Full Press Release Details
Tenet Reports Results
for the Fourth Quarter and Year Ended December 31, 2019
and Issues Financial Outlook for 2020
DALLAS - February 24, 2020 - Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended December 31, 2019 (4Q19).
"Our financial results for 2019 support the sustainable changes we have made across each of our operating segments," said Ronald A. Rittenmeyer, Executive Chairman and Chief Executive Officer. "We closed the year with a very strong fourth quarter and believe our focus on our patients, our physicians and all stakeholders - supported by underlying enhancements to technology, a renewed dedication to customer service and a keen eye on administrative expenses - are driving our growth and positioning us well for 2020 and future years."
Tenet's results for 4Q19 versus the quarter ended December 31, 2018 (4Q18) and the year ended December 31, 2019 (FY 2019) versus the year ended December 31, 2018 (FY 2018) were as follows:
| ($ in millions, except per share results) | 4Q19 | 4Q18 | FY 2019 | FY 2018 |
| Net income (loss) from continuing operations attributable to Tenet common shareholders | $2 | $(5) | $(243) | $108 |
| Net income (loss) from continuing operations attributable to Tenet common shareholders per diluted share | $0.02 | $(0.05) | $(2.35) | $1.04 |
| Adjusted EBITDA | $805 | $684 | $2,706 | $2,560 |
| Adjusted diluted earnings per share from continuing operations | $0.99 | $0.51 | $2.68 | $1.86 |
| The table above as well as tables and discussions throughout this earnings release include certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-6 included at the end of this earnings release. Management's reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release. |
Results from Continuing Operations Attributable to Tenet Common Shareholders
Adjusted Results from Continuing Operations Attributable to Tenet Common Shareholders
Reconciliations of net income available (loss attributable) to Tenet common shareholders to Adjusted net income from continuing operations available to Tenet's common shareholders are contained in Table #1 at the end of this release.
year increase in expense associated with the change in the U.S. Treasury rate used to discount the Company's actuarial liabilities. FY 2019 results were achieved despite lower-than-anticipated revenue and additional expenses related to Hurricane Dorian and an increase in contract labor costs associated with a strike by union nurses at certain of the Company's hospitals during the third quarter of 2019.
Reconciliations of net income available (loss attributable) to Tenet common shareholders to Adjusted EBITDA are contained in Table #2 at the end of this release.
Hospital Operations and Other Segment Results
Tenet's Hospital Operations and other business segment is comprised of acute care and specialty hospitals, ancillary outpatient facilities, freestanding urgent care centers (nearly all which are managed by USPI and operated under the MedPost brand), micro-hospitals and physician practices.
| Hospital Operations and other segment results ($ in millions) | 4Q19 | 4Q18 | FY 2019 | FY 2018 | ||||
| Net operating revenues | $3,983 | $3,843 | $15,522 | $15,285 | ||||
| Same-hospital net patient services revenues (a) | $3,673 | $3,490 | $14,339 | $13,707 | ||||
| Adjusted EBITDA | $407 | $352 | $1,425 | $1,411 | ||||
| Admissions growth | 2.6 | % | (2.7 | )% | 2.3 | % | (1.7 | )% |
| Adjusted Admissions growth (b) | 1.9 | % | (0.8 | )% | 1.9 | % | 0.0 | % |
(a) Same-hospital revenues and statistical data include those for the 65 hospitals operated by the Company's Hospital Operations and other segment continuously from January 1, 2018 through December 31, 2019. Revenues and results for any hospitals acquired or disposed of during this time frame are excluded.
(b) Adjusted admissions are hospital admissions adjusted to include outpatient admissions by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.
Revenues and Volumes
Ambulatory Care Segment Results
Tenet's Ambulatory Care business segment is comprised of the operations of USPI. As of December 31, 2019, USPI had interests in 260 ambulatory surgery centers, 39 urgent care centers (nearly all of which operate under the CareSpot brand), 23 imaging centers and 24 surgical hospitals in 27 states. The Company owns 95 percent of USPI.
| Ambulatory Care segment results ($ in millions) | 4Q19 | 4Q18 | FY 2019 | FY 2018 | ||||
| Net operating revenues | $632 | $554 | $2,158 | $2,085 | ||||
| Same-facility system-wide net patient services revenues (c) | $1,317 | $1,226 | $4,546 | $4,286 | ||||
| Adjusted EBITDA | $304 | $245 | $895 | $792 | ||||
| Adjusted EBITDA less facility-level NCI; excludes Aspen for FY 2018 | $190 | $151 | $568 | $488 | ||||
| Surgical cases growth | 3.4 | % | 1.1 | % | 3.3 | % | 2.1 | % |
| Total ambulatory cases growth | 5.7 | % | 0.9 | % | 3.7 | % | 3.4 | % |
(c) Same-facility system-wide revenues and statistical information include the results of many of the facilities in which the Ambulatory Care segment has an investment that are not consolidated by Tenet (of the 346 facilities at December 31, 2019, the results of 108 were accounted for under the equity method for unconsolidated affiliates). To help analyze the segment's results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities.
