- Tenet reported a net loss from
continuing operations of $44 million and earnings per share from
continuing operations was a loss of $0.44.
- Adjusted EBITDA was $617 million and
Adjusted diluted earnings per share from continuing operations was
$0.38.
- Same-hospital patient revenue grew 4.4%
in the second quarter, driven by 0.5% growth in adjusted admissions
and 3.9% growth in revenue per adjusted admission. Hospital segment
Adjusted EBITDA totaled $415 million.
- Ambulatory Care segment revenue
increased 11.7% on a pro forma same-facility system-wide basis in
the second quarter, with cases increasing 5.2% and revenue per case
increasing 6.1%. Adjusted EBITDA for the ambulatory segment was
$139 million, a 20.9% increase on a pro forma basis.
- Revenue from Conifer Health Solutions
increased 13.5% in the second quarter with revenue from third
parties increasing 28.0%. Conifer generated $63 million of Adjusted
EBITDA in the second quarter, representing a margin of 16.3%.
- Net cash provided by operating
activities in the first half of 2016 was $582 million, a $229
million improvement when compared to $353 million of cash provided
by operating activities in the first half of 2015. Adjusted Free
Cash Flow was $268 million in the first half of 2016, a $180
million improvement when compared to $88 million in the first half
of 2015.
- Tenet believes that it has reached an
agreement in principle with the government to resolve the Clinica
de la Mama criminal investigation and civil litigation for $514
million.
- Reiterated Adjusted EBITDA Outlook for
2016.
Tenet Healthcare Corporation (NYSE:THC) reported a net loss from
continuing operations of $44 million in the second quarter of 2016,
a $16 million improvement when compared to a $60 million net loss
from continuing operations in the second quarter of 2015. Adjusted
EBITDA was $617 million in the second quarter of 2016, an increase
of $49 million, or 8.6 percent, compared to $568 million in the
second quarter of 2015.
“Our strategic investments in high-acuity service lines helped
us to grow same-hospital patient revenue and revenue per adjusted
admission,” said Trevor Fetter, chairman and chief executive
officer. “Our Conifer Health and USPI subsidiaries performed well
and both achieved double-digit revenue growth. We are pleased with
the progress we are making on our core strategies across all three
business segments and remain on track to meet our Adjusted EBITDA
Outlook for the year.”
Hospital Operations and Other Segment
Net operating revenue in the hospital operations and other
segment increased to $4.202 billion, up 0.6 percent from $4.175
billion in the second quarter of 2015. On a same-hospital basis,
patient revenue increased to $3.743 billion, up 4.4 percent from
$3.586 billion in the second quarter of 2015. The increase was
driven by a 0.5 percent increase in adjusted patient admissions and
a 3.9 percent increase in net patient revenue per adjusted
admission.
Adjusted EBITDA in Tenet’s hospital segment was $415 million,
representing a decline of 9.6 percent as compared to $459 million
in the second quarter of 2015. The decline was primarily driven by
divestitures and a decline in electronic health record incentives,
and was partially offset by acquisitions.
Total hospital segment selected operating expenses, defined as
the sum of salaries, wages and benefits, supplies and other
operating expenses, increased 3.4 percent per adjusted admission in
the quarter. Approximately half of the 3.4 percent increase was
attributable to a $47 million increase in expense at Tenet’s health
plan business, which was substantially offset by higher plan
premium revenues, and incremental expense related to our discounted
malpractice liabilities as a result of the decline in Treasury
rates.
Exchanges
Tenet’s same-hospital exchange admissions were 5,478 in the
second quarter of 2016, up 14.9 percent from the second quarter of
2015. Same-hospital exchange outpatient visits were 52,020, up 30.5
percent from the second quarter of 2015.
Uncompensated Care
Tenet’s provision for doubtful accounts was $352 million in the
second quarter of 2016, representing a ratio of 6.7 percent of
revenues before bad debt, as compared to $352 million in the second
quarter of 2015, or 7.3 percent of revenues before bad debt.
Tenet’s uncompensated care cost, defined as the sum of the
provision for doubtful accounts, charity care write-offs and
uninsured discounts, was $1.210 billion and $1.226 billion in the
second quarters of 2016 and 2015, respectively, including $858
million and $874 million, respectively, of charity care write-offs
and uninsured discounts that were offered through Tenet’s Compact
with Uninsured Patients. Uncompensated care represented 19.9
percent of revenue before bad debts, uninsured discounts and
charity care write-offs in the second quarter of 2016, down from
21.4 percent in the second quarter of 2015. Nearly all of Tenet’s
uncompensated care is associated with the Hospital Operations and
other segment.
Uninsured plus charity admissions increased by 688 admissions,
or 7.9 percent on a same-hospital basis in the second quarter of
2016 compared to the second quarter of 2015. Uninsured plus charity
outpatient visits decreased by 692 visits, or 0.6 percent, on a
same-hospital basis.
Ambulatory Care Segment
The results of many of the facilities in which the Ambulatory
Care 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. Tenet’s acquisition of
a majority interest in USPI and all of Aspen on June 16, 2015 makes
the year-over-year comparisons less meaningful since they were not
owned for the entire year. In order to improve comparability, Tenet
is presenting the results for the Ambulatory Care segment on a pro
forma basis, including the results of USPI and Aspen in each
comparable period.
During the second quarter of 2016, the Ambulatory segment
produced net operating revenue of $442 million, representing an
increase of 37.3 percent as compared to $322 million in the second
quarter of 2015 on a pro forma basis. On a pro forma same-facility
system-wide basis, revenue in the Ambulatory segment increased 11.7
percent, with cases increasing 5.2 percent and revenue per case
increasing 6.1 percent.
Tenet’s Ambulatory segment generated Adjusted EBITDA of $139
million in the second quarter of 2016, up 20.9 percent from $115
million in the second quarter of 2015 on a pro forma basis.
Conifer Segment
During the second quarter of 2016, Conifer’s revenue increased
13.5 percent to $386 million, up from $340 million in the second
quarter of 2015, and Conifer’s revenue from third party customers
increased by 28.0 percent to $224 million. Conifer generated $63
million of Adjusted EBITDA in the second quarter of 2016, up 5.0
percent from $60 million in the second quarter of 2015.
Net Income and Earnings Per Share
Tenet reported a net loss from continuing operations of $44
million, or $0.44 per share, in the second quarter of 2016 compared
to a net loss of $60 million, or $0.60 per share, in the second
quarter of 2015.
After adjusting for certain items which are listed on Table #2,
Tenet generated Adjusted net income from continuing operations of
$38 million, or $0.38 per diluted share, during the second quarter
of 2016. During the second quarter of 2015, the Company generated
Adjusted net income from continuing operations of $76 million, or
$0.75 per diluted share.
A reconciliation of GAAP net income available (loss
attributable) to Tenet Healthcare Corporation common shareholders
to Adjusted net income from continuing operations and Adjusted
diluted earnings per share from continuing operations is contained
in Table #2 at the end of this release.
Cash Flow and Liquidity
Cash and cash equivalents were $656 million at June 30, 2016
compared to $728 million at March 31, 2016. The Company had no
outstanding borrowings on its $1 billion credit line as of June 30,
2016. Accounts receivable days outstanding were 51.1 at June 30,
2016 compared to 50.6 at March 31, 2016 and 49.5 at December 31,
2015. The increase in accounts receivable days outstanding was
primarily attributable to receivables that were retained from
divested hospitals, including the sale of the Company’s hospitals
in the Atlanta area and North Carolina.
Net cash provided by operating activities in the six months
ended June 30, 2016 was $582 million, representing a $229 million
improvement compared to $353 million in the comparable period in
2015. After subtracting $413 million and $359 million of capital
expenditures in the six months ended June 30, 2016 and June 30,
2015, respectively, Free Cash Flow was $169 million in the six
months ended June 30, 2016, representing a $175 million improvement
compared to a $6 million outflow in the comparable period in 2015.
Adjusted Free Cash Flow was $268 million in the six months ended
June 30, 2016, representing a $180 million improvement from $88
million in the comparable period in 2015.
Net cash provided by investing activities was $54 million in the
six months ended June 30, 2016 compared to $985 million of net cash
used in investing activities in the comparable period in 2015. Net
cash used in financing activities was $336 million in the six
months ended June 30, 2016 compared to $738 million of net cash
provided by financing activities in the comparable period in
2015.
Reconciliations of net cash provided by (used in) operating
activities to both Free Cash Flow and Adjusted Free Cash Flow are
contained in Table #3 at the end of this release.
