Tenet Healthcare Corporation (NYSE: THC) today reported Adjusted
EBITDA of $294 million for the fourth quarter ended December 31,
2011, an increase of $13 million, or 4.6 percent, compared to $281
million for the fourth quarter of 2010. The Adjusted EBITDA margin
in the quarter was 13.2 percent, compared to 13.3 percent in the
fourth quarter of 2010.
In the fourth quarter of 2011, the Company reported a net loss
attributable to common shareholders of $76 million, or a loss of
$0.17 per diluted share, compared to income of $74 million, or
$0.14 per diluted share, in the fourth quarter of 2010. These
results included a $117 million pre-tax loss from early
extinguishment of debt incurred in relation to Tenet’s strategy to
extend debt maturities and reduce future interest expense.
Excluding impairment, litigation and investigation costs, loss from
early extinguishment of debt, and valuation tax adjustments from
both fourth quarters, income from continuing operations, net of
tax, was $42 million, or $0.10 per diluted share, compared to $43
million, or $0.08 per diluted share, in the fourth quarter of
2010.
“We recorded our eighth consecutive year of growth in Adjusted
EBITDA which grew to $1.145 billion in 2011, a 9.0 percent increase
over 2010,” said Trevor Fetter, president and chief executive
officer. “The growth would have been even stronger had we been able
to close some of the favorable payer settlements we have been
working on for a number of months. Because the settlements remain
likely, we are raising our 2012 Outlook for Adjusted EBITDA to a
new range of $1.225 billion to $1.350 billion. We also recorded our
fifth consecutive quarter of growth in adjusted admissions which
grew by 1.3 percent. The favorable growth in patient volumes,
combined with strong pricing growth, enabled us to achieve a 5.4
percent increase in net operating revenues in the quarter.”
Discussion of Results (Percentage changes compare Q4’11
to Q4’10, unless otherwise noted.)
Adjusted admissions increased by 1.3 percent. Admissions
increased by 0.3 percent, and paying admissions were flat.
Emergency Departments visits increased by 3.1 percent, and there
was a 3.3 percent increase in admissions through our Emergency
Departments. Total surgeries increased by 3.2 percent with
inpatient surgeries declining by 3.1 percent and outpatient
surgeries increasing by 7.6 percent.
Net operating revenues were $2.226 billion, an increase of $115
million, or 5.4 percent, compared to net operating revenues of
$2.111 billion in the fourth quarter of 2010. As a result of the
Company’s early adoption of a new accounting standard, net
operating revenues are now reported after a deduction for the
provision for doubtful accounts. Under the Company’s prior
reporting standard, net operating revenues would have been $2.411
billion, an increase of 4.8 percent, compared to $2.301 billion in
the fourth quarter of 2010.
Net patient revenue per adjusted admission was $11,633, an
increase of 2.3 percent, compared to $11,370 in the fourth quarter
of 2010. This pricing increase reflects improved terms in our
contracts with commercial managed care payers, partially offset by
an adverse shift in payer mix.
Selected operating expenses, which is defined as the sum of
salaries, wages and benefits, supplies and other operating
expenses, increased by 6.5 percent on a per adjusted patient day
basis in the fourth quarter of 2011. The increase is primarily due
to annual merit increases, an increase in the number of physicians
we employ, and higher health benefit costs for our employees. The
comparison to last year’s fourth quarter was made more challenging
by a $10 million favorable adjustment in that quarter related to
the estimated recovery of payroll taxes paid in prior years on
behalf of medical residents. Selected operating expenses were also
adversely impacted by lower interest rates at quarter-end which
contributed $14 million of increased expense between the fourth
quarter of 2011 and 2010. Although claims experience for both
malpractice and workers’ compensation expense continue to be
favorable, lower interest rates increased the balances of these
discounted liabilities. Supply costs were well-controlled,
declining by $3 million, and were flat on a per adjusted patient
day basis. Excluding the expenses from additional physician
employment, the favorable payroll tax adjustment in the 2010
quarter, and expenses related to lower interest rates, the 6.5
percent increase in selected expenses per adjusted patient day
would have been 4.4 percent.
Bad debt expense was $185 million, a decline of 2.6 percent, as
compared to $190 million in the fourth quarter of 2010. Bad debt
expense as a percent of revenues before provision for doubtful
accounts declined to 7.7 percent, a decline of 60 basis points
compared to 8.3 percent in the fourth quarter of 2010. The
improvement in bad debt expense primarily was due to favorable
adjustments related to updates to our estimates of collection rates
in the fourth quarter of 2011 compared to unfavorable adjustments
in the fourth quarter of 2010. The change in bad debt expense also
was impacted favorably by deterioration in the age of managed care
receivables in the fourth quarter of 2010 that did not occur in the
fourth quarter of 2011.