Revenues and Volumes
Conifer Segment Results
Tenet's Conifer business segment provides healthcare business process services in the areas of hospital and physician revenue cycle management as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, healthcare plans and other entities.
| Conifer segment results ($ in millions) | 4Q19 | 4Q18 | FY 2019 | FY 2018 |
| Net operating revenues | $332 | $372 | $1,372 | $1,533 |
| Adjusted EBITDA | $94 | $87 | $386 | $357 |
As previously announced, the Company anticipates a spin-off of its Conifer segment by the end of the second quarter of 2021. This transaction is expected to both enhance shareholder value and reduce the level of debt on Tenet through a tax-free debt-for-debt exchange.
Cash Flows and Liquidity
Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.
Tenet's Outlook for FY 2020 and for 1Q20 on a consolidated basis and by segment follows:
| CONSOLIDATED ($ in millions except per share amounts) | FY 2020 Outlook | 1Q20 Outlook |
| Net operating revenues; includes CA Provider Fee revenues of approx. $239 million for FY 2020 and approx. $60 million for 1Q20 | $19,100 to $19,500 | $4,600 to $4,800 |
| Net income (loss) from continuing operations attributable to Tenet common stockholders | $130 to $245 | $(7) to $37 |
| Adjusted EBITDA | $2,785 to $2,885 | $625 to $675 |
| Adjusted EBITDA margin | 14.6% to 14.8% | 13.6% to 14.1% |
| Diluted income (loss) per common share from continuing operations | $1.23 to $2.31 | $(0.07) to $0.35 |
| Adjusted net income from continuing operations | $285 to $355 | $45 to $80 |
| Adjusted diluted earnings per share from continuing operations | $2.69 to $3.35 | $0.42 to $0.75 |
| Equity in earnings of unconsolidated affiliates | $180 to $200 | $30 to $40 |
| Depreciation and amortization | $845 to $865 | $205 to $215 |
| Interest expense | $975 to $985 | $240 to $250 |
| Net income available to NCI | $450 to $470 | $90 to $100 |
| Weighted average diluted common shares | ~ 106 million | ~106 million |
| Effective tax rate (d) | 22% to 23% | |
| Net cash provided by operating activities | $1,250 to $1,525 | |
| Adjusted net cash provided by operating activities | $1,475 to $1,725 | |
| Capital expenditures | $700 to $750 | |
| Adjusted free cash flow | $775 to $975 | |
| NCI cash distributions | $350 to $370 |
(d) The effective tax rate is calculated as income tax expense divided by the adjusted pretax income. Income tax expense is calculated by multiplying the corporate tax rate by the sum of: adjusted pretax income less GAAP NCI expense plus permanent differences, non-deductible interest, and non-cash NCI expense related to portion of USPI the Company does not own.
| Hospital Operations and Other Segment ($ in millions) | FY 2020 Outlook | Comments |
| Net operating revenues | $15,965 to $16,215 | Prior to intercompany eliminations of approx. $565 million for Conifer |
| Adjusted EBITDA | $1,430 to $1,490 | |
| NCI | ~$10 | Based on GAAP NCI expense |
| Net revenues growth | 2.9% to 4.5% | |
| Adjusted EBITDA growth | 0.4% to 4.6% | |
| Admissions growth | 1.5% to 2.5% | On a same-hospital basis |
| Adjusted admissions growth | 1.5% to 2.5% | On a same-hospital basis |
| Net revenues per adjusted admission growth | 1.5% to 2.5% | On a same-hospital basis |
| Total costs per adjusted admission growth | 2.5% to 3.5% | |
| Ambulatory Care Segment ($ in millions) | FY 2020 Outlook | Comments |
| Net operating revenues | $2,350 to $2,450 | |
| Net revenues growth | 8.9% to 13.5% | |
| Adjusted EBITDA | $970 to $1,000 | |
| Adjusted EBITDA growth | 8.4% to 11.7% | |
| NCI | $365 to $385 | Based on GAAP NCI expense |
| Adjusted EBITDA less NCI growth | 9.2% to 10.9% | Facility-level NCI expense |
| Surgical cases growth | 3.0% to 3.5% | On a same-facility system-wide basis; excludes non-surgical services |
| Net revenues per surgical case growth | 2.0% to 2.5% | On a same-facility system-wide basis; excludes non-surgical services |
| Conifer Segment ($ in millions) | FY 2020 Outlook | Comments |
| Net operating revenues | $1,350 to $1,400 | |
| Adjusted EBITDA | $385 to $395 | |
| NCI | ~$75 | Based on GAAP NCI expense; no cash distributions to be made |
| Net revenues growth | (1.6%) to 2.0% | |
| Adjusted EBITDA growth | (0.3%) to 2.3% |
Management's Webcast Discussion of Results and Outlook
Tenet management will discuss the Company's 4Q19 and FY 2019 results, as well as the Company's Outlook for FY 2020, on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 25, 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 supplemental financial disclosure document will be available on the Company's Investor Relations website.