Clinica de la Mama Update
The Company believes that it has reached an agreement in
principle with the government to resolve the Clinica de la Mama
criminal investigation and civil litigation for $514 million. Based
on the agreement in principle, we have increased our reserve from
$407 million to $516 million to reflect the monetary components of
the agreement in principle and certain other costs. This amount is
reflected in Tenet’s consolidated balance sheet as of June 30, 2016
as accrued legal settlement costs. The increase in reserve lowered
net income by approximately $67 million or $0.67 per share during
the second quarter of 2016. Tenet expects the payment to be made as
early as the third quarter of 2016, and to be funded through
general corporate sources of liquidity, including cash on the
balance sheet and borrowings under the Company’s revolving credit
facility.
In addition to the monetary component, the agreement in
principle includes the following non-monetary terms: (i) the
execution of a Non-Prosecution Agreement, which includes the
appointment of a corporate monitor for a period of three years;
(ii) the agreement of the two indirect, wholly owned subsidiaries
that previously operated Atlanta Medical Center and North Fulton
Hospital, and which currently have no operating assets, to each
plead guilty to a single-count indictment; and (iii) the execution
of a corporate integrity agreement. The final resolution is subject
to the negotiation and execution of definitive agreements. For
additional information regarding these and other terms of the
agreement in principle, see Note 10 to the Consolidated Financial
Statements included in the Company’s Form 10-Q for the three months
ended June 30, 2016.
Outlook
The Company’s Outlook for 2016 includes:
- Revenue of $19.5 billion to $19.8
billion,
- Net loss from continuing operations
ranging from a loss of $65 million to a loss of $30 million,
- Adjusted EBITDA of $2.4 billion to $2.5
billion,
- Net cash provided by operating
activities of $1.2 billion to $1.3 billion,
- Adjusted Free Cash Flow of $400 million
to $600 million,
- Loss per share from continuing
operations ranging from a loss of $0.66 to a loss of $0.30 per
basic share, and
- Adjusted diluted earnings per share
from continuing operations of $1.32 to $1.67.
The Outlook for calendar year 2016 assumes equity in earnings of
unconsolidated affiliates of $110 million to $130 million,
electronic health record incentives of $25 million to $35 million,
net income attributable to noncontrolling interests of $330 million
to $350 million (excluding the additional $18 million of
noncontrolling interests recorded by USPI in the first quarter of
2016, as discussed in our first quarter earnings release) and an
average diluted share count of 102 million.
The Company’s Outlook for the third quarter of 2016
includes:
- Revenue of $4.75 billion to $4.85
billion,
- Net income from continuing operations
of $10 million to $25 million,
- Adjusted EBITDA of $550 million to $600
million,
- Earnings per diluted share from
continuing operations of $0.10 to $0.25, and
- Adjusted diluted earnings per share
from continuing operations of $0.10 to $0.25.
The Outlook for the third quarter assumes equity in earnings of
unconsolidated affiliates of approximately $25 million, electronic
health record incentives of less than $5 million, net income
attributable to noncontrolling interests of $80 million to $90
million and an average diluted share count of 102 million.
Additional details on Tenet’s Outlook for both the third quarter
and calendar year 2016 are available in Tables 4 and 5 at the end
of this press release and in an accompanying slide presentation
that is accessible through the Company’s website at
www.tenethealth.com/investors.
Management’s Webcast Discussion of Second Quarter
Results
Tenet management will discuss the Company’s second quarter 2016
results on a webcast scheduled for 10:00 a.m. EDT (9:00 a.m. CDT)
on August 2, 2016. Investors can access the webcast through Tenet’s
website at www.tenethealth.com/investors. A set of slides, which
will be referred to on the conference call, is available on the
Quarterly Results section of the Company’s website.
Additional information regarding Tenet’s quarterly results of
operations is contained in its Form 10-Q report for the three
months ended June 30, 2016, which will be filed with the Securities
and Exchange Commission and posted on the Tenet website before the
webcast. This press release includes certain non-GAAP measures,
such as Adjusted EBITDA, Adjusted net income from continuing
operations, Adjusted diluted earnings per share from continuing
operations, Free Cash Flow and Adjusted Free Cash Flow.
Reconciliations of these measures to the most comparable GAAP
measure are contained in the tables at the end of this release.
Tenet Healthcare Corporation is a diversified healthcare
services company with 130,000 employees united around a common
mission: to help people live happier, healthier lives. Through its
subsidiaries, partnerships and joint ventures, including United
Surgical Partners International, the Company operates 79 general
acute care hospitals, 20 short-stay surgical hospitals and over 470
outpatient centers in the United States, as well as nine facilities
in the United Kingdom. Tenet’s Conifer Health Solutions subsidiary
provides technology-enabled performance improvement and health
management solutions to hospitals, health systems, integrated
delivery networks, physician groups, self-insured organizations and
health plans. For more information, please visit
www.tenethealth.com.
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.
This release contains “forward-looking statements” – that is,
statements that relate to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance and financial condition,
and often contain words such as “expect,” “assume,” “anticipate,”
“intend,” “plan,” “believe,” “seek,” “see,” or “will.”
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. Particular uncertainties that
could cause our actual results to be materially different than
those expressed in our forward-looking statements include, but are
not limited to, the factors disclosed under “Forward-Looking
Statements” and “Risk Factors” in our Form 10-K for the year ended
December 31, 2015 and other filings with the Securities and
Exchange Commission. Among other things, these factors include
adverse regulatory developments, government investigations or
litigation, including the payment of civil and criminal monetary
penalties and other conditions required in connection with the
proposed settlement and resolution of the Clinica de la Mama civil
litigation and criminal investigation described in Note 10 to the
Consolidated Financial Statements included in our Form 10-Q for the
three months ended June 30, 2016. The settlement and resolution of
the Clinica de la Mama matters is subject to the execution of
definitive documents and court acceptance. Although the Company
believes it will reach a final resolution of the Clinica de la Mama
matters, there can be no assurance that such a resolution will be
reached or that judicial acceptance of the resolution terms will be
received. If a resolution is not reached or accepted, or if the
terms of the final resolution are materially different than the
agreement in principle, the eventual loss related to these matters
could materially exceed the amount reserved and could have a
material adverse effect on our business, financial condition,
results of operations or cash flows.
Tenet uses its Company website to provide
important information to investors about the Company including the
posting of important announcements regarding financial performance
and corporate developments.
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (Dollars in millions except per
share amounts)
Three Months Ended June 30,
2016 % 2015
% Change Net operating
revenues: Net operating revenues before provision for doubtful
accounts $ 5,220 $ 4,844 7.8
% Less: Provision for doubtful
accounts 352 352 -
% Net
operating revenues 4,868 100.0 %
4,492 100.0 % 8.4 % Equity in
earnings of unconsolidated affiliates 30 0.6
% 16 0.4 % 87.5 %
Operating expenses: Salaries, wages and benefits 2,316 47.6
% 2,185 48.6 % 6.0
% Supplies 773 15.9 % 707 15.7 % 9.3
% Other operating expenses, net 1,213 24.9 % 1,081 24.1 %
12.2
% Electronic health record incentives (21 ) (0.4 )% (33
) (0.7 )% (36.4 )
% Depreciation and amortization 215 4.4 %
197 4.4 % Impairment and restructuring charges, and
acquisition-related costs 22 0.4 % 193 4.3 % Litigation and
investigation costs 114 2.3 % 14 0.3 % Gains on sales,
consolidation and deconsolidation of facilities (1 ) — %
— — %
Operating income 267 5.5
% 164 3.7 % Interest expense (244 )
(217 ) Investment earnings (losses) 2 (1 )
Net income (loss) from continuing operations, before income
taxes 25 (54 ) Income tax expense
16 27
Net income (loss) from continuing
operations, before discontinued operations 41 (27
) Discontinued operations: Loss from operations (2 )
(2 ) Income tax benefit — 1
Net loss
from discontinued operations (2 )
(1 ) Net income (loss) 39 (28
) Less: Net income attributable to noncontrolling interests
85 33
Net loss attributable to Tenet
Healthcare Corporation common shareholders $ (46
) $ (61 ) Amounts attributable to
Tenet Healthcare Corporation common shareholders Net loss from
continuing operations, net of tax $ (44 ) $ (60 ) Net loss from
discontinued operations, net of tax (2 ) (1 )
Net
loss attributable to Tenet Healthcare Corporation common
shareholders $ (46 ) $ (61
) Loss per share attributable to Tenet Healthcare
Corporation common shareholders: Basic Continuing
operations $ (0.44 ) $ (0.60 ) Discontinued operations (0.02
) (0.01 )
$ (0.46 ) $
(0.61 ) Diluted Continuing operations $ (0.44
) $ (0.60 ) Discontinued operations (0.02 ) (0.01 )
$ (0.46 ) $ (0.61 )
Weighted average shares and dilutive securities outstanding (in
thousands): Basic 99,341 99,244 Diluted* 99,341 99,244
*Had we generated income from continuing operations in the three
months ended June 30, 2016 and 2015 the effect of employee stock
options, restricted stock units and deferred compensation units on
the diluted shares calculation would have been an increase of 1,386
shares and 2,673 shares, respectively.
