Exhibit 99.1
NEWS RELEASE
Tenet Reports Adjusted EBITDA of $460 Million
for the Quarter Ended June 30, 2014
Outlook Range for 2014 Adjusted EBITDA Raised to $1.85 Billion to $1.95 Billion
DALLAS — August 4, 2014 — Tenet Healthcare Corporation (NYSE:THC) reported Adjusted EBITDA for the second quarter ended June 30, 2014 of $460 million, an increase of $124 million, or 36.9 percent, as compared to $336 million in the second quarter of 2013. Excluding the effect of the California Provider Fee program from both periods would have resulted in an even greater increase of $190 million, or 70.4% in the quarter.
“I am very pleased with Tenet’s performance in the second quarter. All growth and profitability metrics exceeded our expectations,” said Trevor Fetter, president and chief executive officer. “Our success at capturing incremental market share through strategic investments, service line expansion, and successfully positioning Tenet’s hospitals to benefit from key aspects of the Affordable Care Act all contributed to a great quarter. We also continue to exceed expectations for the benefits from our 2013 acquisition of Vanguard. Tenet grew at near-record rates in commercial patient volumes, inpatient admissions, outpatient visits, surgeries and emergency department visits.”
Mr. Fetter continued, “Our multi-year strategy to transform Tenet from a regional operator of hospitals to a national diversified healthcare services company is driving significant growth in value. Our business trends are positive, and we are in the early days of a long term transformation in the delivery and financing of healthcare services. We are raising our 2014 EBITDA Outlook range, but only by the outperformance we reported in the second quarter, until we have greater visibility into the longer-term trends driving the strong growth we’ve generated in the first half of 2014.”
Discussion of Results (Percentage changes compare Q2’14 to Q2’13 on a same-hospital pro forma basis, unless otherwise noted. Pro forma operating metrics are defined as including both Tenet and Vanguard legacy hospitals in both reporting periods.)
Tenet achieved admissions and adjusted admissions growth of 2.8 percent and 4.0 percent, respectively, compared to the second quarter of 2013, on a same-hospital pro forma basis. Pro forma performance metrics include legacy Vanguard operations in both reporting periods. The growth trend in commercial admissions continued to strengthen in the second quarter achieving the best quarterly same-hospital performance in more than a decade. Paying admissions increased by 4.8 percent on a pro forma basis and 4.4 percent on a same-hospital basis.
Outpatient visits increased by 7.1 percent on a pro forma basis and 6.3 percent on a same-hospital basis. Approximately 85 percent of the company’s same-hospital outpatient growth was organic. Surgeries grew by 8.3 percent on a pro forma basis and 14.2 percent on a same-hospital basis. Emergency department visits grew by 4.8 percent on a pro forma basis and by 8.0 percent on a same-hospital basis.
In the five states that expanded Medicaid eligibility under the Affordable Care Act, Tenet achieved a decline in uninsured plus charity admissions of 2,238 admissions, or 54.3 percent, and an increase in Medicaid admissions of 4,685 admissions, or 22.9 percent. Uninsured plus charity outpatient visits declined by 19,739 visits, or 26.9 percent, and Medicaid outpatient visits grew by 62,154 visits, or 24.5 percent, in these same five states. Across the entire company, including those states that did not expand Medicaid, uninsured plus charity admissions declined by 3,030 admissions, or 21.8 percent, while Medicaid admissions increased by 5,479 admissions, or 11.3 percent.
More than 2,700 admissions and more than 24,000 outpatient visits in the second quarter were identified as patients insured by exchange products created as part of the Affordable Care Act. These exchange volumes were more than triple the exchange volumes identified in the first quarter.
Net operating revenues, after provision for doubtful accounts, were $4.042 billion, an increase of $102 million, or 2.6 percent, compared to pro forma net operating revenues of $3.940 billion in the second quarter of 2013. These revenue increases primarily reflect volume growth, improved terms in commercial managed care contracts, and growth in the company’s Conifer services businesses. These growth drivers were partially offset by a decline of approximately $87 million in health plan revenue due to a reduction of covered lives under contract with the Arizona Medicaid program, and the absence of revenue from the California Provider Fee program in the second quarter of 2014 compared to $66 million in the second quarter of 2013. Excluding the impact of the California Provider Fee program, net patient revenue per adjusted admission increased by 1.5 percent on a same-hospital basis. Excluding the impact of the California Provider Fee program, patient revenue net of bad debt expense per adjusted admission increased by 2.5 percent on a same-hospital basis and 1.9 percent on a pro forma basis. Commercial managed care revenue increased 7.0 percent per admission and 2.9 percent per outpatient visit on a pro forma basis.
Selected operating expenses for hospital operations, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased by only 0.7 percent per adjusted admission on a pro forma basis. 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, same-hospital selected operating expenses per adjusted admission declined by 0.3 percent. The operating expense increases reflect volume growth in the company’s supply-intensive service lines, especially surgical volume, as well as increases in employee compensation. Electronic health records incentives recorded in the second quarter of 2014 were $58 million, a $17 million increase compared to the $41 million recognized on a pro forma basis in the second quarter of 2013. These incentive payments are not included in the definition of selected operating expenses.
Bad debt expense declined by $71 million, or 18.2 percent, to $320 million in the second quarter of 2014 on a pro forma basis. The decrease in bad debt expense was primarily attributable to a $78 million pro forma decline in uninsured revenues. Bad debt expense as a percent of revenues before bad debts was 7.3 percent, a pro forma decrease of 170 basis points compared to 9.0 percent in the second quarter of 2013. The same-hospital self-pay collection rate was 27.8 percent in the second quarter of 2014, a 90 basis point decline compared to 28.7 percent in the second quarter of 2013. The same-hospital commercial managed care collection rate was 98.3 percent in the second quarter of 2014, a 10 basis point increase compared to 98.2 percent in the second quarter of 2013.
Conifer reported Adjusted EBITDA of $44 million, an increase of $16 million, or 57.1 percent, compared to $28 million in the second quarter of 2013. Conifer’s revenues were $285 million in the second quarter of 2014, an increase of $66 million, or 30.1 percent, compared to $219 million in the second quarter of 2013.
Income from continuing operations in the second quarter of 2014 was $17 million after-tax, or $0.17 per diluted share, excluding $27 million in after-tax impairments, restructuring charges, acquisition-related costs, litigation and investigation costs and loss on debt extinguishment. The comparable after-tax exclusions were $122 million in the second quarter of 2013. Income from continuing operations, excluding these items, was $69 million, or $0.66 per diluted share in the second quarter of 2013.
Net loss attributable to common shareholders in the second quarter of 2014 was $26 million after-tax, or $0.27 per share, compared to a net loss of $50 million after-tax, or $0.49 per share, in the second quarter of 2013. The second quarter of 2014 included a $92 million increase in pre-tax interest expense compared to the second quarter of 2013. This increased interest expense is substantially due to the $4.6 billion of financing related to the Vanguard acquisition and the $300 million used to finance share repurchases since March 31, 2013.