Cash and cash equivalents were $113 million at December 31,
2011, a decrease of $72 million from $185 million at September 30,
2011. Cash used in the fourth quarter of 2011 included $178 million
to repurchase 40.3 million shares of the Company’s common stock and
$28 million for the purchase of five outpatient centers and certain
assets related to acquired physician practices. Capital
expenditures were $177 million in the fourth quarter of 2011,
compared to $196 million in the fourth quarter of 2010. As of
December 31, 2011, the Company had an outstanding balance of $80
million on its credit line.
Through December 31, 2011, the Company repurchased an aggregate
total of 75.8 million shares of common stock since announcing its
$400 million share repurchase program in May, 2011. These 75.8
million repurchased shares represent 15.5 percent of outstanding
common shares at the time the program was initiated. The average
repurchase price was $4.94 per share for a total expenditure of
approximately $374 million. At December 31, 2011, there were 415
million shares of common stock outstanding. The full $400 million
common stock repurchase program was completed in January 2012. In
total, 81.1 million shares, or 17 percent of our outstanding
shares, were repurchased at an average price of $4.94.
Outlook for Adjusted EBITDA
Tenet raised its 2012 Outlook for Adjusted EBITDA to a new range
of $1.225 billion to $1.350 billion. Other than expected outpatient
acquisitions, the Company’s 2012 Outlook represents purely organic
growth.
Adjusted EBITDA in the first quarter of 2012 is expected to
comprise approximately one-fifth of the Company’s total Adjusted
EBITDA for the year. This reflects the expectation that the
approximately $140 million in state provider fees will be
recognized in the second half of the year. In addition, the
expected ramp up of Tenet’s strategic initiatives, including cost
efficiencies related to the Medicare Performance Initiative and
incremental outpatient acquisitions, are expected to make more
significant contributions to earnings in the second half of the
year.
Tenet reconfirmed its 2013 Outlook range for Adjusted EBITDA of
$1.335 billion to $1.535 billion. The 2015 Outlook range for
Adjusted EBITDA, which includes the increased coverage of the
uninsured pursuant to the Affordable Care Act, was reconfirmed at
$1.75 billion to $2.25 billion.
Tenet’s statements on outlook constitute forward-looking
information and are subject to the qualifications set forth at the
end of this release.
Management’s Webcast Discussion of Fourth Quarter
Results
Tenet management will discuss fourth quarter 2011 results on a
webcast scheduled for 10:00 AM (ET) on February 28, 2012. This
webcast may be accessed through Tenet’s website at
www.tenethealth.com/investors. A set
of slides that management intends to refer to on the call will be
posted to the Company’s website at shortly before the start of the
webcast.
Additional information regarding Tenet’s quarterly results of
operations, including detailed tabular operational data, is
contained in its Form 10-K report, which will be filed with the
Securities and Exchange Commission and posted on the Tenet investor
relations website before today’s webcast. This press release
includes certain non-GAAP measures, such as Adjusted EBITDA. A
reconciliation of Adjusted EBITDA to net income attributable to
Tenet common shareholders is included in the financial tables at
the end of this release.
Tenet Healthcare Corporation, a premier health care services
company, operates 50 hospitals, 99 free-standing outpatient centers
and Conifer Health Solutions, a leader in business process
solutions for health care providers that serves over 250 hospital
and health care entities nationwide. Tenet’s hospitals and related
health care facilities are committed to providing high quality care
to patients in the communities they serve. For more information,
please visit www.tenethealth.com.
This document 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,” “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 the factors disclosed under
“Forward Looking Statements” and “Risk Factors” in our Form 10-K
for the year ended December 31, 2011, our quarterly reports on Form
10-Q, periodic reports on Form 8-K and other filings with the
Securities and Exchange Commission. The information contained in
this earnings release and the attachments is as of February 28,
2012. The Company assumes no obligation to update forward-looking
statements contained in this earnings release or the attachments as
a result of new information or future events or developments.