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. 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 factors disclosed under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended December 31, 2019 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 500 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
4Q19 Earnings Release
| Description | Page |
| Consolidated Statements of Operations - quarters | 13 |
| Consolidated Statements of Operations - years | 14 |
| Consolidated Balance Sheets | 15 |
| Consolidated Statements of Cash Flows | 16 |
| Segment Reporting | 17 |
| Table #1 - Reconciliations of Net Income to Adjusted Net Income | 18 |
| Table #2 - Reconciliations of Net Income to Adjusted EBITDA | 20 |
| Table #3 - Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow | 22 |
| Table #4 - Reconciliations of Outlook Net Income to Outlook Adjusted EBITDA | 23 |
| Table #5 - Reconciliations of Outlook Net Income to Outlook Adjusted Net Income | 24 |
| Table #6 - Reconciliations of Outlook Net Cash Provided by Operating Activities to Outlook Free Cash Flow and Outlook Adjusted Free Cash Flow | 24 |
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| (Dollars in millions except per share amounts) | Three Months Ended December 31, | ||||||||||||||||
| 2019 | % | 2018 | % | Change | |||||||||||||
| Net operating revenues | $ | 4,806 | 100.0 | % | $ | 4,619 | 100.0 | % | 4.0 | % | |||||||
| Equity in earnings of unconsolidated affiliates | 61 | 1.3 | % | 53 | 1.1 | % | 15.1 | % | |||||||||
| Operating expenses: | |||||||||||||||||
| Salaries, wages and benefits | 2,229 | 46.4 | % | 2,156 | 46.7 | % | 3.4 | % | |||||||||
| Supplies | 803 | 16.7 | % | 756 | 16.4 | % | 6.2 | % | |||||||||
| Other operating expenses, net | 1,030 | 21.5 | % | 1,076 | 23.3 | % | (4.3 | )% | |||||||||
| Depreciation and amortization | 223 | 4.6 | % | 200 | 4.3 | % | |||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 84 | 1.7 | % | 86 | 1.9 | % | |||||||||||
| Litigation and investigation costs | 26 | 0.5 | % | 10 | 0.2 | % | |||||||||||
| Net losses (gains) on sales, consolidation and deconsolidation of facilities | 12 | 0.3 | % | (16 | ) | (0.4 | )% | ||||||||||
| Operating income | 460 | 9.6 | % | 404 | 8.7 | % | |||||||||||
| Interest expense | (243 | ) | (246 | ) | |||||||||||||
| Other non-operating expense, net | (2 | ) | (3 | ) | |||||||||||||
| Gain from early extinguishment of debt | - | 3 | |||||||||||||||
| Income from continuing operations, before income taxes | 215 | 158 | |||||||||||||||
| Income tax expense | (86 | ) | (56 | ) | |||||||||||||
| Income from continuing operations, before discontinued operations | 129 | 102 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| Income from operations | 2 | 1 | |||||||||||||||
| Income tax expense | (2 | ) | (1 | ) | |||||||||||||
| Income (loss) from discontinued operations | - | - | |||||||||||||||
| Net income | 129 | 102 | |||||||||||||||
| Less: Net income available to noncontrolling interests | 127 | 107 | |||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 2 | $ | (5 | ) | ||||||||||||
| Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | 2 | $ | (5 | ) | ||||||||||||
| Income (loss) from discontinued operations, net of tax | - | - | |||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 2 | $ | (5 | ) | ||||||||||||
| Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Continuing operations | $ | 0.02 | $ | (0.05 | ) | ||||||||||||
| Discontinued operations | - | - | |||||||||||||||
| $ | 0.02 | $ | (0.05 | ) | |||||||||||||
| Diluted | |||||||||||||||||
| Continuing operations | $ | 0.02 | $ | (0.05 | ) | ||||||||||||
| Discontinued operations | - | - | |||||||||||||||
| $ | 0.02 | $ | (0.05 | ) | |||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
| Basic | 104,048 | 102,501 | |||||||||||||||
| Diluted* | 105,666 | 102,501 |
*Had the Company generated income from continuing operations in the three months ended December 31, 2018, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,617 thousand shares.
