229 | ) | $ | (704 | ) | |||||
Net income (loss) from discontinued operations | (1 | ) | $ | 1 | (1 | ) | 1 | — | ||||||||||||
Net loss from continuing operations | (52 | ) | (56 | ) | (366 | ) | (230 | ) | (704 | ) | ||||||||||
Less: Impairment and restructuring charges, and acquisition-related costs | (33 | ) | (41 | ) | (329 | ) | (138 | ) | (541 | ) | ||||||||||
Litigation and investigation costs | (5 | ) | (1 | ) | (6 | ) | (11 | ) | (23 | ) | ||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | 15 | 23 | 104 | 2 | 144 | |||||||||||||||
Loss from early extinguishment of debt | — | (26 | ) | (138 | ) | — | (164 | ) | ||||||||||||
Loss from divested and closed businesses | (16 | ) | (19 | ) | (6 | ) | — | (41 | ) | |||||||||||
Tax impact of above items | 14 | 25 | 26 | 49 | 114 | |||||||||||||||
Tax reform adjustment | — | — | — | (252 | ) | (252 | ) | |||||||||||||
Noncontrolling interests impact of above items | — | — | — | (23 | ) | (23 | ) | |||||||||||||
Adjusted net income available (loss attributable) from continuing operations to common shareholders | $ | (27 | ) | $ | (17 | ) | $ | (17 | ) | $ | 143 | $ | 82 | |||||||
Diluted loss per share from continuing operation | $ | (0.52 | ) | $ | (0.56 | ) | $ | (3.63 | ) | $ | (2.28 | ) | $ | (7.00 | ) | |||||
Less: Impairment and restructuring charges, and acquisition-related costs | (0.33 | ) | (0.41 | ) | (3.26 | ) | (1.35 | ) | (5.34 | ) | ||||||||||
Litigation and investigation costs | (0.05 | ) | (0.01 | ) | (0.06 | ) | (0.11 | ) | (0.23 | ) | ||||||||||
Net gains on sales, consolidation and deconsolidation of facilities | 0.15 | 0.23 | 1.03 | 0.02 | 1.42 | |||||||||||||||
Loss from early extinguishment of debt | — | (0.26 | ) | (1.37 | ) | — | (1.62 | ) | ||||||||||||
Loss from divested and closed businesses | (0.16 | ) | (0.19 | ) | (0.06 | ) | — | (0.40 | ) | |||||||||||
Tax impact of above items | 0.14 | 0.25 | 0.26 | 0.48 | 1.12 | |||||||||||||||
Tax reform adjustment | — | — | — | (2.47 | ) | (2.49 | ) | |||||||||||||
Noncontrolling interests impact of above items | — | — | — | (0.23 | ) | (0.23 | ) | |||||||||||||
Adjusted diluted earnings (loss) per share from continuing operations | $ | (0.27 | ) | $ | (0.17 | ) | $ | (0.17 | ) | $ | 1.40 | $ | 0.81 | |||||||
Weighted average basic shares outstanding (in thousands) | 100,000 | 100,612 | 100,812 | 100,945 | 100,592 | |||||||||||||||
Weighted average dilutive shares outstanding (in thousands) | 100,848 | 101,294 | 101,523 | 101,853 | 101,380 | |||||||||||||||
Page 28
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #3 – Reconciliations of Net Cash Provided By Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations
(Unaudited)
(Dollars in millions) | 2018 | |||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | YTD | |||||||||||||
Net cash provided by operating activities | $ | 113 | $ | 348 | $ | 338 | $ | 799 | ||||||||
Purchases of property and equipment | (143 | ) | (125 | ) | (136 | ) | (404 | ) | ||||||||
Free cash flow | $ | (30 | ) | $ | 223 | $ | 202 | $ | 395 | |||||||
Net cash provided by (used in) investing activities | $ | 373 | $ | (148 | ) | $ | (105 | ) | $ | 120 | ||||||
Net cash used in financing activities | $ | (123 | ) | $ | (771 | ) | $ | (136 | ) | $ | (1,030 | ) | ||||
Net cash provided by operating activities | $ | 113 | $ | 348 | $ | 338 | $ | 799 | ||||||||
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (33 | ) | (30 | ) | (50 | ) | (113 | ) | ||||||||
Net cash used in operating activities from discontinued operations | (1 | ) | (2 | ) | (1 | ) | (4 | ) | ||||||||