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 OPERATIONS DATA
(Unaudited) (Dollars in millions except per share amounts)
Three Months Ended December 31, 2011
% 2010 % Change
Net operating revenues Revenues before provision for
doubtful accounts $ 2,411 $ 2,301 4.8 % Less provision for doubtful
accounts 185 190 (2.6
)%
Net operating revenues 2,226 100.0 %
2,111 100.0 % 5.4 % Operating
expenses: Salaries, wages and benefits 1,029 46.2 % 967 45.8 %
6.4 % Supplies 391 17.6 % 394 18.7 % (0.8
)%
Other operating expenses, net 517 23.2 % 469 22.2 % 10.2 %
Electronic Health Records Incentives (5 ) (0.2
)%
0 — % — % Depreciation and amortization 105 4.7 % 101 4.8 % 4.0 %
Impairment of long-lived assets and goodwill, and restructuring
charges, net 9 0.4 % 9 0.4 % Litigation and investigation costs
31 1.4 % 6 0.3 %
Operating
income 149 6.7 % 165 7.8
% Interest expense (100 ) (101 ) Loss from early
extinguishment of debt (117 )
(2 )
Income (loss) from continuing operations, before income
taxes (68 ) 62 Income tax benefit
(expense) 12 (2 )
Income (loss) from continuing
operations, before discontinued operations
(56 ) 60 Discontinued operations:
Income (loss) from operations (2 ) 15 Litigation and investigation
costs (17 ) — Income tax benefit 9 7
Income (loss) from discontinued operations (10
) 22 Net income (loss)
(66 ) 82 Less: Preferred stock dividends 6 6
Less: Net income attributable to noncontrolling interests 4
2
Net income (loss) attributable to Tenet
Healthcare Corporation common shareholders $ (76
) $ 74 Amounts attributable
to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations,
net of tax
$ (66 ) $ 52 Loss from discontinued operations, net of tax
(10 ) 22
Net income (loss) attributable to Tenet
Healthcare Corporation common shareholders $ (76
) $ 74 Earnings (loss) per
share attributable to Tenet Healthcare Corporation common
shareholders Basic Continuing operations $ (0.15 ) $
0.11 Discontinued operations (0.02 ) 0.04 $
(0.17 ) $ 0.15
Diluted Continuing operations $ (0.15
) $ 0.10 Discontinued operations (0.02 ) 0.04
$ (0.17 ) $ 0.14
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic 432,454 485,549 Diluted 432,454 561,921 TENET
HEALTHCARE CORPORATION CONSOLIDATED OPERATIONS DATA (Unaudited)
(Dollars in millions except per share amounts)
Year Ended December 31, 2011 %
2010 % Change Net
operating revenues
Revenues before provision for doubtful
accounts
$ 9,584 $ 9,205 4.1 % Less provision for doubtful accounts
730 738 (1.1 ) %
Net operating revenues
8,854 100.0 % 8,467 100.0
% 4.6
% Operating expenses: Salaries, wages
and benefits 4,082 46.1 % 3,900 46.1 % 4.7 % Supplies 1,582 17.9 %
1,577 18.6 % 0.3 % Other operating expenses, net 2,100 23.7 % 1,940
22.9 % 8.2 % Electronic Health Record Incentives (55 ) (0.6 ) % 0 —
% — % Depreciation and amortization 413 4.7 % 394 4.7 % 4.8 %
Impairment of long-lived assets and
goodwill, and restructuring charges, net
27 0.3 % 10 0.1 % Litigation and investigation costs 55
0.6 % 12 0.1 %
Operating income
650 7.3 % 634 7.5 %
Interest expense (375 ) (424 ) Loss from early extinguishment of
debt (117 ) (57 ) Investment earnings 3 5
Income from continuing operations,
before income taxes
161 158 Income tax benefit (expense) (61 )
977
Income from continuing operations,
before discontinued operations
100 1,135 Discontinued operations: Income
(loss) from operations (22 ) 11 Impairment of long-lived assets and
goodwill, and restructuring charges, net — (1 ) Litigation and
investigation costs (17 ) — Income tax benefit 33
7
Income (loss) from discontinued operations
(6 ) 17 Net income
94 1,152 Less: Preferred stock dividends 24 24 Less:
Net income attributable to noncontrolling interests 12
9
Net income attributable to Tenet
Healthcare Corporation common shareholders
$ 58 $ 1,119
Amounts attributable to Tenet Healthcare Corporation common
shareholders Income from continuing operations, net of tax $ 64
