Full Press Release Details
Tenet Reports Results
for the First Quarter Ended March 31, 2020
and Provides Update on Effects of COVID-19
DALLAS - May 4, 2020 - Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended March 31, 2020 (1Q20).
"Our first quarter represents results that were trending above our expectations through early March and then, in a virtual snap of the finger, hit a wall created by the COVID-19 pandemic and the quick shutdown of elective surgeries and normal patient traffic," said Ronald A. Rittenmeyer, Executive Chairman and Chief Executive Officer. "Our team responded quickly, focused on the safety of our patients and staff while ensuring we were caring for the potential and actual surge of COVID patients. This included forward purchasing of PPE and other supplies and equipment regardless of price, implementation of staffing deployment plans tailored to the unique elements of various markets, and the establishment of clear clinical protocols and safety measures standardized across operations."
"We acted swiftly to mitigate the impact of significant volume reductions in our hospitals and surgery centers, enhance our operational and financial flexibility and redirect resources to
critical operations. Simultaneously, we took actions to increase liquidity and defer capital spend and other costs that could be delayed without disrupting our mission. At all times, our patients have continued to receive excellent care with uninterrupted access to caregivers, medication and equipment. Conifer and our Global Business Center in Manila continued to operate and execute their respective missions.
"We have now shifted our focus to a comprehensive recovery effort across our entire system in compliance with state and local orders. We have begun to resume vital elective procedures and methodically re-open, with a detailed plan by physician, our USPI facilities and the hospital departments that were closed as a result of the pandemic.
"Importantly for Tenet, this recovery is led by the same team that has navigated the turnaround of Tenet during the past two years and through this pandemic. The team is energized and fully engaged in executing the recovery with the same tenacity and accountability that has served all our stakeholders well and will enable us to return, as soon as possible, to the trajectory we had in place in February.
"On behalf of myself and our Board, we want to thank our teams and all healthcare providers, who have responded to this public health emergency with strength and courage. We recognize and applaud the sacrifices our teams and others are making every day."
Tenet's results for 1Q20 versus the quarter ended March 31, 2019 (1Q19) were as follows:
| ($ in millions, except per share results) | 1Q20 | 1Q19 |
| Net income (loss) from continuing operations attributable to Tenet common shareholders | $94 | $(20) |
| Net income (loss) from continuing operations attributable to Tenet common shareholders per diluted share | $0.89 | $(0.19) |
| Adjusted EBITDA | $585 | $623 |
| Adjusted diluted earnings per share from continuing operations | $1.28 | $0.60 |
| The table above as well as tables and discussions throughout this earnings release include certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-3 included at the end of this earnings release. Management's reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release. | ||
| Prior period amounts have been recast to reflect the Company's change in accounting for its medical malpractice and workers' compensation actuarial liabilities, As permitted by U.S. GAAP, these liabilities are now reported on an undiscounted basis, whereas they were previously reported on a discounted basis. |
apprehension among the public. Patient volumes impacted include emergency room (ER) visits, admissions, elective surgeries and other procedures. In addition, a substantial portion of the Company's USPI ambulatory surgery centers have been closed and other centers are operating with very limited hours. The Company has an established and tested support structure in place to protect its caregivers and patients and manage infectious agents, including facility deep cleaning processes and appropriate security precautions. The Company proactively planned for COVID-19 by making additional investments to enhance its inventory of personal protective equipment and other supplies. The Company has encountered significantly higher prices for such supplies, but believes it currently has adequate supplies on hand.
Current Liquidity and Cash Balance
Results from Continuing Operations Attributable to Tenet Common Shareholders
Adjusted Results from Continuing Operations Attributable to Tenet Common Shareholders
Reconciliations of net income available (loss attributable) to Tenet common shareholders to Adjusted net income from continuing operations available to Tenet's common shareholders are contained in Table #1 at the end of this release.
Reconciliations of net income available (loss attributable) to Tenet common shareholders to Adjusted EBITDA are contained in Table #2 at the end of this release.