Cash and cash equivalents were $406 million at June 30, 2014 compared to $113 million at December 31, 2013. Approximately $143 million of net revenues related to the California Provider Fee program, the Texas Medicaid disproportionate share funding, and the Texas uncompensated care 1115 Waiver program had not been received by the Company as of June 30, 2014. Accounts receivable days were 48.9 days at June 30, 2014, an improvement of 0.2 days compared to 49.1 days at March 31, 2014.
Outlook for Third Quarter and 2014 Adjusted EBITDA
The Company’s Outlook range for Adjusted EBITDA for the third quarter of 2014 is $400 million to $450 million and earnings per share in a range of a loss of $0.30 per share to income of $0.21 per share. No revenue related to the California Provider Fee program is assumed in this third quarter Outlook. Electronic health records incentives are assumed to contribute approximately $5 million to the third quarter’s Adjusted EBITDA.
The Company raised its 2014 Adjusted EBITDA Outlook range to $1.85 billion to $1.95 billion.
Management’s Webcast Discussion of Second Quarter Results
Tenet management will discuss the Company’s second quarter 2014 results on a 10:00 a.m. (ET) webcast on August 5, 2014. Investors can access the webcast through Tenet’s website at www.tenethealth.com/investors. A set of slides that will be referred to on the conference call is available on the section of the Company’s website relating to the webcast.
Additional information regarding Tenet’s quarterly results of operations, including detailed tabular operational data, is contained in its Form 10-Q report, which will be filed with the Securities and Exchange Commission and posted on the Tenet investor relations 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.
About Tenet
Tenet Healthcare Corporation is a national, diversified healthcare services company with more than 105,000 employees united around a common mission: to help people live happier, healthier lives. The company operates 80 hospitals, more than 190 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.
###
Corporate Communications | Investor Relations |
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, 2013, and in our quarterly reports on Form 10-Q, periodic reports on Form 8-K and other filings with the Securities and Exchange Commission. The information contained in this 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)
|
| Three Months Ended June 30, |
| |||||||||||||
(Dollars in millions except per share amounts) |
| 2014 |
| % |
|
| 2013 |
| % |
|
| Change |
| |||
Net operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net operating revenues before provision for doubtful accounts |
| $ | 4,362 |
|
|
|
| $ | 2,629 |
|
|
|
| 65.9 |
| % |
Less: Provision for doubtful accounts |
| 320 |
|
|
|
| 207 |
|
|
|
| 54.6 |
| % | ||
Net operating revenues |
| 4,042 |
| 100.0 |
| % | 2,422 |
| 100.0 |
| % | 66.9 |
| % | ||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Salaries, wages and benefits |
| 1,956 |
| 48.4 |
| % | 1,166 |
| 48.1 |
| % | 67.8 |
| % | ||
Supplies |
| 649 |
| 16.1 |
| % | 387 |
| 16.0 |
| % | 67.7 |
| % | ||
Other operating expenses, net |
| 1,035 |
| 25.5 |
| % | 567 |
| 23.4 |
| % | 82.5 |
| % | ||
Electronic health record incentives |
| (58 | ) | (1.4 | ) | % | (34 | ) | (1.4 | ) | % | 70.6 |
| % | ||
Depreciation and amortization |
| 209 |
| 5.2 |
| % | 121 |
| 5.0 |
| % | 72.7 |
| % | ||
Impairment and restructuring charges, and acquisition-related costs |
| 32 |
| 0.8 |
| % | 11 |
| 0.5 |
| % |
|
| |||
Litigation and investigation costs |
| 12 |
| 0.3 |
| % | 2 |
| 0.1 |
| % |
|
| |||
Operating income |
| 207 |
| 5.1 |
| % | 202 |
| 8.3 |
| % |
|
| |||
Interest expense |
| (190 | ) |
|
|
| (98 | ) |
|
|
|
|
| |||
Loss from early extinguishment of debt |
| — |
|
|
|
| (171 | ) |
|
|
|
|
| |||
Investment earnings |
| — |
|
|
|
| 1 |
|
|
|
|
|
| |||
Income (loss) from continuing operations, before income taxes |
| 17 |
|
|
|
| (66 | ) |
|
|
|
|
| |||
Income tax benefit (expense) |
| (8 | ) |
|
|
| 20 |
|
|
|
|
|
| |||
Income (loss) from continuing operations, before discontinued operations |
| 9 |
|
|
|
| (46 | ) |
|
|
|
|
| |||
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Income (loss) from operations |
| (7 | ) |
|
|
| 6 |
|
|
|
|
|
| |||
Litigation and investigation costs |
| (18 | ) |
|
|
| 0 |
|
|
|
|
|
| |||
Income tax benefit (expense) |
| 9 |
|
|
|
| (3 | ) |
|
|
|
|
| |||
Income (loss) from discontinued operations |
| (16 | ) |
|
|
| 3 |
|
|
|
|
|
| |||
Net loss |
| (7 | ) |
|
|
| (43 | ) |
|
|
|
|
| |||
Less: Net income attributable to noncontrolling interests |
| 19 |
|
|
|
| 7 |
|
|
|
|
|
| |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (26 | ) |
|
|
| $ | (50 | ) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Amounts attributable to Tenet Healthcare Corporation common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Loss from continuing operations, net of tax |
| $ | (10 | ) |
|
|
| $ | (53 | ) |
|
|
|
|
| |
Income (loss) from discontinued operations, net of tax |
| (16 | ) |
|
|
| 3 |
|
|
|
|
|
| |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (26 | ) |
|
|
| $ | (50 | ) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.11 | ) |
|
|
| $ | (0.52 | ) |
|
|
|
|
| |
Discontinued operations |
| (0.16 | ) |
|
|
| 0.03 |
|
|
|
|
|
| |||
|
| $ | (0.27 | ) |
|
|
| $ | (0.49 | ) |
|
|
|
|
| |