$ 1,102 Income (loss) from discontinued operations, net of tax
(6 ) 17
Net income attributable to Tenet
Healthcare Corporation common shareholders $ 58
$ 1,119
Earnings (loss) per share attributable
to Tenet Healthcare Corporation common shareholders
Basic Continuing operations $ 0.13 $ 2.28 Discontinued
operations (0.01 ) 0.03 $ 0.12 $ 2.31
Diluted Continuing operations $ 0.13 $ 2.01
Discontinued operations (0.01 ) 0.03 $ 0.12
$ 2.04
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic 468,726 484,321 Diluted 485,181 560,631 TENET
HEALTHCARE CORPORATION CONSOLIDATED BALANCE SHEET DATA (Unaudited)
December 31, December 31,
(Dollars in millions)
2011 2010 ASSETS
Current assets: Cash and cash equivalents $ 113 $ 405
Accounts receivable, less allowance for doubtful accounts 1,278
1,143 Inventories of supplies, at cost 161 156 Income tax
receivable 7 22 Current portion of deferred income taxes 418 282
Assets held for sale 2 14 Other current assets 378
289
Total current assets 2,357
2,311 Investments and other assets 156 164 Deferred income
taxes, net of current portion 374 627 Property and equipment, at
cost, less accumulated depreciation and amortization 4,350 4,304
Goodwill 736 652 Other intangible assets, at cost, less accumulated
amortization 489 442
Total
assets $ 8,462 $ 8,500
LIABILITIES AND EQUITY Current
liabilities: Current portion of long-term debt $ 66 $ 67
Accounts payable 760 720 Accrued compensation and benefits 376 363
Professional and general liability reserves 75 84 Accrued interest
payable 112 115 Accrued legal settlement costs 64 8 Other current
liabilities 362 368
Total current
liabilities 1,815 1,725 Long-term debt, net of
current portion 4,294 3,997 Professional and general liability
reserves 337 383 Accrued legal settlement costs 2 22 Other
long-term liabilities 506 554
Total
liabilities 6,954 6,681 Commitments and
contingencies
Redeemable noncontrolling interests in
equity of consolidated subsidiaries
16 —
Equity: Shareholders’ equity: Preferred stock
334 334 Common stock 27 27 Additional paid-in capital 4,407 4,449
Accumulated other comprehensive loss (52 ) (43 ) Accumulated
deficit (1,440 ) (1,522 ) Common stock in treasury, at cost
(1,853 ) (1,479 )
Total shareholders’ equity
1,423 1,766 Noncontrolling interests
69 53 Total equity
1,492 1,819 Total liabilities
and equity $ 8,462 $ 8,500
TENET HEALTHCARE CORPORATION
CONSOLIDATED CASH FLOW DATA (Unaudited) (Dollars in millions)
Year EndedDecember 31, 2011
2010 Net income $ 94 $
1,152 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
413 394 Provision for doubtful accounts 730 740 Deferred income tax
expense 81 (952 ) Stock-based compensation expense 24 22 Impairment
of long-lived assets and goodwill, and restructuring charges, net
27 10 Fair market value adjustments related to interest rate swap
and LIBOR cap agreements — 3 Amortization of debt discount and debt
issuance costs 30 31 Litigation and investigation costs 55 12 Loss
from early extinguishment of debt 117 57 Pre-tax loss from
discontinued operations 39 (10 ) Other items, net (15 ) (4 )
Changes in cash from operating assets and liabilities:
Accounts receivable (865 ) (744 ) Inventories and other current
assets (38 ) (17 ) Income taxes (63 ) 3 Accounts payable, accrued
expenses and other current liabilities (35 ) (84 ) Other long-term
liabilities (6 ) (58 )
Payments against reserves for
restructuring charges and litigation costs (44 )
(83 ) Net cash used in operating activities from
discontinued operations, excluding income taxes
(47 ) — Net cash provided by
operating activities 497 472 Cash flows from
investing activities: Purchases of property and
equipment—continuing operations (475 ) (450 ) Construction of new
and replacement hospitals — (13 ) Purchase of property and
equipment—discontinued operations — (13 ) Purchases of businesses
or joint venture interests (84 ) (65 ) Proceeds from sales of
facilities and other assets — discontinued operations — 19 Proceeds