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| (Dollars in millions except per share amounts) | Years Ended December 31, | ||||||||||||||||
| 2019 | % | 2018 | % | Change | |||||||||||||
| Net operating revenues | $ | 18,479 | 100.0 | % | $ | 18,313 | 100.0 | % | 0.9 | % | |||||||
| Equity in earnings of unconsolidated affiliates | 175 | 0.9 | % | 150 | 0.8 | % | 16.7 | % | |||||||||
| Operating expenses: | |||||||||||||||||
| Salaries, wages and benefits | 8,704 | 47.1 | % | 8,634 | 47.1 | % | 0.8 | % | |||||||||
| Supplies | 3,057 | 16.5 | % | 3,004 | 16.4 | % | 1.8 | % | |||||||||
| Other operating expenses, net | 4,189 | 22.6 | % | 4,256 | 23.3 | % | (1.6 | )% | |||||||||
| Depreciation and amortization | 850 | 4.6 | % | 802 | 4.4 | % | |||||||||||
| Impairment and restructuring charges, and acquisition-related costs | 185 | 1.0 | % | 209 | 1.1 | % | |||||||||||
| Litigation and investigation costs | 141 | 0.8 | % | 38 | 0.2 | % | |||||||||||
| Net losses (gains) on sales, consolidation and deconsolidation of facilities | 15 | 0.1 | % | (127 | ) | (0.7 | )% | ||||||||||
| Operating income | 1,513 | 8.2 | % | 1,647 | 9.0 | % | |||||||||||
| Interest expense | (985 | ) | (1,004 | ) | |||||||||||||
| Other non-operating expense, net | (5 | ) | (5 | ) | |||||||||||||
| Gain (loss) from early extinguishment of debt | (227 | ) | 1 | ||||||||||||||
| Income from continuing operations, before income taxes | 296 | 639 | |||||||||||||||
| Income tax expense | (153 | ) | (176 | ) | |||||||||||||
| Income from continuing operations, before discontinued operations | 143 | 463 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| Income from operations | 15 | 4 | |||||||||||||||
| Income tax expense | (4 | ) | (1 | ) | |||||||||||||
| Income from discontinued operations | 11 | 3 | |||||||||||||||
| Net income | 154 | 466 | |||||||||||||||
| Less: Net income available to noncontrolling interests | 386 | 355 | |||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (232 | ) | $ | 111 | ||||||||||||
| Amounts available (attributable) to Tenet Healthcare Corporation common shareholders | |||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | (243 | ) | $ | 108 | ||||||||||||
| Income from discontinued operations, net of tax | 11 | 3 | |||||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (232 | ) | $ | 111 | ||||||||||||
| Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Continuing operations | $ | (2.35 | ) | $ | 1.06 | ||||||||||||
| Discontinued operations | 0.11 | 0.03 | |||||||||||||||
| $ | (2.24 | ) | $ | 1.09 | |||||||||||||
| Diluted | |||||||||||||||||
| Continuing operations | $ | (2.35 | ) | $ | 1.04 | ||||||||||||
| Discontinued operations | 0.11 | 0.03 | |||||||||||||||
| $ | (2.24 | ) | $ | 1.07 | |||||||||||||
| Weighted average shares and dilutive securities outstanding (in thousands): | |||||||||||||||||
| Basic | 103,398 | 102,110 | |||||||||||||||
| Diluted* | 103,398 | 103,881 |
*Had the Company generated income from continuing operations in the twelve months ended December 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 1,457 thousand shares.