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (Dollars in millions except per
share amounts)
Six Months Ended June 30,
2016 % 2015
% Change Net operating
revenues: Net operating revenues before provision for doubtful
accounts $ 10,640 $ 9,631 10.5 % Less: Provision for doubtful
accounts 728 715 1.8 %
Net operating
revenues 9,912 100.0 % 8,916
100.0 % 11.2 % Equity in earnings of
unconsolidated affiliates 54 0.5 %
20 0.2 % 170.0 %
Operating
expenses: Salaries, wages and benefits 4,718 47.6 % 4,310 48.3
% 9.5 % Supplies 1,584 16.0 % 1,394 15.6 % 13.6 % Other operating
expenses, net 2,455 24.8 % 2,174 24.4 % 12.9 % Electronic health
record incentives (21 ) (0.2 )% (39 ) (0.4 )% (46.2 )% Depreciation
and amortization 427 4.3 % 404 4.5 % Impairment and restructuring
charges, and acquisition-related costs 50 0.4 % 222 2.5 %
Litigation and investigation costs 287 2.9 % 17 0.2 % Gains on
sales, consolidation and deconsolidation of facilities (148
) (1.5 )% — — %
Operating income 614
6.2 % 454 5.1 % Interest expense
(487 ) (416 ) Investment earnings (losses) 3
(1 )
Net income from continuing operations, before income
taxes 130 37 Income tax benefit (expense)
(51 ) 11
Net income from continuing operations,
before discontinued operations 79 48
Discontinued operations: Loss from operations (7 ) — Income
tax benefit 1 —
Net loss from
discontinued operations (6 )
— Net income 73 48 Less: Net
income attributable to noncontrolling interests 178
62
Net loss attributable to Tenet Healthcare
Corporation common shareholders $ (105 )
$ (14 ) Amounts attributable to Tenet
Healthcare Corporation common shareholders Net loss from
continuing operations, net of tax $ (99 ) $ (14 ) Net loss from
discontinued operations, net of tax (6 ) —
Net loss attributable to Tenet Healthcare Corporation common
shareholders $ (105 ) $ (14
) Net loss per share attributable to Tenet Healthcare
Corporation common shareholders: Basic Continuing
operations $ (1.00 ) $ (0.14 ) Discontinued operations (0.06
) —
$ (1.06 ) $
(0.14 ) Diluted Continuing operations $ (1.00
) $ (0.14 ) Discontinued operations (0.06 ) —
$ (1.06 ) $ (0.14 )
Weighted average shares and dilutive securities outstanding (in
thousands): Basic 99,054 98,972 Diluted* 99,054 98,972
*Had we generated income from continuing
operations in the six months ended June 30, 2016 and 2015 the
effect of employee stock options, restricted stock units and
deferred compensation units on the diluted shares calculation would
have been an increase of 1,477 shares and 2,423 shares,
respectively.
TENET HEALTHCARE CORPORATION CONSOLIDATED BALANCE
SHEETS (Unaudited)
June 30,
December 31, (Dollars in millions)
2016
2015 ASSETS Current
assets: Cash and cash equivalents $ 656 $ 356 Accounts
receivable, less allowance for doubtful accounts 2,734 2,704
Inventories of supplies, at cost 316 309 Income tax receivable 3 7
Assets held for sale 2 550 Other current assets 1,282
1,245
Total current assets 4,993
5,171 Investments and other assets 1,317 1,175 Deferred
income taxes 797 776 Property and equipment, at cost, less
accumulated depreciation and amortization 7,977 7,915 Goodwill
7,291 6,970 Other intangible assets, at cost, less accumulated
amortization 1,865 1,675
Total
assets $ 24,240 $ 23,682
LIABILITIES AND EQUITY Current
liabilities: Current portion of long-term debt $ 181 $ 127
Accounts payable 1,272 1,380 Accrued compensation and benefits 843
880 Professional and general liability reserves 179 177 Accrued
interest payable 205 205 Liabilities held for sale — 101 Accrued
legal settlement costs 525 294 Other current liabilities
1,225 1,144
Total current liabilities
4,430 4,308 Long-term debt, net of current portion
14,320 14,383 Professional and general liability reserves 613 578
Defined benefit plan obligations 594 595 Deferred income taxes 274
37 Other long-term liabilities 582 557
Total liabilities 20,813 20,458 Commitments
and contingencies Redeemable noncontrolling interests in equity of
consolidated subsidiaries 2,275 2,266
Equity:
Shareholders’ equity: Common stock 7 7 Additional paid-in
capital 4,791 4,815 Accumulated other comprehensive loss (203 )
(164 ) Accumulated deficit (1,655 ) (1,550 ) Common stock in
treasury, at cost (2,417 ) (2,417 )
Total
shareholders’ equity 523 691 Noncontrolling
interests 629 267
Total equity 1,152 958
Total liabilities and equity $ 24,240
$ 23,682 TENET HEALTHCARE
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Six Months Ended (Dollars in millions)
June
30, 2016 2015
Net Income $ 73 $ 48
Adjustments to reconcile net income to net cash provided by
(used in) operating activities: Depreciation and amortization
427 404 Provision for doubtful accounts 728 715 Deferred income tax
expense 37 (27 ) Stock-based compensation expense 35 33 Impairment
and restructuring charges, and acquisition-related costs 50 222
Litigation and investigation costs 287 17 Gains on sales,
consolidation and deconsolidation of facilities (148 ) — Equity in
earnings of unconsolidated affiliates, net of distributions
received 10 (20 ) Amortization of debt discount and debt issuance
costs 21 21 Pre-tax loss (income) from discontinued operations 7 —
Other items, net (2 ) (5 )
Changes in cash from operating assets
and liabilities: Accounts receivable (725 ) (779 ) Inventories
and other current assets (30 ) 36 Income taxes (17 ) 9 Accounts
payable, accrued expenses and other current liabilities (106 ) (267
) Other long-term liabilities 34 40
Payments for restructuring
charges, acquisition-related costs, and litigation costs and
settlements (99 ) (86 ) Net cash
used in operating activities from discontinued operations,
excluding income taxes — (8
) Net cash provided by operating activities
582 353 Cash flows from investing activities:
Purchases of property and equipment — continuing operations (413 )
(359 ) Purchases of businesses or joint venture interests, net of
cash acquired (94 ) (636 ) Proceeds from sales of facilities and
other assets 573 — Proceeds from sales of marketable securities,
long-term investments and other assets 24 11 Purchases of equity
investments (35 ) (2 ) Other long-term assets (3 ) — Other items,
net 2 1
Net cash provided by (used
in) investing activities 54 (985 ) Cash
flows from financing activities: Repayments of borrowings under
credit facility (1,195 ) (1,315 ) Proceeds from borrowings under
credit facility 1,195 1,195 Repayments of other borrowings (76 )
(1,992 ) Proceeds from other borrowings — 3,187 Debt issuance costs
— (72 ) Distributions paid to noncontrolling interests (95 ) (23 )
Proceeds from sale of noncontrolling interests 15 3 Purchase of
noncontrolling interests (177 ) (254 ) Proceeds from exercise of
stock options 3 9 Other items, net (6 ) —
Net cash provided by (used in) financing activities
(336 ) 738 Net increase in cash
and cash equivalents 300 106 Cash and cash equivalents at beginning
of period 356 193
Cash and cash
equivalents at end of period $ 656
$ 299 Supplemental disclosures: Interest paid,
