EXHIBIT 99.1
Investor contact: Paul J. Russell (805) 563-7188
Media contact: Lance Ignon (805) 563-6975
TENET THIRD QUARTER EPS FROM OPERATIONS UP 18 PERCENT
SANTA BARBARA, CALIF. -- APRIL 10, 1997 -- Tenet Healthcare Corporation
(THC: NYSE, PSE) reported an 18 percent increase in earnings per share from
operations and a 21 percent increase in net income from operations on a 13
percent increase in net operating revenues in its third quarter ended Feb.
28, 1997. Earnings per share from operations in the quarter were 39 cents,
compared with 33 cents in the prior-year quarter.
Earnings per share and net income from operations exclude the effect of
non-recurring merger related expenses and an extraordinary charge recorded in
the current quarter. All periods are restated to reflect the pooling of
interests merger with OrNda HealthCorp on Jan. 30, 1997.
THIRD QUARTER GROWTH
Net operating revenues for the quarter were $2,236,964,000, compared with
$1,972,700,000 in the prior year. EBITDA for the quarter of $411,685,000
increased 12 percent from $367,263,000 in the prior year. Net income from
operations was $118,294,000, an increase of 21 percent from $98,136,000 in the
prior-year quarter.
"The latest quarterly results confirm a continuation of the growth Tenet
has shown for many quarters," said Jeffrey C. Barbakow, chairman and chief
executive officer of Tenet, "and this comes before we have had an
opportunity to reap any of the anticipated benefits of the OrNda acquisition.
In the quarters ahead, we will be working to increase revenues from our
stronger local healthcare networks, as well as achieving the goals we have
set for cost improvements. We are making excellent progress integrating the
OrNda facilities into our system and they provide us with many opportunities
to enhance our future financial performance."
"At the same time, we are enjoying increasing success in efforts to
strengthen our local networks through acquisitions of not-for-profit
hospitals and other innovative partnerships," Barbakow added. In the
February quarter, Tenet completed the acquisition of four hospitals with a
total of 1,158 licensed beds, in addition to the merger with OrNda. Pending
transactions announced by the company include five hospitals. Just
yesterday, Tenet and MedPartners, Inc. announced an alliance that will
further strengthen Tenet's California HealthSystem in Los Angeles and Orange
counties.
GROWTH IN PATIENT VOLUMES
Total admissions at the company's hospitals increased a robust 12.6
percent over the prior-year quarter. Same-facility admissions increased 2.1
percent. Total outpatient visits increased 28 percent, while same-facility
outpatient visits increased 13.9 percent over the prior-year quarter. The
improvements in same-facility patient volumes were even more noteworthy since
the prior-year quarter had an additional day due to leap year.
EBITDA margins for the quarter were 18.4 percent, compared with 18.6
percent in the prior year.
Pre-tax margins from operations increased to 8.8 percent from 8.3 percent in
the prior-year quarter, while after-tax margins from operations increased to
5.3 percent from 5 percent. These margins exclude the effect of the
merger-related expenses and extraordinary charges recorded in the current
quarter.
REGISTRATION
Tenet announced Joseph, Littlejohn & Levy Fund, L.P. has exercised its
registration rights in connection with the OrNda merger, and the company is in
the process of fulfilling its request. The JLL Fund, previously the largest
shareholder of OrNda, received 9,580,644 shares of Tenet in connection with
Tenet's merger with OrNda.
BOARD CHANGES
Tenet also announced the resignations of three members of its board of
directors: Thomas J. Pritzker, Peter A. Joseph, and Paul S. Levy. Pritzker,
who is president of Hyatt Corp., has served on Tenet's board since March,
1995 following Tenet's acquisition of American Medical Holdings, of which he
was a director. "Tom Pritzker has been a real asset to our board and we
thank him for his many contributions," said Barbakow. "He graciously
continued his service through the completion of the OrNda merger, even with
his expanded responsibilities at Hyatt."
Joseph and Levy, both of whom are partners of JLL and both of whom served
on OrNda's board, became members of Tenet's board when Tenet acquired OrNda.
In view of the proposed sale of the JLL shares, Joseph and Levy deemed it
appropriate to resign from the Tenet board.
