Tenet Reports Adjusted EBITDA of $646 Million for the Quarter Ended December 31, 2014

DALLAS--(BUSINESS WIRE)--

Tenet Healthcare Corporation THC reported Adjusted EBITDA of $646 million for the fourth quarter ended December 31, 2014, an increase of $202 million, or 45.5 percent, compared to $444 million in the fourth quarter of 2013.

"Another quarter of robust earnings growth across our entire business capped off Tenet's strongest year in a decade," said Trevor Fetter, president and chief executive officer. "Our strategies to capture incremental market share, combined with an improving economy and expanded health coverage, generated admissions growth that was among the highest in the industry. Conifer also achieved record growth and continues to gain recognition as a leading provider of revenue cycle management and value-based care services. We are well-positioned to continue driving strong performance in 2015."

Discussion of Results (Percentage changes in operating metrics compare Q4'14 to Q4'13 on a same-hospital basis unless otherwise noted.)

Tenet generated same-hospital growth in admissions and adjusted admissions of 4.0 percent and 4.5 percent, respectively, compared to the fourth quarter of 2013. In addition, the company achieved one of the strongest quarterly percentage increases in same-hospital commercial volumes in more than a decade. We achieved an increase in paying admissions of 6.1 percent, driven in part by growth in commercial admissions. Surgeries increased 7.5 percent and emergency department visits increased 7.2 percent. The company estimates that approximately 70 percent of its volume growth in the quarter is related to investments in service line development, quality improvements, and enhanced physician alignment. This is independent of growth attributable to expanded insurance coverage under the Affordable Care Act (ACA).

Tenet increased outpatient visits by 9.6 percent. Approximately 92 percent of this growth was organic. At the end of 2014, Tenet operated 210 outpatient facilities, an increase of 27 facilities over the prior year.

Payer mix improved in the quarter. In the five states that expanded Medicaid, uninsured plus charity admissions declined by 2,547 admissions, or 62.4 percent, and Medicaid admissions increased by 4,355 admissions, or 20.5 percent. Uninsured plus charity outpatient visits decreased by 23,336 visits, or 34.3 percent, and Medicaid outpatient visits grew by 67,252 visits, or 25.2 percent, in these same five states. Across the entire company, uninsured plus charity admissions decreased by 3,109 admissions, or 21.9 percent, and Medicaid admissions increased by 4,555 admissions, or 9.0 percent. There was a decline in charity and uninsured outpatient visits of 18,917 visits, or 10.3 percent, and an increase in Medicaid outpatient visits of 86,891 visits, or 17.9 percent.

Tenet's exchange volumes were 3,768 admissions and 32,133 outpatient visits in the fourth quarter. Compared to the third quarter of 2014, the company drove increases in exchange admissions and exchange outpatient visits of 11.0 percent and 7.4 percent, respectively.

Net operating revenues, after provision for doubtful accounts, grew by $583 million, or 15.0 percent, to $4.468 billion, compared to net operating revenues of $3.885 billion in the fourth quarter of 2013. Tenet drove revenue growth by increasing patient volumes, improving terms in commercial managed care contracts and growing the company's Conifer services businesses. In addition, the California Provider Fee program contributed $165 million to net operating revenues in the fourth quarter of 2014, an increase of $146 million compared to $19 million in the fourth quarter of 2013, due to the 2014 program being approved in the fourth quarter of 2014. Including only the impact of the California Provider Fee program related to the fourth quarter of 2014, or $38 million on a same-hospital basis, Tenet increased patient revenue net of bad debt expense per adjusted admission by 4.9 percent. The company grew commercial managed care revenue by 6.7 percent per admission and 0.9 percent per outpatient visit. Tenet continued to increase its investments in urgent care centers, which have lower acuity and generate lower revenues and costs per patient encounter. This contributed to a smaller percentage increase in commercial outpatient pricing.

Selected operating expenses for hospital operations, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased by 3.8 percent. The selected operating expense metric for hospital operations excludes the company's Conifer services business, health plans, and a provider network in Southern California. Excluding incremental expenses related to increased physician employment, selected operating expenses per adjusted admission increased by 2.6 percent.

Tenet recorded $32 million in electronic health records incentives in the fourth quarter of 2014, a $16 million decrease compared to $48 million in the fourth quarter of 2013. Electronic health record incentive payments are recorded based on the timing of when the company's hospitals achieve meaningful use criteria.

The company's bad debt expense ratio was 7.4 percent of revenues before bad debt, a decrease of 80 basis points compared to 8.2 percent in the fourth quarter of 2013. This improvement reflects the benefits of healthcare reform.

Conifer generated an increase in Adjusted EBITDA of $28 million, or 77.8 percent, to $64 million, compared to $36 million in the fourth quarter of 2013. Conifer's revenue increased by $63 million, or 23.9 percent, to $327 million in the fourth quarter of 2014, compared to revenues of $264 million in the fourth quarter of 2013.