net of capitalized interest $ (467 ) $ (385 ) Income tax payments,
net $ (29 ) $ (8 ) TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL
HOSPITALS(1)
(Unaudited) (Dollars in millions except per patient day,
per admission, per adjusted admission
Three
Months Ended June 30, Six Months Ended June 30, and per
visit amounts)
2016 2015
Change 2016 2015
Change Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 75 80 (5 ) * 75 80 (5 ) *
Total admissions 193,898 201,908 (4.0 )% 405,697 410,241 (1.1 )%
Adjusted patient admissions 342,813 349,145 (1.8 )% 705,632 698,242
1.1 % Paying admissions (excludes charity and uninsured) 183,539
191,373 (4.1 )% 384,975 388,756 (1.0 )% Charity and uninsured
admissions 10,359 10,535 (1.7 )% 20,722 21,485 (3.6 )% Admissions
through emergency department 122,283 128,570 (4.9 )% 258,339
262,114 (1.4 )% Paying admissions as a percentage of total
admissions 94.7 % 94.8 % (0.1 )% * 94.9 % 94.8 % 0.1 % * Charity
and uninsured admissions as a percentage of total admissions 5.3 %
5.2 % 0.1 % * 5.1 % 5.2 % (0.1 )% * Emergency department admissions
as a percentage of total admissions 63.1 % 63.7 % (0.6 )% * 63.7 %
63.9 % (0.2 )% * Surgeries — inpatient 54,379 55,282 (1.6 )%
110,134 108,992 1.0 % Surgeries — outpatient 75,821 72,241 5.0 %
152,650 139,934 9.1 % Total surgeries 130,201 127,523 2.1 % 262,785
248,926 5.6 % Patient days — total 897,313 929,840 (3.5 )%
1,907,827 1,905,752 0.1 % Adjusted patient days 1,569,272 1,589,659
(1.3 )% 3,283,641 3,208,175 2.4 % Average length of stay (days)
4.63 4.61 0.4 % 4.70 4.65 1.1 % Licensed beds (at end of period)
20,380 20,826 (2.1 )% 20,380 20,826 (2.1 )% Average licensed beds
20,380 20,826 (2.1 )% 20,953 20,823 0.6 % Utilization of licensed
beds 48.4 % 49.1 % (0.7 )% * 50.0 % 50.6 % (0.6 )% *
Outpatient
Visits Total visits 2,038,287 2,063,037 (1.2 )% 4,184,905
4,057,610 3.1 % Paying visits (excludes charity and uninsured)
1,896,394 1,903,403 (0.4 )% 3,880,909 3,740,779 3.7 % Charity and
uninsured visits 141,893 159,634 (11.1 )% 303,996 316,831 (4.1 )%
Emergency department visits 715,692 742,951 (3.7 )% 1,505,608
1,484,484 1.4 % Paying visits as a percentage of total visits 93.0
% 92.3 % 0.7 % * 92.7 % 92.2 % 0.5 % * Charity and uninsured visits
as a percentage of total visits 7.0 % 7.7 % (0.7 )% * 7.3 % 7.8 %
(0.5 )% *
Revenues Net inpatient revenues $ 2,588 $ 2,623
(1.3 )% $ 5,369 $ 5,314 1.0 % Net outpatient revenues $ 1,460 $
1,484 (1.6 )% $ 2,974 $ 2,896 2.7 %
Revenues on a Per Admission,
Per Patient Day and Per Visit Basis Net inpatient revenue per
admission $ 13,347 $ 12,991 2.7 % $ 13,234 $ 12,953 2.2 % Net
inpatient revenue per patient day $ 2,884 $ 2,821 2.2 % $ 2,814 $
2,788 0.9 % Net outpatient revenue per visit $ 716 $ 719 (0.4 )% $
711 $ 714 (0.4 )% Net patient revenue per adjusted patient
admission $ 11,808 $ 11,767 0.3 % $ 11,823 $ 11,758 0.6 % Net
patient revenue per adjusted patient day $ 2,580 $ 2,585 (0.2 )% $
2,541 $ 2,559 (0.7 )% Total selected operating expenses (salaries,
wages and benefits, supplies and other operating expenses) per
adjusted patient admission $ 10,668 $ 10,314 3.4 % $ 10,600 $
10,299 2.9 %
Net Patient Revenues from: Medicare 21.7
% 20.7 % 1.0 % * 20.8 % 21.3 % (0.5 )% * Medicaid 7.4 % 8.5 % (1.1
)% * 8.0 % 9.0 % (1.0 )% * Managed care 59.4 % 60.8 % (1.4 )% *
60.4 % 59.9 % 0.5 % * Indemnity, self-pay and other 11.5 % 10.0 %
1.5 % * 10.8 % 9.8 % 1.0 % * (1) Represents the consolidated
results of Tenet’s Hospital Operations and other segment. * This
change is the difference between the 2016 and 2015 amounts shown
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME
HOSPITALS(1)
(Unaudited) (Dollars in millions except per patient day,
per admission, per adjusted admission
Three
Months Ended June 30, Six Months Ended June 30, and per
visit amounts)
2016 2015
Change 2016 2015
Change Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 67 67 — * 67 67 — * Total
admissions 177,151 179,135 (1.1 )% 362,204 364,282 (0.6 )% Adjusted
patient admissions 309,372 307,958 0.5 % 625,159 616,687 1.4 %
Paying admissions (excludes charity and uninsured) 167,717 170,389
(1.6 )% 344,003 346,412 (0.7 )% Charity and uninsured admissions
9,434 8,746 7.9 % 18,201 17,870 1.9 % Admissions through emergency
department 111,994 113,741 (1.5 )% 230,572 232,067 (0.6 )% Paying
admissions as a percentage of total admissions 94.7 % 95.1 % (0.4
)% * 95.0 % 95.1 % (0.1 )% * Charity and uninsured admissions as a
percentage of total admissions 5.3 % 4.9 % 0.4 % * 5.0 % 4.9 % 0.1
% * Emergency department admissions as a percentage of total
admissions 63.2 % 63.5 % (0.3 )% * 63.7 % 63.7 % — % * Surgeries —
inpatient 49,222 49,291 (0.1 )% 97,769 97,586 0.2 % Surgeries —
outpatient 65,678 64,407 2.0 % 129,677 124,901 3.8 % Total
surgeries 114,900 113,698 1.1 % 227,446 222,487 2.2 % Patient days
— total 805,662 817,881 (1.5 )% 1,667,800 1,678,808 (0.7 )%
Adjusted patient days 1,394,486 1,391,305 0.2 % 2,851,066 2,812,810
1.4 % Average length of stay (days) 4.55 4.57 (0.4 )% 4.60 4.61
(0.2 )% Licensed beds (at end of period) 18,144 18,244 (0.5 )%
18,144 18,244 (0.5 )% Average licensed beds 18,144 18,244 (0.5 )%
18,142 18,241 (0.5 )% Utilization of licensed beds 48.8 % 49.3 %
(0.5 )% * 50.8 % 50.8 % — % *
Outpatient Visits Total visits
1,830,522 1,815,393 0.8 % 3,685,257 3,578,261 3.0 % Paying visits
(excludes charity and uninsured) 1,707,375 1,691,554 0.9 %
3,436,059 3,330,685 3.2 % Charity and uninsured visits 123,147
123,839 (0.6 )% 249,198 247,576 0.7 % Emergency department visits
640,774 632,470 1.3 % 1,311,452 1,269,330 3.3 % Paying visits as a
percentage of total visits 93.3 % 93.2 % 0.1 % * 93.2 % 93.1 % 0.1
% * Charity and uninsured visits as a percentage of total visits
6.7 % 6.8 % (0.1 )% * 6.8 % 6.9 % (0.1 )% *
Revenues Net
inpatient revenues $ 2,400 $ 2,305 4.1 % $ 4,899 $ 4,687 4.5 % Net
outpatient revenues $ 1,343 $ 1,281 4.8 % $ 2,674 $ 2,507 6.7 %
Revenues on a Per Admission, Per Patient Day and Per Visit
Basis Net inpatient revenue per admission $ 13,548 $ 12,867 5.3
% $ 13,526 $ 12,866 5.1 % Net inpatient revenue per patient day $
2,979 $ 2,818 5.7 % $ 2,937 $ 2,792 5.2 % Net outpatient revenue
per visit $ 734 $ 706 4.0 % $ 726 $ 701 3.6 % Net patient revenue
per adjusted patient admission $ 12,099 $ 11,644 3.9 % $ 12,114 $
11,666 3.8 % Net patient revenue per adjusted patient day $ 2,684 $
2,577 4.2 % $ 2,656 $ 2,558 3.8 %
Net Patient Revenues
from: Medicare 20.1 % 20.7 % (0.6 )% * 20.4 % 21.3 % (0.9 )% *
Medicaid 7.8 % 8.3 % (0.5 )% * 8.1 % 8.9 % (0.8 )% * Managed care
62.1 % 61.6 % 0.5 % * 62.0 % 60.4 % 1.6 % * Indemnity, self-pay and
other 10.0 % 9.4 % 0.6 % * 9.5 % 9.4 % 0.1 % * (1)
Information for our Hospital Operations and other segment is
presented on a same-hospital basis, which includes the results of
our same 67 hospitals operated throughout the six months ended June
30, 2016 and 2015, associated outpatient facilities and six health
plans and excludes the results of eight hospitals that Tenet
