UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 


 

Date of Report:  April 30, 2013

(Date of earliest event reported)

 


 

TENET HEALTHCARE CORPORATION

(Exact name of Registrant as specified in its charter)

 

Nevada

 

1-7293

 

95-2557091

(State of Incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification Number)

 

1445 Ross Avenue, Suite 1400

Dallas, Texas 75202

(Address of principal executive offices, including zip code)

 

(469) 893-2200

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02      Results of Operations and Financial Condition.

 

The information contained herein is being furnished pursuant to Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.”  This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

On April 30, 2013, Tenet Healthcare Corporation (the “Company”) issued a press release reporting the financial results of the Company for the quarter ended March 31, 2013.  A copy of the press release is attached to this report as Exhibit 99.1 and incorporated herein by reference.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained in the press release filed as an exhibit to this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking statements are based on management’s current expectations and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by such forward-looking statements.  Such factors include, among others, the following: the passage of health care reform legislation and the enactment of additional federal and state health care reform; other changes in federal, state and local laws and regulations affecting the health care industry; general economic and business conditions, both nationally and regionally; demographic changes; changes in, or the failure to comply with, laws and governmental regulations; the ability to enter into managed care provider arrangements on acceptable terms; changes in Medicare and Medicaid payments or reimbursement; liability and other claims asserted against the Company; competition, including the Company’s ability to attract patients to its hospitals; technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care; changes in business strategy or development plans; the ability to attract and retain qualified personnel, including physicians, nurses and other health care professionals, and the impact on the Company’s labor expenses resulting from a shortage of nurses or other health care professionals; the significant indebtedness of the Company; the Company’s ability to integrate new businesses with its existing operations; the availability and terms of capital to fund the expansion of the Company’s business, including the acquisition of additional facilities; the creditworthiness of counterparties to the Company’s business transactions; adverse fluctuations in interest rates and other risks related to interest rate swaps or any other hedging activities the Company undertakes; the ability to continue to expand and realize earnings contributions from the revenue cycle management, health care information management, capitation management, and patient communications services businesses under our Conifer Health Solutions (“Conifer”) subsidiary by marketing these services to third party hospitals and other health care-related entities; and its ability to identify and execute on measures designed to save or control costs or streamline operations.  Such factors also include the positive and negative effects of health reform legislation on reimbursement and utilization and the future designs of provider networks and insurance plans, including pricing, provider participation, coverage and co-pays and deductibles, all of which contain significant uncertainty, and for which multiple models exist which may differ materially from the Company’s expectations.  Certain additional risks and uncertainties are discussed in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q.  All information in this report and the press release is as of April 30, 2013.  The Company specifically disclaims any obligation to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.

 

2



 

NON-GAAP INFORMATION

 

The press release filed as an exhibit to this report includes certain financial measures, such as adjusted EBITDA, that are not calculated in accordance with generally accepted accounting principles (GAAP).  Management recommends that you focus on the GAAP numbers as the best indicator of financial performance.  These alternative measures are provided only as a supplement to aid in analysis of the Company.  Reconciliation between non-GAAP measures and related GAAP measures can be found at the end of the press release.

 

Item 9.01                                           Financial Statements and Exhibits.

 

(d)                                 Exhibits

 

99.1        Press Release issued on April 30, 2013

 

3



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

TENET HEALTHCARE CORPORATION

 

 

 

 

 

By:

/s/ Daniel J. Cancelmi

 

 

Daniel J. Cancelmi

 

 

Chief Financial Officer

 

 

Date:  April 30, 2013

 

4



 

EXHIBIT INDEX

 

99.1        Press Release issued on April 30, 2013

 

5



Exhibit 99.1

 

GRAPHIC

 

Tenet Reports $274 Million of Adjusted EBITDA for First Quarter

Adjusted EBITDA Exceeded the Mid-Point of Outlook Range

16.6% Increase in Adjusted EBITDA, Excluding a 2012 Non-Recurring Item

7.5% Increase in Revenues, Excluding a 2012 Non-Recurring Item

 