from sales of marketable securities, long-term investments and
other assets 59 84 Release of escrow funds — 15 Other items, net
(3 ) 3
Net cash used in investing
activities (503 ) (420 ) Cash
flows from financing activities: Repayments of borrowings under
credit facility (365 ) — Proceeds from borrowings under credit
facility 445 — Repayments of borrowings (843 ) (886 ) Proceeds from
borrowings 900 601 Deferred debt issuance costs (21 ) (27 )
Repurchases of common stock (374 ) — Cash dividends on preferred
stock (24 ) (24 ) Distributions paid to noncontrolling interests
(11 ) (8 ) Other items, net 7 7
Net
cash used in financing activities (286 )
(337 ) Net decrease in cash and cash
equivalents (292 ) (285 ) Cash and cash equivalents at beginning of
period 405 690
Cash and cash
equivalents at end of period $ 113
$ 405 Supplemental disclosures: Interest paid,
net of capitalized interest $ (347 ) $ (402 ) Proceeds from
interest rate swap agreement $ 30 $ 0 Income tax (payments)
refunds, net $ (10 ) $ 34
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING HOSPITALS (Unaudited)
(Dollars in millions except per patient
day, per admission and per visit amounts)
Three Months Ended December 31, Year Ended
December 31, 2011 2010
Change 2011 2010 Change
Net inpatient revenues $ 1,536 $ 1,477 4.0 % $ 6,163 $ 5,929
3.9 % Net outpatient revenues $ 751 $ 730 2.9 % $ 2,984 $ 2,903 2.8
% Number of acute care hospitals (at end of period) (1) 50
50 — 50 50 — * Licensed beds (at end of period) 13,453 13,428 0.2 %
13,453 13,428 0.2 % Average licensed beds 13,453 13,429 0.2 %
13,449 13,430 0.1 % Utilization of licensed beds 48.5 % 49.3 % (0.8
) 50.0 % 50.4 % (0.4 ) * Patient days 599,859 608,890 (1.5 ) %
2,452,156 2,473,017 (0.8 ) % Adjusted patient days 917,798 923,219
(0.6 ) % 3,732,330 3,723,702 0.2 %
Net inpatient revenue per patient day
$ 2,561 $ 2,426 5.6 % $ 2,513 $ 2,397 4.8 % Admissions 127,321
126,977 0.3 % 515,693 512,972 0.5 % Adjusted patient admissions
196,594 194,098 1.3 % 791,919 778,505 1.7 %
Net inpatient revenue per admission
$ 12,064 $ 11,632 3.7 % $ 11,951 $ 11,558 3.4 % Average length of
stay (days) 4.7 4.8 (0.1 ) 4.8 4.8 — * Surgeries 92,691 89,859 3.2
% 367,638 360,206 2.1 % Net outpatient revenue per visit $ 749 $
730 2.6 % $ 739 $ 741 (0.3 ) % Outpatient visits 1,002,842 999,827
0.3 % 4,039,456 3,917,758 3.1 %
Sources of net patient
revenue Medicare 23.3 % 23.5 % (0.2 ) 23.2 % 23.9 % (0.7 ) *
Medicaid 8.8 % 8.6 % 0.2 9.0 % 8.7 % 0.3 * Managed care 57.8 % 56.9
% 0.9 57.0 % 56.5 % 0.6 * Indemnity, self-pay and other 10.1 % 11.0
% (0.9 ) 10.8 % 10.9 % (0.2 ) *
* This change is the difference between
the 2011 and 2010 amounts shown(1) Number of hospitals includes the
49 general hospitals and our critical access facility
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA Fiscal 2011 by Calendar Quarter
(Unaudited)
Year Ended (Dollars
in millions except per share amounts)
Three Months Ended
Ended 3/31/11 6/30/11 9/30/11
12/31/11 12/31/11 Net operating
revenues Revenues before provision for doubtful accounts $
2,481 $ 2,349 $ 2,343 $ 2,411 $ 9,584 Less provision for doubtful
accounts 182 170 193
185 730
Net operating revenues
2,299 2,179 2,150 2,226 8,854
Operating expenses: Salaries, wages and benefits 1,035 999
1,019 1,029 4,082 Supplies 404 399 388 391 1,582 Other operating
expenses, net 506 529 548 517 2,100 Electronic Health Record
Incentives (25 ) (25 )
— (5 ) (55 ) Depreciation and
amortization 101 104 103 105 413
Impairment of long-lived assets and
goodwill, and restructuring charges
8 2 8 9 27 Litigation and investigation costs 11
8 5 31 55
Operating income 259 163 79 149
650 Interest expense (118 ) (98 ) (59 ) (100 ) (375 ) Loss
from early extinguishment of debt
— — — (117 )
(117 ) Investment earnings 1 1 1
— 3
Income (loss) from
continuing operations, before income taxes 142 66
21 (68 ) 161 Income tax expense
(51 ) (18 ) (4 ) 12 (61 )