acquired, as well as hospitals Tenet divested, since January 1,
2015. * This change is the difference between the 2016 and 2015
amounts shown TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars
in millions except per share amounts)
Three Months
Ended Six Months Ended
3/31/2016 6/30/2016
6/30/2016 Net operating
revenues: Net operating revenues before provision for doubtful
accounts $ 5,420 $ 5,220 $ 10,640 Less: Provision for doubtful
accounts 376 352 728
Net operating revenues 5,044 4,868
9,912 Equity in earnings of unconsolidated affiliates
24 30 54 Operating expenses: Salaries,
wages and benefits 2,402 2,316 4,718 Supplies 811 773 1,584 Other
operating expenses, net 1,242 1,213 2,455 Electronic health record
incentives — (21 ) (21 ) Depreciation and amortization 212 215 427
Impairment and restructuring charges, and acquisition-related costs
28 22 50 Litigation and investigation costs 173 114 287
Gains on sales, consolidation and
deconsolidation of facilities
(147 ) (1 ) (148 )
Operating income
347 267 614 Interest expense (243 ) (244 )
(487 ) Investment earnings (losses) 1 2
3
Net income from continuing operations, before
income taxes 105 25 130 Income tax benefit
(expense) (67 ) 16 (51 )
Net income
from continuing operations, before discontinued operations
38 41 79 Discontinued operations: Loss
from operations (5 ) (2 ) (7 ) Income tax benefit 1
— 1
Net loss from discontinued
operations (4 ) (2 )
(6 ) Net income 34 39
73 Less: Net income attributable to noncontrolling interests
93 85 178
Net loss
attributable to Tenet Healthcare Corporation common
shareholders $ (59 ) $ (46
) $ (105 ) Amounts attributable to
Tenet Healthcare Corporation common shareholders Net loss from
continuing operations, net of tax $ (55 ) $ (44 ) $ (99 ) Net loss
from discontinued operations, net of tax (4 ) (2 )
(6 )
Net loss attributable to Tenet Healthcare
Corporation common shareholders $ (59 )
$ (46 ) $ (105 ) Net
loss per share attributable to Tenet Healthcare Corporation common
shareholders: Basic Continuing operations $ (0.56 ) $
(0.44 ) $ (1.00 ) Discontinued operations (0.04 )
(0.02 ) (0.06 )
$ (0.60 ) $
(0.46 ) $ (1.06 ) Diluted
Continuing operations $ (0.56 ) $ (0.44 ) $ (1.00 ) Discontinued
operations (0.04 ) (0.02 ) (0.06 )
$
(0.60 ) $ (0.46 ) $
(1.06 ) Weighted average shares and dilutive
securities outstanding (in thousands): Basic 98,768 99,341
99,054 Diluted 98,768 99,341 99,054 TENET HEALTHCARE
CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL
HOSPITALS(1)
(Unaudited) (Dollars in millions except per patient day,
per admission, per
adjusted admission
Three Months Ended Six Months
Ended and per visit amounts)
3/31/2016
6/30/2016 6/30/2016
Admissions, Patient Days and Surgeries Number of
hospitals (at end of period) 80 75 75 Total admissions 211,799
193,898 405,697 Adjusted patient admissions 362,819 342,813 705,632
Paying admissions (excludes charity and uninsured) 201,436 183,539
384,975 Charity and uninsured admissions 10,363 10,359 20,722
Admissions through emergency department 136,056 122,283 258,339
Paying admissions as a percentage of total admissions 95.1 % 94.7 %
94.9 % Charity and uninsured admissions as a percentage of total
admissions 4.9 % 5.3 % 5.1 % Emergency department admissions as a
percentage of total admissions 64.2 % 63.1 % 63.7 % Surgeries —
inpatient 55,755 54,379 110,134 Surgeries — outpatient 76,829
75,821 152,650 Total surgeries 132,584 130,201 262,785 Patient days
— total 1,010,514 897,313 1,907,827 Adjusted patient days 1,714,369
1,569,272 3,283,641 Average length of stay (days) 4.77 4.63 4.70
Licensed beds (at end of period) 21,529 20,380 20,380 Average
licensed beds 21,524 20,380 20,953 Utilization of licensed beds
51.6 % 48.4 % 50.0 %
Outpatient Visits Total visits
2,146,618 2,038,287 4,184,905 Paying visits (excludes charity and
uninsured) 1,984,515 1,896,394 3,880,909 Charity and uninsured
visits 162,103 141,893 303,996 Emergency department visits 789,916
715,692 1,505,608 Paying visits as a percentage of total visits
92.4 % 93.0 % 92.7 % Charity and uninsured visits as a percentage
of total visits 7.6 % 7.0 % 7.3 %
Revenues Net inpatient
revenues $ 2,781 $ 2,588 $ 5,369 Net outpatient revenues $ 1,514 $
1,460 $ 2,974
Revenues on a Per Admission, Per Patient Day and
Per Visit Basis Net inpatient revenue per admission $ 13,130 $
13,347 $ 13,234 Net inpatient revenue per patient day $ 2,752 $
2,884 $ 2,814 Net outpatient revenue per visit $ 705 $ 716 $ 711
Net patient revenue per adjusted patient admission $ 11,838 $
11,808 $ 11,823 Net patient revenue per adjusted patient day $
2,505 $ 2,580 $ 2,541 Total selected operating expenses (salaries,
wages and benefits, supplies and other operating expenses) per
adjusted patient admission $ 10,537 $ 10,668 $ 10,600
Net
Patient Revenues from: Medicare 20.0 % 21.7 % 20.8 % Medicaid
8.7 % 7.4 % 8.0 % Managed care 61.1 % 59.4 % 60.4 % Indemnity,
self-pay and other 10.2 % 11.5 % 10.8 % (1) Represents the
consolidated results of Tenet’s Hospital Operations and other
segment. TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME
HOSPITALS(1)
(Unaudited) (Dollars in millions except per patient day,
per admission, per
adjusted admission
Three Months Ended Six Months
Ended and per visit amounts)
3/31/2016
6/30/2016 6/30/2016
Admissions, Patient Days and Surgeries Number of
hospitals (at end of period) 67 67 67 Total admissions 185,053
177,151 362,204 Adjusted patient admissions 315,787 309,372 625,159
Paying admissions (excludes charity and uninsured) 176,286 167,717
344,003 Charity and uninsured admissions 8,767 9,434 18,201
Admissions through emergency department 118,578 111,994 230,572
Paying admissions as a percentage of total admissions 95.3 % 94.7 %
95.0 % Charity and uninsured admissions as a percentage of total
admissions 4.7 % 5.3 % 5.0 % Emergency department admissions as a
percentage of total admissions 64.1 % 63.2 % 63.7 % Surgeries —
inpatient 48,547 49,222 97,769 Surgeries — outpatient 63,999 65,678
129,677 Total surgeries 112,546 114,900 227,446 Patient days —
total 862,138 805,662 1,667,800 Adjusted patient days 1,456,580
1,394,486 2,851,066 Average length of stay (days) 4.66 4.55 4.60
Licensed beds (at end of period) 18,144 18,144 18,144 Average
licensed beds 18,139 18,144 18,142 Utilization of licensed beds
52.8 % 48.8 % 50.8 %
Outpatient Visits Total visits
1,854,735 1,830,522 3,685,257 Paying visits (excludes charity and
uninsured) 1,728,684 1,707,375 3,436,059 Charity and uninsured
visits 126,051 123,147 249,198 Emergency department visits 670,678
640,774 1,311,452 Paying visits as a percentage of total visits
93.2 % 93.3 % 93.2 % Charity and uninsured visits as a percentage
of total visits 6.8 % 6.7 % 6.8 %
Revenues Net inpatient
revenues $ 2,499 $ 2,400 $ 4,899 Net outpatient revenues $ 1,331 $
1,343 $ 2,674
Revenues on a Per Admission, Per Patient Day and
Per Visit Basis Net inpatient revenue per admission $ 13,504 $
13,548 $ 13,526 Net inpatient revenue per patient day $ 2,899 $
2,979 $ 2,937 Net outpatient revenue per visit $ 718 $ 734 $ 726