Tenet generated after-tax income from continuing operations in the fourth quarter of 2014 of $104 million, or $1.03 per diluted share. This excludes $43 million, or $0.42 per share in after-tax impairments, restructuring charges, acquisition-related costs, and litigation and investigation costs. The company reported income from continuing operations in the fourth quarter of 2013 of $43 million, or $0.43 per diluted share, excluding the comparable items which totaled $60 million after-tax, or $0.60 per share.

Tenet drove net income attributable to common shareholders of $61 million after-tax, or $0.61 per share in the fourth quarter of 2014, compared to a net loss of $24 million after-tax, or $0.24 per share, in the fourth quarter of 2013.

Cash and cash equivalents were $193 million at December 31, 2014, compared to $200 million at September 30, 2014. Net revenues related to the California Provider Fee program, the Texas Medicaid disproportionate share funding, and the Texas uncompensated care 1115 Waiver programs of approximately $300 million had not been received by the company as of December 31, 2014. Tenet's outstanding borrowings on its credit line were $220 million as of December 31, 2014. Accounts receivable days increased by 0.2 days to 49.5 days at December 31, 2014, compared to 49.3 days at September 30, 2014.

Outlook for First Quarter and Full Year 2015 Adjusted EBITDA

The company confirmed its existing 2015 Outlook for Adjusted EBITDA to be in a range of $2.05 billion to $2.15 billion. The company expects 2015 earnings per share to be in a range of $1.32 to $2.40 per share. For the first quarter ending March 31, 2015, the company expects Adjusted EBITDA of $475 million to $525 million and earnings per share of $0.05 to $0.55 per share.

Management's Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company's fourth quarter 2014 results on a webcast scheduled for 9:00 a.m. (CST) / 10:00 a.m. (EST) on February 24, 2015. 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, 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 website before the 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 is a national, diversified healthcare services company with more than 109,000 employees united around a common mission: to help people live happier, healthier lives. The company operates 80 hospitals, 214 outpatient centers, six health plans and Conifer Health Solutions, a leading provider of healthcare business process services in the areas of revenue cycle management, value based care and patient communications. 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, 2014 and other filings with the Securities and Exchange Commission. The information contained in this release is as of the date hereof. The company assumes no obligation to update forward-looking statements contained in this release 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 STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts)			Three Months Ended December 31,
			2014				%			2013				%				Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts			$	4,824						$	4,233								14.0	%
Less: Provision for doubtful accounts				356							348								2.3	%
Net operating revenues				4,468			100.0	%			3,885				100.0	%			15.0	%
Operating expenses:
Salaries, wages and benefits				2,118			47.4	%			1,872				48.2	%			13.1	%
Supplies				688			15.4	%			626				16.1	%			9.9	%
Other operating expenses, net				1,048			23.5	%			991				25.5	%			5.8	%
Electronic health record incentives				(32	)		(0.7	)%			(48	)			(1.2	)%			(33.3	)%
Depreciation and amortization				240			5.4	%			191				4.9	%			25.7	%
Impairment and restructuring charges, and acquisition-related costs				63			1.4	%			58				1.5	%
Litigation and investigation costs				6			0.1	%			28				0.7	%
Operating income				337			7.5	%			167				4.3	%
Interest expense				(196	)						(182	)
Income (loss) from continuing operations, before income taxes				141							(15	)
Income tax benefit (expense)				(60	)						8
Income (loss) from continuing operations, before discontinued operations				81							(7	)
Discontinued operations:
Loss from operations				—							—
Income tax expense				—							(7	)
Net loss from discontinued operations				—							(7	)
Net income (loss)				81							(14	)
Less: Net income attributable to noncontrolling interests				20							10
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	61						$	(24	)
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax			$	61						$	(17	)
Loss from discontinued operations, net of tax				—							(7	)
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	61						$	(24	)
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations			$	0.62						$	(0.17	)
Discontinued operations				—							(0.07	)
			$	0.62						$	(0.24	)
Diluted
Continuing operations			$	0.61						$	(0.17	)
Discontinued operations				—							(0.07	)
			$	0.61						$	(0.24	)
Weighted average shares and dilutive securities outstanding (in thousands):
Basic				98,331							98,586
Diluted*				101,279							98,586
*Had we generated income from continuing operations in the three months ended December 31, 2013, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 2,472 shares.
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts)			Year Ended December 31,
			2014				%			2013				%				Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts			$	17,920						$	12,074								48.4	%
Less: Provision for doubtful accounts				1,305							972								34.3	%
Net operating revenues				16,615			100.0	%			11,102				100.0	%			49.7	%
Operating expenses:
Salaries, wages and benefits				8,023			48.3	%			5,371				48.4	%			49.4	%
Supplies				2,630			15.8	%			1,784				16.1	%			47.4	%
Other operating expenses, net				4,114			24.8	%			2,701				24.3	%			52.3	%
Electronic health record incentives				(104	)		(0.7	)%			(96	)			(0.9	)%			8.3	%
Depreciation and amortization				849			5.1	%			545				4.9	%			55.8	%
Impairment and restructuring charges, and acquisition-related costs				153			0.9	%			103				0.9	%
Litigation and investigation costs				25			0.2	%			31				0.3	%
Operating income				925			5.6	%			663				6.0	%
Interest expense				(754	)						(474	)
Loss from early extinguishment of debt				(24	)						(348	)
Investment earnings				—							1
Income (loss) from continuing operations, before income taxes				147							(158	)
Income tax benefit (expense)				(49	)						65
Net income (loss) from continuing operations, before discontinued operations				98							(93	)
Discontinued operations:
Loss from operations				(17	)						(5	)
Litigation and investigation costs				(18	)						(2	)
Income tax benefit (expense)				13							(4	)
Loss from discontinued operations				(22	)						(11	)
Net income (loss)				76							(104	)
Less: Net income attributable to noncontrolling interests				64							30
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	12						$	(134	)
Amounts attributable to Tenet Healthcare Corporation common shareholders
Net income (loss) from continuing operations, net of tax			$	34						$	(123	)
Loss from discontinued operations, net of tax				(22	)						(11	)
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	12						$	(134	)
Net income (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations			$	0.35						$	(1.21	)
Discontinued operations				(0.23	)						(0.11	)
			$	0.12						$	(1.32	)
Diluted
Continuing operations			$	0.34						$	(1.21	)
Discontinued operations				(0.22	)						(0.11	)
			$	0.12						$	(1.32	)
Weighted average shares and dilutive securities outstanding (in thousands):
Basic				97,801							101,648
Diluted*				100,287							101,648
*Had we generated income from continuing operations available to shareholders in the year ended December 31, 2013, the effect (in thousands) of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase in shares of 2,310 shares.
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
														December 31,				December 31,
(Dollars in millions)														2014				2013
ASSETS
Current assets:
Cash and cash equivalents														$	193			$	113
Accounts receivable, less allowance for doubtful accounts															2,404				1,890
Inventories of supplies, at cost															276				260
Income tax receivable															2				—
Current portion of deferred income taxes															747				692
Other current assets															1,095				737
Total current assets															4,717				3,692
Investments and other assets															384				357
Deferred income taxes, net of current portion															116				148
Property and equipment, at cost, less accumulated depreciation and amortization															7,733				7,582
Goodwill															3,913				3,566
Other intangible assets, at cost, less accumulated amortization															1,278				1,105
Total assets														$	18,141			$	16,450
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt														$	112			$	153
Accounts payable															1,179				1,085
Accrued compensation and benefits															852				622
Professional and general liability reserves															189				156
Accrued interest payable															194				198
Other current liabilities															1,051				879
Total current liabilities															3,577				3,093
Long-term debt, net of current portion															11,695				10,696
Professional and general liability reserves															492				555
Defined benefit plan obligations															633				398
Other long-term liabilities															558				490
Total liabilities															16,955				15,232
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries															401				340
Equity:
Shareholders' equity:
Common stock															7				7
Additional paid-in capital															4,614				4,572
Accumulated other comprehensive loss															(182	)			(24	)
Accumulated deficit															(1,410	)			(1,422	)
Common stock in treasury, at cost															(2,378	)			(2,378	)
Total shareholders' equity															651				755
Noncontrolling interests															134				123
Total equity															785				878
Total liabilities and equity														$	18,141			$	16,450

TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)				Year Ended December 31,
				2014					2013
Net income (loss)				$	76				$	(104	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization					849					545
Provision for doubtful accounts					1,305					972
Deferred income tax benefit					30					(67	)
Stock-based compensation expense					51					36
Impairment and restructuring charges, and acquisition-related costs					153					103
Litigation and investigation costs					25					31
Loss from early extinguishment of debt					24					348
Amortization of debt discount and debt issuance costs					28					19
Pre-tax income from discontinued operations					35					7
Other items, net					(40	)				(33	)
Changes in cash from operating assets and liabilities:
Accounts receivable					(1,896	)				(987	)
Inventories and other current assets					(314	)				(203	)
Income taxes					3					—
Accounts payable, accrued expenses and other current liabilities					505					38
Other long-term liabilities					44					13
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements					(168	)				(114	)
Net cash used in operating activities from discontinued operations, excluding income taxes					(23	)				(15	)
Net cash provided by operating activities					687					589
Cash flows from investing activities:
Purchases of property and equipment — continuing operations					(933	)				(691	)
Purchases of businesses or joint venture interests, net of cash acquired					(428	)				(1,515	)
Proceeds from sales of facilities and other assets — discontinued operations					6					16
Proceeds from sales of marketable securities, long-term investments and other assets					31					15
Other long-term assets					1					8
Other items, net					1					3
Net cash used in investing activities					(1,322	)				(2,164	)
Cash flows from financing activities:
Repayments of borrowings under credit facility					(2,430	)				(1,286	)
Proceeds from borrowings under credit facility					2,245					1,691
Repayments of other borrowings					(683	)				(5,133	)
Proceeds from other borrowings					1,608					6,507
Deferred debt issuance costs					(27	)				(154	)
Repurchases of common stock					—					(400	)
Distributions paid to noncontrolling interests					(45	)				(27	)
Contributions from noncontrolling interests					17					99
Proceeds from exercise of stock options					26					22
Other items, net					4					5
Net cash provided by financing activities					715					1,324
Net increase (decrease) in cash and cash equivalents					80					(251	)
Cash and cash equivalents at beginning of period					113					364
Cash and cash equivalents at end of period				$	193				$	113
Supplemental disclosures:
Interest paid, net of capitalized interest				$	(726	)			$	(426	)
Income tax payments, net				$	(8	)			$	(6	)