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| (Dollars in millions) | 2019 | 2018 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 262 | $ | 411 | ||||
| Accounts receivable | 2,743 | 2,595 | ||||||
| Inventories of supplies, at cost | 310 | 305 | ||||||
| Income tax receivable | 10 | 21 | ||||||
| Assets held for sale | 387 | 107 | ||||||
| Other current assets | 1,369 | 1,197 | ||||||
| Total current assets | 5,081 | 4,636 | ||||||
| Investments and other assets | 2,369 | 1,456 | ||||||
| Deferred income taxes | 169 | 312 | ||||||
| Property and equipment, at cost, less accumulated depreciation and amortization | 6,878 | 6,993 | ||||||
| Goodwill | 7,252 | 7,281 | ||||||
| Other intangible assets, at cost, less accumulated amortization | 1,602 | 1,731 | ||||||
| Total assets | $ | 23,351 | $ | 22,409 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 171 | $ | 182 | ||||
| Accounts payable | 1,204 | 1,207 | ||||||
| Accrued compensation and benefits | 877 | 838 | ||||||
| Professional and general liability reserves | 330 | 216 | ||||||
| Accrued interest payable | 245 | 240 | ||||||
| Liabilities held for sale | 44 | 43 | ||||||
| Other current liabilities | 1,334 | 1,131 | ||||||
| Total current liabilities | 4,205 | 3,857 | ||||||
| Long-term debt, net of current portion | 14,580 | 14,644 | ||||||
| Professional and general liability reserves | 585 | 666 | ||||||
| Defined benefit plan obligations | 560 | 521 | ||||||
| Deferred income taxes | 27 | 36 | ||||||
| Other long-term liabilities | 1,405 | 578 | ||||||
| Total liabilities | 21,362 | 20,302 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 1,506 | 1,420 | ||||||
| Equity: | ||||||||
| Shareholders' equity: | ||||||||
| Common stock | 7 | 7 | ||||||
| Additional paid-in capital | 4,760 | 4,747 | ||||||
| Accumulated other comprehensive loss | (257 | ) | (223 | ) | ||||
| Accumulated deficit | (2,467 | ) | (2,236 | ) | ||||
| Common stock in treasury, at cost | (2,414 | ) | (2,414 | ) | ||||
| Total shareholders' deficit | (371 | ) | (119 | ) | ||||
| Noncontrolling interests | 854 | 806 | ||||||
| Total equity | 483 | 687 | ||||||
| Total liabilities and equity | $ | 23,351 | $ | 22,409 |
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
| Years Ended | ||||||||
| (Dollars in millions) | December 31, | |||||||
| 2019 | 2018 | |||||||
| Net income | $ | 154 | $ | 466 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 850 | 802 | ||||||
| Deferred income tax expense | 137 | 150 | ||||||
| Stock-based compensation expense | 42 | 46 | ||||||
| Impairment and restructuring charges, and acquisition-related costs | 185 | 209 | ||||||
| Litigation and investigation costs | 141 | 38 | ||||||
| Net losses (gains) on sales, consolidation and deconsolidation of facilities | 15 | (127 | ) | |||||
| Loss (gain) from early extinguishment of debt | 227 | (1 | ) | |||||
| Equity in earnings of unconsolidated affiliates, net of distributions received | (32 | ) | (12 | ) | ||||
| Amortization of debt discount and debt issuance costs | 35 | 45 | ||||||
| Pre-tax income from discontinued operations | (15 | ) | (4 | ) | ||||
| Other items, net | (15 | ) | (21 | ) | ||||
| Changes in cash from operating assets and liabilities: | ||||||||
| Accounts receivable | (247 | ) | (134 | ) | ||||
| Inventories and other current assets | (94 | ) | 17 | |||||
| Income taxes | 8 | (3 | ) | |||||
| Accounts payable, accrued expenses and other current liabilities | 36 | (152 | ) | |||||
| Other long-term liabilities | 3 | (102 | ) | |||||
| Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (192 | ) | (163 | ) | ||||
| Net cash used in operating activities from discontinued operations, excluding income taxes | (5 | ) | (5 | ) | ||||
| Net cash provided by operating activities | 1,233 | 1,049 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment - continuing operations | (670 | ) | (617 | ) | ||||
| Purchases of businesses or joint venture interests, net of cash acquired | (25 | ) | (113 | ) | ||||
| Proceeds from sales of facilities and other assets - continuing operations | 63 | 543 | ||||||
| Proceeds from sales of facilities and other assets - discontinued operations | 17 | - | ||||||
| Proceeds from sales of marketable securities, long-term investments and other assets | 82 | 199 | ||||||
| Purchases of marketable securities and equity investments | (62 | ) | (148 | ) | ||||
| Other long-term assets | (24 | ) | 15 | |||||
| Other items, net | - | 6 | ||||||
| Net cash used in investing activities | (619 | ) | (115 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of borrowings under credit facility | (2,640 | ) | (950 | ) | ||||