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.11 | ) |
|
|
| $ | (0.52 | ) |
|
|
|
|
| |
Discontinued operations |
| (0.16 | ) |
|
|
| 0.03 |
|
|
|
|
|
| |||
|
| $ | (0.27 | ) |
|
|
| $ | (0.49 | ) |
|
|
|
|
| |
Weighted average shares and dilutive securities outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Basic |
| 97,677 |
|
|
|
| 103,010 |
|
|
|
|
|
| |||
Diluted* |
| 97,677 |
|
|
|
| 103,010 |
|
|
|
|
|
| |||
* | Had we generated income from continuing operations available to shareholders in the three months ended June 30, 2014 and 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 2,123 and 2,326 shares, respectively. |
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Six Months Ended June 30, |
| |||||||||||||
(Dollars in millions except per share amounts) |
| 2014 |
| % |
|
| 2013 |
| % |
|
| Change |
| |||
Net operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net operating revenues before provision for doubtful accounts |
| $ | 8,668 |
|
|
|
| $ | 5,223 |
|
|
|
| 66.0 |
| % |
Less: Provision for doubtful accounts |
| 700 |
|
|
|
| 414 |
|
|
|
| 69.1 |
| % | ||
Net operating revenues |
| 7,968 |
| 100.0 |
| % | 4,809 |
| 100.0 |
| % | 65.7 |
| % | ||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Salaries, wages and benefits |
| 3,877 |
| 48.7 |
| % | 2,327 |
| 48.4 |
| % | 66.6 |
| % | ||
Supplies |
| 1,277 |
| 16.0 |
| % | 771 |
| 16.0 |
| % | 65.6 |
| % | ||
Other operating expenses, net |
| 2,034 |
| 25.5 |
| % | 1,135 |
| 23.6 |
| % | 79.2 |
| % | ||
Electronic health record incentives |
| (67 | ) | (0.8 | ) | % | (34 | ) | (0.7 | ) | % | 97.1 |
| % | ||
Depreciation and amortization |
| 402 |
| 5.0 |
| % | 235 |
| 4.9 |
| % | 71.1 |
| % | ||
Impairment and restructuring charges, and acquisition-related costs |
| 53 |
| 0.7 |
| % | 25 |
| 0.5 |
| % |
|
| |||
Litigation and investigation costs |
| 15 |
| 0.2 |
| % | 2 |
| 0.1 |
| % |
|
| |||
Operating income |
| 377 |
| 4.7 |
| % | 348 |
| 7.2 |
| % |
|
| |||
Interest expense |
| (372 | ) |
|
|
| (201 | ) |
|
|
|
|
| |||
Loss from early extinguishment of debt |
| �� |
|
|
|
| (348 | ) |
|
|
|
|
| |||
Investment earnings |
| — |
|
|
|
| 1 |
|
|
|
|
|
| |||
Income (loss) from continuing operations, before income taxes |
| 5 |
|
|
|
| (200 | ) |
|
|
|
|
| |||
Income tax benefit (expense) |
| (7 | ) |
|
|
| 73 |
|
|
|
|
|
| |||
Net loss from continuing operations, before discontinued operations |
| (2 | ) |
|
|
| (127 | ) |
|
|
|
|
| |||
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Income (loss) from operations |
| (15 | ) |
|
|
| 3 |
|
|
|
|
|
| |||
Litigation and investigation costs |
| (18 | ) |
|
|
| — |
|
|
|
|
|
| |||
Income tax benefit (expense) |
| 12 |
|
|
|
| (2 | ) |
|
|
|
|
| |||
Income (loss) from discontinued operations |
| (21 | ) |
|
|
| 1 |
|
|
|
|
|
| |||
Net loss |
| (23 | ) |
|
|
| (126 | ) |
|
|
|
|
| |||
Less: Net income attributable to noncontrolling interests |
| 35 |
|
|
|
| 12 |
|
|
|
|
|
| |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (58 | ) |
|
|
| $ | (138 | ) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Amounts attributable to Tenet Healthcare Corporation common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Loss from continuing operations, net of tax |
| $ | (37 | ) |
|
|
| $ | (139 | ) |
|
|
|
|
| |
Income (loss) from discontinued operations, net of tax |
| (21 | ) |
|
|
| 1 |
|
|
|
|
|
| |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (58 | ) |
|
|
| $ | (138 | ) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.38 | ) |
|
|
| $ | (1.34 | ) |
|
|
|
|
| |
Discontinued operations |
| (0.22 | ) |
|
|
| 0.01 |
|
|
|
|
|
| |||
|
| $ | (0.60 | ) |
|
|
| $ | (1.33 | ) |
|
|
|
|
| |
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.38 | ) |
|
|
| $ | (1.34 | ) |
|
|
|
|
| |
Discontinued operations |
| (0.22 | ) |
|
|
| 0.01 |
|
|
|
|
|
| |||
|
| $ | (0.60 | ) |
|
|
| $ | (1.33 | ) |
|
|
|
|
| |
Weighted average shares and dilutive securities outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Basic |
| 97,419 |
|
|
|
| 103,557 |
|
|
|
|
|
| |||
Diluted* |
| 97,419 |
|
|
|
| 103,557 |
|
|
|
|
|
| |||
* | Had we generated income from continuing operations available to shareholders in the six months ended June 30, 2014 and 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 2,053 and 2,282 shares, respectively. |
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| June 30, |
| December 31, |
| ||
(Dollars in millions) |
| 2014 |
| 2013 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 406 |
| $ | 113 |
|
Accounts receivable, less allowance for doubtful accounts |
| 2,171 |
| 1,965 |
| ||
Inventories of supplies, at cost |
| 264 |
| 262 |
| ||
Income tax receivable |
| 34 |
| — |
| ||
Current portion of deferred income taxes |
| 633 |
| 581 |
| ||
Other current assets |
| 700 |
| 789 |
| ||
Total current assets |
| 4,208 |
| 3,710 |
| ||
Investments and other assets |
| 362 |
| 405 |
| ||
Deferred income taxes, net of current portion |
| 125 |
| 90 |
| ||
Property and equipment, at cost, less accumulated depreciation and amortization |
| 7,771 |
| 7,691 |
| ||
Goodwill |
| 3,200 |
| 3,042 |
| ||
Other intangible assets, at cost, less accumulated amortization |
| 1,241 |
| 1,192 |
| ||
Total assets |
| $ | 16,907 |
| $ | 16,130 |
|
|
|
|
|
|
| ||
LIABILITIES AND EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current portion of long-term debt |
| $ | 622 |
| $ | 149 |
|