DALLAS — April 30, 2013 — Tenet Healthcare Corporation (NYSE:THC) today reported Adjusted EBITDA of $274 million for the first quarter ended March 31, 2013, a decrease of $36 million as compared to Adjusted EBITDA of $310 million in the first quarter of 2012. Adjusted EBITDA in the first quarter of 2012 included $75 million from an industry-wide Medicare inpatient prospective payment settlement (“Rural Floor settlement”). Excluding this non-recurring item, Adjusted EBITDA increased by 16.6 percent. Income from continuing operations, excluding impairments, restructuring charges, acquisition-related costs and the loss on early extinguishment of debt, was $34 million after-tax, or $0.33 per diluted share, in the first quarter of 2013.  In the first quarter of 2012, income from continuing operations was $13 million after-tax, or $0.15 per diluted share, excluding the Rural Floor settlement, litigation and investigation costs, impairments, restructuring charges, and acquisition-related costs. Net loss attributable to common shareholders in the first quarter of 2013 was $88 million after-tax, or $0.85 per share, compared to net income of $58 million after-tax, or $0.53 per diluted share, in the first quarter of 2012.

 

“Tenet generated strong earnings growth by rapidly adjusting costs in a soft volume environment in the first quarter,” said Trevor Fetter, president and chief executive officer. “Adjusted EBITDA grew by almost 17 percent, after excluding a non-recurring item which contributed to last year’s first quarter, and exceeded the mid-point of our Outlook range. After making adjustments for non-recurring items, earnings per share more than doubled.  Our Conifer subsidiary continues to achieve its performance milestones and grew its EBITDA by 28 percent over last year’s first quarter.”

 

Discussion of Results   (Percentage changes compare Q1’13 to Q1’12, unless otherwise noted.)

 

Adjusted admissions declined 2.5 percent in the first quarter reflecting 2.2 percent growth in outpatient visits offset by a 4.0 percent decline in inpatient admissions. The growth in outpatient visits was primarily driven by our successful outpatient center acquisition program. About half of the admissions decline was related to the loss of a Leap Year day and the observance of the Easter and Passover holidays in this year’s first quarter. The admissions decline also included a 2.8 percent decline in uninsured and charity admissions. Total emergency department visits increased 3.1 percent.

 

Net operating revenues were $2.387 billion, an increase of $85 million, or 3.7 percent, compared to net operating revenues of $2.302 billion in the first quarter of 2012. The increase in net operating revenues was 7.5 percent excluding the Rural Floor settlement from the first quarter of 2012.

 

Total net patient revenue per adjusted admission was $11,884, an increase of 1.6 percent, or 5.1 percent excluding the 2012 Rural Floor settlement. These pricing increases primarily reflect improved terms in our contracts with commercial managed care payers and higher Medicare reimbursement rates. Commercial managed care revenue increased 7.6 percent per admission, 4.7 percent per patient day, and 4.1 percent per outpatient visit.

 

Selected operating expenses of our hospital operations, defined as the sum of salaries, wages and benefits, supplies and other operating expenses excluding the Company’s Conifer services business, increased by 3.9 percent on a per adjusted admission basis. Excluding the incremental expenses related to increased physician employment, this growth was 2.1 percent. As a result of an increase in our patient length of stay, primarily related to a 1.6 percent increase in acuity, this cost metric increased only 2.0 percent on a per adjusted patient day basis, or 0.3 percent excluding incremental physician employment expenses. Supplies expense per adjusted admission decreased 1.2 percent, the seventh consecutive quarter this cost metric declined. No Health Information Technology (“HIT”) incentives were recorded in the first quarter of 2013.

 

Bad debt expense as a percent of revenues was 8.0 percent, an increase of 40 basis points compared to 7.6 percent in the first quarter of 2012. The first quarter 2012 percentage is 7.8 percent excluding the 2012 Rural

 



 

Floor settlement.  Our self-pay collection rate improved to 28.8 percent in the first quarter of 2013, as compared to 27.9 percent in the first quarter of 2012.

 

Conifer reported a 28 percent increase in EBITDA from $25 million in the first quarter of 2012 to $32 million. Conifer’s revenues essentially doubled from $107 million in the first quarter of 2012 to $211 million in this year’s first quarter. The growth in both metrics reflects the integration of Catholic Health Initiatives (“CHI”) revenue cycle operations and other new business. The profitability of the CHI integration is expected to produce incremental growth as the cost efficiencies related to this integration are captured over time.

 

Cash and cash equivalents were $95 million at March 31, 2013 compared to $364 million at December 31, 2012. The Company had a $20 million balance on its bank line at March 31, 2013. Accounts receivable days improved by one day to 52 days down from 53 days at December 31, 2012.

 

In the first quarter Tenet invested an additional $100 million to repurchase approximately 2.5 million shares.  Under the current Board Authorized Repurchase Program of $500 million, the company has invested $200 million in the last two quarters to repurchase 5.86 million shares. Since 2011, Tenet has invested $892 million to repurchase almost 30 percent, or 38.9 million of its fully diluted shares, at a weighted average share price of $22.93, spending $892 million.

