Market Overview

Tenet Reports Results for the Second Quarter Ended June 30, 2018

Share:
  • Tenet reported net income from continuing operations available to
    Tenet common shareholders of $24 million or $0.23 per diluted share in
    the second quarter of 2018 compared to a net loss of $56 million or
    $0.56 per diluted share in the second quarter of 2017. After adjusting
    for certain items, which totaled $27 million or $0.26 per share in the
    second quarter of 2018, Tenet reported Adjusted diluted earnings per
    share from continuing operations of $0.49 in the second quarter of
    2018 compared to an Adjusted diluted loss per share of $0.17 in the
    second quarter of 2017.
  • Adjusted EBITDA was $634 million in the second quarter of 2018
    compared to $570 million in the second quarter of 2017. Adjusted
    EBITDA in the second quarter of 2018 consisted of $345 million in the
    Hospital segment, $198 million in the Ambulatory segment and $91
    million in the Conifer segment.
  • Net cash provided by operating activities was $461 million in the
    first half of 2018, an increase of $60 million when compared to $401
    million in the first half of 2017. Free Cash Flow was $193 million, an
    increase of $140 million when compared to $53 million in the first
    half of 2017. Adjusted Free Cash Flow was $259 million, a $142 million
    increase when compared to $117 million in the first half of 2017.
  • Hospital segment same-hospital net patient revenue grew 3.2 percent.
    Admissions decreased 2.3 percent, adjusted admissions decreased 0.2
    percent, and revenue per adjusted admission increased 3.5 percent.
  • Ambulatory Care segment same-facility system-wide revenue grew 6.9
    percent, with cases up 4.3 percent and revenue per case up 2.4
    percent. Surgical revenue grew 6.6 percent, with cases up 3.4 percent
    and revenue per surgical case up 3.1 percent.
  • Conifer segment revenues decreased 3.5 percent primarily due to
    divestitures by Tenet and other customers.
  • 2018 Outlook includes an increase in net income from continuing
    operations available to Tenet common shareholders to $115 million to
    $186 million, Adjusted EBITDA is unchanged at $2.550 billion to $2.650
    billion, an increase in diluted earnings per share from continuing
    operations to $1.11 to $1.79 and an increase in Adjusted diluted
    earnings per share from continuing operations to $1.54 to $1.88.

Tenet Healthcare Corporation (NYSE:THC) reported net income from
continuing operations available to Tenet common shareholders of $24
million in the second quarter of 2018 compared to a $56 million net loss
from continuing operations in the second quarter of 2017. Adjusted
EBITDA was $634 million in the second quarter of 2018 compared to $570
million in the second quarter of 2017.

"We are becoming a more agile and decisive organization and are pleased
with our strong financial results for the third quarter in a row," said
Ronald A. Rittenmeyer, Executive Chairman and CEO. "We have demonstrated
our ability to appropriately minimize costs, which will be an ongoing
fundamental part of how we do business. Our top priorities remain
strengthening our portfolio, delivering more consistent organic growth
and taking additional steps to enhance our margins and free cash flow."

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were
$3.733 billion, down 8.6 percent from the second quarter of 2017,
primarily due to hospital divestitures and the wind-down of our health
plan business.

On a same-hospital basis, net patient revenues after implicit price
concessions were $3.432 billion, up 3.2 percent from the second quarter
of 2017. Adjusted admissions were down 0.2 percent in the second quarter
of 2018 and would have been up approximately 1.1 percent on a
same-hospital basis excluding service line closures and declines in
Detroit and Chicago. The Company's decision to discontinue certain
services at selected hospitals lowered same-hospital adjusted admissions
by approximately 40 basis points in the second quarter of 2018. In
addition, volume declines in Chicago (which the Company is divesting)
and Detroit lowered same-hospital adjusted admissions by approximately
90 basis points. Revenue per adjusted admission increased 3.5 percent on
a same-hospital basis. Same-hospital revenue included $63 million from
the California Provider Fee Program in the second quarter of 2018
compared to no revenue in the second quarter of 2017 since the 2017
program was not approved until December 2017; excluding timing
differences related to the California Provider Fee, same-hospital
revenue per adjusted admission increased 1.6 percent.

Adjusted EBITDA in Tenet's hospital segment was $345 million, a decrease
of $1 million or 0.3 percent as compared to $346 million in the second
quarter of 2017. Key items impacting the year-over-year comparison in
Adjusted EBITDA include: (i) a $63 million increase in California
Provider Fee revenue, (ii) a $41 million decline in EBITDA due to
divestitures; (iii) a $23 million gain in the second quarter of 2017,
primarily from the sale of the Company's home health and hospice assets,
which was recorded as a reduction to the Company's other operating
expenses, and (iv) a $6 million decline in electronic health record
incentives. After normalizing for these items, Adjusted EBITDA in the
hospital segment increased by $6 million, or approximately 2 percent.

Tenet's health plan business recognized no revenue and $1 million of
Adjusted EBITDA in the second quarter of 2018 versus $25 million of
revenue and negative $19 million of Adjusted EBITDA in the second
quarter of 2017. The revenue and expenses associated with the Company's
health plan operations are included in Tenet's consolidated statements
of operations; however, the results are excluded from Adjusted EBITDA in
both periods.

Selected operating expenses in the hospital segment, defined as the sum
of salaries, wages and benefits, supplies and other operating expenses,
increased 2.2 percent on a per adjusted admission basis in the second
quarter of 2018 or just 1.5 percent after normalizing for the
aforementioned $23 million gain in the 2017 period.

Exchanges

Tenet's same-hospital exchange outpatient visits increased 0.6 percent
to 51,845 in the second quarter of 2018. Same-hospital exchange
admissions were 4,725 in the second quarter of 2018, down 5.6 percent
from the second quarter of 2017.

Ambulatory Care Segment

During the second quarter of 2018, the Ambulatory segment produced net
operating revenues of $531 million, representing an increase of 12.5
percent as compared to $472 million in the second quarter of 2017. In
addition, the Ambulatory segment generated Adjusted EBITDA of $198
million, up 20.7 percent from $164 million in the second quarter of 2017
and Adjusted EBITDA less facility-level noncontrolling interest was $128
million, up 20.8 percent from $106 million in the second quarter of 2017.

The results of many of the facilities in which the Ambulatory segment
has an investment are not consolidated by Tenet. To help analyze the
segment's results of operations, management uses system-wide measures,
which include revenues and cases of both consolidated and unconsolidated
facilities. On a same-facility system-wide basis, revenue in the
Ambulatory segment increased 6.9 percent, with cases increasing 4.3
percent and revenue per case increasing 2.4 percent. In the surgical
business, which represents the majority of the revenue in the Ambulatory
segment, same-facility system-wide revenue grew 6.6 percent, with cases
up 3.4 percent and revenue per case up 3.1 percent, reflecting growth in
higher-acuity surgical procedures. In the non-surgical business,
same-facility system-wide revenue grew 13.6 percent, with visits up 5.8
percent and revenue per visit up 7.4 percent.

Conifer Segment

During the second quarter of 2018, as a result of divestiture activity
at Tenet and other customers, Conifer's revenue decreased 3.5 percent to
$386 million, down from $400 million in the second quarter of 2017.
Revenue from third party customers was down 1.2 percent to $242 million.
Conifer's revenue in the second quarter of 2018 included $7 million of
contract termination fees from two health systems that acquired
hospitals from Tenet and another Conifer customer and subsequently
decided to insource revenue cycle management.

Conifer generated $91 million of Adjusted EBITDA in the second quarter
of 2018, up 51.7 percent from $60 million in the second quarter of 2017.
After normalizing for the aforementioned $7 million of contract
termination fee revenue and $3 million of incentive revenue from
customers in the second quarter of 2018, Adjusted EBITDA grew by 35
percent, primarily driven by improvements in Conifer's cost structure.

Net Income and Earnings Per Share

Tenet reported net income from continuing operations available to Tenet
common shareholders of $24 million, or $0.23 per diluted share, in the
second quarter of 2018 compared to a net loss of $56 million, or $0.56
per diluted share, in the second quarter of 2017.