Hospital Operations and Other Segment Results
Tenet's Hospital Operations and other business segment (Hospital segment) is comprised of acute care and specialty hospitals, ancillary outpatient facilities, freestanding urgent care centers (nearly all which are managed by USPI and operated under the MedPost brand), micro-hospitals and physician practices.
| Hospital segment results ($ in millions) | 1Q20 | 1Q19 | ||
| Net operating revenues | $3,834 | $3,862 | ||
| Same-hospital net patient services revenues (a) | $3,542 | $3,557 | ||
| Adjusted EBITDA | $342 | $347 | ||
| Same-hospital admissions decline (a) | (4.5 | )% | (0.1 | )% |
| Same-hospital adjusted admissions (decline) growth (a)(b) | (4.9 | )% | 0.6 | % |
| Prior period amounts have been recast to reflect the Company's change in accounting for its medical malpractice and workers' compensation actuarial liabilities, As permitted by U.S. GAAP, these liabilities are now reported on an undiscounted basis, whereas they were previously reported on a discounted basis. |
(a) Same-hospital revenues and statistical data include those for the 65 hospitals operated by the Company's Hospital segment continuously from January 1, 2019 through March 31, 2020. Revenues and volumes for any hospitals acquired or disposed of during that time frame are excluded.
(b) Adjusted patient admissions are hospital admissions adjusted to include outpatient admissions by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.
Revenues and Volumes
| Jan. - Feb. 2020 | Month of March 2020 | 1Q20 | |
| Admissions | 1.1% | (15.2)% | (4.5)% |
| Adjusted admissions | 1.7% | (17.6)% | (4.9)% |
| ER visits | 6.0% | (16.2)% | (1.7)% |
| Hospital surgeries | 0.4% | (21.1)% | (6.9)% |
Ambulatory Care Segment Results
Tenet's Ambulatory Care business segment is comprised of the operations of USPI. As of March 31, 2020, USPI had interests in 265 ambulatory surgery centers, 39 urgent care centers (nearly all of which operate under the CareSpot brand), 23 imaging centers and 24 surgical hospitals in 27 states. The Company owns 95 percent of USPI.
| Ambulatory Care segment results ($ in millions) | 1Q20 | 1Q19 | ||
| Net operating revenues | $490 | $480 | ||
| Same-facility system-wide net patient services revenues (c) | $1,019 | $1,035 | ||
| Adjusted EBITDA | $156 | $177 | ||
| Adjusted EBITDA less facility-level NCI | $100 | $112 | ||
| Same-facility system-wide surgical cases (decline) growth | (8.5 | )% | 2.8 | % |
| Same-facility system-wide total ambulatory cases (decline) growth | (4.3 | )% | 0.9 | % |
(c) Same-facility system-wide revenues and statistical information include the results of many of the facilities in which the Ambulatory Care segment has an investment that are not consolidated by Tenet (of the 351 facilities at March 31, 2020, the results of 107 were accounted for under the equity method for unconsolidated affiliates). To help analyze the segment's results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities.
Revenues and Volumes
| Jan. - Feb. 2020 | Month of March 2020 | 1Q20 | |
| Surgical cases growth (decline) | 2.0% | (28.6)% | (8.5)% |
Conifer Segment Results
Tenet's Conifer business segment provides healthcare business process services in the areas of hospital and physician revenue cycle management as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, healthcare plans and other entities.
| Conifer segment results ($ in millions) | 1Q20 | 1Q19 |
| Net operating revenues | $332 | $349 |
| Adjusted EBITDA | $87 | $99 |
The Company continues to work on spinning off its Conifer segment. This transaction is expected to both enhance shareholder value and reduce the level of debt on Tenet through a tax-free debt-for-debt exchange.
Balance Sheet, Cash Flows and Liquidity
Balance Sheet Highlights
| ($ in millions) | March 31, 2020 | December 31, 2019 |
| Cash and cash equivalents | $613 | $262 |
| Accounts receivable days outstanding | 60.7 | 58.4 |
| Line-of-credit borrowings outstanding | $500 | $0 |
| Ratio of net debt to Adjusted EBITDA (d) | 5.44 | 5.35 |
(d) Net debt is total debt less cash and cash equivalents
Cash flows and liquidity
Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.
| ($ in millions) | 1Q20 | 1Q19 |
| Net cash provided by operating activities | $129 | $10 |
| Capital expenditures | $(182) | $(192) |
| Free cash flow | $(53) | $(182) |
| Adjusted free cash flow | $15 | $(148) |
| Net cash used in investing activities | $(204) | $(139) |
| Net cash provided by (used in) financing activities | $426 | $(30) |
Act, which was enacted at the end of March 2020. In April 2020, the Company received approximately $345 million of grant aid associated with the $50 billion distributed to providers across the country from the $175 billion of grant aid earmarked for health care providers under the stimulus legislation. The Company does not have to repay the grant aid as long as the terms and conditions of the grants are met.