| Proceeds from borrowings under credit facility | 2,640 | 950 | ||||||
| Repayments of other borrowings | (6,131 | ) | (312 | ) | ||||
| Proceeds from other borrowings | 5,719 | 23 | ||||||
| Debt issuance costs | (70 | ) | - | |||||
| Distributions paid to noncontrolling interests | (307 | ) | (288 | ) | ||||
| Proceeds from sale of noncontrolling interests | 21 | 20 | ||||||
| Purchases of noncontrolling interests | (11 | ) | (647 | ) | ||||
| Proceeds from exercise of stock options and employee stock purchase plan | 12 | 16 | ||||||
| Other items, net | 4 | 54 | ||||||
| Net cash used in financing activities | (763 | ) | (1,134 | ) | ||||
| Net decrease in cash and cash equivalents | (149 | ) | (200 | ) | ||||
| Cash and cash equivalents at beginning of period | 411 | 611 | ||||||
| Cash and cash equivalents at end of period | $ | 262 | $ | 411 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid, net of capitalized interest | $ | (946 | ) | $ | (976 | ) | ||
| Income tax payments, net | $ | (12 | ) | $ | (25 | ) |
TENET HEALTHCARE CORPORATION
| (Dollars in millions) | Three Months Ended | Years Ended | ||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net operating revenues: | ||||||||||||||||
| Hospital Operations and other total prior to inter-segment eliminations (1) | $ | 3,983 | $ | 3,843 | $ | 15,522 | $ | 15,285 | ||||||||
| Ambulatory Care | 632 | 554 | 2,158 | 2,085 | ||||||||||||
| Conifer | ||||||||||||||||
| Tenet | 141 | 150 | 573 | 590 | ||||||||||||
| Other clients | 191 | 222 | 799 | 943 | ||||||||||||
| Total Conifer revenues | 332 | 372 | 1,372 | 1,533 | ||||||||||||
| Inter-segment eliminations | (141 | ) | (150 | ) | (573 | ) | (590 | ) | ||||||||
| Total | $ | 4,806 | $ | 4,619 | $ | 18,479 | $ | 18,313 | ||||||||
| Equity in earnings of unconsolidated affiliates: | ||||||||||||||||
| Hospital Operations and other | $ | 3 | $ | 4 | $ | 15 | $ | 10 | ||||||||
| Ambulatory Care | 58 | 49 | 160 | 140 | ||||||||||||
| Total | $ | 61 | $ | 53 | $ | 175 | $ | 150 | ||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Hospital Operations and other (2) | $ | 407 | $ | 352 | $ | 1,425 | $ | 1,411 | ||||||||
| Ambulatory Care | 304 | 245 | 895 | 792 | ||||||||||||
| Conifer | 94 | 87 | 386 | 357 | ||||||||||||
| Total | $ | 805 | $ | 684 | $ | 2,706 | $ | 2,560 | ||||||||
| Capital expenditures: | ||||||||||||||||
| Hospital Operations and other | $ | 149 | $ | 184 | $ | 572 | $ | 527 | ||||||||
| Ambulatory Care | 18 | 22 | 75 | 68 | ||||||||||||
| Conifer | 11 | 7 | 23 | 22 | ||||||||||||
| Total | $ | 178 | $ | 213 | $ | 670 | $ | 617 |
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 for 2019
| (Dollars in millions except per share amounts) | 2019 | ||||||||
| 4th Qtr | Full Year | ||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 2 | $ | (232 | ) | ||||
| Net income from discontinued operations | - | 11 | |||||||
| Net income (loss) from continuing operations | 2 | (243 | ) | ||||||
| Less: Impairment and restructuring charges, and acquisition-related costs | (84 | ) | (185 | ) | |||||
| Litigation and investigation costs | (26 | ) | (141 | ) | |||||
| Net losses on sales, consolidation and deconsolidation of facilities | (12 | ) | (15 | ) | |||||
| Loss from early extinguishment of debt | - | (227 | ) | ||||||
| Loss from divested and closed businesses | - | (2 | ) | ||||||
| Noncontrolling interest impact | - | 4 | |||||||
| Tax impact of above items | 19 | 42 | |||||||
| Adjusted net income available from continuing operations to common shareholders | $ | 105 | $ | 281 | |||||
| Diluted earnings (loss) per share from continuing operations | $ | 0.02 | $ | (2.35 | ) | ||||
| Less: Impairment and restructuring charges, and acquisition-related costs | (0.79 | ) | (1.76 | ) | |||||
| Litigation and investigation costs | (0.25 | ) | (1.34 | ) | |||||
| Net losses on sales, consolidation and deconsolidation of facilities | (0.11 | ) | (0.14 | ) | |||||
| Loss from early extinguishment of debt | - | (2.16 | ) | ||||||
| Loss from divested and closed businesses | - | (0.02 | ) | ||||||
| Noncontrolling interest impact | - | 0.04 | |||||||
| Tax impact of above items | 0.18 | 0.40 | |||||||
| Adjusted diluted earnings per share from continuing operations | $ | 0.99 | $ | 2.68 | |||||
| Weighted average basic shares outstanding (in thousands) | 104,048 | 103,398 | |||||||
| Weighted average dilutive shares outstanding (in thousands) | 105,666 | 104,855 |
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 for 2018
| (Dollars in millions except per share amounts) | 2018 | |||||||