 

Outlook for 2013 and Q2’13 Adjusted EBITDA

 

For the second quarter of 2013, the Outlook range for Adjusted EBITDA is $325 million to $375 million. This second quarter Outlook includes expected contributions to EBITDA of $54 million related to the anticipated approval of the managed care portion of the 30-month California Provider Fee program and $31 million from the recognition of HIT incentives. The Company is confirming the $1.325 billion to $1.425 billion Outlook range for 2013 Adjusted EBITDA.

 

Management’s Webcast Discussion of First Quarter Results

 

Tenet management will discuss the Company’s first quarter 2013 results on an 11:30 a.m. (ET) webcast on April 30, 2013. This webcast may be accessed through Tenet’s website at www.tenethealth.com/investors.

 

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.

 

Tenet Healthcare Corporation, a leading health care services company, through its subsidiaries operates 49 hospitals, 122 free-standing outpatient centers and Conifer Health Solutions, a leader in business process solutions for health care providers that serves over 600 hospital and other clients nationwide.  Tenet’s hospitals and related health care facilities are committed to providing high quality care to patients in the communities they serve.  For more information, please visit www.tenethealth.com.

 

Media:  Rick Black (469) 893-2647                         Investors:  Thomas Rice (469) 893-2522

Rick.Black@tenethealth.com                                           Thomas.Rice@tenethealth.com

 

# # #

 

This document contains “forward-looking statements” — that is, statements relating 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,” “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 the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended Dec. 31, 2012, our quarterly reports on Form 10-Q, periodic reports on Form 8-K and other filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking statements contained in this press release as a result of new information or future events or developments.

 

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

 

2



 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

(Dollars in millions except per share amounts)

 

2013

 

%

 

2012

 

%

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenues:

 

 

 

 

 

 

 

 

 

 

 

Net operating revenues before provision for doubtful accounts

 

$

2,594

 

 

 

$

2,491

 

 

 

4.1

%

Less: Provision for doubtful accounts

 

207

 

 

 

189

 

 

 

9.5

%

Net operating revenues

 

2,387

 

100.0

%

2,302

 

100.0

%

3.7

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

1,161

 

48.6

%

1,062

 

46.1

%

9.3

%

Supplies

 

384

 

16.1

%

399

 

17.3

%

(3.8

)%

Other operating expenses, net

 

568

 

23.8

%

531

 

23.2

%

7.0

%

Depreciation and amortization

 

114

 

4.8

%

100

 

4.3

%

14.0

%

Impairment and restructuring charges, and acquisition-related costs

 

14

 

0.6

%

3

 

0.1

%

 

 

Litigation and investigation costs

 

 

%

2

 

0.1

%

 

 

Operating income

 

146

 

6.1

%

205

 

8.9

%

 

 

Interest expense

 

(103

)

 

 

(98

)

 

 

 

 

Loss from early extinguishment of debt

 

(177

)

 

 

 

 

 

 

 

Investment earnings

 

 

 

 

1

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

(134

)

 

 

108

 

 

 

 

 

Income tax benefit (expense)

 

53

 

 

 

(42

)

 

 

 

 

Income (loss) from continuing operations, before discontinued operations

 

(81

)

 

 

66

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

(3

)

 

 

2

 

 

 

 

 

Income tax benefit (expense)

 

1

 

 

 

(1

)

 

 

 

 

Income (loss) from discontinued operations

 

(2

)

 

 

1

 

 

 

 

 

Net income (loss)

 

(83

)

 

 

67

 

 

 

 

 

Less: Preferred stock dividends

 

 

 

 

6

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

5

 

 

 

3

 

 

 

 

 

Net income (loss) attributable to Tenet Healthcare Corporation common shareholders

 

$

(88

)

 

 

$

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to Tenet Healthcare Corporation common shareholders

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of tax

 

$

(86

)

 

 

$

57

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

(2

)

 

 

1

 

 

 

 

 

Net income (loss) attributable to Tenet Healthcare Corporation common shareholders

 

$

(88

)

 

 

$

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.83

)

 

 

$

0.55

 

 

 

 

 

Discontinued operations

 

(0.02

)

 

 

0.01

 

 

 

 

 

 

 

$

(0.85

)

 

 

$

0.56

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.83

)

 

 

$

0.52

 

 

 

 

 