Net patient revenue per adjusted patient admission $ 12,128 $
12,099 $ 12,114 Net patient revenue per adjusted patient day $
2,629 $ 2,684 $ 2,656
Net Patient Revenues from:
Medicare 20.6 % 20.1 % 20.4 % Medicaid 8.5 % 7.8 % 8.1 % Managed
care 61.5 % 62.1 % 62.0 % Indemnity, self-pay and other 9.4 % 10.0
% 9.5 % (1) Information for our Hospital Operations and
other segment is presented on a same-hospital basis, which includes
the results of our same 67 hospitals operated throughout the six
months ended June 30, 2016 and 2015, associated outpatient
facilities and six health plans and excludes the results of eight
hospitals that Tenet acquired, as well as hospitals Tenet divested,
since January 1, 2015. TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME
HOSPITALS(1)
(Unaudited) (Dollars in millions except per patient day,
per admission, per adjusted admission
Three Months
Ended Year Ended and per visit amounts)
03/31/15 06/30/15
9/30/2015 12/31/2015
12/31/2015 Admissions, Patient Days and
Surgeries Number of hospitals (at end of period) 67 67 67 67 67
Total admissions 185,147 179,135 176,885 176,051 717,218 Adjusted
patient admissions 308,729 307,958 305,916 305,436 1,228,039 Paying
admissions (excludes charity and uninsured) 176,023 170,389 167,463
166,962 680,837 Charity and uninsured admissions 9,124 8,746 9,422
9,089 36,381 Admissions through emergency department 118,326
113,741 110,235 110,291 452,593 Paying admissions as a percentage
of total admissions 95.1 % 95.1 % 95.1 % 95.1 % 95.1 % Charity and
uninsured admissions as a percentage of total admissions 4.9 % 4.9
% 4.9 % 4.9 % 4.9 % Emergency department admissions as a percentage
of total admissions 63.9 % 63.5 % 62.3 % 62.6 % 63.1 % Surgeries —
inpatient 48,295 49,291 49,527 49,239 196,352 Surgeries —
outpatient 60,494 64,407 64,985 65,046 254,932 Total surgeries
108,789 113,698 114,512 114,285 451,284 Patient days — total
860,927 817,881 804,181 803,037 3,286,026 Adjusted patient days
1,421,505 1,391,305 1,374,619 1,379,612 5,567,041 Average length of
stay (days) 4.65 4.57 4.55 4.56 4.58 Licensed beds (at end of
period) 18,244 18,244 18,201 18,130 18,130 Average licensed beds
18,241 18,244 18,233 18,154 18,217 Utilization of licensed beds
52.4 % 49.3 % 47.9 % 48.1 % 49.4 %
Outpatient Visits Total
visits 1,762,868 1,815,393 1,792,264 1,806,125 7,176,650 Paying
visits (excludes charity and uninsured) 1,639,131 1,691,554
1,659,417 1,680,609 6,670,711 Charity and uninsured visits 123,737
123,839 132,847 125,516 505,939 Emergency department visits 636,860
632,470 624,871 626,280 2,520,481 Paying visits as a percentage of
total visits 93.0 % 93.2 % 92.6 % 93.1 % 93.0 % Charity and
uninsured visits as a percentage of total visits 7.0 % 6.8 % 7.4 %
6.9 % 7.0 %
Revenues Net inpatient revenues $ 2,382 $ 2,305
$ 2,289 $ 2,358 $ 9,334 Net outpatient revenues $ 1,226 $ 1,281 $
1,288 $ 1,308 $ 5,103
Revenues on a Per Admission, Per Patient
Day and Per Visit Basis Net inpatient revenue per admission $
12,865 $ 12,867 $ 12,941 $ 13,394 $ 13,014 Net inpatient revenue
per patient day $ 2,767 $ 2,818 $ 2,846 $ 2,936 $ 2,841 Net
outpatient revenue per visit $ 695 $ 706 $ 719 $ 724 $ 711 Net
patient revenue per adjusted patient admission $ 11,687 $ 11,644 $
11,693 $ 12,003 $ 11,756 Net patient revenue per adjusted patient
day $ 2,538 $ 2,577 $ 2,602 $ 2,657 $ 2,593
Net Patient
Revenues from: Medicare 21.9 % 20.7 % 20.2 % 19.9 % 20.7 %
Medicaid 9.4 % 8.3 % 8.8 % 8.3 % 8.7 % Managed care 59.1 % 61.6 %
61.7 % 61.8 % 61.1 % Indemnity, self-pay and other 9.6 % 9.4 % 9.3
% 10.0 % 9.5 % (1) Information for our Hospital Operations
and other segment is presented on a same-hospital basis, which
includes the results of our same 67 hospitals operated throughout
the six months ended June 30, 2016 and 2015, associated outpatient
facilities and six health plans and excludes the results of eight
hospitals that Tenet acquired, as well as hospitals Tenet divested,
since January 1, 2015. TENET HEALTHCARE CORPORATION
SEGMENT REPORTING (Unaudited)
June 30, December 31,
2016 2015 Assets
Hospital Operations and other $ 17,412 $ 17,353 Ambulatory Care
5,673 5,159 Conifer 1,155 1,170
Total
$
24,240
$
23,682
Three Months Ended Six Months Ended
June 30, June 30, 2016
2015 2016 2015
Capital expenditures: Hospital Operations and other $
184 $ 166 $ 375 $ 341 Ambulatory Care 16 3 28 7 Conifer 5
6 10 11
Total $ 205 $ 175
$ 413 $ 359 Net
operating revenues: Hospital Operations and other $ 4,202 $
4,175 $ 8,599 $ 8,326 Ambulatory Care 442 142 871 233 Conifer Tenet
162 165 329 325 Other customers 224 175
442 357 Total Conifer revenues
386 340 771 682
Intercompany eliminations (162 ) (165 ) (329 )
(325 )
Total $ 4,868 $
4,492 $ 9,912 $
8,916 Equity in earnings of unconsolidated
affiliates: Hospital Operations and other $ 4 $ 10 $ 3 $ 14
Ambulatory Care 26 6 51
6
Total $ 30 $
16 $ 54 $ 20
Adjusted EBITDA: Hospital Operations and other
$ 415 $ 459 $ 829 $ 877 Ambulatory Care 139 49 275 78 Conifer
63 60 126 142
Total $ 617 $ 568
$ 1,230 $ 1,097
Depreciation and amortization: Hospital Operations
and other $ 181 $ 178 $ 355 $ 369 Ambulatory Care 22 7 47 11
Conifer 12 12 25
24
Total $ 215 $
197 $ 427 $ 404
TENET HEALTHCARE CORPORATION STATEMENT OF
OPERATIONS – AMBULATORY CARE SEGMENT INCLUDING PRO FORMA USPI AND
ASPEN FOR ALL PERIODS (Unaudited) (Dollars in millions)
Three Months Ended June 30, 2016
2015
AmbulatoryCare
asReportedUnderGAAP
UnconsolidatedAffiliates
AmbulatoryCare
asReportedUnderGAAP
UnconsolidatedAffiliates
Net operating revenues: Net operating revenues before
provision for doubtful accounts $ 452 $ 505 $ 327 $ 534 Less:
Provision for doubtful accounts (10) (14) (5)
(14)
Net operating revenues(1) 442
491 322 520 Equity in earnings of
unconsolidated affiliates(2) 26 —
28 — Operating expenses: Salaries, wages and
benefits 147 116 104 127 Supplies 91 128 59 133 Other operating
expenses, net 91 102 72 112 Depreciation and amortization 22 17 16
20 Impairment and restructuring charges, and acquisition-related
costs 3 5 — 3 Gains on sales, consolidation and deconsolidation of
facilities (1) — — —
Operating
income 115 123 99 125 Interest
expense (35) (6) (34) (7) Other — 1 — —
Net income from continuing operations, before income taxes
80 118 65 118 Income tax expense
(11) (1) (13) (1)
Net income
69
$
117
52
$
117
Less: Net income attributable to noncontrolling interests 60
42
Net income attributable to Tenet Healthcare
Corporation common shareholders
$
9
$
10
Equity in earnings of unconsolidated affiliates
$
26
$
28
(1) On a same-facility system-wide basis, net revenue in
Tenet’s Ambulatory Care segment increased 11.7% during the three
months ended June 30, 2016, with cases increasing 5.2% and revenue
per case increasing 6.1%. (2) At June 30, 2016, 120 of the 334
facilities in the Company’s newly formed Ambulatory segment were
not consolidated based on the nature of the segment’s joint venture
relationships with physicians and prominent healthcare systems.