Management's Webcast Discussion of Results and Outlook
Tenet management will discuss the Company's 1Q20 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on May 5, 2020. Investors can access the webcast through the Company's website at www.tenethealth.com/investors.
The slide presentation associated with the webcast referenced above, a copy of this earnings press release and a related supplemental financial disclosures document will be available on the Company's Investor Relations website on May 4, 2020.
Cautionary Statement
This release contains "forward-looking statements" - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company's expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "assume," "believe," "budget," "estimate," "forecast," "intend," "plan," "predict," "project," "seek," "see," "target," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, especially with regards to developments related to COVID-19. Particular uncertainties that could cause the Company's actual results to be materially different than those expressed in the Company's forward-looking statements include, but are not limited to, the recent outbreak of the COVID-19 pandemic and the other factors disclosed under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended December 31, 2019, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.
About Tenet Healthcare
Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas with 113,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 510 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care and imaging centers and other care sites and clinics. We also operate Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other customers. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve. For more information, please visit www.tenethealth.com.
Non-GAAP Financial Measures
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 use similar non-GAAP financial measures in their presentations and earnings releases. 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.
The Company uses, and believes investors use, Free Cash Flow and Adjusted Free Cash Flow as supplemental non-GAAP measures to analyze cash flows generated from the Company's operations. The Company believes these measures are useful to investors in evaluating its ability to fund distributions paid to noncontrolling interests or for 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 the Company's financial statements, they do not provide a complete measure of the Company's 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.
Tenet Healthcare Corporation
Financial Statements and Reconciliations
1Q20 Earnings Release
| Description | Page |
| Consolidated Statements of Operations - quarters | 13 |
| Consolidated Balance Sheets | 14 |
| Consolidated Statements of Cash Flows | 15 |
| Segment Reporting | 16 |
| Table #1 - Reconciliations of Net Income to Adjusted Net Income | 17 |
| Table #2 - Reconciliations of Net Income to Adjusted EBITDA | 18 |
| Table #3 - Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flows | 19 |
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| (Dollars in millions except per share amounts) | Three Months Ended March 31, | ||||||||||||||||
| 2020 | % | 2019 | % | Change | |||||||||||||
| Net operating revenues | $ | 4,520 | 100.0 | % | $ | 4,545 | 100.0 | % | (0.6 | )% | |||||||
| Equity in earnings of unconsolidated affiliates | 28 | 0.6 | % | 34 | 0.7 | % | (17.6 | )% | |||||||||
| Operating expenses: | |||||||||||||||||
| Salaries, wages and benefits | 2,187 | 48.4 | % | 2,151 | 47.3 | % | 1.7 | % | |||||||||
| Supplies | 763 | 16.9 | % | 741 | 16.3 | % | 3.0 | % | |||||||||
| Other operating expenses, net | 1,013 | 22.4 | % | 1,065 | 23.4 | % | (4.9 | )% | |||||||||
| Depreciation and amortization | 203 | 4.5 | % | 208 | 4.6 | % | |||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 55 | 1.2 | % | 19 | 0.4 | % | |||||||||||
| Litigation and investigation costs | 2 | - | % | 13 | 0.3 | % | |||||||||||
| Net (gains) losses on sales, consolidation and deconsolidation of facilities | (2 | ) | - | % | 1 | - | % | ||||||||||
| Operating income | 327 | 7.2 | % | 381 | 8.4 | % | |||||||||||
| Interest expense | (243 | ) | (251 | ) | |||||||||||||
| Other non-operating income, net | 1 | 1 | |||||||||||||||
| Loss from early extinguishment of debt | - | (47 | ) | ||||||||||||||
| Income from continuing operations, before income taxes | 85 | 84 | |||||||||||||||
| Income tax benefit (expense) | 75 | (20 | ) | ||||||||||||||
| Income from continuing operations, before discontinued operations | 160 | 64 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| (Loss) income from operations | (1 | ) | 10 | ||||||||||||||
| Income tax expense | - | (2 | ) | ||||||||||||||
| (Loss) income from discontinued operations | (1 | ) | 8 | ||||||||||||||
| Net income | 159 | 72 | |||||||||||||||
| Less: Net income available to noncontrolling interests | 66 | 84 | |||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 93 | $ | (12 | ) | ||||||||||||
| Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | 94 | $ | (20 | ) | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (1 | ) | 8 | ||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 93 | $ | (12 | ) | ||||||||||||
| Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Continuing operations | $ | 0.90 | $ | (0.19 | ) | ||||||||||||
| Discontinued operations | (0.01 | ) | 0.08 | ||||||||||||||
| $ | 0.89 | $ | (0.11 | ) | |||||||||||||
| Diluted | |||||||||||||||||
| Continuing operations | $ | 0.89 | $ | (0.19 | ) | ||||||||||||
| Discontinued operations | (0.01 | ) | 0.08 | ||||||||||||||
| $ | 0.88 | $ | (0.11 | ) | |||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
| Basic | 104,353 | 102,788 | |||||||||||||||
| Diluted* | 105,733 | 102,788 |
*Had the Company generated income from continuing operations in the three months ended March 31, 2019, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,753 thousand shares.