As shown on Table #2 at the end of this release, net income from
continuing operations available to Tenet common shareholders of $24
million included: (i) $30 million of pre-tax impairment and
restructuring charges, including $9 million of employee severance, $4
million of impairment charges to write-down assets held for sale in the
United Kingdom to their estimated fair value, $4 million of contract and
lease termination fees, and $13 million of other items; (ii) $13 million
of pre-tax litigation and investigation costs; (iii) $8 million of
pre-tax net gains on sales, consolidation and deconsolidation of
facilities, primarily related to a $12 million pre-tax gain on the sale
of Des Peres Hospital offset by $4 million of other items, and, (iv)
other offsetting items. These items collectively lowered pre-tax income
by $35 million, after-tax income by $27 million and diluted earnings per
share by $0.26.

After adjusting for the items listed above and on Table #2, Tenet
produced Adjusted net income from continuing operations available to
Tenet common shareholders of $51 million, or $0.49 per diluted share,
during the second quarter of 2018, as compared to an Adjusted net loss
from continuing operations attributable to Tenet common shareholders of
$17 million, or $0.17 per diluted share, in the second quarter of 2017.

A reconciliation of GAAP net income available (loss attributable) to
Tenet common shareholders to Adjusted net income available (loss
attributable) from continuing operations and Adjusted diluted earnings
(loss) per share from continuing operations is contained in Table #2 at
the end of this release.

Cash Flow and Liquidity

Cash and cash equivalents were $403 million at June 30, 2018 compared to
$974 million at March 31, 2017. The Company had no outstanding
borrowings on its $1 billion credit line as of June 30, 2018. Accounts
receivable days outstanding from continuing operations were 55.1 at June
30, 2018 compared to 54.3 at March 31, 2018 and 55.8 at December 31,
2017.

Net cash provided by operating activities was $461 in the first half of
2018, representing a $60 million increase compared to $401 million in
the first half of 2017. After subtracting $268 million and $348 million
of capital expenditures in the first half of 2018 and 2017,
respectively, Free Cash Flow was $193 million in the first half of 2018,
an increase of $140 million compared to $53 million in the first half of
2017. Adjusted Free Cash Flow was $259 million in the first half of
2018, representing a $142 million increase from $117 million in the
first half of 2017.

Net cash provided by investing activities was $225 million in the first
half of 2018 compared to $308 million of net cash used in investing
activities in the first half of 2017. The 2018 period included $624
million of proceeds from the sales of facilities, long-term investments
and other assets, primarily from the sale of the Company's two hospitals
in the Philadelphia area, MacNeal Hospital, Des Peres Hospital, and the
Company's minority interests in four Dallas-area hospitals. The 2018
period also included $126 million of purchases of businesses, joint
ventures and equity investments, primarily related to USPI's acquisition
program.

Net cash used in financing activities was $894 million in the first half
of 2018 compared to $334 million of net cash used in financing
activities in the first half of 2017. The 2018 period included $642
million in purchases of noncontrolling interests, including
approximately $630 million in the second quarter of 2018 to increase
Tenet's ownership in USPI to 95 percent, and $78 million of debt
retirement through open market purchases.

Reconciliations of net cash provided by operating activities to both
Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at
the end of this release.

Outlook

The Company's Outlook for 2018 includes:

  • Revenue of $17.9 billion to $18.3 billion,
  • Net income from continuing operations available to Tenet common
    shareholders of $115 million to $186 million,
  • Adjusted EBITDA of $2.550 billion to $2.650 billion,
  • Net cash provided by operating activities of $1.220 billion to $1.525
    billion,
  • Adjusted Free Cash Flow of $725 million to $925 million,
  • Diluted earnings per share from continuing operations of $1.11 to
    $1.79, and
  • Adjusted diluted earnings per share from continuing operations of
    $1.54 to $1.88.

The Outlook for 2018 assumes equity in earnings of unconsolidated
affiliates of $160 million to $170 million, net income available to
noncontrolling interests of $390 million to $410 million and an average
diluted share count of 104 million.

The Company's Outlook for the third quarter of 2018 includes:

  • Revenue of $4.300 billion to $4.500 billion,
  • Net income available (loss attributable) from continuing operations to
    Tenet common shareholders ranging from a loss of $10 million to income
    of $5 million,
  • Adjusted EBITDA of $575 million to $625 million,
  • Diluted earnings per share from continuing operations ranging from a
    loss of $0.10 to earnings of $0.05, and
  • Adjusted diluted earnings per share from continuing operations ranging
    from $0.10 to $0.24.

The Outlook for the third quarter assumes equity in earnings of
unconsolidated affiliates of $40 million to $45 million, net income
available to noncontrolling interests of $90 million to $100 million,
and an average diluted share count of 104 million.

Additional details on Tenet's Outlook for both the third quarter and
calendar year 2018 are available in Tables #4, #5 and #6 at the end of
this press release and in an accompanying slide presentation that is
accessible through the Company's website at www.tenethealth.com/investors.

Management's Webcast Discussion of Second Quarter Results

Tenet management will discuss the Company's second quarter 2018 results
on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central
Time) on August 7, 2018. Investors can access the webcast through the
Company's website at www.tenethealth.com/investors.
A set of slides, which will be referred to on the conference call, is
available on the Quarterly Results section of the Company's website.

Additional information regarding Tenet's quarterly results of operations
is contained in its Form 10-Q report for the period ended June 30, 2018,
which will be filed with the Securities and Exchange Commission and
posted on the Company's website.

This press release includes certain non-GAAP measures, such as Adjusted
EBITDA, Adjusted net income available (loss attributable) from
continuing operations to Tenet common shareholders, Adjusted diluted
earnings (loss) per share from continuing operations, Free Cash Flow and
Adjusted Free Cash Flow. Reconciliations of these measures to the most
comparable GAAP measures are contained in the tables at the end of this
release.

Tenet Healthcare Corporation is a diversified healthcare services
company with approximately 115,000 employees united around a common
mission: to help people live happier, healthier lives. Through its
subsidiaries, partnerships and joint ventures, including United Surgical
Partners International, the Company operates general acute care and
specialty hospitals, ambulatory surgery centers, urgent care centers and
other outpatient facilities in the United States and 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," "estimate," "intend,"
"plan," "project" "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, 2017, and subsequent Form 10-Q
filings and other filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to
investors about the Company including the posting of important
announcements regarding financial performance and corporate developments.

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts)   Three Months Ended June 30,
2018   %   2017   %   Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,173
Less: Provision for doubtful accounts   371  
Net operating revenues $ 4,506 100.0 % 4,802 100.0 % (6.2 )%
Equity in earnings of unconsolidated affiliates 39 0.9 % 28 0.6 % 39.3 %
Operating expenses:
Salaries, wages and benefits 2,135 47.4 % 2,346 48.9 % (9.0 )%
Supplies 748 16.6 % 780 16.2 % (4.1 )%
Other operating expenses, net 1,027 22.8 % 1,159 24.1 % (11.4 )%
Electronic health record incentives % (6 ) (0.1 )% (100.0 )%
Depreciation and amortization 194 4.3 % 222 4.6 %
Impairment and restructuring charges, and acquisition-related costs 30 0.7 % 41 0.9 %
Litigation and investigation costs 13 0.3 % 1 0.0 %
Net gains on sales, consolidation and deconsolidation of facilities   (8 ) (0.2 )%   (23 ) (0.5 )%
Operating income 406 9.0 % 310 6.5 %
Interest expense (254 ) (260 )
Other non-operating expense, net (1 ) (5 )
Loss from early extinguishment of debt   (1 )   (26 )
Income from continuing operations, before income taxes 150 19
Income tax benefit (expense)   (44 )   12  
Income from continuing operations, before discontinued operations 106 31
Discontinued operations:
Income from operations 2 2
Income tax benefit (expense)       (1 )
Income from discontinued operations   2     1  
Net income 108 32
Less: Net income available to noncontrolling interests   82     87  
Net income available (loss attributable) to Tenet Healthcare
Corporation common shareholders
$ 26   $ (55 )
Amounts available (attributable) to Tenet Healthcare Corporation
common shareholders
Income (loss) from continuing operations, net of tax $ 24 $ (56 )
Income from discontinued operations, net of tax   2     1  
Net income available (loss attributable) to Tenet Healthcare
Corporation common shareholders
$ 26   $ (55 )
Earnings (loss) per share available (attributable) to Tenet
Healthcare Corporation common shareholders:
Basic
Continuing operations $ 0.23 $ (0.56 )
Discontinued operations   0.02     0.01  
$ 0.25   $ (0.55 )
Diluted
Continuing operations $ 0.23 $ (0.56 )
Discontinued operations   0.02     0.01  
$ 0.25   $ (0.55 )
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 102,147 100,612
Diluted* 104,177 100,612
 

*Had we generated income from continuing operations in the three months
ended June 30, 2017 the effect of employee stock options, restricted
stock units and deferred compensation units on the diluted shares
calculation would have been an increase of 682 thousand shares.