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS INCLUDING VANGUARD PROFORMA FOR FULL YEAR 2013
(Unaudited)
(Dollars in millions except per patient day, per admission and per visit amounts)			Three Months Ended December 31,												Year Ended December 31,
			2014				2013				Change				2014				2013				Change
Net inpatient revenues			$	2,669			$	2,372			12.5	%			$	9,927			$	9,651			2.9	%
Net outpatient revenues			$	1,495			$	1,357			10.2	%			$	5,712			$	5,343			6.9	%
Number of acute care hospitals (at end of period)				77				77			—		*			77				77			—		*
Licensed beds (at end of period)				20,407				20,293			0.6	%				20,407				20,293			0.6	%
Average licensed beds				20,398				20,294			0.5	%				20,328				20,295			0.2	%
Utilization of licensed beds				49.1	%			47.2	%		1.9	%	*			49.4	%			48.1	%		1.3	%	*
Patient days – total				921,926				880,737			4.7	%				3,665,814				3,562,658			2.9	%
Adjusted patient days				1,562,581				1,481,407			5.5	%				6,201,568				5,971,291			3.9	%
Net inpatient revenue per patient day			$	2,895			$	2,693			7.5	%			$	2,708			$	2,709			—	%
Total admissions				198,219				190,506			4.0	%				783,268				764,695			2.4	%
Adjusted patient admissions				340,125				325,377			4.5	%				1,340,444				1,295,720			3.5	%
Charity and uninsured admissions				11,104				14,189			(21.7	)%				45,308				55,548			(18.4	)%
Net inpatient revenue per admission			$	13,465			$	12,451			8.1	%			$	12,674			$	12,621			0.4	%
Average length of stay (days)				4.65				4.62			0.6	%				4.68				4.66			0.4	%
Total surgeries				181,336				168,730			7.5	%				694,272				640,960			8.3	%
Admissions through emergency department				124,600				116,592			6.9	%				490,006				472,515			3.7	%
Emergency department visits				711,351				663,114			7.3	%				2,775,281				2,664,278			4.2	%
Total emergency department admissions and visits				835,951				779,706			7.2	%				3,265,287				3,136,793			4.1	%
Outpatient visits				2,100,683				1,916,932			9.6	%				8,198,002				7,646,969			7.2	%
Charity and uninsured outpatient visits				164,746				183,586			(10.3	)%				664,082				761,027			(12.7	) %
Net outpatient revenue per visit			$	712			$	708			0.6	%			$	697			$	699			(0.3	) %
Net patient revenue per adjusted patient admission			$	12,243			$	11,461			6.8	%			$	11,667			$	11,572			0.8	%
Net patient revenue per adjusted patient day			$	2,665			$	2,517			5.9	%			$	2,522			$	2,511			0.4	%
Net Patient Revenues from:
Medicare				20.9	%			21.8	%		(0.9	)%	*			21.8	%			22.5	%		(0.7	)%	*
Medicaid				10.9	%			9.3	%		1.6	%	*			9.4	%			10.2	%		(0.8	)%	*
Managed care				58.1	%			57.7	%		0.4	%	*			58.6	%			56.0	%		2.6	%	*
Indemnity, self-pay and other				10.1	%			11.2	%		(1.1	)%	*			10.2	%			11.3	%		(1.1	)%	*
* This change is the difference between the 2014 and 2013 amounts shown