Income (loss) from continuing
operations, before discontinued operations
91 48 17 (56 ) 100
Discontinued operations: Loss from operations (15 ) (3 ) (2
) (2 ) (22 ) Litigation and investigation costs — — — (17 ) (17 )
Income tax benefit 6 18 —
9 33
Income (loss) from discontinued
operations (9 ) 15
(2 ) (10 )
(6 ) Net income (loss) 82 63
15 (66 ) 94 Less: Preferred stock
dividends 6 6 6 6 24 Less: Net income attributable to
noncontrolling interests 3 2 3
4 12
Net income (loss)
attributable to Tenet Healthcare Corporation common
shareholders $ 73 $ 55
$ 6 $ (76 )
$ 58
Amounts attributable to Tenet Healthcare Corporation common
shareholders Income (loss) from continuing operations, net of
tax $ 82 $ 40 $ 8 $ (66 ) $ 64 Income (loss) from discontinued
operations, net of tax (9 ) 15 (2 )
(10 ) (6 )
Net income (loss) attributable to Tenet
Healthcare Corporation common shareholders $ 73
$ 55 $ 6 $
(76 ) $ 58
Earnings (loss) per share attributable
to Tenet Healthcare Corporation common shareholders
Basic Continuing operations $ 0.17 $ 0.08 $ 0.02 $ (0.15 ) $
0.13 Discontinued operations (0.02 ) 0.03
— (0.02 ) (0.01 ) $ 0.15 $ 0.11
$ 0.02 $ (0.17 ) $ 0.12
Diluted
Continuing operations $ 0.16 $ 0.08 $ 0.02 $ (0.15 ) $ 0.13
Discontinued operations (0.02 ) 0.03 —
(0.02 ) (0.01 ) $ 0.14 $ 0.11 $
0.02 $ (0.17 ) $ 0.12
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic 486,902 486,794 468,753 432,454 468,726 Diluted 565,181
503,748 483,632 432,454 485,181
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA Fiscal 2010 by Calendar Quarter
(Unaudited)
Year (Dollars in
millions except per share amounts)
Three Months Ended
Ended 3/31/10 6/30/10 9/30/10
12/31/10
12/31/10
Net operating revenues Revenues before provision for
doubtful accounts $ 2,339 $ 2,303 $ 2,262 $ 2,301 $ 9,205 Less
provision for doubtful accounts 188 173
187 190 738
Net
operating revenues $ 2,151 $ 2,130
$ 2,075 $ 2,111 $ 8,467
Operating expenses: Salaries, wages and benefits 987 969 977
967 3,900 Supplies 398 395 390 394 1,577 Other operating expenses,
net 468 498 505 469 1,940 Depreciation and amortization 95 97 101
101 394
Impairment of long-lived assets and
goodwill, and restructuring charges
— (2 ) 3 9 10 Litigation and investigation costs 2
2 2 6 12
Operating income 201 171 97 165
634 Interest expense (109 ) (107 ) (107 ) (101 ) (424 ) Loss
from early extinguishment of debt — — (55 ) (2 ) (57 ) Investment
earnings 1 1 3 —
5
Income (loss) from continuing
operations, before income taxes
93 65 (62 ) 62 158 Income
tax (expense) benefit (3 ) (20 ) 1,002
(2 ) 977
Income from continuing operations,
before discontinued operations
90 45 940 60 1,135
Discontinued operations: Income (loss) from operations 5 (5
) (4 ) 15 11
Impairment of long-lived assets and
goodwill, and restructuring charges, net
1 (3 ) 1 — (1 ) Income tax (expense) benefit (1 ) (2
) 3 7 7
Income (loss)
from discontinued operations 5
(10 ) — 22
17 Net income 95 35
940 82 1,152 Less: Preferred stock dividends 6
6 6 6 24 Less: Net income attributable to noncontrolling interests
1 4 2 2
9
Net income attributable to Tenet Healthcare
Corporation common shareholders $ 88
$ 25 $ 932 $
74 $ 1,119
Amounts attributable to Tenet
Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 83 $ 35 $ 932 $ 52
$ 1,102 Income (loss) from discontinued operations, net of tax
5 (10 ) — 22
17
Net income attributable to Tenet Healthcare
Corporation common shareholders $ 88
$ 25 $ 932 $
74 $ 1,119
Earnings (loss) per share attributable
to Tenet Healthcare Corporation common shareholders
Basic Continuing operations $ 0.17 $ 0.07 $ 1.92 $ 0.11 $
2.28 Discontinued operations 0.01 (0.02 )
— 0.04 0.03 $ 0.18
$ 0.05 $ 1.92 $ 0.15 $ 2.31
Diluted Continuing operations $ 0.16 $ 0.07 $ 1.68 $ 0.10 $
2.01 Discontinued operations 0.01 (0.02 )
— 0.04 0.03 $ 0.17
$ 0.05 $ 1.68 $ 0.14 $ 2.04
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic 481,917 484,610 485,210 485,549 484,321 Diluted 559,228