Accounts payable |
| 1,015 |
| 1,075 |
| ||
Accrued compensation and benefits |
| 669 |
| 631 |
| ||
Professional and general liability reserves |
| 162 |
| 156 |
| ||
Accrued interest payable |
| 207 |
| 198 |
| ||
Other current liabilities |
| 709 |
| 719 |
| ||
Total current liabilities |
| 3,384 |
| 2,928 |
| ||
Long-term debt, net of current portion |
| 10,942 |
| 10,690 |
| ||
Professional and general liability reserves |
| 567 |
| 543 |
| ||
Defined benefit plan obligations |
| 380 |
| 398 |
| ||
Other long-term liabilities |
| 484 |
| 446 |
| ||
Total liabilities |
| 15,757 |
| 15,005 |
| ||
Commitments and contingencies |
|
|
|
|
| ||
Redeemable noncontrolling interests in equity of consolidated subsidiaries |
| 277 |
| 247 |
| ||
Equity: |
|
|
|
|
| ||
Shareholders’ equity: |
|
|
|
|
| ||
Common stock |
| 7 |
| 7 |
| ||
Additional paid-in capital |
| 4,594 |
| 4,572 |
| ||
Accumulated other comprehensive loss |
| (20 | ) | (24 | ) | ||
Accumulated deficit |
| (1,480 | ) | (1,422 | ) | ||
Common stock in treasury, at cost |
| (2,378 | ) | (2,378 | ) | ||
Total shareholders’ equity |
| 723 |
| 755 |
| ||
Noncontrolling interests |
| 150 |
| 123 |
| ||
Total equity |
| 873 |
| 878 |
| ||
Total liabilities and equity |
| $ | 16,907 |
| $ | 16,130 |
|
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Month Ended |
| ||||
(Dollars in millions) |
| 2014 |
| 2013 |
| ||
Net loss |
| $ | (23 | ) | $ | (126 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 402 |
| 235 |
| ||
Provision for doubtful accounts |
| 700 |
| 414 |
| ||
Deferred income tax benefit |
| (7 | ) | (76 | ) | ||
Stock-based compensation expense |
| 26 |
| 19 |
| ||
Impairment and restructuring charges, and acquisition-related costs |
| 53 |
| 25 |
| ||
Litigation and investigation costs |
| 15 |
| 2 |
| ||
Loss from early extinguishment of debt |
| — |
| 348 |
| ||
Amortization of debt discount and debt issuance costs |
| 14 |
| 9 |
| ||
Pre-tax (income) loss from discontinued operations |
| 33 |
| (3 | ) | ||
Other items, net |
| (9 | ) | (18 | ) | ||
Changes in cash from operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| (937 | ) | (445 | ) | ||
Inventories and other current assets |
| 78 |
| (166 | ) | ||
Income taxes |
| (17 | ) | (4 | ) | ||
Accounts payable, accrued expenses and other current liabilities |
| (32 | ) | (65 | ) | ||
Other long-term liabilities |
| 47 |
| 5 |
| ||
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements |
| (84 | ) | (19 | ) | ||
Net cash used in operating activities from discontinued operations, excluding income taxes |
| (12 | ) | (7 | ) | ||
Net cash provided by operating activities |
| 247 |
| 128 |
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Purchases of property and equipment — continuing operations |
| (523 | ) | (256 | ) | ||
Purchases of businesses or joint venture interests, net of cash acquired |
| (42 | ) | (16 | ) | ||
Proceeds from sales of marketable securities, long-term investments and other assets |
| 3 |
| 3 |
| ||
Other long-term assets |
| (14 | ) | 6 |
| ||
Other items, net |
| — |
| 3 |
| ||
Net cash used in investing activities |
| (576 | ) | (260 | ) | ||
Cash flows from financing activities: |
|
|
|
|
| ||
Repayments of borrowings under credit facility |
| (1,300 | ) | (620 | ) | ||
Proceeds from borrowings under credit facility |
| 895 |
| 653 |
| ||
Repayments of other borrowings |
| (68 | ) | (1,967 | ) | ||
Proceeds from other borrowings |
| 1,108 |
| 1,907 |
| ||
Repurchases of common stock |
| — |
| (192 | ) | ||
Deferred debt issuance costs |
| (19 | ) | (30 | ) | ||
Distributions paid to noncontrolling interests |
| (20 | ) | (10 | ) | ||
Contributions from noncontrolling interests |
| 13 |
| 98 |
| ||
Proceeds from exercise of stock options |
| 11 |
| 21 |
| ||
Other items, net |
| 2 |
| (2 | ) | ||
Net cash provided by (used in) financing activities |
| 622 |
| (142 | ) | ||
Net increase (decrease) in cash and cash equivalents |
| 293 |
| (274 | ) | ||
Cash and cash equivalents at beginning of period |
| 113 |
| 364 |
| ||
Cash and cash equivalents at end of period |
| $ | 406 |
| $ | 90 |
|
Supplemental disclosures: |
|
|
|
|
| ||
Interest paid, net of capitalized interest |
| $ | (360 | ) | $ | (226 | ) |
Income tax payments, net |
| $ | (19 | ) | $ | (8 | ) |
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS — CONTINUING SAME HOSPITALS
(Unaudited)
(Dollars in millions except per patient day, |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||||||||||||
per admission and per visit amounts) |
| 2014 |
| 2013 |
| Change |
| 2014 |
| 2013 |
| Change |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net inpatient revenues |
| $ | 1,540 |
|
| $ | 1,542 |
|
| (0.1 | ) | % | $ | 3,109 |
|
| $ | 3,078 |
|
| 1.0 |
| % |
Net outpatient revenues |
| $ | 927 |
|
| $ | 844 |
|
| 9.8 |
| % | $ | 1,786 |
|
| $ | 1,657 |
|
| 7.8 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Number of acute care hospitals (at end of period) |
| 49 |
|
| 49 |
|
| — |
| % * | 49 |
|
| 49 |
|
| — |
| % * | ||||
Licensed beds (at end of period) |
| 13,231 |
|
| 13,180 |
|
| 0.4 |
| % | 13,231 |
|
| 13,180 |
|
| 0.4 |
| % | ||||
Average licensed beds |
| 13,196 |
|
| 13,180 |
|
| 0.1 |
| % | 13,187 |
|
| 13,180 |
|
| 0.1 |
| % | ||||
Utilization of licensed beds |
| 48.7 |
| % | 47.3 |
| % | 1.4 |
| % * | 49.8 |
| % | 49.1 |
| % | 0.7 |
| % * | ||||
Patient days — total |
| 584,251 |