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts)   Six Months Ended June 30,
2018   %   2017   %   Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 10,369
Less: Provision for doubtful accounts   754  
Net operating revenues $ 9,205 100.0 % 9,615 100.0 % (4.3 )%
Equity in earnings of unconsolidated affiliates 64 0.7 % 57 0.6 % 12.3 %
Operating expenses:
Salaries, wages and benefits 4,362 47.5 % 4,726 49.2 % (7.7 )%
Supplies 1,522 16.5 % 1,545 16.1 % (1.5 )%
Other operating expenses, net 2,087 22.7 % 2,346 24.4 % (11.0 )%
Electronic health record incentives (1 ) % (7 ) (0.1 )% (85.7 )%
Depreciation and amortization 398 4.3 % 443 4.6 %
Impairment and restructuring charges, and acquisition-related costs 77 0.8 % 74 0.8 %
Litigation and investigation costs 19 0.2 % 6 0.1 %
Net gains on sales, consolidation and deconsolidation of facilities   (118 ) (1.3 )%   (38 ) (0.4 )%
Operating income 923 10.0 % 577 6.0 %
Interest expense (509 ) (518 )
Other non-operating expense, net (2 ) (10 )
Loss from early extinguishment of debt   (2 )   (26 )
Income from continuing operations, before income taxes 410 23
Income tax benefit (expense)   (114 )   45  
Income from continuing operations, before discontinued operations 296 68
Discontinued operations:
Income (loss) from operations 3
Income tax benefit (expense)        
Income (loss) from discontinued operations   3      
Net income 299 68
Less: Net income available to noncontrolling interests   174     176  
Net income available (loss attributable) to Tenet Healthcare
Corporation common shareholders
$ 125   $ (108 )
Amounts available (attributable) to Tenet Healthcare Corporation
common shareholders
Income (loss) from continuing operations, net of tax $ 122 $ (108 )
Income (loss) from discontinued operations, net of tax   3      
Net income available (loss attributable) to Tenet Healthcare
Corporation common shareholders
$ 125   $ (108 )
Earnings (loss) per share available (attributable) to Tenet
Healthcare Corporation common shareholders:
Basic
Continuing operations $ 1.20 $ (1.08 )
Discontinued operations   0.03      
$ 1.23   $ (1.08 )
Diluted
Continuing operations $ 1.18 $ (1.08 )
Discontinued operations   0.03      
$ 1.21   $ (1.08 )
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 101,770 100,306
Diluted* 103,416 100,306
 

*Had we generated income from continuing operations in the six months
ended June 30, 2017 the effect of employee stock options, restricted
stock units and deferred compensation units on the diluted shares
calculation would have been an increase of 766 thousand shares.

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
  June 30,   December 31,
(Dollars in millions) 2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 403 $ 611
Accounts receivable, less allowance for doubtful accounts 2,483 2,616
Inventories of supplies, at cost 298 289
Income tax receivable 28 5
Assets held for sale 452 1,017
Other current assets   1,041     1,035  
Total current assets 4,705 5,573
Investments and other assets 1,416 1,543
Deferred income taxes 348 455
Property and equipment, at cost, less accumulated depreciation and
amortization
6,863 7,030
Goodwill 7,218 7,018
Other intangible assets, at cost, less accumulated amortization   1,793     1,766  
Total assets $ 22,343   $ 23,385  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 663 $ 146
Accounts payable 1,047 1,175
Accrued compensation and benefits 711 848
Professional and general liability reserves 230 200
Accrued interest payable 243 256
Liabilities held for sale 393 480
Other current liabilities   1,067     1,227  
Total current liabilities 4,354 4,332
Long-term debt, net of current portion 14,204 14,791
Professional and general liability reserves 630 654
Defined benefit plan obligations 515 536
Deferred income taxes 36 36
Other long-term liabilities   599     631  
Total liabilities 20,338 20,980
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated
subsidiaries
1,429 1,866
Equity:
Shareholders' equity:
Common stock 7 7
Additional paid-in capital 4,722 4,859
Accumulated other comprehensive loss (243 ) (204 )
Accumulated deficit (2,222 ) (2,390 )
Common stock in treasury, at cost   (2,418 )   (2,419 )
Total shareholders' equity (deficit) (154 ) (147 )
Noncontrolling interests   730     686  
Total equity   576     539  
Total liabilities and equity $ 22,343   $ 23,385  
 
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 
  Six Months Ended
(Dollars in millions) June 30,
2018   2017
Net income $ 299 $ 68
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 398 443
Provision for doubtful accounts 754
Deferred income tax expense (benefit) 108 (81 )
Stock-based compensation expense 20 29
Impairment and restructuring charges, and acquisition-related costs 77 74
Litigation and investigation costs 19 6
Net gains on sales, consolidation and deconsolidation of facilities (118 ) (38 )
Loss from early extinguishment of debt 2 26
Equity in earnings of unconsolidated affiliates, net of
distributions received
10 4
Amortization of debt discount and debt issuance costs 22 22
Pre-tax income from discontinued operations (3 )
Other items, net (1 ) (25 )
Changes in cash from operating assets and liabilities:
Accounts receivable (13 ) (673 )
Inventories and other current assets 144 160
Income taxes (18 ) (7 )
Accounts payable, accrued expenses and other current liabilities (371 ) (345 )
Other long-term liabilities (48 ) 48
Payments for restructuring charges, acquisition-related costs,
and litigation costs and settlements
(63 ) (62 )
Net cash used in operating activities from discontinued
operations, excluding income taxes
  (3 )   (2 )
Net cash provided by operating activities 461 401
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (268 ) (348 )
Purchases of businesses or joint venture interests, net of cash
acquired
(89 ) (26 )
Proceeds from sales of facilities and other assets 481 74
Proceeds from sales of marketable securities, long-term investments
and other assets
143 16
Purchases of equity investments (37 ) (2 )
Other long-term assets 3 (12 )
Other items, net   (8 )   (10 )
Net cash provided by (used in) investing activities 225 (308 )
Cash flows from financing activities:
Repayments of borrowings under credit facility (360 ) (100 )
Proceeds from borrowings under credit facility 360 100
Repayments of other borrowings (161 ) (1,029 )
Proceeds from other borrowings 14 837
Debt issuance costs (29 )
Distributions paid to noncontrolling interests (140 ) (123 )
Proceeds from sale of noncontrolling interests 7 14
Purchases of noncontrolling interests (642 ) (5 )
Proceeds from exercise of stock options and employee stock purchase
plan
14 3
Other items, net   14     (2 )
Net cash used in financing activities   (894 )   (334 )
Net decrease in cash and cash equivalents (208 ) (241 )
Cash and cash equivalents at beginning of period   611     716  
Cash and cash equivalents at end of period $ 403   $ 475  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (501 ) $ (468 )
Income tax refunds (payments), net $ (21 ) $ (44 )
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day   Three Months Ended June 30,   Six Months Ended June 30,
and per adjusted patient admission amounts) 2018   2017   Change 2018   2017   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 76 (8 ) * 68 76

(8

)