Prior period amounts have been recast to reflect the Company's change in accounting for its medical malpractice and workers' compensation actuarial liabilities, As permitted by U.S. GAAP, these liabilities are now reported on an undiscounted basis, whereas they were previously reported on a discounted basis.
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| (Dollars in millions) | 2020 | 2019 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 613 | $ | 262 | ||||
| Accounts receivable | 2,722 | 2,743 | ||||||
| Inventories of supplies, at cost | 324 | 310 | ||||||
| Income tax receivable | 18 | 10 | ||||||
| Assets held for sale | 394 | 387 | ||||||
| Other current assets | 1,317 | 1,369 | ||||||
| Total current assets | 5,388 | 5,081 | ||||||
| Investments and other assets | 2,467 | 2,369 | ||||||
| Deferred income taxes | 263 | 183 | ||||||
| Property and equipment, at cost, less accumulated depreciation and amortization | 6,786 | 6,878 | ||||||
| Goodwill | 7,308 | 7,252 | ||||||
| Other intangible assets, at cost, less accumulated amortization | 1,611 | 1,602 | ||||||
| Total assets | $ | 23,823 | $ | 23,365 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 165 | $ | 171 | ||||
| Accounts payable | 1,079 | 1,204 | ||||||
| Accrued compensation and benefits | 788 | 877 | ||||||
| Professional and general liability reserves | 279 | 330 | ||||||
| Accrued interest payable | 306 | 245 | ||||||
| Liabilities held for sale | 49 | 44 | ||||||
| Other current liabilities | 1,429 | 1,334 | ||||||
| Total current liabilities | 4,095 | 4,205 | ||||||
| Long-term debt, net of current portion | 15,082 | 14,580 | ||||||
| Professional and general liability reserves | 638 | 635 | ||||||
| Defined benefit plan obligations | 547 | 560 | ||||||
| Deferred income taxes | 27 | 27 | ||||||
| Other long-term liabilities | 1,405 | 1,415 | ||||||
| Total liabilities | 21,794 | 21,422 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 1,526 | 1,506 | ||||||
| Equity: | ||||||||
| Shareholders' equity: | ||||||||
| Common stock | 7 | 7 | ||||||
| Additional paid-in capital | 4,739 | 4,760 | ||||||
| Accumulated other comprehensive loss | (256 | ) | (257 | ) | ||||
| Accumulated deficit | (2,434 | ) | (2,513 | ) | ||||
| Common stock in treasury, at cost | (2,414 | ) | (2,414 | ) | ||||
| Total shareholders' deficit | (358 | ) | (417 | ) | ||||
| Noncontrolling interests | 861 | 854 | ||||||
| Total equity | 503 | 437 | ||||||
| Total liabilities and equity | $ | 23,823 | $ | 23,365 |
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
| Quarters Ended | ||||||||
| (Dollars in millions) | March 31, | |||||||
| 2020 | 2019 | |||||||
| Net income | $ | 159 | $ | 72 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 203 | 208 | ||||||
| Deferred income tax (benefit) expense | (79 | ) | 22 | |||||
| Stock-based compensation expense | 13 | 11 | ||||||
| Impairment and restructuring charges, and acquisition-related costs | 55 | 19 | ||||||
| Litigation and investigation costs | 2 | 13 | ||||||
| Net losses (gains) on sales, consolidation and deconsolidation of facilities | (2 | ) | 1 | |||||
| Loss from early extinguishment of debt | - | 47 | ||||||
| Equity in earnings of unconsolidated affiliates, net of distributions received | (11 | ) | 3 | |||||
| Amortization of debt discount and debt issuance costs | 10 | 11 | ||||||
| Pre-tax loss (income) from discontinued operations | 1 | (10 | ) | |||||
| Other items, net | 2 | (7 | ) | |||||
| Changes in cash from operating assets and liabilities: | ||||||||
| Accounts receivable | 14 | (158 | ) | |||||
| Inventories and other current assets | 23 | (115 | ) | |||||
| Income taxes | 2 | 9 | ||||||