Although revenues of the segment’s unconsolidated facilities are
not recorded as revenues by the Company, equity in earnings of
unconsolidated affiliates is nonetheless a significant portion of
the Company’s overall earnings. To help analyze results of
operations, management also uses system-wide operating measures
such as system-wide revenue growth, which includes revenues of both
consolidated and unconsolidated facilities. We control our
remaining 214 facilities and account for these investments as
consolidated subsidiaries. TENET HEALTHCARE
CORPORATION STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS (Unaudited)
Six Months Ended June 30, 2016
2015
AmbulatoryCare
asReportedUnderGAAP
UnconsolidatedAffiliates
AmbulatoryCare
asReportedUnderGAAP
UnconsolidatedAffiliates
Net operating revenues: Net operating revenues before
provision for doubtful accounts $ 889 $ 984 $ 627 $ 1,020 Less:
Provision for doubtful accounts (18 ) (28 )
(10 ) (26 )
Net operating revenues(1)
871 956 617 994 Equity in earnings
of unconsolidated affiliates(2) 51 —
49 — Operating expenses: Salaries, wages and
benefits 293 234 202 247 Supplies 177 251 110 256 Other operating
expenses, net 177 204 145 220 Electronic health record incentives —
— — — Depreciation and amortization 47 35 29 40 Impairment and
restructuring charges, and acquisition-related costs 4 1 — 3 Gains
on sales, consolidation and deconsolidation of facilities
(30 ) — — —
Operating
income 254 231 180 228 Interest
expense (70 ) (12 ) (68 ) (14 ) Other — 1
— —
Net income from
continuing operations, before income taxes 184
220 112 214 Income tax expense (19 )
(3 ) (22 ) (3 )
Net Income
165
$
217
90 $ 211 Less: Net income
attributable to noncontrolling interests(3) 135
76
Net income attributable to Tenet Healthcare
Corporation common shareholders $ 30
$ 14 Equity in earnings of unconsolidated
affiliates $ 51 $ 49 (1) On
a same-facility system-wide basis, net revenue in Tenet’s
Ambulatory Care segment increased 11.4% during the six months ended
June 30, 2016, with cases increasing 6.9% and revenue per case
increasing 4.2%. (2) At June 30, 2016, 120 of the 334 facilities in
the Company’s newly formed Ambulatory segment were not consolidated
based on the nature of the segment’s joint venture relationships
with physicians and prominent healthcare systems. Although revenues
of the segment’s unconsolidated facilities are not recorded as
revenues by the Company, equity in earnings of unconsolidated
affiliates is nonetheless a significant portion of the Company’s
overall earnings. To help analyze results of operations, management
also uses system-wide operating measures such as system-wide
revenue growth, which includes revenues of both consolidated and
unconsolidated facilities. We control our remaining 214 facilities
and account for these investments as consolidated subsidiaries. (3)
During the six months ended June 30, 2016, the Company recorded $18
million of noncontrolling interests expense related to a $29
million gain on the consolidation of facilities (the gain is not
included in Adjusted EBITDA) and an associated $7 million income
tax benefit.
Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP measure, is defined by the Company
as net income (loss) attributable to Tenet Healthcare Corporation
common shareholders before (1) the cumulative effect of changes in
accounting principle, (2) net loss (income) attributable to
noncontrolling interests, (3) income (loss) from discontinued
operations, (4) income tax benefit (expense), (5) investment
earnings (losses), (6) gain (loss) from early extinguishment of
debt, (7) interest expense, (8) litigation and investigation
(costs) benefit, net of insurance recoveries, (9) net gains
(losses) on sales, consolidation and deconsolidation of facilities,
(10) impairment and restructuring charges and acquisition-related
costs, and (11) depreciation and amortization. Litigation and
investigation costs do not include ordinary course of business
malpractice and other litigation and related expense.
Adjusted net income from continuing operations, a non-GAAP
measure, is defined by the Company as net income (loss)
attributable to Tenet Healthcare Corporation common shareholders
before (1) impairment and restructuring charges, and
acquisition-related costs, (2) litigation and investigation costs,
(3) gains on sales, consolidation and deconsolidation of
facilities, (4) the associated impact of these three items on taxes
and noncontrolling interests, and (5) net income (loss) from
discontinued operations. Adjusted diluted earnings per share from
continuing operations, a non-GAAP term, is defined by the Company
as Adjusted net income from continuing operations divided by the
weighted average diluted shares outstanding in the reporting
period.
Free Cash Flow, a non-GAAP measure, is defined by the Company as
(1) net cash provided by (used in) operating activities, less (2)
purchases of property and equipment from continuing operations.
Adjusted Free Cash Flow, a non-GAAP measure, is defined by the
Company as (1) Adjusted net cash provided by (used in) operating
activities from continuing operations, less (2) purchases of
property and equipment from continuing operations. Adjusted net
cash provided by (used in) operating activities, a non-GAAP
measure, is defined by the Company as cash provided by (used in)
operating activities prior to (1) payments for restructuring
charges, acquisition-related costs and litigation costs and
settlements, and, (2) net cash provided by (used in) operating
activities from discontinued operations.
The Company believes the foregoing non-GAAP measures are useful
to investors and analysts because they present additional
information on the Company’s financial performance. Investors,
analysts, Company management and the Company’s Board of Directors
utilize these non-GAAP measures, in addition to GAAP measures, to
track the company’s financial and operating performance and compare
the Company’s performance to its peer companies, which utilize
similar non-GAAP measures in their presentations. The Human
Resources Committee of the Company’s Board of Directors also uses
certain of these measures to evaluate management’s performance for
the purpose of determining incentive compensation. Additional
information regarding the purpose and utility of specific non-GAAP
measures used in this release is set forth below.
The Company believes that Adjusted EBITDA is a useful measure,
in part, because certain investors and analysts use both historical
and projected Adjusted EBITDA, in addition to other GAAP and
non-GAAP measures, as factors in determining the estimated fair
value of shares of the Company’s common stock. Company management
also regularly reviews the Adjusted EBITDA performance for each
operating segment. The Company does not use Adjusted EBITDA to
measure liquidity, but instead to measure operating
performance.
We use, and we believe investors and analysts use, Free Cash
Flow and Adjusted Free Cash Flow as supplemental measures to
analyze cash flows generated from our operations because we believe
it is useful to investors in evaluating our ability to fund
distributions paid to noncontrolling interests, acquisitions,
purchasing equity interests in joint ventures or repaying debt.
These non-GAAP measures may not be comparable to similarly
titled measures reported by other companies. Because these measures
exclude many items that are included in our financial statements,
they do not provide a complete measure of our operating
performance. For example, the Company’s definitions of Free Cash
Flow and Adjusted Free Cash Flow do not account for other important
uses of cash including (1) cash used to purchase businesses or
joint venture interests, or (2) any items that are classified as
Cash Flows From Financing Activities on the Company’s Consolidated
Statement of Cash Flows, including items such as (i) cash used to
repay borrowings, (ii) distributions paid to noncontrolling
interests, or (iii) payments under the Put/Call Agreement for USPI
redeemable noncontrolling interest, which are recorded on the
Statement of Cash Flows as the purchase of noncontrolling interest.
Accordingly, investors are encouraged to use GAAP measures when
evaluating the Company’s financial performance.
A reconciliation of Adjusted EBITDA to net
income (loss) attributable to Tenet Healthcare Corporation common
shareholders, the most comparable GAAP measure, is set forth in
Table #1 below for the three and six months ended June 30, 2016 and
2015. A reconciliation of Adjusted net income from continuing
operations to net income (loss) attributable to Tenet Healthcare
Corporation common shareholders, the most comparable GAAP measure,
is set forth in Table #2 below for the three and six months ended
June 30, 2016 and 2015. A reconciliation of Free Cash Flow and
Adjusted Free Cash Flow to net cash provided by (used in) operating
activities, the most comparable GAAP measure, is set forth in Table
#3 below for the three and six months ended June 30, 2016
and 2015.