|
| 567,390 |
|
| 3.0 |
| % | 1,189,293 |
|
| 1,170,675 |
|
| 1.6 |
| % | ||||
Adjusted patient days |
| 948,144 |
|
| 909,720 |
|
| 4.2 |
| % | 1,897,547 |
|
| 1,849,560 |
|
| 2.6 |
| % | ||||
Net inpatient revenue per patient day |
| $ | 2,636 |
|
| $ | 2,718 |
|
| (3.0 | ) | % | $ | 2,614 |
|
| $ | 2,629 |
|
| (0.6 | ) | % |
Total admissions |
| 124,720 |
|
| 120,722 |
|
| 3.3 |
| % | 249,171 |
|
| 246,651 |
|
| 1.0 |
| % | ||||
Adjusted patient admissions |
| 204,637 |
|
| 195,440 |
|
| 4.7 |
| % | 401,492 |
|
| 393,105 |
|
| 2.1 |
| % | ||||
Charity and uninsured admissions |
| 7,919 |
|
| 8,831 |
|
| (10.3 | ) | % | 16,306 |
|
| 17,434 |
|
| (6.5 | ) | % | ||||
Net inpatient revenue per admission |
| $ | 12,348 |
|
| $ | 12,773 |
|
| (3.3 | ) | % | $ | 12,477 |
|
| $ | 12,479 |
|
| — |
| % |
Average length of stay (days) |
| 4.68 |
|
| 4.70 |
|
| (0.4 | ) | % | 4.77 |
|
| 4.75 |
|
| 0.4 |
| % | ||||
Total surgeries |
| 124,152 |
|
| 108,669 |
|
| 14.2 |
| % | 238,886 |
|
| 210,082 |
|
| 13.7 |
| % | ||||
Admissions through emergency department |
| 80,529 |
|
| 75,608 |
|
| 6.5 |
| % | 161,439 |
|
| 155,816 |
|
| 3.6 |
| % | ||||
Emergency department visits |
| 432,858 |
|
| 399,702 |
|
| 8.3 |
| % | 847,051 |
|
| 801,780 |
|
| 5.6 |
| % | ||||
Total emergency department admissions and visits |
| 513,387 |
|
| 475,310 |
|
| 8.0 |
| % | 1,008,490 |
|
| 957,596 |
|
| 5.3 |
| % | ||||
Outpatient visits |
| 1,140,595 |
|
| 1,072,712 |
|
| 6.3 |
| % | 2,221,269 |
|
| 2,127,501 |
|
| 4.4 |
| % | ||||
Charity and uninsured outpatient visits |
| 108,675 |
|
| 114,333 |
|
| (4.9 | ) | % | 220,532 |
|
| 224,573 |
|
| (1.8 | ) | % | ||||
Net outpatient revenue per visit |
| $ | 813 |
|
| $ | 787 |
|
| 3.3 |
| % | $ | 804 |
|
| $ | 779 |
|
| 3.2 |
| % |
Net patient revenue per adjusted patient admission |
| $ | 12,055 |
|
| $ | 12,208 |
|
| (1.3 | ) | % | $ | 12,192 |
|
| $ | 12,045 |
|
| 1.2 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Patient Revenues from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Medicare |
| 21.3 |
| % | 21.0 |
| % | 0.3 |
| % * | 21.6 |
| % | 22.0 |
| % | (0.4 | ) | % * | ||||
Medicaid |
| 7.2 |
| % | 9.9 |
| % | (2.7 | ) | % * | 7.3 |
| % | 9.0 |
| % | (1.7 | ) | % * | ||||
Managed care |
| 61.7 |
| % | 58.1 |
| % | 3.6 |
| % * | 60.6 |
| % | 58.0 |
| % | 2.6 |
| % * | ||||
Indemnity, self-pay and other |
| 9.8 |
| % | 11.0 |
| % | (1.2 | ) | % * | 10.5 |
| % | 11.0 |
| % | (0.5 | ) | % * | ||||
* 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, |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||||||||||||
per admission and per visit amounts) |
| 2014 |
| 2013 |
| Change |
| 2014 |
| 2013 |
| Change |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net inpatient revenues |
| $ | 2,393 |
|
| $ | 1,542 |
|
| 55.2 |
| % | $ | 4,833 |
|
| $ | 3,078 |
|
| 57.0 |
| % |
Net outpatient revenues |
| $ | 1,448 |
|
| $ | 844 |
|
| 71.6 |
| % | $ | 2,794 |
|
| $ | 1,657 |
|
| 68.6 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Number of acute care hospitals (at end of period) |
| 79 |
|
| 49 |
|
| 30 |
| * | 79 |
|
| 49 |
|
| 30 |
| * | ||||
Licensed beds (at end of period) |
| 20,553 |
|
| 13,180 |
|
| 55.9 |
| % | 20,553 |
|
| 13,180 |
|
| 55.9 |
| % | ||||
Average licensed beds |
| 20,370 |
|
| 13,180 |
|
| 54.6 |
| % | 20,313 |
|
| 13,180 |
|
| 54.1 |
| % | ||||
Utilization of licensed beds |
| 48.9 |
| % | 47.3 |
| % | 1.6 |
| % * | 49.9 |
| % | 49.1 |
| % | 0.8 |
| % * | ||||
Patient days — total |
| 907,093 |
|
| 567,390 |
|
| 59.9 |
| % | 1,836,257 |
|
| 1,170,675 |
|
| 56.9 |
| % | ||||
Adjusted patient days |
| 1,563,681 |
|
| 909,720 |
|
| 71.9 |
| % | 3,089,060 |
|
| 1,849,560 |
|
| 67.0 |
| % | ||||
Net inpatient revenue per patient day |
| $ | 2,638 |
|
| $ | 2,718 |
|
| (2.9 | ) | % | $ | 2,632 |
|
| $ | 2,629 |
|
| 0.1 |
| % |
Total admissions |
| 194,641 |
|
| 120,722 |
|
| 61.2 |
| % | 388,914 |
|
| 246,651 |
|
| 57.7 |
| % | ||||
Adjusted patient admissions |
| 337,509 |
|
| 195,440 |
|
| 72.7 |
| % | 661,319 |
|
| 393,105 |
|
| 68.2 |
| % | ||||
Charity and uninsured admissions |
| 10,927 |
|
| 8,831 |
|
| 23.7 |
| % | 23,457 |
|
| 17,434 |
|
| 34.5 |
| % | ||||
Net inpatient revenue per admission |
| $ | 12,294 |
|
| $ | 12,773 |
|
| (3.8 | ) | % | $ | 12,427 |
|
| $ | 12,479 |
|
| (0.4 | ) | % |
Average length of stay (days) |
| 4.66 |
|
| 4.70 |
|
| (0.9 | ) | % | 4.72 |
|
| 4.75 |
|
| (0.6 | ) | % | ||||
Total surgeries |
| 173,664 |
|
| 108,669 |
|
| 59.8 |
| % | 335,946 |
|
| 210,082 |
|
| 59.9 |
| % | ||||
Admissions through emergency department |
| 122,086 |
|
| 75,608 |
|
| 61.5 |
| % | 244,687 |
|
| 155,816 |
|
| 57.0 |
| % | ||||
Emergency department visits |
| 702,009 |
|
| 399,702 |
|
| 75.6 |
| % | 1,367,011 |
|
| 801,780 |
|
| 70.5 |
| % | ||||
Total emergency department admissions and visits |
| 824,095 |
|
| 475,310 |
|
| 73.4 |
| % | 1,611,698 |
|
| 957,596 |
|
| 68.3 |
| % | ||||
Outpatient visits |
| 2,066,051 |
|
| 1,072,712 |
|
| 92.6 |
| % | 4,013,738 |
|
| 2,127,501 |
|
| 88.7 |
| % | ||||
Charity and uninsured outpatient visits |
| 169,766 |
|
| 114,333 |
|
| 48.5 |
| % | 335,014 |
|
| 224,573 |
|
| 49.2 |
| % | ||||
Net outpatient revenue per visit |
| $ | 701 |
|
| $ | 787 |
|
| (10.9 | ) | % | $ | 696 |
|
| $ | 779 |
|
| (10.7 | ) | % |
Net patient revenue per adjusted patient admission |
| $ | 11,380 |
|
| $ | 12,208 |
|
| (6.8 | ) | % | $ | 11,533 |