*

Total admissions 168,453 190,394 (11.5 )% 350,759 387,301 (9.4 )%
Adjusted patient admissions 306,063 342,439 (10.6 )% 626,931 689,589 (9.1 )%
Paying admissions (excludes charity and uninsured) 158,216 179,889 (12.0 )% 330,706 366,537 (9.8 )%
Charity and uninsured admissions 10,237 10,505 (2.6 )% 20,053 20,764 (3.4 )%
Admissions through emergency department 115,036 121,807 (5.6 )% 240,112 248,280 (3.3 )%
Paying admissions as a percentage of total admissions 93.9 % 94.5 % (0.6 )% * 94.3 % 94.6 %

(0.3

)%

*

Charity and uninsured admissions as a percentage of total admissions 6.1 % 5.5 % 0.6 % * 5.7 % 5.4 %

0.3

%

*

Emergency department admissions as a percentage of total admissions 68.3 % 64.0 % 4.3 % * 68.5 % 64.1 %

4.4

%

*

Surgeries — inpatient 46,274 52,083 (11.2 )% 93,497 103,883 (10.0 )%
Surgeries — outpatient 63,805 71,366 (10.6 )% 126,813 140,970 (10.0 )%
Total surgeries 110,079 123,449 (10.8 )% 220,310 244,853 (10.0 )%
Patient days — total 766,519 874,930 (12.4 )% 1,625,167 1,798,269 (9.6 )%
Adjusted patient days 1,373,480 1,552,302 (11.5 )% 2,859,619 3,156,000 (9.4 )%
Average length of stay (days) 4.55 4.60 (1.1 )% 4.63 4.64 (0.2 )%
Licensed beds (at end of period) 18,314 20,435 (10.4 )% 18,314 20,435 (10.4 )%
Average licensed beds 18,362 20,435 (10.1 )% 18,523 20,437 (9.4 )%
Utilization of licensed beds 45.9 % 47.0 % (1.1 )% * 48.5 % 48.6 %

(0.1

)%

*

Outpatient Visits
Total visits 1,749,847 1,981,848 (11.7 )% 3,592,386 4,021,790 (10.7 )%
Paying visits (excludes charity and uninsured) 1,633,372 1,849,697 (11.7 )% 3,359,348 3,757,909 (10.6 )%
Charity and uninsured visits 116,475 132,151 (11.9 )% 233,038 263,881 (11.7 )%
Emergency department visits 643,036 724,785 (11.3 )% 1,340,037 1,457,836 (8.1 )%
Paying visits as a percentage of total visits 93.3 % 93.3 % % * 93.5 % 93.4 %

0.1

%

*

Charity and uninsured visits as a percentage of total visits 6.7 % 6.7 % % * 6.5 % 6.6 %

(0.1

)%

*

Total emergency department admissions and visits 758,072 846,592 (10.5 )% 1,580,149 1,706,116 (7.4 )%
Revenues
Net patient revenues(3) $ 3,443 $ 3,719 (7.4 )% $ 7,086 $ 7,447 (4.8 )%
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day

Net patient revenue(3) per adjusted patient admission

 

$ 11,249 $ 10,860 3.6 % $ 11,303 $ 10,799 4.7 %
Net patient revenue(3) per adjusted patient day $ 2,507 $ 2,396 4.6 % $ 2,478 $ 2,360 5.0 %
Total selected operating expenses (salaries, wages and benefits,
supplies and other operating expenses) per adjusted patient admission(2)
$ 10,619 $ 10,394 2.2 % $ 10,590 $ 10,342 2.4 %
Net Patient Revenues(3) from:
Medicare 20.4 % 22.0 % (1.6 )% * 20.9 % 22.6 %

(1.7

)%

*

Medicaid 9.1 % 7.5 % 1.6 % * 9.0 % 7.4 %

1.6

%

*

Managed care 66.0 % 65.9 % 0.1 % * 65.5 % 65.6 %

(0.1

)%

*

Self-pay 0.2 % 0.5 % (0.3 )% * 0.6 % 0.4 %

0.2

%

*

Indemnity and other 4.3 % 4.1 % 0.2 % * 4.0 % 4.0 %

%

*

 

(1) Represents the consolidated results of Tenet's acute care hospitals
and related outpatient facilities included in the Hospital Operations
and other segment.

(2) Excludes operating expenses from Tenet's health plans.

(3) Less implicit price concessions and provision for doubtful accounts.

* This change is the difference between the 2018 and 2017 amounts shown.

 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day   Three Months Ended June 30,   Six Months Ended June 30,
and per adjusted patient admission amounts) 2018   2017   Change 2018   2017   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 *
Total admissions 168,135 172,048 (2.3 )% 346,324 349,672 (1.0 )%
Adjusted patient admissions 305,541 306,278 (0.2 )% 617,838 616,415 0.2 %
Paying admissions (excludes charity and uninsured) 157,904 162,630 (2.9 )% 326,458 331,153 (1.4 )%
Charity and uninsured admissions 10,231 9,418 8.6 % 19,866 18,519 7.3 %
Admissions through emergency department 114,945 110,486 4.0 % 237,867 225,253 5.6 %
Paying admissions as a percentage of total admissions 93.9 % 94.5 % (0.6 )% 94.3 % 94.7 % (0.4 )% *
Charity and uninsured admissions as a percentage of total admissions 6.1 % 5.5 % 0.6 % 5.7 % 5.3 % 0.4 % *
Emergency department admissions as a percentage of total admissions 68.4 % 64.2 % 4.2 % 68.7 % 64.4 % 4.3 % *
Surgeries — inpatient 46,057 47,288 (2.6 )% 91,997 94,188 (2.3 )%
Surgeries — outpatient 63,615 63,642 % 124,664 125,754 (0.9 )%
Total surgeries 109,672 110,930 (1.1 )% 216,661 219,942 (1.5 )%
Patient days — total 765,659 792,160 (3.3 )% 1,606,445 1,625,921 (1.2 )%
Adjusted patient days 1,372,048 1,390,154 (1.3 )% 2,820,404 2,824,012 (0.1 )%
Average length of stay (days) 4.55 4.60 (1.1 )% 4.64 4.65 (0.2 )%
Licensed beds (at end of period) 17,946 17,980 (0.2 )% 17,946 17,980 (0.2 )%
Average licensed beds 17,946 17,980 (0.2 )% 17,946 17,972 (0.1 )%
Utilization of licensed beds 46.9 % 48.4 % (1.5 )% 49.5 % 50.0 % (0.5 )% *
Outpatient Visits
Total visits 1,748,312 1,766,625 (1.0 )% 3,542,213 3,577,426 (1.0 )%
Paying visits (excludes charity and uninsured) 1,631,963 1,652,532 (1.2 )% 3,312,212 3,351,449 (1.2 )%
Charity and uninsured visits 116,349 114,093 2.0 % 230,001 225,977 1.8 %
Emergency department visits 642,623 645,803 (0.5 )% 1,325,226 1,296,580 2.2 %
Paying visits as a percentage of total visits 93.3 % 93.5 % (0.2 )% 93.5 % 93.7 % (0.2 )% *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.5 % 0.2 % 6.5 % 6.3 % 0.2 % *
Total emergency department admissions and visits 757,568 756,289 0.2 % 1,563,093 1,521,833 2.7 %
Revenues
Net patient revenues(2) $ 3,432 $ 3,325 3.2 % $ 7,002 $ 6,668 5.0 %
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day
Net patient revenue(2) per adjusted patient

admission

$ 11,233 $ 10,856 3.5 % $ 11,333 $ 10,817 4.8 %
Net patient revenue(2) per adjusted patient day $ 2,501 $ 2,392 4.6 % $ 2,483 $ 2,361 5.2 %
Net Patient Revenues(2) from:
Medicare 20.4 % 22.3 % (1.9 )% 20.8 % 22.9 % (2.1 )% *
Medicaid 9.1 % 7.1 % 2.0 % 9.0 % 7.1 % 1.9 % *
Managed care 66.1 % 65.8 % 0.3 % 65.5 % 65.4 % 0.1 % *
Self-pay 0.1 % 0.6 % (0.5 )% 0.7 % 0.5 % 0.2 % *
Indemnity and other 4.3 % 4.2 % 0.1 % 4.0 % 4.1 % (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 68 hospitals operated throughout the six months ended June 30, 2018
and 2017 and associated outpatient facilities, but excludes the results
of hospitals Tenet divested since January 1, 2017.