Adjusted net cash provided by operating activities from continuing operations | 147 | 380 | 389 | 916 | ||||||||||||
Purchases of property and equipment | (143 | ) | (125 | ) | (136 | ) | (404 | ) | ||||||||
Adjusted free cash flow – continuing operations | $ | 4 | $ | 255 | $ | 253 | $ | 512 | ||||||||
(Dollars in millions) | 2017 | |||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Total | ||||||||||||||||
Net cash provided by operating activities | $ | 186 | $ | 215 | $ | 308 | $ | 491 | $ | 1,200 | ||||||||||
Purchases of property and equipment | (198 | ) | (150 | ) | (144 | ) | (215 | ) | (707 | ) | ||||||||||
Free cash flow | $ | (12 | ) | $ | 65 | $ | 164 | $ | 276 | $ | 493 | |||||||||
Net cash provided by (used in) investing activities | $ | (189 | ) | $ | (119 | ) | $ | 535 | $ | (206 | ) | $ | 21 | |||||||
Net cash used in financing activities | $ | (141 | ) | $ | (193 | ) | $ | (889 | ) | $ | (103 | ) | $ | (1,326 | ) | |||||
Net cash provided by operating activities | $ | 186 | $ | 215 | $ | 308 | $ | 491 | $ | 1,200 | ||||||||||
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (24 | ) | (38 | ) | (26 | ) | (37 | ) | (125 | ) | ||||||||||
Net cash provided by (used in) operating activities from discontinued operations | 2 | (4 | ) | (1 | ) | (2 | ) | (5 | ) | |||||||||||
Adjusted net cash provided by operating activities from continuing operations | 208 | 257 | 335 | 530 | 1,330 | |||||||||||||||
Purchases of property and equipment | (198 | ) | (150 | ) | (144 | ) | (215 | ) | (707 | ) | ||||||||||
Adjusted free cash flow – continuing operations | $ | 10 | $ | 107 | $ | 191 | $ | 315 | $ | 623 | ||||||||||
Page 29
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #4 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA
(Unaudited)
(Dollars in millions) | Q4 2018 | 2018 | ||||||||||||||
Low | High | Low | High | |||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (32 | ) | $ | 33 | $ | 84 | $ | 149 | |||||||
Less: Net income available to noncontrolling interests | (117 | ) | (137 | ) | (365 | ) | (385 | ) | ||||||||
Net income (loss) from discontinued operations, net of tax | (3 | ) | 2 | — | 5 | |||||||||||
Income tax expense | (55 | ) | (70 | ) | (175 | ) | (190 | ) | ||||||||
Interest expense | (252 | ) | (242 | ) | (1,010 | ) | (1,000 | ) | ||||||||
Loss from early extinguishment of debt(1) | — | — | (2 | ) | (2 | ) | ||||||||||
Other non-operating expense, net | (3 | ) | (3 | ) | (5 | ) | (5 | ) | ||||||||
Net gains on sales, consolidation and deconsolidation of facilities(1) | — | — | 111 | 111 | ||||||||||||
Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(2) | (39 | ) | (19 | ) | (190 | ) | (170 | ) | ||||||||
Depreciation and amortization | (208 | ) | (198 | ) | (810 | ) | (800 | ) | ||||||||
Income (loss) from divested and closed businesses | (4 | ) | 1 | 5 | 10 | |||||||||||
Adjusted EBITDA | $ | 649 | $ | 699 | $ | 2,525 | $ | 2,575 | ||||||||
Income (loss) from continuing operations | $ | (29 | ) | $ | 31 | $ | 84 | $ | 144 | |||||||
Net operating revenues | $ | 4,420 | $ | 4,620 | $ | 18,100 | $ | 18,300 | ||||||||
Income (loss) from continuing operations as a % of operating revenues | (0.7 | )% | 0.7 | % | 0.5 | % | 0.8 | % | ||||||||
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) | 14.7 | % | 15.1 | % | 14.0 | % | 14.1 | % | ||||||||
(1) | The Company does not generally forecast losses from the early extinguishment of debt or net gains (losses) 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. The figures shown represent the Company's actual year-to-date results for these items. |