|
| $ | 12,045 |
|
| (4.3 | ) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Patient Revenues from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Medicare |
| 22.5 |
| % | 21.0 |
| % | 1.5 |
| % * | 22.6 |
| % | 22.0 |
| % | 0.6 |
| % * | ||||
Medicaid |
| 9.9 |
| % | 9.9 |
| % | — |
| % * | 8.8 |
| % | 9.0 |
| % | (0.2 | ) | % * | ||||
Managed care |
| 58.0 |
| % | 58.1 |
| % | (0.1 | ) | % * | 57.9 |
| % | 58.0 |
| % | (0.1 | ) | % * | ||||
Indemnity, self-pay and other |
| 9.6 |
| % | 11.0 |
| % | (1.4 | ) | % * | 10.7 |
| % | 11.0 |
| % | (0.3 | ) | % * | ||||
* This change is the difference between the 2014 and 2013 amounts shown
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| |||||
(Dollars in millions except per share amounts) |
| 03/31/14 |
| 06/30/14 |
| 06/30/14 |
| |||
Net operating revenues: |
|
|
|
|
|
|
| |||
Net operating revenues before provision for doubtful accounts |
| $ | 4,306 |
| $ | 4,362 |
| $ | 8,668 |
|
Less: Provision for doubtful accounts |
| 380 |
| 320 |
| 700 |
| |||
Net operating revenues |
| 3,926 |
| 4,042 |
| 7,968 |
| |||
Operating expenses: |
|
|
|
|
|
|
| |||
Salaries, wages and benefits |
| 1,921 |
| 1,956 |
| 3,877 |
| |||
Supplies |
| 628 |
| 649 |
| 1,277 |
| |||
Other operating expenses, net |
| 999 |
| 1,035 |
| 2,034 |
| |||
Electronic health record incentives |
| (9 | ) | (58 | ) | (67 | ) | |||
Depreciation and amortization |
| 193 |
| 209 |
| 402 |
| |||
Impairment and restructuring charges, and acquisition-related costs |
| 21 |
| 32 |
| 53 |
| |||
Litigation and investigation costs |
| 3 |
| 12 |
| 15 |
| |||
Operating income |
| 170 |
| 207 |
| 377 |
| |||
Interest expense |
| (182 | ) | (190 | ) | (372 | ) | |||
Income (loss) from continuing operations, before income taxes |
| (12 | ) | 17 |
| 5 |
| |||
Income tax benefit (expense) |
| 1 |
| (8 | ) | (7 | ) | |||
Income (loss) from continuing operations, before discontinued operations |
| (11 | ) | 9 |
| (2 | ) | |||
Discontinued operations: |
|
|
|
|
|
|
| |||
Loss from operations |
| (8 | ) | (7 | ) | (15 | ) | |||
Litigation and investigation costs |
| — |
| (18 | ) | (18 | ) | |||
Income tax benefit |
| 3 |
| 9 |
| 12 |
| |||
Net loss from discontinued operations |
| (5 | ) | (16 | ) | (21 | ) | |||
Net loss |
| (16 | ) | (7 | ) | (23 | ) | |||
Less: Net income attributable to noncontrolling interests |
| 16 |
| 19 |
| 35 |
| |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (32 | ) | $ | (26 | ) | $ | (58 | ) |
|
|
|
|
|
|
|
| |||
Amounts attributable to Tenet Healthcare Corporation common shareholders |
|
|
|
|
|
|
| |||
Loss from continuing operations, net of tax |
| $ | (27 | ) | $ | (10 | ) | $ | (37 | ) |
Loss from discontinued operations, net of tax |
| (5 | ) | (16 | ) | (21 | ) | |||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (32 | ) | $ | (26 | ) | $ | (58 | ) |
|
|
|
|
|
|
|
| |||
Net loss per share attributable to Tenet Healthcare Corporation common shareholders: |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.28 | ) | $ | (0.11 | ) | $ | (0.38 | ) |
Discontinued operations |
| (0.05 | ) | (0.16 | ) | (0.22 | ) | |||
|
| $ | (0.33 | ) | $ | (0.27 | ) | $ | (0.60 | ) |
Diluted |
|
|
|
|
|
|
| |||
Continuing operations |
| $ | (0.28 | ) | $ | (0.11 | ) | $ | (0.38 | ) |
Discontinued operations |
| (0.05 | ) | (0.16 | ) | (0.22 | ) | |||
|
| $ | (0.33 | ) | $ | (0.27 | ) | $ | (0.60 | ) |
Weighted average shares and dilutive securities outstanding (in thousands): |
|
|
|
|
|
|
| |||
Basic |
| 97,161 |
| 97,677 |
| 97,419 |
| |||
Diluted |
| 97,161 |
| 97,677 |
| 97,419 |
| |||
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS — CONTINUING SAME HOSPITALS
(Unaudited)
(Dollars in millions except per patient days, |
| Three Months Ended |
| Six Months Ended |
| ||||||||
per admission and per visit amounts) |
| 03/31/14 |
| 06/30/14 |
| 06/30/14 |
| ||||||
|
|
|
|
|
|
|
| ||||||
Net inpatient revenues |
| $ | 1,569 |
|
| $ | 1,540 |
|
| $ | 3,109 |
| |
Net outpatient revenues |
| $ | 859 |
|
| $ | 927 |
|
| $ | 1,786 |
| |
|
|
|
|
|
|
|
|
|
| ||||
Number of acute care hospitals (at end of period) |
| 49 |
|
| 49 |
|
| 49 |
| ||||
Licensed beds (at end of period) |
| 13,178 |
|
| 13,231 |
|
| 13,231 |
| ||||
Average licensed beds |
| 13,178 |
|
| 13,196 |
|
| 13,187 |
| ||||
Utilization of licensed beds |
| 51.0 |
| % | 48.7 |
| % | 49.8 |
| % | |||
Patient days — total |
| 605,042 |
|
| 584,251 |
|
| 1,189,293 |
| ||||
Adjusted patient days |
| 949,403 |
|
| 948,144 |
|
| 1,897,547 |
| ||||
Net inpatient revenue per patient day |
| $ | 2,593 |
|
| $ | 2,636 |
|
| $ | 2,614 |
| |
Total admissions |
| 124,451 |
|
| 124,720 |
|
| 249,171 |
| ||||
Adjusted patient admissions |
| 196,855 |
|
| 204,637 |
|
| 401,492 |
| ||||
Charity and uninsured admissions |
| 8,387 |
|
| 7,919 |
|
| 16,306 |
| ||||
Net inpatient revenue per admission |
| $ | 12,607 |
|
| $ | 12,348 |
|
| $ | 12,477 |
| |
Average length of stay (days) |
| 4.86 |
|
| 4.68 |
|
| 4.77 |
| ||||
Total surgeries |
| 114,734 |
|
| 124,152 |
|
| 238,886 |
| ||||
Admissions through emergency department |
| 80,910 |
|
| 80,529 |
|
| 161,439 |
| ||||
Emergency department visits |
| 414,193 |
|
| 432,858 |
|
| 847,051 |
| ||||
Total emergency department admissions and visits |
| 495,103 |
|
| 513,387 |
|
| 1,008,490 |
| ||||
Outpatient visits |
| 1,080,674 |
|
| 1,140,595 |
|
| 2,221,269 |
| ||||
Charity and uninsured outpatient visits |