| 4th Qtr | Full Year | |||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (5 | ) | $ | 111 | |||
| Net income from discontinued operations | - | 3 | ||||||
| Net income (loss) from continuing operations | (5 | ) | 108 | |||||
| Less: Impairment and restructuring charges, and acquisition-related costs | (86 | ) | (209 | ) | ||||
| Litigation and investigation costs | (10 | ) | (38 | ) | ||||
| Net gains on sales, consolidation and deconsolidation of facilities | 16 | 127 | ||||||
| Gain from early extinguishment of debt | 3 | 1 | ||||||
| Income from divested and closed businesses | - | 9 | ||||||
| Tax impact of above items | 19 | 25 | ||||||
| Adjusted net income available from continuing operations to common shareholders | $ | 53 | $ | 193 | ||||
| Diluted earnings (loss) per share from continuing operations | $ | (0.05 | ) | $ | 1.04 | |||
| Less: Impairment and restructuring charges, and acquisition-related costs | (0.83 | ) | (2.01 | ) | ||||
| Litigation and investigation costs | (0.10 | ) | (0.37 | ) | ||||
| Net gains on sales, consolidation and deconsolidation of facilities | 0.15 | 1.22 | ||||||
| Gain from early extinguishment of debt | 0.03 | 0.01 | ||||||
| Income from divested and closed businesses | - | 0.09 | ||||||
| Tax impact of above items | 0.18 | 0.24 | ||||||
| Adjusted diluted earnings per share from continuing operations | $ | 0.51 | $ | 1.86 | ||||
| Weighted average basic shares outstanding (in thousands) | 102,501 | 102,110 | ||||||
| Weighted average dilutive shares outstanding (in thousands) | 104,118 | 103,881 |
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 for 2019
| (Dollars in millions) | 2019 | |||||||
| 4th Qtr | Full Year | |||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | 2 | (232 | ) | ||||
| Less: Net income available to noncontrolling interests | (127 | ) | (386 | ) | ||||
| Income from discontinued operations, net of tax | - | 11 | ||||||
| Income from continuing operations | 129 | 143 | ||||||
| Income tax expense | (86 | ) | (153 | ) | ||||
| Loss from early extinguishment of debt | - | (227 | ) | |||||
| Other non-operating expense, net | (2 | ) | (5 | ) | ||||
| Interest expense | (243 | ) | (985 | ) | ||||
| Operating income | 460 | 1,513 | ||||||
| Litigation and investigation costs | (26 | ) | (141 | ) | ||||
| Net losses on sales, consolidation and deconsolidation of facilities | (12 | ) | (15 | ) | ||||
| Impairment and restructuring charges, and acquisition-related costs | (84 | ) | (185 | ) | ||||
| Depreciation and amortization | (223 | ) | (850 | ) | ||||
| Loss from divested and closed businesses | - | (2 | ) | |||||
| Adjusted EBITDA | $ | 805 | $ | 2,706 | ||||
| Net operating revenues | $ | 4,806 | $ | 18,479 | ||||
| Less: Net operating revenues from health plans | - | 1 | ||||||
| Adjusted net operating revenues | $ | 4,806 | $ | 18,478 | ||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | - | % | (1.3 | )% | ||||
| Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) | 16.7 | % | 14.6 | % |
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 for 2018
| (Dollars in millions) | 2018 | |||||||
| 4th Qtr | Full Year | |||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (5 | ) | $ | 111 | |||
| Less: Net income available to noncontrolling interests | (107 | ) | (355 | ) | ||||
| Income from discontinued operations, net of tax | - | 3 | ||||||
| Income from continuing operations | 102 | 463 | ||||||
| Income tax expense | (56 | ) | (176 | ) | ||||
| Gain from early extinguishment of debt | 3 | 1 | ||||||
| Other non-operating expense, net | (3 | ) | (5 | ) | ||||
| Interest expense | (246 | ) | (1,004 | ) | ||||
| Operating income | 404 | 1,647 | ||||||
| Litigation and investigation costs | (10 | ) | (38 | ) | ||||
| Net gains on sales, consolidation and deconsolidation of facilities | 16 | 127 | ||||||
| Impairment and restructuring charges, and acquisition-related costs | (86 | ) | (209 | ) | ||||
| Depreciation and amortization | (200 | ) | (802 | ) | ||||
| Income from divested and closed businesses | - | 9 | ||||||
| Adjusted EBITDA | $ | 684 | $ | 2,560 | ||||
| Net operating revenues | $ | 4,619 | $ | 18,313 | ||||
| Less: Net operating revenues from health plans | - | 14 | ||||||
| Adjusted net operating revenues | $ | 4,619 | $ | 18,299 | ||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues | (0.1 | )% | 0.6 | % | ||||
| Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) | 14.8 | % | 14.0 | % |
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) | 2019 | |||||||
| 4th Qtr | Full Year | |||||||
| Net cash provided by operating activities | $ | 520 | $ | 1,233 | ||||