| Accounts payable, accrued expenses and other current liabilities | (144 | ) | (119 | ) | ||||
| Other long-term liabilities | (51 | ) | 37 | |||||
| Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (68 | ) | (32 | ) | ||||
| Net cash used in operating activities from discontinued operations, excluding income taxes | - | (2 | ) | |||||
| Net cash provided by operating activities | 129 | 10 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment - continuing operations | (182 | ) | (192 | ) | ||||
| Purchases of businesses or joint venture interests, net of cash acquired | (55 | ) | (2 | ) | ||||
| Proceeds from sales of facilities and other assets - continuing operations | 11 | 41 | ||||||
| Proceeds from sales of facilities and other assets - discontinued operations | - | 17 | ||||||
| Proceeds from sales of marketable securities, long-term investments and other assets | 10 | 4 | ||||||
| Purchases of marketable securities and equity investments | (4 | ) | (4 | ) | ||||
| Other long-term assets | (2 | ) | (2 | ) | ||||
| Other items, net | 18 | (1 | ) | |||||
| Net cash used in investing activities | (204 | ) | (139 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of borrowings under credit facility | (240 | ) | (495 | ) | ||||
| Proceeds from borrowings under credit facility | 740 | 685 | ||||||
| Repayments of other borrowings | (48 | ) | (1,620 | ) | ||||
| Proceeds from other borrowings | 7 | 1,507 | ||||||
| Debt issuance costs | (1 | ) | (18 | ) | ||||
| Distributions paid to noncontrolling interests | (76 | ) | (74 | ) | ||||
| Proceeds from sale of noncontrolling interests | 2 | 4 | ||||||
| Purchases of noncontrolling interests | - | (3 | ) | |||||
| Proceeds from exercise of stock options and employee stock purchase plan | 2 | 1 | ||||||
| Other items, net | 40 | (17 | ) | |||||
| Net cash provided by (used in) financing activities | 426 | (30 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 351 | (159 | ) | |||||
| Cash and cash equivalents at beginning of period | 262 | 411 | ||||||
| Cash and cash equivalents at end of period | $ | 613 | $ | 252 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid, net of capitalized interest | $ | (172 | ) | $ | (158 | ) | ||
| Income tax (payments) refunds, net | $ | (3 | ) | $ | 9 |
TENET HEALTHCARE CORPORATION
| (Dollars in millions) | Three Months Ended | |||||||
| March 31, | ||||||||
| 2020 | 2019 | |||||||
| Net operating revenues: | ||||||||
| Hospital Operations and other total prior to inter-segment eliminations | $ | 3,834 | $ | 3,862 | ||||
| Ambulatory Care | 490 | 480 | ||||||
| Conifer | ||||||||
| Tenet | 136 | 146 | ||||||
| Other clients | 196 | 203 | ||||||
| Total Conifer revenues | 332 | 349 | ||||||
| Inter-segment eliminations | (136 | ) | (146 | ) | ||||
| Total | $ | 4,520 | $ | 4,545 | ||||
| Equity in earnings of unconsolidated affiliates: | ||||||||
| Hospital Operations and other | $ | 2 | $ | 3 | ||||
| Ambulatory Care | 26 | 31 | ||||||
| Total | $ | 28 | $ | 34 | ||||
| Adjusted EBITDA: | ||||||||
| Hospital Operations and other | $ | 342 | $ | 347 | ||||
| Ambulatory Care | 156 | 177 | ||||||
| Conifer | 87 | 99 | ||||||
| Total | $ | 585 | $ | 623 | ||||
| Capital expenditures: | ||||||||
| Hospital Operations and other | $ | 167 | $ | 170 | ||||
| Ambulatory Care | 11 | 20 | ||||||
| Conifer | 4 | 2 | ||||||
| Total | $ | 182 | $ | 192 |
Prior period amounts have been recast to reflect the Company's change in accounting for its medical malpractice and workers' compensation actuarial liabilities, As permitted by U.S. GAAP, these liabilities are now reported on an undiscounted basis, whereas they were previously reported on a discounted basis.