(2) | The Company has provided an estimate of restructuring charges and related payments that it anticipates in 2018. The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, litigation costs and settlements 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 30
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #5 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders
(Unaudited)
(Dollars in millions except per share amounts) | Q4 2018 | 2018 | ||||||||||||||
Low | High | Low | High | |||||||||||||
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (32 | ) | $ | 33 | $ | 84 | $ | 149 | |||||||
Net income (loss) from discontinued operations, net of tax | (3 | ) | $ | 2 | — | 5 | ||||||||||
Net income (loss) from continuing operations | (29 | ) | 31 | 84 | 144 | |||||||||||
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements | (39 | ) | (19 | ) | (190 | ) | (170 | ) | ||||||||
Net gains on sales, consolidation and deconsolidation of facilities | — | — | 111 | 111 | ||||||||||||
Loss from early extinguishment of debt | — | — | (2 | ) | (2 | ) | ||||||||||
Income (loss) from divested and closed businesses | (4 | ) | 1 | 5 | 10 | |||||||||||
Tax impact of above items | 4 | (1 | ) | 10 | 5 | |||||||||||
Adjusted net income available from continuing operations to common shareholders | $ | 10 | $ | 50 | $ | 150 | $ | 190 | ||||||||
Diluted earnings (loss) per share from continuing operations | $ | (0.28 | ) | $ | 0.30 | $ | 0.81 | $ | 1.38 | |||||||
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements | (0.37 | ) | (0.18 | ) | (1.83 | ) | (1.63 | ) | ||||||||
Net gains on sales, consolidation and deconsolidation of facilities | — | — | 1.07 | 1.07 | ||||||||||||
Loss from early extinguishment of debt | — | — | (0.02 | ) | (0.02 | ) | ||||||||||
Income (loss) from divested and closed businesses | (0.04 | ) | 0.01 | 0.05 | 0.10 | |||||||||||
Tax impact of above items | 0.04 | (0.01 | ) | 0.10 | 0.05 | |||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 0.10 | $ | 0.48 | $ | 1.44 | $ | 1.83 | ||||||||
Weighted average basic shares outstanding (in thousands) | 102,000 | 102,000 | 102,000 | 102,000 | ||||||||||||
Weighted average dilutive shares outstanding (in thousands) | 105,000 | 105,000 | 104,000 | 104,000 | ||||||||||||
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #6 – Reconciliation of Outlook Net Cash Provided by Operating Activities to Outlook Adjusted Free Cash Flow from Continuing Operations
(Dollars in millions) | 2018 | |||||||||||||
Low | High | |||||||||||||
Net cash provided by operating activities | $ | 1,060 | $ | 1,335 | ||||||||||
Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1) | (160 | ) | (140 | ) | ||||||||||
Net cash used in operating activities from discontinued operations | (5 | ) | — | |||||||||||
Adjusted net cash provided by operating activities – continuing operations | 1,225 | 1,475 | ||||||||||||
Purchases of property and equipment – continuing operations | (625 | ) | (675 | ) | ||||||||||
Adjusted free cash flow – continuing operations(2) | $ | 600 | $ | 800 | ||||||||||
(1) | The Company has provided an estimate of payments that it anticipates in 2018 related to restructuring charges. The Company does not generally forecast payments related to acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook. |
(2) | The Company's definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interests, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interests. |
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