| 111,857 |
|
| 108,675 |
|
| 220,532 |
| ||||
Net outpatient revenue per visit |
| $ | 795 |
|
| $ | 813 |
|
| $ | 804 |
| |
Net patient revenue per adjusted patient admission |
| $ | 12,334 |
|
| $ | 12,055 |
|
| $ | 12,192 |
| |
|
|
|
|
|
|
|
|
|
| ||||
Net Patient Revenues from: |
|
|
|
|
|
|
|
|
| ||||
Medicare |
| 22.0 |
| % | 21.3 |
| % | 21.6 |
| % | |||
Medicaid |
| 7.4 |
| % | 7.2 |
| % | 7.3 |
| % | |||
Managed care |
| 59.5 |
| % | 61.7 |
| % | 60.6 |
| % | |||
Indemnity, self-pay and other |
| 11.1 |
| % | 9.8 |
| % | 10.5 |
| % | |||
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS — CONTINUING TOTAL HOSPITALS
(Unaudited)
(Dollars in millions except per patient days, |
| Three Months Ended |
| Six Months Ended |
| |||||||||
per admission and per visit amounts) |
| 03/31/14 |
| 06/30/14 |
| 06/30/14 |
| |||||||
|
|
|
|
|
|
|
| |||||||
Net inpatient revenues |
| $ | 2,440 |
| $ | 2,393 |
| $ | 4,833 |
| ||||
Net outpatient revenues |
| $ | 1,346 |
| $ | 1,448 |
| $ | 2,794 |
| ||||
|
|
|
|
|
|
|
| |||||||
Number of acute care hospitals (at end of period) |
| 77 |
| 79 |
| 79 |
| |||||||
Licensed beds (at end of period) |
| 20,279 |
| 20,553 |
| 20,553 |
| |||||||
Average licensed beds |
| 20,263 |
| 20,370 |
| 20,313 |
| |||||||
Utilization of licensed beds |
| 51.0 |
| % | 48.9 |
| % | 49.9 |
| % | ||||
Patient days — total |
| 929,164 |
| 907,093 |
| 1,836,257 |
| |||||||
Adjusted patient days |
| 1,525,379 |
| 1,563,681 |
| 3,089,060 |
| |||||||
Net inpatient revenue per patient day |
| $ | 2,626 |
| $ | 2,638 |
| $ | 2,632 |
| ||||
Total admissions |
| 194,273 |
| 194,641 |
| 388,914 |
| |||||||
Adjusted patient admissions |
| 323,810 |
| 337,509 |
| 661,319 |
| |||||||
Charity and uninsured admissions |
| 12,530 |
| 10,927 |
| 23,457 |
| |||||||
Net inpatient revenue per admission |
| $ | 12,560 |
| $ | 12,294 |
| $ | 12,427 |
| ||||
Average length of stay (days) |
| 4.78 |
| 4.66 |
| 4.72 |
| |||||||
Total surgeries |
| 162,282 |
| 173,664 |
| 335,946 |
| |||||||
Admissions through emergency department |
| 122,601 |
| 122,086 |
| 244,687 |
| |||||||
Emergency department visits |
| 665,002 |
| 702,009 |
| 1,367,011 |
| |||||||
Total emergency department admissions and visits |
| 787,603 |
| 824,095 |
| 1,611,698 |
| |||||||
Outpatient visits |
| 1,947,687 |
| 2,066,051 |
| 4,013,738 |
| |||||||
Charity and uninsured outpatient visits |
| 165,248 |
| 169,766 |
| 335,014 |
| |||||||
Net outpatient revenue per visit |
| $ | 691 |
| $ | 701 |
| $ | 696 |
| ||||
Net patient revenue per adjusted patient admission |
| $ | 11,692 |
| $ | 11,380 |
| $ | 11,533 |
| ||||
|
|
|
|
|
|
|
| |||||||
Net Patient Revenues from: |
|
|
|
|
|
|
| |||||||
Medicare |
| 22.6 |
| % | 22.5 |
| % | 22.6 |
| % | ||||
Medicaid |
| 7.7 |
| % | 9.9 |
| % | 8.8 |
| % | ||||
Managed care |
| 57.8 |
| % | 58.0 |
| % | 57.9 |
| % | ||||
Indemnity, self-pay and other |
| 11.9 |
| % | 9.6 |
| % | 10.7 |
| % | ||||
TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
|
| June 30, |
| December 31, |
| ||||||||
|
| 2014 |
| 2013 |
| ||||||||
Assets |
|
|
|
|
| ||||||||
Hospital Operations and other |
| $ | 16,577 |
| $ | 15,874 |
| ||||||
Conifer |
| 330 |
| 256 |
| ||||||||
Total |
| $ | 16,907 |
| $ | 16,130 |
| ||||||
|
|
|
|
|
|
|
| ||||||
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2014 |
| 2013 |
| 2014 |
| 2013 |
| ||||
Capital expenditures: |
|
|
|
|
|
|
|
|
| ||||
Hospital Operations and other |
| $ | 237 |
| $ | 117 |
| $ | 510 |
| $ | 248 |
|
Conifer |
| 5 |
| 6 |
| 13 |
| 8 |
| ||||
Total |
| $ | 242 |
| $ | 123 |
| $ | 523 |
| $ | 256 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net operating revenues: |
|
|
|
|
|
|
|
|
| ||||
Hospital Operations and other |
| $ | 3,895 |
| $ | 2,297 |
| $ | 7,676 |
| $ | 4,565 |
|
Conifer |
|
|
|
|
|
|
|
|
| ||||
Tenet |
| 138 |
| 94 |
| 278 |
| 186 |
| ||||
Other customers |
| 147 |
| 125 |
| 292 |
| 244 |
| ||||
|
| 4,180 |
| 2,516 |
| 8,246 |
| 4,995 |
| ||||
Intercompany eliminations |
| (138 | ) | (94 | ) | (278 | ) | (186 | ) | ||||
Total |
| $ | 4,042 |
| $ | 2,422 |
| $ | 7,968 |
| $ | 4,809 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Hospital Operations and other |
| $ | 416 |
| $ | 308 |
| $ | 755 |
| $ | 550 |
|
Conifer |
| 44 |
| 28 |
| 92 |
| 60 |
| ||||
Total |
| $ | 460 |
| $ | 336 |
| $ | 847 |
| $ | 610 |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization: |
|
|
|
|
|
|
|
|
| ||||
Hospital Operations and other |
| $ | 204 |
| $ | 115 |
| $ | 392 |
| $ | 225 |
|
Conifer |
| 5 |
| 6 |
| 10 |
| 10 |
| ||||
Total |
| $ | 209 |
| $ | 121 |
| $ | 402 |
| $ | 235 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA |
| $ | 460 |
| $ | 336 |
| $ | 847 |
| $ | 610 |
|
Depreciation and amortization |
| (209 | ) | (121 | ) | (402 | ) | (235 | ) | ||||
Impairments and restructuring charges, and acquisition-related costs |
| (32 | ) | (11 | ) | (53 | ) | (25 | ) | ||||
Litigation and investigation costs |
| (12 | ) | (2 | ) | (15 | ) | (2 | ) | ||||
Interest expense |
| (190 | ) | (98 | ) | (372 | ) | (201 | ) | ||||
Loss from early extinguishment of debt |
| — |
| (171 | ) | — |
| (348 | ) | ||||
Investment earnings |
| — |
| 1 |
| — |
| 1 |
| ||||
Income (loss) from continuing operations before income taxes |
| $ | 17 |
| $ | (66 | ) | $ | 5 |
| $ | (200 | ) |
(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 six months ended June 30, 2014 and 2013.