(2) Less implicit price concessions and provision for doubtful accounts.

* This change is the difference between the 2018 and 2017 amounts shown.

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts)   Three Months Ended   Six Months Ended
3/31/2018   6/30/2018 6/30/2018
Net operating revenues $ 4,699 $ 4,506 $ 9,205
Equity in earnings of unconsolidated affiliates 25 39 64
Operating expenses:
Salaries, wages and benefits 2,227 2,135 4,362
Supplies 774 748 1,522
Other operating expenses, net 1,060 1,027 2,087
Electronic health record incentives (1 ) (1 )
Depreciation and amortization 204 194 398
Impairment and restructuring charges, and acquisition-related costs 47 30 77
Litigation and investigation costs 6 13 19
Net gains on sales, consolidation and deconsolidation of facilities   (110 )   (8 )   (118 )
Operating income 517 406 923
Interest expense (255 ) (254 ) (509 )
Other non-operating expense, net (1 ) (1 ) (2 )
Loss from early extinguishment of debt   (1 )   (1 )   (2 )
Income from continuing operations, before income taxes 260 150 410
Income tax expense   (70 )   (44 )   (114 )
Income from continuing operations, before discontinued operations 190 106 296
Discontinued operations:
Income from operations 1 2 3
Income tax benefit (expense)            
Income from discontinued operations   1     2     3  
Net income 191 108 299
Less: Net income available to noncontrolling interests   92     82     174  
Net income available to Tenet Healthcare Corporation common

shareholders

$ 99   $ 26   $ 125  
Amounts available to Tenet Healthcare Corporation common

shareholders

Income from continuing operations, net of tax $ 98 $ 24 $ 122
Income from discontinued operations, net of tax   1     2     3  
Net income available to Tenet Healthcare Corporation common

shareholders

$ 99   $ 26   $ 125  
Earnings per share available to Tenet Healthcare Corporation

common shareholders:

Basic
Continuing operations $ 0.97 $ 0.23 $ 1.20
Discontinued operations   0.01     0.02     0.03  
$ 0.98   $ 0.25   $ 1.23  
Diluted
Continuing operations $ 0.95 $ 0.23 1.18
Discontinued operations   0.01     0.02   $ 0.03  
$ 0.96   $ 0.25   $ 1.21  
Weighted average shares and dilutive securities

outstanding (in thousands):

Basic 101,392 102,147 101,770
Diluted 102,656 104,177 103,416
 
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts)   Three Months Ended   Year Ended
3/31/2017   6/30/2017   9/30/2017   12/31/2017 12/31/2017
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,196 $ 5,173 $ 4,941 $ 5,303 $ 20,613
Less: Provision for doubtful accounts   383     371     355       325     1,434  
Net operating revenues 4,813 4,802 4,586 4,978 19,179
Equity in earnings of unconsolidated affiliates 29 28 38 49 144
Operating expenses:
Salaries, wages and benefits 2,380 2,346 2,264 2,284 9,274
Supplies 765 780 740 800 3,085
Other operating expenses, net 1,187 1,159 1,120 1,104 4,570
Electronic health record incentives (1 ) (6 ) (1 ) (1 ) (9 )
Depreciation and amortization 221 222 219 208 870
Impairment and restructuring charges, and acquisition-related costs 33 41 329 138 541
Litigation and investigation costs 5 1 6 11 23
Net gains on sales, consolidation and deconsolidation of facilities   (15 )   (23 )   (104 )     (2 )   (144 )
Operating income 267 310 51 485 1,113
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Loss from early extinguishment of debt       (26 )   (138 )         (164 )
Income (loss) from continuing operations, before income

taxes

4 19 (348 ) 224 (101 )
Income tax benefit (expense)   33     12     60       (324 )   (219 )
Income (loss) from continuing operations, before

discontinued operations

37 31 (288 ) (100 ) (320 )
Discontinued operations:
Income (loss) from operations (2 ) 2 (1 ) 1
Income tax benefit (expense)   1     (1 )              
Income (loss) from discontinued operations   (1 )   1     (1 )     1      
Net income (loss) 36 32 (289 ) (99 ) (320 )
Less: Net income available to noncontrolling interests   89     87     78       130     384  
Net income available (loss attributable) to Tenet Healthcare

Corporation common shareholders

$ (53 ) $ (55 ) $ (367 )   $ (229 ) $ (704 )
Amounts available (attributable) to Tenet Healthcare

Corporation common shareholders

Loss from continuing operations, net of tax $ (52 ) $ (56 ) $ (366 ) $ (230 ) $ (704 )
Income (loss) from discontinued operations, net of tax   (1 )   1     (1 )     1      
Net loss attributable to Tenet Healthcare

Corporation common shareholders

$ (53 ) $ (55 ) $ (367 )   $ (229 ) $ (704 )
Earnings available (loss attributable) per share to Tenet

Healthcare Corporation common shareholders:

Basic
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations   (0.01 )   0.01     (0.01 )     0.01      
$ (0.53 ) $ (0.55 ) $ (3.64 )   $ (2.27 ) $ (7.00 )
Diluted
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations   (0.01 )   0.01     (0.01 )     0.01      
$ (0.53 ) $ (0.55 ) $ (3.64 )   $ (2.27 ) $ (7.00 )
Weighted average shares and dilutive securities

outstanding (in thousands):

Basic 100,000 100,612 100,812 100,945 100,592
Diluted 100,000 100,612 100,812 100,945 100,592
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

     
Three Months Ended Six Months Ended
3/31/2018 6/30/2018 06/30/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 69 68 68
Total admissions 182,306 168,453 350,759
Adjusted patient admissions 320,868 306,063 626,931
Paying admissions (excludes charity and uninsured) 172,490 158,216 330,706
Charity and uninsured admissions 9,816 10,237 20,053
Admissions through emergency department 125,076 115,036 240,112
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 94.3 %
Charity and uninsured admissions as a percentage of total admissions 5.4 % 6.1 % 5.7 %
Emergency department admissions as a percentage of total admissions 68.6 % 68.3 % 68.5 %
Surgeries — inpatient 47,223 46,274 93,497
Surgeries — outpatient 63,008 63,805 126,813
Total surgeries 110,231 110,079 220,310
Patient days — total 858,648 766,519 1,625,167
Adjusted patient days 1,486,139 1,373,480 2,859,619
Average length of stay (days) 4.71 4.55 4.63
Licensed beds (at end of period) 18,457 18,314 18,314
Average licensed beds 18,685 18,362 18,523
Utilization of licensed beds 51.1 % 45.9 % 48.5 %
Outpatient Visits
Total visits 1,842,539 1,749,847 3,592,386
Paying visits (excludes charity and uninsured) 1,725,976 1,633,372 3,359,348
Charity and uninsured visits 116,563 116,475 233,038
Emergency department visits 697,001 643,036 1,340,037
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.5 %
Total emergency department admissions and visits 822,077 758,072 1,580,149
Revenues
Net patient revenues(3) $ 3,643 $ 3,443 $ 7,086
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day
Net patient revenue(3) per adjusted patient admission $ 11,354 $ 11,249 $ 11,303
Net patient revenue(3) per adjusted patient day $ 2,451 $ 2,507 $ 2,478
Total selected operating expenses (salaries, wages and benefits,
supplies and other operating expenses) per adjusted patient admission(2)
$ 10,561 $ 10,619 $ 10,590
Net Patient Revenues(3) from:
Medicare 21.5 % 20.4 % 20.9 %
Medicaid 8.8 % 9.1 % 9.0 %
Managed care 65.0 % 66.0 % 65.5 %
Self-pay 1.0 % 0.2 % 0.6 %
Indemnity and other 3.7 % 4.3 % 4.0 %
 

(1) Represents the consolidated results of Tenet's acute care hospitals
and related outpatient facilities included in the Hospital Operations
and other segment.

(2) Excludes operating expenses from Tenet's health plans.

(3) Less implicit price concessions and provision for doubtful accounts.