MERGER RELATED EXPENSES AND EXTRAORDINARY CHARGE
In the quarter, Tenet recorded non-recurring expenses in connection with
the OrNda merger of $272,225,000 before tax benefits of $88,000,000,
equivalent to 60 cents per share. The expenses include transaction costs of
the merger as well as other costs related to OrNda associated with: (1)
severance and other benefit programs; (2) closure of OrNda offices,
consolidation of operations, and impairment of assets; (3) information
systems consolidations; (4) estimated costs to settle a government
investigation of OrNda and other OrNda litigation; and (5) conforming
accounting practices of the two companies.
Also, Tenet is currently developing a plan which will involve the
closure, sale or conversion of certain of its facilities and a reorganization
of its physician practices, and expects to incur an additional non-recurring
charge in the fourth quarter of fiscal 1997 related to this plan.
Tenet also recorded an extraordinary charge of $47,398,000 after taxes,
or 16 cents per share, in the quarter reflecting the costs of early
retirement of debt refinanced in connection with the OrNda acquisition.
In its very successful January refinancing, Tenet issued $2 billion in
senior and senior subordinated notes, redeemed most of OrNda's publicly
traded debt, and replaced the Tenet and OrNda bank credit facilities with a
new $2.8 billion revolving credit facility. In that refinancing, Tenet was
able to reduce interest rates on both its publicly traded and bank debt, as
well as extend maturities and fix rates for most of its debt. As of Feb. 28,
1997, less than $600 million of Tenet's debt was subject to floating interest
rates.
Including the merger related expenses and extraordinary charge, Tenet
had a net loss for the quarter of $113,329,000, or 37 cents per share.
NINE MONTHS RESULTS
Tenet also reported solid gains in revenues, net income from operations
and earnings per share from
operations for the nine months ended Feb. 28, 1997, restated for the
acquisition of OrNda on a pooling-of-interests basis.
Earnings per share from operations rose to $1.05 in the nine-month
period, a gain of 17 percent from 90 cents in the prior year. Net operating
revenues of $6,339,432,000 increased 13 percent from $5,603,154,000. Net
income from operations of $317,153,000 increased 23 percent from
$258,038,000 in the prior year. Earnings per share and net income from
operations exclude the effect of gains on sale of facilities and long-term
investments of $177,086,000 after tax, or 62 cents per share, in the
prior-year period, as well as the merger related expenses and extraordinary
charge in the most recent quarter and year-to-date periods.
Tenet Healthcare, which is based in Santa Barbara, Calif., through its
subsidiaries owns or operates 127 acute care hospitals and numerous related
healthcare services from coast to coast. The company's 97,000 employees
serve communities in 22 states. Tenet's name reflects its core business
philosophy: the importance of shared values between partners -- including
employees, physicians, insurers and communities -- in providing a full
spectrum of quality healthcare. The company's World Wide Web address is
www.tenethealth.com.
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[table to follow]
[Listed: NYSE, PSE (THC]
TENET HEALTHCARE CORPORATION
Summary for
Quarter and Nine Months Ended February 28, 1997 and February 29, 1996
(UNAUDITED)
(in millions, except per share amounts)
Three Months Nine Months
1997 1996 1997 1996
Net operating revenues 2,236.9 1,972.7 6,339.4 5,603.2
Income (loss) before income taxes(*) (76.4) 164.0 257.9 744.3
Taxes on income 10.5 (65.9) (125.0) (309.2)
Income (loss) before extraordinary charge (65.9) 98.1 132.9 435.1
Net income (113.3) 98.1 85.5 435.1
EARNINGS (LOSS) PER SHARE:
Operations 0.39 0.33 1.05 0.90
Merger-related expenses (0.60) -- (0.61) --
Extraordinary charge (0.16) -- (0.16) --
Gains on disposals of facilities & long-term investments -- -- -- 0.62
------- ------- ------- ------
Total (0.37) 0.33 0.28 1.52
------- ------- ------- ------
Average shares and share equivalents outstanding 305,267 299,284 302,915 286,284
(*) Included in income before income taxes are:
1) Gains on disposals of facilities & long-term investments -- -- -- 311.9
2) Merger-related expenses (272.2) -- (272.2) --