For certain pro financial information of the Company as if the Vanguard acquisition had occurred at January 1, 2013, see Note 14 of the notes to the condensed consolidated financial statements in the Company’s Form 10-Q for the quarterly period ended June 30, 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)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
(Dollars in millions) |
| 2014 |
| 2013 |
| 2014 |
| 2013 |
| ||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
| $ | (26 | ) | $ | (50 | ) | $ | (58 | ) | $ | (138 | ) |
Less: Net income attributable to noncontrolling interests |
| (19 | ) | (7 | ) | (35 | ) | (12 | ) | ||||
Income (loss) from discontinued operations, net of tax |
| (16 | ) | 3 |
| (21 | ) | 1 |
| ||||
Income (loss) from continuing operations |
| 9 |
| (46 | ) | (2 | ) | (127 | ) | ||||
Income tax benefit (expense) |
| (8 | ) | 20 |
| (7 | ) | 73 |
| ||||
Investment earnings |
| — |
| 1 |
| — |
| 1 |
| ||||
Loss from early extinguishment of debt |
| — |
| (171 | ) | — |
| (348 | ) | ||||
Interest expense |
| (190 | ) | (98 | ) | (372 | ) | (201 | ) | ||||
Operating income |
| 207 |
| 202 |
| 377 |
| 348 |
| ||||
Litigation and investigation costs |
| (12 | ) | (2 | ) | (15 | ) | (2 | ) | ||||
Impairment and restructuring charges, and acquisition-related costs |
| (32 | ) | (11 | ) | (53 | ) | (25 | ) | ||||
Depreciation and amortization |
| (209 | ) | (121 | ) | (402 | ) | (235 | ) | ||||
Adjusted EBITDA |
| $ | 460 |
| $ | 336 |
| $ | 847 |
| $ | 610 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net operating revenues |
| $ | 4,042 |
| $ | 2,422 |
| $ | 7,968 |
| $ | 4,809 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) |
| 11.4 | % | 13.9 | % | 10.6 | % | 12.7 | % | ||||
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #2 - Reconciliation of Adjusted Free Cash Flow
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
(Dollars in millions) |
| 2014 |
| 2013 |
| 2014 |
| 2013 |
| ||||
Net cash provided by operating activities |
| $ | 266 |
| $ | 160 |
| $ | 247 |
| $ | 128 |
|
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements |
| (54 | ) | (12 | ) | (84 | ) | (19 | ) | ||||
Net cash provided by (used in) operating activities from discontinued operations |
| 2 |
| (2 | ) | (12 | ) | (7 | ) | ||||
Adjusted net cash provided by operating activities — continuing operations |
| 318 |
| 174 |
| 343 |
| 154 |
| ||||
Purchases of property and equipment — continuing operations |
| (242 | ) | (123 | ) | (523 | ) | (256 | ) | ||||
Adjusted free cash flow — continuing operations |
| $ | 76 |
| $ | 51 |
| $ | (180 | ) | $ | (102 | ) |
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, 2014
(Unaudited)
|
| Q3 2014 |
| 2014 |
| ||||||||||||
(Dollars in millions) |
| Low |
| High |
| Low |
| High |
| ||||||||
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders |
| $ | (48 | ) | $ | 7 |
| $ | (21 | ) | $ | 112 |
| ||||
Less: Net (income) attributable to noncontrolling interests |
| (20 | ) | (15 | ) | (75 | ) | (65 | ) | ||||||||
Loss from discontinued operations, net of tax |
| (5 | ) | 0 |
| (30 | ) | (15 | ) | ||||||||
Income (loss) from continuing operations |
| $ | (23 | ) | $ | 22 |
| $ | 84 |
| $ | 192 |
| ||||
Income tax (expense) benefit(a) |
| 16 |
| (14 | ) | (64 | ) | (136 | ) | ||||||||
Income (loss) from continuing operations, before income taxes |
| $ | (39 | ) | $ | 36 |
| $ | 148 |
| $ | 328 |
| ||||
Loss from early extinguishment of debt |
| (24 | ) | (24 | ) | (24 | ) | (24 | ) | ||||||||
Interest expense, net |
| (195 | ) | (185 | ) | (760 | ) | (730 | ) | ||||||||
Operating income |
| $ | 180 |
| $ | 245 |
| $ | 932 |
| $ | 1,082 |
| ||||
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements(b) |
| 0 |
| 0 |
| (68 | ) | (68 | ) | ||||||||
Depreciation and amortization |
| (220 | ) | (205 | ) | (850 | ) | (800 | ) | ||||||||
Adjusted EBITDA |
| $ | 400 |
| $ | 450 |
| $ | 1,850 |
| $ | 1,950 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Net operating revenues |
| $ | 3,800 |
|
| $ | 4,000 |
|
| $ | 16,000 |
|
| $ | 16,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) |
| 10.5 |
| % | 11.3 |
| % | 11.6 |
| % | 12.0 |
| % | ||||
(a) Uses a tax rate of 40% excluding unusual adjustments for unreported periods
(b) 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, 2014
(Unaudited)
|
| Q3 2014 |
| 2014 |
| ||||||||
(Dollars in millions except per share amounts) |
| Low |
| High |
| Low |
| High |
| ||||
Adjusted EBITDA |
| $ | 400 |
| $ | 450 |
| $ | 1,850 |
| $ | 1,950 |
|
Depreciation and amortization |
| (220 | ) | (205 | ) | (850 | ) | (800 | ) | ||||
Interest expense, net |
| (195 | ) | (185 | ) | (760 | ) | (730 | ) | ||||
Income (loss) from continuing operations before income taxes |
| $ | (15 | ) | $ | 60 |
| $ | 240 |
| $ | 420 |
|
Income tax (expense) benefit (a) |
| 6 |
| (24 | ) | (100 | ) | (172 | ) | ||||
Normalized income (loss) from continuing operations |
| $ | (9 | ) | $ | 36 |
| $ | 140 |
| $ | 248 |
|
Net (income) attributable to noncontrolling interests |
| (20 | ) | (15 | ) | (75 | ) | (65 | ) | ||||
Net income (loss) attributable to common shareholders |
| $ | (29 | ) | $ | 21 |
| $ | 65 |
| $ | 183 |
|
|
|
|
|
|
|
|
|
|
| ||||
Fully diluted weighted average share outstanding (in millions) |
| 98 |
| 101 |
| 100 |
| 100 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Normalized fully diluted earnings per share — continuing operations |
| $ | (0.30 | ) | $ | 0.21 |
| $ | 0.65 |
| $ | 1.83 |
|
(a) Uses a tax rate of 40% excluding unusual adjustments for unreported periods
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2014
(Unaudited)
|
| 2014 |
| ||||
(Dollars in millions) |
| Low |
| High |
| ||
Net cash provided by operating activities |
| $ | 951 |
| $ | 1,011 |
|
Less: Payments for restructuring charges, acquisition-related costs and litigation costs and |
| (84 | ) | (84 | ) | ||
Net cash used in operating activities from discontinued operations |
| (15 | ) | (5 | ) | ||
Adjusted net cash provided by operating activities — continuing operations |
| $ | 1,050 |
| $ | 1,100 |
|
Purchases of property and equipment — continuing operations |
| (1,000 | ) | (900 | ) | ||
Adjusted free cash flow — continuing operations |
| $ | 50 |
| $ | 200 |
|
(a) Company does not forecast impairment and restructuring charges, acquisition-related and litigation costs and settlements