Discontinued operations

 

(0.02

)

 

 

0.01

 

 

 

 

 

 

 

$

(0.85

)

 

 

$

0.53

 

 

 

 

 

Weighted average shares and dilutive securities outstanding (in thousands):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

104,103

 

 

 

102,843

 

 

 

 

 

Diluted

 

104,103

 

 

 

121,218

 

 

 

 

 

 

3



 

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31,

 

December 31,

 

(Dollars in millions)

 

2013

 

2012

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

95

 

$

364

 

Accounts receivable, less allowance for doubtful accounts

 

1,383

 

1,345

 

Inventories of supplies, at cost

 

152

 

153

 

Income tax receivable

 

4

 

7

 

Current portion of deferred income taxes

 

354

 

354

 

Other current assets

 

455

 

458

 

Total current assets

 

2,443

 

2,681

 

Investments and other assets

 

163

 

162

 

Deferred income taxes, net of current portion

 

395

 

342

 

Property and equipment, at cost, less accumulated depreciation and amortization

 

4,296

 

4,293

 

Goodwill

 

948

 

916

 

Other intangible assets, at cost, less accumulated amortization

 

670

 

650

 

Total assets

 

$

8,915

 

$

9,044

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

52

 

$

94

 

Accounts payable

 

625

 

722

 

Accrued compensation and benefits

 

373

 

415

 

Professional and general liability reserves

 

49

 

64

 

Accrued interest payable

 

99

 

125

 

Other current liabilities

 

351

 

343

 

Total current liabilities

 

1,549

 

1,763

 

Long-term debt, net of current portion

 

5,375

 

5,158

 

Professional and general liability reserves

 

298

 

292

 

Other long-term liabilities

 

611

 

597

 

Total liabilities

 

7,833

 

7,810

 

Commitments and contingencies

 

 

 

 

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

36

 

16

 

Equity:

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock

 

7

 

7

 

Additional paid-in capital

 

4,484

 

4,471

 

Accumulated other comprehensive loss

 

(68

)

(68

)

Accumulated deficit

 

(1,376

)

(1,288

)

Common stock in treasury, at cost

 

(2,078

)

(1,979

)

Total shareholders’ equity

 

969

 

1,143

 

Noncontrolling interests

 

77

 

75

 

Total equity

 

1,046

 

1,218

 

Total liabilities and equity

 

$

8,915

 

$

9,044

 

 

4



 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

(Dollars in millions)

 

2013

 

2012

 

Net income (loss)

 

$

(83

)

$

67

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

114

 

100

 

Provision for doubtful accounts

 

207

 

189

 

Deferred income tax expense (benefit)

 

(55

)

38

 

Stock-based compensation expense

 

11

 

8

 

Impairment and restructuring charges, and acquisition-related costs

 

14

 

3

 

Litigation and investigation costs

 

 

2

 

Loss from early extinguishment of debt

 

177

 

 

Amortization of debt discount and debt issuance costs

 

5

 

5

 

Pre-tax (income) loss from discontinued operations

 

3

 

(2

)

Other items, net

 

(10

)

(3

)

Changes in cash from changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(251

)

(324

)

Inventories and other current assets

 

(44

)

(8

)

Income taxes

 

3

 

3

 

Accounts payable, accrued expenses and other current liabilities

 

(138

)

(109

)

Other long-term liabilities

 

27

 

16

 

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

 

(7

)

(11

)

Net cash used in operating activities from discontinued operations, excluding income taxes

 

(5

)

(16

)

Net cash used in operating activities

 

(32

)

(42

)

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment—continuing operations

 

(133

)

(136

)

Purchases of businesses or joint venture interests

 

(5

)

(3

)

Proceeds from sales of marketable securities, long-term investments and other assets

 

3

 

3

 

Other long-term assets

 

29

 

(2

)

Other items, net

 

2

 

2

 

Net cash used in investing activities

 

(104

)

(136

)

Cash flows from financing activities:

 

 

 

 

 

Repayments of borrowings under credit facility

 

(200

)

(455

)

Proceeds from borrowings under credit facility

 

220

 

658

 

Repayments of other borrowings

 

(899

)

(4

)

Proceeds from other borrowings

 

850

 

 

Repurchases of common stock

 

(100

)

(26

)

Cash dividends on preferred stock

 

 

(6

)

Deferred debt issuance costs

 

(15

)

 

Distributions paid to noncontrolling interests

 

(6

)

(3

)

Proceeds from exercise of stock options

 

15

 