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 Net Income Available from Continuing Operations to Common Shareholders
| (Dollars in millions except per share amounts) | 1Q20 | 1Q19 | ||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 93 | $ | (12 | ) | |||
| Net (loss) income from discontinued operations | (1 | ) | 8 | |||||
| Net income (loss) from continuing operations | 94 | (20 | ) | |||||
| Less: Impairment and restructuring charges, and acquisition-related costs | (55 | ) | (19 | ) | ||||
| Litigation and investigation costs | (2 | ) | (13 | ) | ||||
| Net gains (losses) on sales, consolidation and deconsolidation of facilities | 2 | (1 | ) | |||||
| Loss from early extinguishment of debt | - | (47 | ) | |||||
| Loss from divested and closed businesses | - | (1 | ) | |||||
| Noncontrolling interest impact | - | - | ||||||
| Tax impact of above items | 14 | (2 | ) | |||||
| Adjusted net income available from continuing operations to common shareholders | $ | 135 | $ | 63 | ||||
| Diluted earnings (loss) per share from continuing operations | $ | 0.89 | $ | (0.19 | ) | |||
| Less: Impairment and restructuring charges, and acquisition-related costs | (0.52 | ) | (0.18 | ) | ||||
| Litigation and investigation costs | (0.02 | ) | (0.12 | ) | ||||
| Net gains (losses) on sales, consolidation and deconsolidation of facilities | 0.02 | (0.01 | ) | |||||
| Loss from early extinguishment of debt | - | (0.45 | ) | |||||
| Loss from divested and closed businesses | - | (0.01 | ) | |||||
| Noncontrolling interest impact | - | - | ||||||
| Tax impact of above items | 0.13 | (0.02 | ) | |||||
| Adjusted diluted earnings per share from continuing operations | $ | 1.28 | $ | 0.60 | ||||
| Weighted average basic shares outstanding (in thousands) | 104,353 | 102,788 | ||||||
| Weighted average dilutive shares outstanding (in thousands) | 105,733 | 104,541 |
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 EBITDA
| (Dollars in millions) | 1Q20 | 1Q19 | ||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 93 | $ | (12 | ) | |||
| Less: Net income available to noncontrolling interests | (66 | ) | (84 | ) | ||||
| (Loss) income from discontinued operations, net of tax | (1 | ) | 8 | |||||
| Income from continuing operations | 160 | 64 | ||||||
| Income tax benefit (expense) | 75 | (20 | ) | |||||
| Loss from early extinguishment of debt | - | (47 | ) | |||||
| Other non-operating income, net | 1 | 1 | ||||||
| Interest expense | (243 | ) | (251 | ) | ||||
| Operating income | 327 | 381 | ||||||
| Litigation and investigation costs | (2 | ) | (13 | ) | ||||
| Net gains (losses) on sales, consolidation and deconsolidation of facilities | 2 | (1 | ) | |||||
| Impairment and restructuring charges, and acquisition-related costs | (55 | ) | (19 | ) | ||||
| Depreciation and amortization | (203 | ) | (208 | ) | ||||
| Loss from divested and closed businesses | - | (1 | ) | |||||
| Adjusted EBITDA | $ | 585 | $ | 623 | ||||
| Net operating revenues | $ | 4,520 | $ | 4,545 | ||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | 2.1 | % | (0.3 | )% | ||||
| Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) | 12.9 | % | 13.7 | % |
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #3 - Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations
| (Dollars in millions) | 1Q20 | 1Q19 | ||||||
| Net cash provided by operating activities | $ | 129 | $ | 10 | ||||
| Purchases of property and equipment | (182 | ) | (192 | ) | ||||
| Free cash flow | $ | (53 | ) | $ | (182 | ) | ||
| Net cash used in investing activities | $ | (204 | ) | $ | (139 | ) | ||
| Net cash provided by (used in) financing activities | $ | 426 | $ | (30 | ) | |||
| Net cash provided by operating activities | $ | 129 | $ | 10 | ||||
| Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (68 | ) | (32 | ) | ||||
| Net cash used in operating activities from discontinued operations | - | (2 | ) | |||||
| Adjusted net cash provided by operating activities from continuing operations | 197 | 44 | ||||||
| Purchases of property and equipment | (182 | ) | (192 | ) | ||||
| Adjusted free cash flow - continuing operations | $ | 15 | $ | (148 | ) |