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS
(Unaudited)
(Dollars in millions except per patient day, per admission and per visit amounts)			Three Months Ended December 31,												Year Ended December 31,
			2014				2013				Change				2014					2013				Change
Net inpatient revenues			$	2,719			$	2,372			14.6	%			$	10,015				$	6,952			44.1	%
Net outpatient revenues			$	1,539			$	1,357			13.4	%			$	5,774				$	3,859			49.6	%
Number of acute care hospitals (at end of period)				80				77			3		*			80					77			3		*
Licensed beds (at end of period)				20,814				20,293			2.6	%				20,814					20,293			2.6	%
Average licensed beds				20,805				20,294			2.5	%				20,531					14,963			37.2	%
Utilization of licensed beds				49.0	%			47.2	%		1.8	%	*			49.3	%				48.0	%		1.3	%	*
Patient days – total				937,803				880,737			6.5	%				3,695,288					2,621,245			41.0	%
Adjusted patient days				1,592,166				1,481,291			7.5	%				6,255,572					4,243,334			47.4	%
Net inpatient revenue per patient day			$	2,899			$	2,693			7.6	%			$	2,710				$	2,652			2.2	%
Total admissions				202,337				190,506			6.2	%				791,165					558,726			41.6	%
Adjusted patient admissions				347,790				325,410			6.9	%				1,354,896					915,276			48.0	%
Charity and uninsured admissions				11,256				14,190			(20.7	)%				45,703					40,487			12.9	%
Net inpatient revenue per admission			$	13,438			$	12,451			7.9	%			$	12,659				$	12,443			1.7	%
Average length of stay (days)				4.63				4.62			0.2	%				4.67					4.69			(0.4	) %
Total surgeries				183,250				168,730			8.6	%				697,635					489,867			42.4	%
Admissions through emergency department				127,361				116,592			9.2	%				495,195					347,920			42.3	%
Emergency department visits				737,680				663,114			11.2	%				2,824,526					1,865,239			51.4	%
Total emergency department admissions and visits				865,041				779,706			10.9	%				3,319,721					2,213,159			50.0	%
Outpatient visits				2,145,138				1,916,932			11.9	%				8,283,878					5,115,854			61.9	%
Charity and uninsured outpatient visits				168,284				183,587			(8.3	)%				673,320					522,781			28.8	%
Net outpatient revenue per visit			$	717			$	708			1.3	%			$	697				$	754			(7.6	)%
Net patient revenue per adjusted patient admission			$	12,243			$	11,459			6.8	%			$	11,653				$	11,812			(1.3	)%
Net patient revenue per adjusted patient day			$	2,674			$	2,517			6.2	%			$	2,524				$	2,548			(0.9	)%
Net Patient Revenues from:
Medicare				20.9	%			21.8	%		(0.9	)%	*			21.9	%				21.8	%		0.1	%	*
Medicaid				11.1	%			9.3	%		1.8	%	*			9.4	%				9.0	%		0.4	%	*
Managed care				57.9	%			57.7	%		0.2	%	*			58.6	%				58.1	%		0.5	%	*
Indemnity, self-pay and other				10.1	%			11.2	%		(1.1	)%	*			10.1	%				11.1	%		(1.0	)%	*
* This change is the difference between the 2014 and 2013 amounts shown

TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts)			Three Months Ended																				Year Ended 12/31/14
			03/31/14					06/30/14					09/30/14					12/31/14
Net operating revenues:
Net operating revenues before provision for doubtful accounts			$	4,306				$	4,362				$	4,428				$	4,824				$	17,920
Less: Provision for doubtful accounts				380					320					249					356					1,305
Net operating revenues				3,926					4,042					4,179					4,468					16,615
Operating expenses:
Salaries, wages and benefits				1,921					1,956					2,028					2,118					8,023
Supplies				628					649					665					688					2,630
Other operating expenses, net				999					1,035					1,032					1,048					4,114
Electronic health record incentives				(9	)				(58	)				(5	)				(32	)				(104	)
Depreciation and amortization				193					209					207					240					849
Impairment and restructuring charges, and acquisition-related costs				21					32					37					63					153
Litigation and investigation costs				3					12					4					6					25
Operating income				170					207					211					337					925
Interest expense				(182	)				(190	)				(186	)				(196	)				(754	)
Loss from early extinguishment of debt				—					—					(24	)				—					(24	)
Income (loss) from continuing operations, before income taxes				(12	)				17					1					141					147
Income tax benefit (expense)				1					(8	)				18					(60	)				(49	)
Income (loss) from continuing operations, before discontinued operations				(11	)				9					19					81					98
Discontinued operations:
Loss from operations				(8	)				(7	)				(2	)				—					(17	)
Litigation and investigation costs				—					(18	)				—					—					(18	)
Income tax benefit				3					9					1					—					13
Net loss from discontinued operations				(5	)				(16	)				(1	)				—					(22	)
Net income (loss)				(16	)				(7	)				18					81					76
Less: Net income attributable to noncontrolling interests				16					19					9					20					64
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	(32	)			$	(26	)			$	9				$	61				$	12
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax			$	(27	)			$	(10	)			$	10				$	61				$	34
Loss from discontinued operations, net of tax				(5	)				(16	)				(1	)				—					(22	)
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	(32	)			$	(26	)			$	9				$	61				$	12
Net income (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations			$	(0.28	)			$	(0.11	)			$	0.10				$	0.61				$	0.35
Discontinued operations				(0.05	)				(0.16	)				(0.01	)				—					(0.23	)
			$	(0.33	)			$	(0.27	)			$	0.09				$	0.61				$	0.12
Diluted
Continuing operations			$	(0.28	)			$	(0.11	)			$	0.10				$	0.61				$	0.34
Discontinued operations				(0.05	)				(0.16	)				(0.01	)				—					(0.22	)
			$	(0.33	)			$	(0.27	)			$	0.09				$	0.61				$	0.12
Weighted average shares and dilutive securities outstanding (in thousands):
Basic				97,161					97,677					98,036					98,331					97,801
Diluted				97,161					97,677					100,926					101,279					100,287