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP
disclosures
Table #1 – Reconciliation of Adjusted
EBITDA to Net Income Available
(Loss Attributable) to Tenet Healthcare Corporation Common
Shareholders
(Unaudited)
(Dollars in millions)
Three Months
Ended Six Months Ended June 30,
June 30, 2016
2015 2016
2015 Net loss attributable to Tenet Healthcare
Corporation common shareholders $ (46 )
$ (61 ) $ (105 ) $
(14 ) Less: Net income attributable to noncontrolling
interests (85 ) (33 ) (178 ) (62 ) Net loss from discontinued
operations, net of tax (2 ) (1 ) (6 ) —
Net income (loss) from continuing operations 41 (27 ) 79 48
Income tax benefit (expense) 16 27 (51 ) 11 Investment earnings
(losses) 2 (1 ) 3 (1 ) Interest expense (244 ) (217 )
(487 ) (416 ) Operating income 267 164 614 454
Litigation and investigation costs (114 ) (14 ) (287 ) (17 ) Gains
on sales, consolidation and deconsolidation of facilities 1 — 148 —
Impairment and restructuring charges, and acquisition-related costs
(22 ) (193 ) (50 ) (222 ) Depreciation and amortization (215
) (197 ) (427 ) (404 )
Adjusted EBITDA
$ 617 $ 568 $
1,230 $ 1,097 Net
operating revenues $ 4,868 $
4,492 $ 9,912 $
8,916 Net income (loss) from continuing
operations as a % of operating revenues (0.9 )%
(1.4 )% (1.1 )% (0.2 )%
Adjusted EBITDA as % of net operating revenues (Adjusted
EBITDA margin) 12.7 % 12.6 %
12.4 % 12.3 %
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP
disclosures
Table #2 – Pre-Tax, After-Tax and Earnings Per Share Impact of
Certain Items on Continuing Operations
(Unaudited)
Three Months Ended Six
Months Ended (Dollars in millions except per share amounts)
June 30, June 30, 2016
2015 2016
2015 Adjustments to calculate
Adjusted Diluted EPS (Expense) Income Impairment and
restructuring charges, and acquisition-related costs $ (22 ) $ (193
) $ (50 ) $ (222 ) Litigation and investigation costs (114 ) (14 )
(287 ) (17 ) Gain on sales, consolidation and deconsolidation of
facilities 1 — 148
— Pre-tax impact $ (135 ) $ (207 ) $ (189 ) $ (239 ) Tax
impact of above items $ 53 $ 71 $ 25 $ 82
Total after-tax impact $ (82 ) $ (136 ) $ (164 ) $ (157 )
Noncontrolling interests impact — —
(18 ) —
Total income (loss) from items
above $ (82 ) $ (136
) $ (182 ) $ (157
) Net income available (loss attributable) to
common shareholders $ (46 ) $
(61 ) $ (105 ) $
(14 ) Less net income (loss) discontinued operations,
net of tax (2 ) (1 ) (6 ) —
Net income (loss) from continuing operations, net of tax
$ (44 ) $ (60 ) $
(99 ) $ (14 ) Net loss (income)
from adjustments above 82 136
182 157
Adjusted net income (loss)
$ 38 $ 76 $
83 $ 143 Weighted
average dilutive shares outstanding (in thousands)
100,727 101,917 100,531 101,395
Diluted earnings per share from continuing operations
$ (0.44 ) $ (0.60 )
$ (1.00 ) $ (0.14 )
Adjusted diluted EPS from continuing
operations
$ 0.38 $ 0.75 $ 0.83
$ 1.41
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP
disclosures
Table #3 – Reconciliations of Free Cash
Flow and Adjusted Free Cash Flow
(Unaudited)
Three Months Ended Six
Months Ended (Dollars in millions)
June 30, June
30, 2016 2015
2016 2015
Net cash provided by (used in) operating activities
$ 435 $ 410 $ 582
$ 353 Purchases of property and equipment (205
) (175 ) (413 ) (359 )
Free cash flow
$ 230 $ 235 $
169 $ (6 ) Net cash
provided by (used in) investing activities $ (266
) $ (798 ) $ 54 $
(985 ) Net cash provided by (used in) financing
activities $ (241 ) $ 502
$ (336 ) $ 738 Net
cash provided by (used in) operating activities $
435 $ 410 $ 582 $
353 Less: Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements (30
) (53 ) (99 ) (86 ) Net cash used in operating activities from
discontinued operations 3 (4 ) —
(8 )
Adjusted net cash provided by operating activities –
continuing operations 462 467 681
447 Purchases of property and equipment – continuing
operations (205 )
(175 ) (413 )
(359 )
Adjusted free cash flow – continuing
operations $ 257 $ 292
$ 268 $ 88
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP
disclosures
Table #4 – Reconciliation of Outlook Adjusted EBITDA to
Outlook Net Income Attributable to Tenet Healthcare Corporation
Common Shareholders
(Unaudited)
(Dollars in millions)
Q3 2016
2016 Low High Low
High Net income (loss) attributable to
Tenet Healthcare Corporation common shareholders $
5 $ 25 $ (80 ) $
(40 ) Less: Net (income) loss attributable to
noncontrolling interests (80 ) (90 ) (350 ) (370 ) Net loss from
discontinued operations, net of tax (5 ) -
(15 ) (10 ) Income from continuing operations 90 115
285 340 Income tax expense (15 ) (25 ) (115 )
(140 ) Income from continuing operations, before income
taxes 105 140 400 480 Interest expense (240 ) (245 )
(970 ) (980 ) Operating income 345 385 1,370 1,460
Gains on sales, consolidation and deconsolidation of facilities(a)
- - 147 147 Impairment and restructuring charges,
acquisition-related costs and litigation costs and settlements(a) -
- (337 ) (337 ) Depreciation and amortization (205 )
(215 ) (840 ) (850 )
Adjusted EBITDA $
550 $ 600 $ 2,400
$ 2,500 Adjusted EBITDA as %
of net operating revenues (Adjusted EBITDA margin) 11.6
% 12.4 % 12.3 % 12.6
% Net income (loss) from continuing operations
$ 10 $ 25 $ (65 )
$ (30 ) Net income (loss) from
continuing operations as a % of operating revenues 0.2
% 0.5 % (0.3 )% (0.2
)% Net operating revenues
$ 4,750 $ 4,850 $
19,500 $ 19,800
Adjusted EBITDA $ 550 $ 600
$ 2,400 $ 2,500 Depreciation and
amortization (205 ) (215 ) (840 ) (850 ) Interest expense
(240 ) (245 ) (970 ) (980 ) Adjusted income
from continuing operations before income taxes 105 140 590 670
Income tax expense (15 ) (25 ) (125 )
(150 ) Adjusted income from continuing operations 90 115 465 520
Net income attributable to noncontrolling interests (80 )
(90 ) (330 ) (350 )
Adjusted net income
attributable to common shareholders $ 10
$ 25 $ 135 $
170 Basic weighted average shares
outstanding 100 100 99 99
Fully diluted weighted average shares outstanding (in
millions) 102 102 102 102
Diluted earnings per share from continuing operations
$ 0.10 $ 0.25 $ (0.66
) $ (0.30 ) Adjusted diluted
earnings per share from continuing operations $
0.10 $ 0.25 $ 1.32 $
1.67
(a)
Company does not forecast impairment and restructuring
charges, acquisition-related costs and litigation costs and
settlements and gains on sales, consolidation and deconsolidation
of facilities because the Company does not believe that it can
forecast these items with sufficient accuracy since some of these
items are indeterminable at the time the Company provides its
financial Outlook.
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP
disclosures
Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2016 (Dollars in
millions)
2016 Low
High Net cash provided by operating activities
$ 1,177 $ 1,337 Less: Payments for
restructuring charges, acquisition-related costs and litigation
costs and settlements(a) (98 ) (98 ) Net cash used in operating
activities from discontinued operations (25 ) (15 )
Adjusted net cash provided by operating activities – continuing
operations $ 1,300 $ 1,450
Purchases of property and equipment – continuing operations
(900 ) (850 )
Adjusted free cash flow – continuing
operations $ 400 $ 600
(a)
Company does not forecast impairment and restructuring
charges, acquisition-related costs and litigation costs and
settlements 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160801006284/en/
Tenet Healthcare CorporationCorporate
CommunicationsCharles Nicolas,
469-893-2640mediarelations@tenethealth.comorInvestor
RelationsBrendan Strong,
469-893-6992investorrelations@tenethealth.com
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