| Purchases of property and equipment | (178 | ) | (670 | ) | ||||
| Free cash flow | $ | 342 | $ | 563 | ||||
| Net cash used in investing activities | $ | (193 | ) | $ | (619 | ) | ||
| Net cash used in financing activities | $ | (379 | ) | $ | (763 | ) | ||
| Net cash provided by operating activities | $ | 520 | $ | 1,233 | ||||
| Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (56 | ) | (192 | ) | ||||
| Net cash used in operating activities from discontinued operations | (1 | ) | (5 | ) | ||||
| Adjusted net cash provided by operating activities from continuing operations | 577 | 1,430 | ||||||
| Purchases of property and equipment | (178 | ) | (670 | ) | ||||
| Adjusted free cash flow - continuing operations | $ | 399 | $ | 760 |
| (Dollars in millions) | 2018 | |||||||
| 4th Qtr | Full Year | |||||||
| Net cash provided by operating activities | $ | 250 | $ | 1,049 | ||||
| Purchases of property and equipment | (213 | ) | (617 | ) | ||||
| Free cash flow | $ | 37 | $ | 432 | ||||
| Net cash used in investing activities | $ | (235 | ) | $ | (115 | ) | ||
| Net cash used in financing activities | $ | (104 | ) | $ | (1,134 | ) | ||
| Net cash provided by operating activities | $ | 250 | $ | 1,049 | ||||
| Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements | (50 | ) | (163 | ) | ||||
| Net cash used in operating activities from discontinued operations | (1 | ) | (5 | ) | ||||
| Adjusted net cash provided by operating activities from continuing operations | 301 | 1,217 | ||||||
| Purchases of property and equipment | (213 | ) | (617 | ) | ||||
| Adjusted free cash flow - continuing operations | $ | 88 | $ | 600 |
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #4 - Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA
| (Dollars in millions) | Q1 2020 | 2020 | ||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (7 | ) | $ | 37 | $ | 130 | $ | 245 | |||||||
| Less: Net income available to noncontrolling interests | (90 | ) | (100 | ) | (450 | ) | (470 | ) | ||||||||
| Income tax expense | (17 | ) | (33 | ) | (190 | ) | (210 | ) | ||||||||
| Interest expense | (250 | ) | (240 | ) | (985 | ) | (975 | ) | ||||||||
| Other non-operating expense, net | (5 | ) | - | (5 | ) | 5 | ||||||||||
| Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements (1) | (60 | ) | (50 | ) | (175 | ) | (125 | ) | ||||||||
| Depreciation and amortization | (205 | ) | (215 | ) | (845 | ) | (865 | ) | ||||||||
| Loss from divested and closed businesses | (5 | ) | - | (5 | ) | - | ||||||||||
| Adjusted EBITDA | $ | 625 | $ | 675 | $ | 2,785 | $ | 2,885 | ||||||||
| Income (loss) from continuing operations | $ | (7 | ) | $ | 37 | $ | 130 | $ | 245 | |||||||
| Net operating revenues | $ | 4,600 | $ | 4,800 | $ | 19,100 | $ | 19,500 | ||||||||
| Income from continuing operations as a % of operating revenues | (0.2 | )% | 0.8 | % | 0.7 | % | 1.3 | % | ||||||||
| Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) | 13.6 | % | 14.1 | % | 14.6 | % | 14.8 | % |
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #5 - Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders
| (Dollars in millions except per share amounts) | Q1 2020 | 2020 | ||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders | $ | (7 | ) | $ | 37 | $ | 130 | $ | 245 | |||||||
| Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements | (60 | ) | (50 | ) | (175 | ) | (125 | ) | ||||||||
| Loss from divested and closed businesses | (5 | ) | - | (5 | ) | - | ||||||||||
| Tax impact of above items | 13 | 7 | 25 | 15 | ||||||||||||
| Noncontrolling interests impact of above items | - | - | - | - | ||||||||||||
| Adjusted net income available from continuing operations to common shareholders | $ | 45 | $ | 80 | $ | 285 | $ | 355 | ||||||||
| Diluted earnings (loss) per share from continuing operations | $ | (0.07 | ) | $ | 0.35 | $ | 1.23 | $ | 2.31 | |||||||
| Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements | (0.57 | ) | (0.47 | ) | (1.65 | ) | (1.18 | ) | ||||||||
| Loss from divested and closed businesses | (0.05 | ) | - | (0.05 | ) | - | ||||||||||
| Tax impact of above items | 0.12 | 0.07 | 0.24 | 0.14 | ||||||||||||
| Noncontrolling interests impact of above items | - | - | - | - | ||||||||||||
| Adjusted diluted earnings per share from continuing operations | $ | 0.42 | $ | 0.75 | $ | 2.69 | $ | 3.35 | ||||||||
| Weighted average basic shares outstanding (in thousands) | 104,000 | 104,000 | 105,000 | 105,000 | ||||||||||||
| Weighted average dilutive shares outstanding (in thousands) | 106,000 | 106,000 | 106,000 | 106,000 |
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures