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Tenet Reports Third Quarter Adjusted EBITDA Growth Of 40% To $269 Million

The Company provides this information as a supplement to GAAP information to assist itself and investors in understanding the impact of various items on its financial statements, some of which are recurring or involve cash payments. The Company uses this information in its analysis of the performance of its business excluding items that it does not consider as relevant in the performance of its hospitals in continuing operations. In addition, from time to time we use this measure to define certain performance targets under our compensation programs. Adjusted EBITDA is not a measure of liquidity, but is a measure of operating performance that management uses in its business as an alternative to net income (loss) attributable to Tenet Healthcare Corporation common shareholders. Because Adjusted EBITDA excludes many items that are included in our financial statements, it does not provide a complete measure of our operating performance. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

The reconciliation of net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP term, to Adjusted EBITDA, is set forth in the first table below for the three and nine months ended September 30, 2012 and 2011.
 
 
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)
 
(Dollars in millions)   Three Months Ended September 30,     Nine Months Ended September 30,
2012   2011 2012   2011
Net income attributable to Tenet Healthcare Corporation common shareholders $ 40 $ 6 $ 92 $ 134
Less: Net (income) loss attributable to noncontrolling interests 9 (3 ) 24 (8 )
Preferred stock dividends (1 ) (6 ) (11 ) (18 )
Income (loss) from discontinued operations, net of tax   (1 )   (2 )   (68 )   7  
Income from continuing operations 33 17 147 153
Income tax expense (18 ) (4 ) (90 ) (73 )
Investment earnings 1 1 2 3
Interest expense   (103 )   (59 )   (303 )   (275 )
Operating income 153 79 538 498
Litigation and investigation costs (5 ) (3 ) (24 )
Impairment of long-lived assets and goodwill, and restructuring charges, net (6 ) (8 ) (12 ) (18 )
Depreciation and amortization   (110 )   (100 )   (314 )   (298 )
Adjusted EBITDA $ 269   $ 192   $ 867   $ 838  
 
Net operating revenues $ 2,221   $ 2,100   $ 6,788   $ 6,482  
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 12.1 % 9.1 % 12.8 % 12.9 %
     
 
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #2 - Reconciliation of Outlook Adjusted EBITDA to
Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders
for Years Ending December 31, 2012 and 2013
(Unaudited)
 
(Dollars in Millions) 2012 2013
Low High Low High
Net Income Attributable to Common Shareholders $ 134 $ 175 $ 258 $ 335
Less:
Net (income) loss attributable to noncontrolling interests 20 25 (15 ) (10 )
Preferred stock dividends (12 ) (12 ) 0 0
Loss from discontinued operations, net of tax   (75 )   (70 )   (5 )   0  
Income from continuing operations 201 232 278 345
Income tax expense   (129 )   (148 )   (177 )   (220 )
Income from continuing operations, before income taxes 330 380 455 565
Investment earnings 0 0 0 0
Interest expense (410 ) (390 ) (460 ) (420 )
Net loss from extinguishment of long-term debt   0     0     0     0  
Operating income 740 770 915 985
Litigation and investigation costs (10 ) (5 ) 0 0
Impairment of long-lived assets and goodwill, and restructuring charges (20 ) (15 ) 0 0
Depreciation and amortization   (410 )   (430 )   (410 )   (440 )
Adjusted EBITDA $ 1,180   $ 1,220   $ 1,325   $ 1,425  
 
 
Table #3 - Reconciliation of Outlook Adjusted EBITDA to
Outlook Normalized Income from Continuing Operations
for Years Ending December 31, 2012 and 2013
(Unaudited)
         
(Dollars in Millions except per share amounts) 2012 2013
Low High Low High
Adjusted EBITDA (from Table #1) $ 1,180 $ 1,220 $ 1,325 $ 1,425
 
Depreciation and amortization (410 ) (430 ) (410 ) (440 )
Interest expense   (410 )   (390 )   (460 )   (420 )
Normalized income from continuing operations before income taxes $ 360 $ 400 $ 455 $ 565
Income tax expense (a)   (140 )   (156 )   (177 )   (220 )

Normalized income from continuing operations (a)
$ 220 $ 244 $ 278 $ 345
Preferred stock dividends (12 ) (12 ) 0 0
Net (income) loss attributable to noncontrolling interests   (12 )   (7 )   (15 )   (10 )
Normalized net income attributable to common shareholders (a) $ 196   $ 225   $ 263   $ 335  
 
Weighted average shares outstanding (in millions) 107 107 99 99
Normalized earnings per share - continuing operations (a) 1.83 2.10 2.66 3.38
 

(a) Uses tax rate of 39 percent excluding unusual adjustments.

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