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS INCLUDING VANGUARD
(Unaudited)
(Dollars in millions except per patient days, per admission and per visit amounts)			Three Months Ended																				Year Ended
			03/31/14					06/30/14					09/30/14					12/31/14					12/31/14
Net inpatient revenues			$	2,440				$	2,400				$	2,418				$	2,669				$	9,927
Net outpatient revenues			$	1,346				$	1,436				$	1,435				$	1,495				$	5,712
Number of acute care hospitals (at end of period)				77					77					77					77					77
Licensed beds (at end of period)				20,255					20,355					20,355					20,407					20,407
Average licensed beds				20,255					20,304					20,355					20,398					20,328
Utilization of licensed beds				51.0	%				49.0	%				48.5	%				49.1	%				49.4	%
Patient days – total				929,164					905,839					908,885					921,926					3,665,814
Adjusted patient days				1,535,545					1,551,263					1,552,179					1,562,581					6,201,568
Net inpatient revenue per patient day			$	2,626				$	2,649				$	2,660				$	2,895				$	2,708
Total admissions				194,273					194,167					196,609					198,219					783,268
Adjusted patient admissions				324,475					335,991					339,853					340,125					1,340,444
Charity and uninsured admissions				12,530					10,900					10,774					11,104					45,308
Net inpatient revenue per admission			$	12,560				$	12,360				$	12,299				$	13,465				$	12,674
Average length of stay (days)				4.78					4.67					4.62					4.65					4.68
Total surgeries				162,282					173,463					177,191					181,336					694,272
Admissions through emergency department				122,601					121,872					120,933					124,600					490,006
Emergency department visits				665,002					699,423					699,505					711,351					2,775,281
Total emergency department admissions and visits				787,603					821,295					820,438					835,951					3,265,287
Outpatient visits				1,947,687					2,063,026					2,086,606					2,100,683					8,198,002
Charity and uninsured outpatient visits				165,248					168,967					165,121					164,746					664,082
Net outpatient revenue per visit			$	691				$	696				$	688				$	712				$	697
Net patient revenue per adjusted patient admission			$	11,668				$	11,417				$	11,337				$	12,243				$	11,667
Net patient revenue per adjusted patient day			$	2,466				$	2,473				$	2,482				$	2,665				$	2,522
Net Patient Revenues from:
Medicare				22.6	%				22.5	%				21.3	%				20.9	%				21.8	%
Medicaid				7.7	%				9.9	%				8.8	%				10.9	%				9.4	%
Managed care				57.8	%				58.0	%				60.8	%				58.1	%				58.6	%
Indemnity, self-pay and other				11.9	%				9.6	%				9.1	%				10.1	%				10.2	%

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS INCLUDING VANGUARD PROFORMA FOR FULL YEAR 2013
(Unaudited)
(Dollars in millions except per patient days, per admission and per visit amounts)			Three Months Ended																				Year Ended
			03/31/13					06/30/13					09/30/13					12/31/13					12/31/13
Net inpatient revenues			$	2,404				$	2,436				$	2,439				$	2,372				$	9,651
Net outpatient revenues			$	1,295				$	1,346				$	1,345				$	1,357				$	5,343
Number of acute care hospitals (at end of period)				77					77					77					77					77
Licensed beds (at end of period)				20,295					20,295					20,295					20,293					20,293
Average licensed beds				20,295					20,295					20,295					20,294					14,963
Utilization of licensed beds				51.0	%				47.3	%				47.0	%				47.2	%				48.0	%
Patient days – total				931,291					873,643					876,987					880,737					3,562,658
Adjusted patient days				1,525,151					1,479,667					1,485,066					1,481,407					5,971,291
Net inpatient revenue per patient day			$	2,581				$	2,788				$	2,781				$	2,693				$	2,709
Total admissions				196,102					188,789					189,298					190,506					764,695
Adjusted patient admissions				323,496					323,000					323,847					325,377					1,295,720
Charity and uninsured admissions				13,217					13,931					14,211					14,189					55,548
Net inpatient revenue per admission			$	12,259				$	12,903				$	12,884				$	12,451				$	12,621
Average length of stay (days)				4.75					4.63					4.63					4.62					4.66
Total surgeries				150,716					160,192					161,322					168,730					640,960
Admissions through emergency department				123,063					117,194					115,666					116,592					472,515
Emergency department visits				669,774					666,261					665,129					663,114					2,664,278
Total emergency department admissions and visits				792,837					783,455					780,795					779,706					3,136,793
Outpatient visits				1,880,002					1,926,196					1,923,839					1,916,932					7,646,969
Charity and uninsured outpatient visits				188,112					193,974					195,354					183,586					761,027
Net outpatient revenue per visit			$	689				$	699				$	699				$	708				$	699
Net patient revenue per adjusted patient admission			$	11,434				$	11,709				$	11,685				$	11,461				$	11,572
Net patient revenue per adjusted patient day			$	2,425				$	2,556				$	2,548				$	2,517				$	2,511
Net Patient Revenues from:
Medicare				24.0	%				22.1	%				22.0	%				21.8	%				22.5	%
Medicaid				9.3	%				11.7	%				10.7	%				9.3	%				10.2	%
Managed care				55.9	%				55.0	%				55.5	%				57.7	%				56.0	%
Indemnity, self-pay and other				10.8	%				11.2	%				11.8	%				11.2	%				11.3	%