 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

         
Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 76 76 73 72 72
Total admissions 196,907 190,394 185,389 186,185 758,875
Adjusted patient admissions 347,150 342,439 332,035 332,642 1,354,266
Paying admissions (excludes charity and uninsured) 186,648 179,889 174,803 176,158 717,498
Charity and uninsured admissions 10,259 10,505 10,586 10,027 41,377
Admissions through emergency department 126,473 121,807 120,493 123,887 492,660
Paying admissions as a percentage of total admissions 94.8 % 94.5 % 94.3 % 94.6 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.2 % 5.5 % 5.7 % 5.4 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.2 % 64.0 % 65.0 % 66.5 % 64.9 %
Surgeries — inpatient 51,800 52,083 50,939 50,292 205,114
Surgeries — outpatient 69,604 71,366 67,321 68,604 276,895
Total surgeries 121,404 123,449 118,260 118,896 482,009
Patient days — total 923,339 874,930 853,059 857,728 3,509,056
Adjusted patient days 1,603,698 1,552,302 1,502,831 1,505,130 6,163,961
Average length of stay (days) 4.69 4.60 4.60 4.61 4.62
Licensed beds (at end of period) 20,439 20,435 19,433 19,141 19,141
Average licensed beds 20,440 20,435 19,783 19,320 19,995
Utilization of licensed beds 50.2 % 47.0 % 46.9 % 48.3 % 48.1 %
Outpatient Visits
Total visits 2,039,942 1,981,848 1,867,471 1,901,864 7,791,125
Paying visits (excludes charity and uninsured) 1,908,212 1,849,697 1,741,815 1,777,790 7,277,514
Charity and uninsured visits 131,730 132,151 125,656 124,074 513,611
Emergency department visits 733,051 724,785 685,096 711,268 2,854,200
Paying visits as a percentage of total visits 93.5 % 93.3 % 93.3 % 93.5 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.5 % 6.7 % 6.7 % 6.5 % 6.6 %
Total emergency department admissions and visits 859,524 846,592 805,589 835,155 3,346,860
Revenues
Net patient revenues(3) $ 3,728 $ 3,719 $ 3,522 $ 3,860 $ 14,829
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day
Net patient revenue(3) per adjusted patient admission $ 10,739 $ 10,860 $ 10,607 $ 11,604 $ 10,950
Net patient revenue(3) per adjusted patient day $ 2,325 $ 2,396 $ 2,344 $ 2,565 $ 2,406
Total selected operating expenses (salaries, wages and benefits,
supplies and other operating expenses) per adjusted patient admission(2)
$ 10,288 $ 10,394 $ 10,367 $ 10,492 $ 10,384
Net Patient Revenues(3) from:
Medicare 23.1 % 22.0 % 22.0 % 20.4 % 21.9 %
Medicaid 7.4 % 7.5 % 7.1 % 12.9 % 8.8 %
Managed care 65.2 % 65.9 % 66.1 % 61.5 % 64.6 %
Self-pay 0.3 % 0.5 % 0.3 % 1.3 % 0.6 %
Indemnity and other 4.0 % 4.1 % 4.5 % 3.9 % 4.1 %
 

(1) Represents the consolidated results of Tenet's acute care hospitals
and related outpatient facilities included in the Hospital Operations
and other segment.

(2) Excludes operating expenses from Tenet's health plans.

(3) Less implicit price concessions and provision for doubtful accounts.

 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

     
Three Months Ended Six Months Ended
3/31/2018 6/30/2018 6/30/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68
Total admissions 178,189 168,135 346,324
Adjusted patient admissions 312,297 305,541 617,838
Paying admissions (excludes charity and uninsured) 168,554 157,904 326,458
Charity and uninsured admissions 9,635 10,231 19,866
Admissions through emergency department 122,922 114,945 237,867
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 94.3 %
Charity and uninsured admissions as a percentage of total admissions 5.4 % 6.1 % 5.7 %
Emergency department admissions as a percentage of total admissions 69.0 % 68.4 % 68.7 %
Surgeries — inpatient 45,940 46,057 91,997
Surgeries — outpatient 61,049 63,615 124,664
Total surgeries 106,989 109,672 216,661
Patient days — total 840,786 765,659 1,606,445
Adjusted patient days 1,448,356 1,372,048 2,820,404
Average length of stay (days) 4.72 4.55 4.64
Licensed beds (at end of period) 17,946 17,946 17,946
Average licensed beds 17,946 17,946 17,946
Utilization of licensed beds 52.1 % 46.9 % 49.5 %
Outpatient Visits
Total visits 1,793,901 1,748,312 3,542,213
Paying visits (excludes charity and uninsured) 1,680,249 1,631,963 3,312,212
Charity and uninsured visits 113,652 116,349 230,001
Emergency department visits 682,603 642,623 1,325,226
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.5 %
Total emergency department admissions and visits 805,525 757,568 1,563,093
Revenues
Net patient revenues(2) $ 3,570 $ 3,432 $ 7,002
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day
Net patient revenue(2) per adjusted patient admission $ 11,431 $ 11,233 $ 11,333
Net patient revenue(2) per adjusted patient day $ 2,465 $ 2,501 $ 2,483
Net Patient Revenues(2) from:
Medicare 21.3 % 20.4 % 20.8 %
Medicaid 8.8 % 9.1 % 9.0 %
Managed care 64.9 % 66.1 % 65.5 %
Self-pay 1.3 % 0.1 % 0.7 %
Indemnity and other 3.7 % 4.3 % 4.0 %
 

(1) Information for our Hospital Operations and other segment is
presented on a same-hospital basis, which includes the results of our
same 68 hospitals operated throughout the six months ended June 30, 2018
and 2017 and associated outpatient facilities, but excludes the results
of hospitals Tenet divested since January 1, 2017.

(2) Less implicit price concessions and provision for doubtful accounts.

 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

         
Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 68
Total admissions 177,624 172,048 171,766 175,152 696,590
Adjusted patient admissions 310,137 306,278 305,300 310,485 1,232,200
Paying admissions (excludes charity and uninsured) 168,523 162,630 161,743 165,400 658,296
Charity and uninsured admissions 9,101 9,418 10,023 9,752 38,294
Admissions through emergency department 114,767 110,486 112,210 116,901 454,364
Paying admissions as a percentage of total admissions 94.9 % 94.5 % 94.2 % 94.4 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.1 % 5.5 % 5.8 % 5.6 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.6 % 64.2 % 65.3 % 66.7 % 65.2 %
Surgeries — inpatient 46,900 47,288 47,315 47,350 188,853
Surgeries — outpatient 62,112 63,642 61,562 63,410 250,726
Total surgeries 109,012 110,930 108,877 110,760 439,579
Patient days — total 833,761 792,160 789,040 805,567 3,220,528
Adjusted patient days 1,433,858 1,390,154 1,379,096 1,402,038 5,605,146
Average length of stay (days) 4.69 4.60 4.59 4.60 4.62
Licensed beds (at end of period) 17,964 17,980 18,006 17,946 17,946
Average licensed beds 17,964 17,980 18,007 17,970 17,980
Utilization of licensed beds 51.6 % 48.4 % 47.6 % 48.7 % 49.1 %
Outpatient Visits
Total visits 1,810,801 1,766,625 1,715,650 1,771,336 7,064,412
Paying visits (excludes charity and uninsured) 1,698,917 1,652,532 1,600,195 1,653,581 6,605,225
Charity and uninsured visits 111,884 114,093 115,455 117,755 459,187
Emergency department visits 650,777 645,803 627,415 659,617 2,583,612
Paying visits as a percentage of total visits 93.8 % 93.5 % 93.3 % 93.4 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.2 % 6.5 % 6.7 % 6.6 % 6.5 %
Total emergency department admissions and visits 765,544 756,289 739,625 776,518 3,037,976
Revenues
Net patient revenues(2) $ 3,343 $ 3,325 $ 3,237 $ 3,609 $ 13,514
Revenues on a Per Adjusted Patient Admission and Per Adjusted
Patient Day
Net patient revenue(2) per adjusted patient admission $ 10,780 $ 10,856 $ 10,603 $ 11,624 $ 10,967
Net patient revenue(2) per adjusted patient day $ 2,331 $ 2,392 $ 2,347 $ 2,574 $ 2,411
Net Patient Revenues(2) from:
Medicare 23.5 % 22.3 % 21.9 % 20.3 % 21.9 %
Medicaid 7.0 % 7.1 % 6.8 % 13.2 % 8.7 %
Managed care 65.0 % 65.8 % 66.1 % 61.0 % 64.4 %
Self-pay 0.3 % 0.6 % 0.3 % 1.5 % 0.7 %
Indemnity and other 4.2 % 4.2 % 4.9 % 4.0 % 4.3 %
 

(1) Information for our Hospital Operations and other segment is
presented on a same-hospital basis, which includes the results of our
same 68 hospitals operated throughout the six months ended June 30, 2018
and 2017 and associated outpatient facilities, but excludes the results
of hospitals Tenet divested since January 1, 2017.