502,549 559,850 561,921 560,631 TENET HEALTHCARE
CORPORATION SELECTED STATISTICS – CONTINUING HOSPITALS Fiscal 2011
by Calendar Quarter (Unaudited)
Year Ended
(Dollars in millions except per patient
day, per admission and per visit amounts)
Three Months Ended Ended 03/31/11
06/30/11 9/300/11 12/31/11 12/31/11
Net inpatient revenues $ 1,653 $ 1,497 $ 1,477 $ 1,536 $
6,163 Net outpatient revenues $ 733 $ 751 $ 749 $ 751 $ 2,984
Number of acute care hospitals (at end of
period) (1)
50 50 50 50 50 Licensed beds (at end of period) 13,457 13,420
13,453 13,453 13,453 Average licensed beds 13,457 13,445 13,440
13,453 13,449 Utilization of licensed beds 53.3 % 49.5 % 48.7 %
48.5 % 50.0 % Patient days 645,166 605,216 601,915 599,859
2,452,156 Adjusted patient days 963,039 926,328 925,165 917,798
3,732,330 Net inpatient revenue per patient day $ 2,562 $ 2,473 $
2,454 $ 2,561 $ 2,513 Admissions 133,349 127,503 127,520 127,321
515,693 Adjusted patient admissions 200,353 196,862 198,110 196,594
791,919 Net inpatient revenue per admission $ 12,396 $ 11,741 $
11,582 $ 12,064 $ 11,951 Average length of stay (days) 4.8 4.7 4.7
4.7 4.8 Surgeries 88,754 92,250 93,943 92,691 367,638 Net
outpatient revenue per visit $ 725 $ 739 $ 742 $ 749 $ 739
Outpatient visits 1,010,848 1,015,830 1,009,936 1,002,842 4,039,456
Sources of net patient revenue Medicare 23.2 % 23.6 %
22.7 % 23.3 % 23.2 % Medicaid 11.6 % 7.5 % 8.0 % 8.8 % 9.0 %
Managed care 54.4 % 58.0 % 58.0 % 57.8 % 57.0 % Indemnity, self-pay
and other 10.8 % 10.9 % 11.3 % 10.1 % 10.8 % (1) Number of
hospitals includes the 49 general hospitals and our critical access
facility
(1) Reconciliation of Adjusted EBITDA
Adjusted EBITDA, a non-GAAP term, is defined by the Company as
net income (loss) attributable to Tenet Healthcare Corporation
common shareholders before (1) cumulative effect of changes in
accounting principle, net of tax, (2) net income attributable to
noncontrolling interests, (3) preferred stock dividends, (4) income
(loss) from discontinued operations, net of tax, (5) income tax
(expense) benefit, (6) investment earnings (loss), (7) gain (loss)
from early extinguishment of debt, (8) net gain (loss) on sales of
investments, (9) interest expense, (10) litigation and
investigation (costs) benefit, net of insurance recoveries, (11)
hurricane insurance recoveries, net of costs, (12) impairment of
long-lived assets and goodwill and restructuring charges, net of
insurance recoveries, and (13) depreciation and amortization. The
Company’s Adjusted EBITDA may not be comparable to EBITDA reported
by other companies.
The Company provides this information as a supplement to GAAP
information to assist itself and investors in understanding the
impact of various items on its financial statements, some of which
are recurring or involve cash payments. The Company uses this
information in its analysis of the performance of its business
excluding items that it does not consider as relevant in the
performance of its hospitals in continuing operations. In addition,
from time to time we use this measure to define certain performance
targets under our compensation programs. Adjusted EBITDA is not a
measure of liquidity, but is a measure of operating performance
that management uses in its business as an alternative to net
income (loss) attributable to Tenet Healthcare Corporation common
shareholders. Because Adjusted EBITDA excludes many items that are
included in our financial statements, it does not provide a
complete measure of our operating performance. Accordingly,
investors are encouraged to use GAAP measures when evaluating the
Company’s financial performance.
The reconciliation of net income (loss) attributable to Tenet
Healthcare Corporation common shareholders, the most comparable
GAAP term, to Adjusted EBITDA, is set forth in the first table
below for the three and twelve months ended December 31, 2011 and
2010.