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS
(Unaudited)
(Dollars in millions except per patient days, per admission and per visit amounts)			Three Months Ended																					Year Ended
			03/31/14					06/30/14					09/30/14						12/30/14					12/31/14
Net inpatient revenues			$	2,440				$	2,393				$	2,463					$	2,719				$	10,015
Net outpatient revenues			$	1,346				$	1,448				$	1,441					$	1,539				$	5,774
Number of acute care hospitals (at end of period)				77					79					80						80					80
Licensed beds (at end of period)				20,279					20,553					20,762						20,814					20,814
Average licensed beds				20,263					20,370					20,692						20,805					20,531
Utilization of licensed beds				51.0	%				48.9	%				48.4		%				49.0	%				49.3	%
Patient days – total				929,164					907,093					921,228						937,803					3,695,288
Adjusted patient days				1,535,545					1,553,515					1,574,346						1,592,166					6,255,572
Net inpatient revenue per patient day			$	2,626				$	2,638				$	2,674					$	2,899				$	2,710
Total admissions				194,273					194,641					199,914						202,337					791,165
Adjusted patient admissions				324,475					336,844					345,787						347,790					1,354,896
Charity and uninsured admissions				12,530					10,927					10,990						11,256					45,703
Net inpatient revenue per admission			$	12,560				$	12,294				$	12,320					$	13,438				$	12,659
Average length of stay (days)				4.78					4.66					4.61						4.63					4.67
Total surgeries				162,282					173,664					178,439						183,250					697,635
Admissions through emergency department				122,601					122,086					123,147						127,361					495,195
Emergency department visits				665,002					702,009					719,835						737,680					2,824,526
Total emergency department admissions and visits				787,603					824,095					842,982						865,041					3,319,721
Outpatient visits				1,947,687					2,066,051					2,125,002						2,145,138					8,283,878
Charity and uninsured outpatient visits				165,248					169,766					170,022						168,284					673,320
Net outpatient revenue per visit			$	691				$	701				$	678					$	717				$	697
Net patient revenue per adjusted patient admission			$	11,692				$	11,380				$	11,290					$	12,243				$	11,653
Net patient revenue per adjusted patient day			$	2,482				$	2,456				$	2,480					$	2,674				$	2,524
Net Patient Revenues from:
Medicare				22.6	%				22.5	%				21.5		%				20.9	%				21.9	%
Medicaid				7.7	%				9.9	%				8.7		%				11.1	%				9.4	%
Managed care				57.8	%				58.0	%				60.7		%				57.9	%				58.6	%
Indemnity, self-pay and other				11.9	%				9.6	%				9.1		%				10.1	%				10.1	%

TENET HEALTHCARE CORPORATION SEGMENT REPORTING (Unaudited)
											December 31,				December 31,
											2014				2013
Assets
Hospital Operations and other											$	17,212			$	15,865
Conifer												929				585
Total											$	18,141			$	16,450
			Three Months Ended December 31,								Year Ended December 31,
			2014				2013				2014				2013
Capital expenditures:
Hospital Operations and other			$	191			$ 283				$	908			$	670
Conifer				8			10					25				21
Total			$	199			$ 293				$	933			$	691
Net operating revenues:
Hospital Operations and other			$	4,306			$ 3,747				$	16,013			$	10,587
Conifer
Tenet				165			126					591				404
Other customers				162			138					602				515
				4,633			4,011					17,206				11,506
Intercompany eliminations				(165	)		(126	)				(591	)			(404	)
Total			$	4,468			$ 3,885				$	16,615			$	11,102
Adjusted EBITDA:
Hospital Operations and other			$	582			$ 408				$	1,749			$	1,210
Conifer				64			36					203				132
Total			$	646			$ 444				$	1,952			$	1,342
Depreciation and amortization:
Hospital Operations and other			$	230			$ 187				$	824			$	526
Conifer				10			4					25				19
Total			$	240			$ 191				$	849			$	545
Adjusted EBITDA			$	646			$ 444				$	1,952			$	1,342
Depreciation and amortization				(240	)		(191	)				(849	)			(545	)
Impairments and restructuring charges, and acquisition-related costs				(63	)		(58	)				(153	)			(103	)
Litigation and investigation costs				(6	)		(28	)				(25	)			(31	)
Interest expense				(196	)		(182	)				(754	)			(474	)
Loss from early extinguishment of debt				—			—					(24	)			(348	)
Investment earnings				—			—					—				1
Income (loss) from continuing operations before income taxes			$	141			$ (15	)			$	147			$	(158	)

(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) the cumulative effect of changes in accounting principle, net of tax; (2) net loss (income) attributable to noncontrolling interests; (3) preferred stock dividends; (4) income (loss) from discontinued operations, net of tax; (5) income tax benefit (expense); (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 benefit (costs), net of insurance recoveries; (11) hurricane insurance recoveries, net of costs; (12) impairment and restructuring charges and acquisition-related costs; 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, 2014 and 2013.