(2) Less implicit price concessions and provision for doubtful accounts.

 

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 
(Dollars in millions)       June 30,   December 31,
2018 2017
Assets
Hospital Operations and other $ 15,396 $ 16,466
Ambulatory Care 5,865 5,822
Conifer   1,082     1,097  
Total $ 22,343   $ 23,385  
 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Capital expenditures:
Hospital Operations and other $ 108 $ 136 $ 228 $ 319
Ambulatory Care 13 10 28 21
Conifer   4     4     12     8  
Total $ 125   $ 150   $ 268   $ 348  
 
Net operating revenues:
Hospital Operations and other total prior to inter-segment
eliminations(1)
$ 3,733 $ 4,085 $ 7,680 $ 8,200
Ambulatory Care 531 472 1,029 927
Conifer
Tenet 144 155 294 314
Other customers   242     245     496     488  
Total Conifer revenues 386 400 790 802
Inter-segment eliminations   (144 )   (155 )   (294 )   (314 )
Total $ 4,506   $ 4,802   $ 9,205   $ 9,615  
 
Equity in earnings of unconsolidated affiliates:
Hospital Operations and other $ 6 $ (2 ) $ 4 $
Ambulatory Care   33     30     60     57  
Total $ 39   $ 28   $ 64   $ 57  
 
Adjusted EBITDA:
Hospital Operations and other(2) $ 345 $ 346 $ 747 $ 655
Ambulatory Care 198 164 363 317
Conifer   91     60     189     125  
Total $ 634   $ 570   $ 1,299   $ 1,097  
 
Depreciation and amortization:
Hospital Operations and other $ 164 $ 188 $ 339 $ 375
Ambulatory Care 17 22 34 44
Conifer   13     12     25     24  
Total $ 194   $ 222   $ 398   $ 443  
 

(1) Hospital Operations and other revenues includes health plan revenues
of less than $1 million and $6 million for the three and six months
ended June 30, 2018, respectively and $25 million and $90 million for
the three and six months ended June 30, 2017, respectively.

(2) Hospital Operations and other Adjusted EBITDA excludes health plan
EBITDA of $1 million and less than $1 million for the three and six
months ended June 30, 2018, respectively, and $(19) million and $(35)
million for the three and six months ended June 30, 2017, respectively.

 

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

       
(Dollars in millions) Three Months Ended June 30,
2018 2017
 
Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 483 $ 499
Less: Provision for doubtful accounts   (11 )   (10 )
Net operating revenues(1) $ 531 $ 547 472 489
Equity in earnings of unconsolidated affiliates(2) 33 30
Operating expenses:
Salaries, wages and benefits 165 134 153 116
Supplies 106 144 96 129
Other operating expenses, net 95 114 89 100
Depreciation and amortization 17 17 22 16
Impairment and restructuring charges, and acquisition-related costs 6 3 1
Net gains on sales, consolidation and deconsolidation of facilities                
Operating income 175 138 139 127
Interest expense (37 ) (5 ) (39 ) (5 )
Other   1     1     2      
Net income from continuing operations, before income taxes 139 134 102 122
Income tax expense   (18 )   (2 )   (20 )   (2 )
Net income 121 $ 132   82 $ 120  
Less: Net income available to noncontrolling interests   75     67  
Net income available to Tenet Healthcare Corporation common
shareholders
$ 46   $ 15  
Equity in earnings of unconsolidated affiliates $ 33 $ 30
 

(1) On a same-facility system-wide basis, net revenue in Tenet's
Ambulatory Care segment increased 6.9% during the three months ended
June 30, 2018, with cases increasing 4.3% and revenue per case
increasing 2.4%.

(2) At June 30, 2018, 110 of the 342 facilities in the Company's
Ambulatory segment were not consolidated based on the nature of the
segment's joint venture relationships with physicians and prominent
healthcare systems. Although revenues of the segment's unconsolidated
facilities are not recorded as revenues by the Company, equity in
earnings of unconsolidated affiliates is nonetheless a significant
portion of the Company's overall earnings. To help analyze results of
operations, management also uses system-wide operating measures such as
system-wide revenue growth, which includes revenues of both consolidated
and unconsolidated facilities. We control our remaining 232 facilities
and account for these investments as consolidated subsidiaries.

 

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

       
(Dollars in millions) Six Months Ended June 30,
2018 2017
 
Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 945 $ 974
Less: Provision for doubtful accounts   (18 )   (20 )
Net operating revenues(1) $ 1,029 $ 1,040 927 954
Equity in earnings of unconsolidated affiliates(2) 60 57
Operating expenses:
Salaries, wages and benefits 327 254 303 230
Supplies 212 274 190 250
Other operating expenses, net 187 219 174 197
Depreciation and amortization 34 33 44 32
Impairment and restructuring charges, and acquisition-related costs 7 8 1
Net gains on sales, consolidation and deconsolidation of facilities   (1 )       (7 )    
Operating income 323 260 272 244
Interest expense (73 ) (10 ) (74 ) (11 )
Other   3     1     3      
Net income from continuing operations, before income taxes 253 251 201 233
Income tax expense   (33 )   (4 )   (38 )   (4 )
Net income 220 $ 247   163 $ 229  
Less: Net income available to noncontrolling interests   139     133  
Net income available to Tenet Healthcare Corporation common
shareholders
$ 81   $ 30  
Equity in earnings of unconsolidated affiliates $ 60 $ 57
 

(1) On a same-facility system-wide basis, net revenue in Tenet's
Ambulatory Care segment increased 4.8% during the six months ended
June 30, 2018, with cases increasing 3.8% and revenue per case
increasing 1.0%.

(2) At June 30, 2018, 110 of the 342 facilities in the Company's
Ambulatory segment were not consolidated based on the nature of the
segment's joint venture relationships with physicians and prominent
healthcare systems. Although revenues of the segment's unconsolidated
facilities are not recorded as revenues by the Company, equity in
earnings of unconsolidated affiliates is nonetheless a significant
portion of the Company's overall earnings. To help analyze results of
operations, management also uses system-wide operating measures such as
system-wide revenue growth, which includes revenues of both consolidated
and unconsolidated facilities. We control our remaining 232 facilities
and account for these investments as consolidated subsidiaries.

Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net
income available (loss attributable) to Tenet Healthcare Corporation
common shareholders before (1) the cumulative effect of changes in
accounting principle, (2) net loss attributable (income available) to
noncontrolling interests, (3) income (loss) from discontinued
operations, (4) income tax benefit (expense), (5) gain (loss) from early
extinguishment of debt, (6) other non-operating income (expense), net,
(7) interest expense, (8) litigation and investigation (costs) benefit,
net of insurance recoveries, (9) net gains (losses) on sales,
consolidation and deconsolidation of facilities, (10) impairment and
restructuring charges and acquisition-related costs, (11) depreciation
and amortization and (12) income (loss) from divested operations and
closed businesses (i.e., the Company's health plan businesses).
Litigation and investigation costs do not include ordinary course of
business malpractice and other litigation and related expense.