TENET HEALTHCARE CORPORATION Additional Supplemental
Non-GAAP Disclosures
Table #1 - Reconciliation of Adjusted
EBITDA to Net Income Attributable to Tenet Healthcare Corporation
Common Shareholders (Unaudited) (Dollars in millions)
Three Months EndedDecember 31, Year
EndedDecember 31, 2011 2010
2011 2010
Net income (loss) attributable to Tenet
Healthcare Corporation common shareholders
$ (76 ) $ 74 $ 58 $ 1,119 Less: Net income attributable to
noncontrolling interests (4 ) (2 ) (12 ) (9 ) Preferred stock
dividends (6 ) (6 ) (24 ) (24 ) Income (loss) from discontinued
operations, net of tax (10 ) 22 (6 )
17 Income (loss) from continuing operations (56 ) 60
100 1,135 Income tax benefit (expense) 12 (2 ) (61 ) 977 Investment
earnings — — 3 5 Loss from early extinguishment of debt (117 ) (2 )
(117 ) (57 ) Interest expense (100 ) (101 )
(375 ) (424 ) Operating income 149 165 650 634 Litigation
and investigation costs (31 ) (6 ) (55 ) (12 )
Impairment of long-lived assets and
goodwill, and restructuring charges, net
(9 ) (9 ) (27 ) (10 ) Depreciation and amortization (105 )
(101 ) (413 ) (394 )
Adjusted EBITDA
$ 294 $ 281 $
1,145 $ 1,050 Net
operating revenues $ 2,226 $
2,111 $ 8,854 $
8,467
Adjusted EBITDA as % of net operating
revenues (Adjusted EBITDA margin)
13.2 % 13.3 % 12.9 %
12.4 % Table #2 - Reconciliation of Outlook
Adjusted EBITDA to Outlook Net Income Attributable to Tenet
Healthcare Corporation Common Shareholders for Years Ending
December 31, 2012, 2013 and 2015 (Unaudited) (Dollars in
Millions)
2012 2013 2015
Low High Low High
Low High Net income attributable to common
shareholders $ 216 $ 302 $ 306 $ 451 $ 578 $ 911 Less:
Net income attributable to noncontrolling
interests
(15 ) (10 ) (15 ) (10 ) (15 ) (10 ) Preferred stock dividends (18 )
(18 ) 0 0 0 0
Loss from discontinued operations, net of
tax
(10 ) (5 ) (5 ) 0 (5 )
0 Income from continuing operations 259 335 326 461
598 921 Income tax expense (166 ) (215 ) (209
) (294 ) (382 ) (589 )
Income from continuing operations, before
income taxes
425 550 535 755 980 1,510 Interest expense (390 )
(370 ) (390 ) (340 ) (360 ) (280 )
Operating income 815 920 925 1,095 1,340 1,790 Depreciation and
amortization (410 ) (430 ) (410 ) (440
) (410 ) (460 )
Adjusted EBITDA $
1,225 $ 1,350 $
1,335 $ 1,535 $
1,750 $ 2,250 Table #3
- Reconciliation of Outlook Adjusted EBITDA to Outlook
Income From Continuing Operations for Years Ending December
31, 2012, 2013 and 2015 (Unaudited)
(Dollars in Millions except per share amounts)
2012 2013 2015 Low High
Low High Low High Adjusted EBITDA
(from Table #2) $ 1,225 $ 1,350
$ 1,335 $ 1,535 $ 1,750
$ 2,250 Depreciation and amortization (410 )
(430 ) (410 ) (440 ) (410 ) (460 ) Interest expense (390 )
(370 ) (390 ) (340 ) (360 ) (280
)
Income from continuing operations, before
income taxes
425 550 535 755 980 1,510 Income tax expense (a) (166 )
(215 ) (209 ) (294 ) (382 ) (589
)
Income from continuing operations (a)
259 335 326 461 598 921 Preferred stock dividends (18 ) (18 ) 0 0 0
0
Net income attributable to noncontrolling
interests
(15 ) (10 ) (15 ) (10 ) (15 )
(10 ) Income from continuing operations, net of tax (a) $
226 $ 307 $ 311 $ 451 $ 583 $
911
Weighted average shares outstanding (in
millions)
489 489 491 491 503 503 Diluted EPS - continuing operations (a)
$
0.46
$
0.63
$
0.63
$
0.92
$
1.16
$
1.81
(a) Uses tax rate of 39 percent
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