For certain pro financial information of the Company as if the Vanguard acquisition had occurred at January 1, 2013, see Note 19 of the notes to the consolidated financial statements in the Company's Form 10-K for the year ended December 31, 2014.

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #1 - Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders
(Unaudited)
(Dollars in millions)			Three Months Ended December 31,									Year Ended December 31,
			2014				2013					2014				2013
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders			$	61			$	(24	)			$	12			$	(134	)
Less: Net (income) attributable to noncontrolling interests				(20	)			(10	)				(64	)			(30	)
Loss from discontinued operations, net of tax				—				(7	)				(22	)			(11	)
Income (loss) from continuing operations				81				(7	)				98				(93	)
Income tax benefit (expense)				(60	)			8					(49	)			65
Investment earnings				—				—					—				1
Loss from early extinguishment of debt				—				—					(24	)			(348	)
Interest expense				(196	)			(182	)				(754	)			(474	)
Operating income				337				167					925				663
Litigation and investigation costs				(6	)			(28	)				(25	)			(31	)
Impairment and restructuring charges, and acquisition-related costs				(63	)			(58	)				(153	)			(103	)
Depreciation and amortization				(240	)			(191	)				(849	)			(545	)
Adjusted EBITDA			$	646			$	444				$	1,952			$	1,342
Net operating revenues			$	4,468			$	3,885				$	16,615			$	11,102
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)				14.5	%			11.4	%				11.7	%			12.1	%
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP Disclosures Table #2 - Reconciliation of Adjusted Free Cash Flow
(Unaudited)
(Dollars in millions)			Three Months Ended December 31,									Year Ended December 31,
			2014				2013					2014				2013
Net cash provided by operating activities			$	219			$	255				$	687			$	589
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements				(53	)			(78	)				(168	)			(114	)
Net cash provided by (used in) operating activities from discontinued operations				(7	)			(10	)				(23	)			(15	)
Adjusted net cash provided by operating activities – continuing operations				279				343					878				718
Purchases of property and equipment – continuing operations				(199	)			(293	)				(933	)			(691	)
Adjusted free cash flow – continuing operations			$	80			$	50				$	(55	)		$	(27	)

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #3 - Reconciliation of Outlook Adjusted EBITDA to Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders for the Year Ending December 31, 2015
(Unaudited)
(Dollars in millions)			Q1 2015									2015
			Low				High					Low				High
Net income attributable to Tenet Healthcare Corporation common shareholders			$	3			$	55				$	130			$	245
Less: Net (income) attributable to noncontrolling interests				(30	)			(25	)				(120	)			(100	)
Loss from discontinued operations, net of tax				(2	)			0					(5	)			0
Income from continuing operations			$	35			$	80				$	255			$	345
Income tax (expense)				(10	)			(45	)				(95	)			(175	)
Income from continuing operations, before income taxes			$	45			$	125				$	350			$	520
Interest expense, net				(200	)			(190	)				(800	)			(770	)
Operating income			$	245			$	315				$	1,150			$	1,290
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements(a)				0				0					0				0
Depreciation and amortization				(230	)			(210	)				(900	)			(860	)
Adjusted EBITDA			$	475			$	525				$	2,050			$	2,150
Net operating revenues			$	4,300			$	4,500				$	17,400			$	17,700
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)				11.0	%			11.7	%				11.8	%			12.1	%
(a) Company does not forecast impairment and restructuring charges, acquisition-related and litigation costs and settlements

TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP Disclosures Table #4 - Reconciliation of Outlook Adjusted EBITDA to Outlook Normalized Income from Continuing Operations for the Year Ending December 31, 2015
(Unaudited)
(Dollars in millions)			Q1 2015									2015
			Low				High					Low				High
Adjusted EBITDA			$	475			$	525				$	2,050			$	2,150
Depreciation and amortization				(230	)			(210	)				(900	)			(860	)
Interest expense, net				(200	)			(190	)				(800	)			(770	)
Income from continuing operations before income taxes			$	45			$	125				$	350			$	520
Income tax (expense)				(10	)			(45	)				(95	)			(175	)
Normalized income from continuing operations			$	35			$	80				$	255			$	345
Net (income) attributable to noncontrolling interests				(30	)			(25	)				(120	)			(100	)
Net income attributable to common shareholders				5				55					135				245
Fully diluted weighted average share outstanding (in millions)				100				100					102				102
Normalized fully diluted earnings per share – continuing operations			$	0.05			$	0.55				$	1.32			$	2.40

TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP Disclosures Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow for the Year Ending December 31, 2015
(Unaudited)
(Dollars in millions)			2015
			Low				High
Net cash provided by operating activities			$	1,130			$	1,240
Less:
Payments for restructuring charges, acquisition-related costs and litigation costs and settlements((a))				0				0
Net cash used in operating activities from discontinued operations				(20	)			(10	)
Adjusted net cash provided by operating activities – continuing operations			$	1,150			$	1,250
Purchases of property and equipment – continuing operations				(1,000	)			(900	)
Adjusted free cash flow – continuing operations			$	150			$	350
(a) Company does not forecast impairment and restructuring charges, acquisition-related and litigation costs and settlements