Adjusted net income available (loss attributable) from continuing
operations to Tenet Healthcare Corporation common shareholders, a
non-GAAP measure, is defined by the Company as net income available
(loss attributable) to Tenet Healthcare Corporation common shareholders
before (1) net income (loss) from discontinued operations,
(2) impairment and restructuring charges, and acquisition-related costs,
(3) litigation and investigation costs, (4) net gains (losses) on sales,
consolidation and deconsolidation of facilities, (5) gain (loss) from
early extinguishment of debt, (6) income (loss) from divested operations
and closed businesses, and (7) the associated impact of these items on
taxes and noncontrolling interests. Adjusted diluted earnings (loss) per
share from continuing operations, a non-GAAP term, is defined by the
Company as Adjusted net income available (loss attributable) from
continuing operations to Tenet Healthcare Corporation common
shareholders divided by the weighted average primary or diluted shares
outstanding in the reporting period.

Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net
cash provided by (used in) operating activities, less (2) purchases of
property and equipment from continuing operations.

Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company
as (1) Adjusted net cash provided by (used in) operating activities from
continuing operations, less (2) purchases of property and equipment from
continuing operations. Adjusted net cash provided by (used in) operating
activities, a non-GAAP measure, is defined by the Company as cash
provided by (used in) operating activities prior to (1) payments for
restructuring charges, acquisition-related costs and litigation costs
and settlements, and (2) net cash provided by (used in) operating
activities from discontinued operations.

The Company believes the foregoing non-GAAP measures are useful to
investors and analysts because they present additional information on
the Company's financial performance. Investors, analysts, Company
management and the Company's Board of Directors utilize these non-GAAP
measures, in addition to GAAP measures, to track the Company's financial
and operating performance and compare the Company's performance to its
peer companies, which utilize similar non-GAAP measures in their
presentations. The Human Resources Committee of the Company's Board of
Directors also uses certain of these measures to evaluate management's
performance for the purpose of determining incentive compensation.
Additional information regarding the purpose and utility of specific
non-GAAP measures used in this release is set forth below.

The Company believes that Adjusted EBITDA is a useful measure, in part,
because certain investors and analysts use both historical and projected
Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as
factors in determining the estimated fair value of shares of the
Company's common stock. Company management also regularly reviews the
Adjusted EBITDA performance for each operating segment. The Company does
not use Adjusted EBITDA to measure liquidity, but instead to measure
operating performance.

We use, and we believe investors and analysts use, Free Cash Flow and
Adjusted Free Cash Flow as supplemental measures to analyze cash flows
generated from our operations because we believe it is useful to
investors in evaluating our ability to fund distributions paid to
noncontrolling interests, acquisitions, purchasing equity interests in
joint ventures or repaying debt.

These non-GAAP measures may not be comparable to similarly titled
measures reported by other companies. Because these measures exclude
many items that are included in our financial statements, they do not
provide a complete measure of our operating performance. For example,
the Company's definitions of Free Cash Flow and Adjusted Free Cash Flow
do not include other important uses of cash including (1) cash used to
purchase businesses or joint venture interests, or (2) any items that
are classified as Cash Flows From Financing Activities on the Company's
Consolidated Statement of Cash Flows, including items such as (i) cash
used to repay borrowings, (ii) distributions paid to noncontrolling
interests, or (iii) payments under the Put/Call Agreement for USPI
redeemable noncontrolling interest, which are recorded on the Statement
of Cash Flows as the purchase of noncontrolling interest. Accordingly,
investors are encouraged to use GAAP measures when evaluating the
Company's financial performance.

A reconciliation of net income available (loss attributable) to Tenet
Healthcare Corporation common shareholders, the most comparable GAAP
measure, to Adjusted EBITDA is set forth in Table #1 below for each
quarter in 2017 and 2018. A reconciliation of net income available (loss
attributable) to Tenet Healthcare Corporation common shareholders, the
most comparable GAAP measure, to Adjusted net income available (loss
attributable) from continuing operations to Tenet Healthcare Corporation
common shareholders is set forth in Table #2 below for each quarter in
2017 and 2018. A reconciliation of net cash provided by operating
activities, the most comparable GAAP measure, to Free Cash Flow and
Adjusted Free Cash Flow is set forth in Table #3 below for each quarter
in 2017 and 2018.

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss
Attributable) to Tenet Healthcare Corporation Common Shareholders
to Adjusted EBITDA for 2018

(Unaudited)

 
(Dollars in millions)   2018
1st Qtr   2nd Qtr   YTD
Net income available to Tenet Healthcare Corporation common
shareholders
$ 99 $ 26 $ 125
Less: Net income available to noncontrolling interests (92 ) (82 ) (174 )
Income from discontinued operations, net of tax   1     2     3  
Income from continuing operations 190 106 296
Income tax expense (70 ) (44 ) (114 )
Loss from early extinguishment of debt (1 ) (1 ) (2 )
Other non-operating expense, net (1 ) (1 ) (2 )
Interest expense   (255 )   (254 )   (509 )
Operating income 517 406 923
Litigation and investigation costs (6 ) (13 ) (19 )
Net gains on sales, consolidation and deconsolidation of facilities 110 8 118
Impairment and restructuring charges, and acquisition-related costs (47 ) (30 ) (77 )
Depreciation and amortization (204 ) (194 ) (398 )
Gain (loss) from divested and closed businesses   (1 )   1      
Adjusted EBITDA $ 665   $ 634   $ 1,299  
 
Net operating revenues $ 4,699 $ 4,506 $ 9,205
Less: Net operating revenues from health plans   6         6  
Adjusted net operating revenues $ 4,693   $ 4,506   $ 9,199  
 
Net income available to Tenet Healthcare Corporation common
shareholders as a % of net operating revenues
2.1 % 0.6 % 1.4 %
Adjusted EBITDA as a % of adjusted net operating revenues
(Adjusted EBITDA margin)
14.2 % 14.1 % 14.1 %
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss
Attributable) to Tenet Healthcare Corporation Common Shareholders
to Adjusted EBITDA for 2017

(Unaudited)

 
(Dollars in millions)   2017
1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Total
Net loss attributable to Tenet Healthcare Corporation common
shareholders
$ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Less: Net income available to noncontrolling interests (89 ) (87 ) (78 ) (130 ) (384 )
Income (loss) from discontinued operations, net of tax   (1 )   1     (1 )   1      
Income (loss) from continuing operations 37 31 (288 ) (100 ) (320 )
Income tax benefit (expense) 33 12 60 (324 ) (219 )
Loss from early extinguishment of debt (26 ) (138 ) (164 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Interest expense   (258 )   (260 )   (257 )   (253 )   (1,028 )
Operating income 267 310 51 485 1,113
Litigation and investigation costs (5 ) (1 ) (6 ) (11 ) (23 )
Net gains on sales, consolidation and deconsolidation of facilities 15 23 104 2 144
Impairment and restructuring charges, and acquisition-related costs (33 ) (41 ) (329 ) (138 ) (541 )
Depreciation and amortization (221 ) (222 ) (219 ) (208 ) (870 )
Loss from divested and closed businesses   (16 )   (19 )   (6 )       (41 )
Adjusted EBITDA $ 527   $ 570   $ 507   $ 840   $ 2,444  
 
Net operating revenues $ 4,813 $ 4,802 $ 4,586 $ 4,978 $ 19,179
Less: Net operating revenues from health plans   65     25     10     10     110  
Adjusted net operating revenues $ 4,748   $ 4,777   $ 4,576   $ 4,968   $ 19,069  
 
Net loss attributable to Tenet Healthcare Corporation common
shareholders as a % of net operating revenues
(1.1 )% (1.1 )% (8.0 )% (4.6 )% (3.7 )%
Adjusted EBITDA as a % of adjusted net operating revenues
(Adjusted EBITDA margin)
11.1 % 11.9 % 11.1 % 16.9 % 12.8 %
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliation of Net Income Available (Loss
Attributable) to Tenet Healthcare Corporation Common Shareholders
to Adjusted Net Income Available from Continuing Operations to
Common Shareholders for 2018

(Unaudited)

 
(Dollars in millions except per share amounts)   2018
1st Qtr   2nd Qtr   YTD
Net income available to Tenet Healthcare Corporation common
shareholders
$ 99 $ 26 $ 125
Net income from discontinued operations   1   $ 2     3  
Net income from continuing operations 98 24 122