2

 

Other items, net

 

2

 

3

 

Net cash provided by (used in) financing activities

 

(133

)

169

 

Net decrease in cash and cash equivalents

 

(269

)

(9

)

Cash and cash equivalents at beginning of period

 

364

 

113

 

Cash and cash equivalents at end of period

 

$

95

 

$

104

 

Supplemental disclosures:

 

 

 

 

 

Interest paid, net of capitalized interest

 

$

(125

)

$

(102

)

Income tax refunds (payments), net

 

$

3

 

$

(2

)

 

5



 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS — CONTINUING HOSPITALS

(Unaudited)

 

(Dollars in millions except per patient day, per 

 

Three Months Ended March 31,

 

admission and per visit amounts)

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

Net inpatient revenues

 

$

1,536

 

$

1,607

 

(4.4

)%

Net outpatient revenues

 

$

813

 

$

766

 

6.1

%

 

 

 

 

 

 

 

 

Number of acute care hospitals (at end of period)

 

49

 

49

 

*

Licensed beds (at end of period)

 

13,180

 

13,175

 

%

Average licensed beds

 

13,180

 

13,138

 

0.3

%

Utilization of licensed beds

 

50.9

%

51.6

%

(0.7

)%*

Patient days - total

 

603,285

 

617,459

 

(2.3

)%

Adjusted patient days

 

939,840

 

947,154

 

(0.8

)%

Net inpatient revenue per patient day

 

$

2,546

 

$

2,603

 

(2.2

)%

Total admissions

 

125,929

 

131,190

 

(4.0

)%

Adjusted patient admissions

 

197,665

 

202,799

 

(2.5

)%

Net inpatient revenue per admission

 

$

12,197

 

$

12,249

 

(0.4

)%

Average length of stay (days)

 

4.79

 

4.71

 

1.7

%

Total surgeries

 

101,413

 

93,228

 

8.8

%

Outpatient visits

 

1,054,789

 

1,031,611

 

2.2

%

Net outpatient revenue per visit

 

$

771

 

$

743

 

3.8

%

 

 

 

 

 

 

 

 

Net Patient Revenues from:

 

 

 

 

 

 

 

Medicare

 

23.0

%

26.5

%

(3.5

)%*

Medicaid

 

8.0

%

7.5

%

0.5

%*

Managed care

 

57.9

%

55.9

%

2.0

%*

Indemnity, self-pay and other

 

11.1

%

10.1

%

1.0

%*

 


*  This change is the difference between the 2013 and 2012 amounts shown

 

6



 

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

Assets

 

 

 

 

 

Hospital Operations and other

 

$

8,683

 

$

8,825

 

Conifer

 

232

 

219

 

Total

 

$

8,915

 

$

9,044

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

Capital expenditures:

 

 

 

 

 

Hospital Operations and other

 

$

131

 

$

133

 

Conifer

 

2

 

3

 

Total

 

$

133

 

$

136

 

 

 

 

 

 

 

Net operating revenues:

 

 

 

 

 

Hospital Operations and other

 

$

2,268

 

$

2,285

 

Conifer

 

 

 

 

 

Tenet

 

92

 

90

 

Other customers

 

119

 

17

 

 

 

2,479

 

2,392

 

Intercompany eliminations

 

(92

)

(90

)

Total

 

$

2,387

 

$

2,302

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

Hospital Operations and other

 

$

242

 

$

285

 

Conifer

 

32

 

25

 

Total

 

$

274

 

$

310

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

Hospital Operations and other

 

$

110

 

$

98

 

Conifer

 

4

 

2

 

Total

 

$

114

 

$

100

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

274

 

$

310

 

Depreciation and amortization

 

(114

)

(100

)

Impairments and restructuring charges, and acquisition-related costs

 

(14

)

(3

)

Litigation and investigation costs

 

 

(2

)

Interest expense

 

(103

)

(98

)

Loss from early extinguishment of debt

 

(177

)

 

Investment earnings

 

 

1

 

Income (loss) before income taxes

 

$

(134

)

$

108

 

 

7



 

(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 months ended March 31, 2013 and 2012.

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP Disclosures

Table #1 - Reconciliation of Adjusted EBITDA to Net Income Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

(Dollars in millions)

 

2013

 

2012

 

Net income (loss) attributable to Tenet Healthcare Corporation common shareholders

 

$

(88

)

$

58

 

Less: Net (income) loss attributable to noncontrolling interests

 

(5

)

(3

)

Preferred stock dividends

 

 

(6

)

Income (loss) from discontinued operations, net of tax

 

(2

)

1

 

Income (loss) from continuing operations

 

(81

)

66

 

Income tax (expense) benefit

 

53

 

(42

)

Investment earnings

 

 

1

 

Loss from early extinguishment of debt

 

(177

)

 

Interest expense

 

(103

)

(98

)

Operating income

 

146

 

205

 

Litigation and investigation costs

 

 

(2

)

Impairment and restructuring charges, and acquisition-related costs

 

(14

)

(3

)

Depreciation and amortization

 

(114

)

(100

)

Adjusted EBITDA

 

$

274

 

$

310

 

 

 

 

 

 

 

Net operating revenues

 

$

2,387

 

$

2,302

 

 

 

 

 

 

 

Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)

 

11.5

%

13.5

%

 

8



 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP Disclosures

Table #2 - Reconciliation of Adjusted Free Cash Flow

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

(Dollars in millions)

 

2013

 

2012

 

Net cash used in operating activities

 

$

(32

)

$

(42

)

Less:

 

 

 

 

 

Payments for restructuring charges, acquisition-related costs and litigation costs and settlements

 

(7

)

(11

)

Net cash used in operating activities from discontinued operations

 

(5

)

(16

)

Adjusted net cash used in operating activities — continuing operations

 

(20

)

(15

)

Purchases of property and equipment — continuing operations

 

(133

)

(136

)

Adjusted free cash flow — continuing operations

 

$

(153

)

$

(151

)

 

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, 2013

(Unaudited)

 

 

 

2013

 

(Dollars in millions)

 

Low

 

High

 

Net income attributable to Tenet Healthcare Corporation common shareholders

 

$

114

 

$

224

 

Less:

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

(25

)

(15

)

Loss from discontinued operations, net of tax

 

(5

)

 

Income from continuing operations

 

$

144

 

$

239

 

Income tax expense(a)

 

(85

)

(140

)

Income from continuing operations, before income taxes

 

$

229

 

$

379

 

Loss from early extinguishment of debt

 

(177

)

(177

)

Interest expense, net

 

(415

)

(395

)

Operating income

 

$

821

 

$

951

 

Impairment and restructuring charges, acquisition-related costs and litigation costs(b) 

 

(14

)

(14

)

Depreciation and amortization

 

(490

)

(460

)

Adjusted EBITDA

 

$

1,325

 

$

1,425

 

 

 

 

 

 

 

 

 

Net operating revenues

 

$

9,800

 

$

10,100

 

 

 

 

 

 

 

Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)

 

13.5

%

14.1

%

 


(a)              Uses tax rate of 37% excluding unusual adjustments

(b)             Company does not forecast impairment and restructuring charges, acquisition-related costs and  litigation costs

 

9



 

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, 2013

(Unaudited)

 

 

 

2013

 

(Dollars in millions except per share amounts)

 

Low

 

High

 

Adjusted EBITDA (from Table #3)

 

$

1,325

 

$

1,425

 

 

 

 

 

 

 

Depreciation and amortization

 

(490

)

(460

)

Interest expense, net

 

(415

)

(395

)

Normalized income from continuing operations before income taxes

 

$

420

 

$

570

 

Income tax expense(a)

 

(155

)

(211

)

Normalized income from continuing operations

 

$

265

 

$

359

 

Net (income) loss attributable to noncontrolling interests

 

(25

)

(15

)

Normalized net income attributable to common shareholders

 

$

240

 

$

344

 

 

 

 

 

 

 

Fully diluted weighted average share outstanding (in millions)

 

104

 

104

 

 

 

 

 

 

 

Normalized fully diluted earnings per share — continuing operations

 

$

2.31

 

$

3.31

 

 


(a) Uses tax rate of 37% excluding unusual adjustments

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP Disclosures

Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow

for the Year Ending December 31, 2013

(Unaudited)

 

 

 

2013

 

(Dollars in millions)

 

Low

 

High

 

Net cash provided by operating activities

 

$

725

 

$

845

 

Less:

 

 

 

 

 

Payments for restructuring charges, acquisition-related costs and litigation costs and settlements

 

(20

)

(10

)

Net cash used in operating activities from discontinued operations

 

(30

)

(20

)

Adjusted net cash provided by operating activities — continuing operations

 

$

775

 

$

875

 

Purchases of property and equipment — continuing operations

 

(600

)

(550

)

Adjusted free cash flow — continuing operations

 

$

175

 

$

325

 

 

10