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

Tenet Healthcare Corporation (NYSE:THC) today reported Adjusted EBITDA of $269 million for the third quarter ended September 30, 2012, an increase of $77 million, or 40 percent, as compared to Adjusted EBITDA of $192 million in the third quarter of 2011. Net income attributable to common shareholders was $40 million, or $0.37 per diluted share, compared to $6 million, or $0.05 per diluted share in the third quarter of 2011.

“Strong revenue growth and disciplined cost control continue to drive our solid financial performance,” said Trevor Fetter, president and chief executive officer. “Adjusted EBITDA increased 40 percent to create the Company’s strongest third quarter in the last ten years. Net revenues grew by 5.8 percent reflecting strong volume increases and continued pricing strength. Our volume growth was one of the strongest in the investor-owned healthcare provider sector, and we recorded our eighth consecutive quarter of positive growth in adjusted admissions. Volume growth was led by a 6.3 percent increase in outpatient surgeries. Cost control was excellent. Conifer Health Solutions, Tenet’s services business, reported another solid quarter contributing $24 million to Adjusted EBITDA.”

“As we look to the fourth quarter, state officials in California recently informed the hospital industry that the managed care portion of the California Provider Fee program is not likely to be approved in 2012,” said Mr. Fetter. “This program had been expected to contribute more than $40 million to Adjusted EBITDA in the fourth quarter. We now expect these earnings to be recognized in 2013. As a result of this delay and recent trends in volumes and payer mix, we now expect Adjusted EBITDA of approximately $1.2 billion for 2012.”

Discussion of Results (Percentage changes compare Q3’12 to Q3’11, unless otherwise noted.)

In the third quarter, adjusted admissions increased by 1.4 percent, and total admissions declined by 0.5 percent. Outpatient surgeries extended their strong growth trend increasing by 6.3 percent and total emergency department visits increased by 4.9 percent.

Net operating revenues were $2.221 billion, an increase of $121 million, or 5.8 percent, compared to net operating revenues of $2.100 billion in the third quarter of 2011.

Bad debt expense as a percent of revenues was 8.5 percent, an increase of 20 basis points compared to 8.3 percent in the third quarter of 2011. The increase in bad debt expense was largely the result of the 7.9 percent increase in uninsured and charity outpatient visits.

Net patient revenue per adjusted admission was $11,579, an increase of 3.7 percent. This pricing increase primarily reflects improved terms in our contracts with commercial managed care payers.

Selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased by only 1.5 percent on a per adjusted admission basis. This favorable cost performance exceeded the Company’s expectations for the quarter. Supply costs were extremely well-controlled, declining 2.2 percent per adjusted admission.

Cash and cash equivalents were $83 million at September 30, 2012 compared to $82 million at June 30, 2012. The balance on the Company’s bank line was $175 million at September 30, 2012, a reduction of $25 million as compared to a balance of $200 million as of June 30, 2012. Approximately $60 million of California Provider Fee program revenues have been recognized in Adjusted EBITDA in 2012 that have not yet been received.

Outlook for Adjusted EBITDA in Fourth Quarter 2012 and Full Year 2013

The outlook range for Adjusted EBITDA in the fourth quarter of 2012 is $313 million to $353 million. This range reflects the delayed recognition of the revenue from the managed care portion of the California Provider Fee program into 2013. The Company’s Outlook for 2013 Adjusted EBITDA is in a range of $1.325 billion to $1.425 billion, slightly above analyst consensus estimates.

Management’s Webcast Discussion of Third Quarter Results

Tenet management will discuss the Company’s third quarter 2012 results on a 9:00 AM (ET) webcast on November 7, 2012. 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, over 100 free-standing outpatient centers and Conifer Health Solutions, a leader in business process solutions for health care providers that serves more than 500 hospital and health care entities 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.

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, 2011, 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.

 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)   Three Months Ended September 30,
2012   %   2011   %   Change
 
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 2,427 $ 2,289 6.0 %
Less: Provision for doubtful accounts   206     189   9.0 %
Net operating revenues 2,221 100.0 % 2,100 100.0 % 5.8 %
Operating expenses:
Salaries, wages and benefits 1,050 47.3 % 1,002 47.7 % 4.8 %
Supplies 376 16.9 % 379 18.0 % (0.8

)%
Other operating expenses, net 539 24.2 % 527 25.1 % 2.3 %
Electronic health record incentives (13 ) (0.6 ) % % (100.0

)%
Depreciation and amortization 110 5.0 % 100 4.8 % 10.0 %
Impairment of long-lived assets and goodwill, and restructuring charges, net 6 0.3 % 8 0.4 %
Litigation and investigation costs     %   5   0.2 %
Operating income 153 6.9 % 79 3.8 %
Interest expense (103 ) (59 )
Investment earnings   1     1  
Income from continuing operations, before income taxes 51 21
Income tax expense   (18 )   (4 )

Income from continuing operations, before discontinued operations
33 17
Discontinued operations:
Income (loss) from operations 4 (2 )
Net losses on sales of facilities (1 )
Income tax expense   (4 )    
Loss from discontinued operations   (1 )   (2 )
Net income 32 15
Less: Preferred stock dividends 1 6
Less: Net income (loss) attributable to noncontrolling interests   (9 )   3  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 40   $ 6  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 30 $ 8
Income (loss) from discontinued operations, net of tax   10     (2 )
Net income attributable to Tenet Healthcare Corporation common shareholders $ 40   $ 6  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.29 $ 0.07
Discontinued operations   0.09     (0.02 )
$ 0.38   $ 0.05  
Diluted
Continuing operations $ 0.28 $ 0.07
Discontinued operations   0.09     (0.02 )
$ 0.37   $ 0.05  

Weighted average shares and dilutive securities outstanding (in thousands):
Basic 104,244 117,188
Diluted 107,311 120,908
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts) Nine Months Ended September 30,
2012   %   2011   %   Change
 
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 7,373 $ 7,018 5.1 %
Less: Provision for doubtful accounts   585     536   9.1 %
Net operating revenues 6,788 100.0 % 6,482 100.0 % 4.7 %
Operating expenses:
Salaries, wages and benefits 3,166 46.7 % 3,001 46.3 % 5.5 %
Supplies 1,164 17.1 % 1,167 18.0 % (0.3 )%
Other operating expenses, net 1,604 23.7 % 1,526 23.5 % 5.1 %
Electronic health record incentives (13 ) (0.2

)%
(50 ) (0.8

)%
(74.0

)%
Depreciation and amortization 314 4.6 % 298 4.6 % 5.4 %
Impairment of long-lived assets and goodwill, and restructuring charges, net 12 0.2 % 18 0.3 %
Litigation and investigation costs   3   %   24   0.4 %
Operating income 538 7.9 % 498 7.7 %
Interest expense (303 ) (275 )
Investment earnings   2     3  

Income from continuing operations, before income taxes
237 226
Income tax expense   (90 )   (73 )

Income from continuing operations, before discontinued operations
147 153
Discontinued operations:
Income (loss) from operations 7 (17 )

Impairment of long-lived assets and goodwill, and restructuring charges, net
(100 )
Net gains on sales of facilities 1
Income tax benefit   24     24  
Income (loss) from discontinued operations   (68 )   7  
Net income 79 160
Less: Preferred stock dividends 11 18

Less: Net income (loss) attributable to noncontrolling interests
  (24 )   8  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 92   $ 134  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 129 $ 128
Income (loss) from discontinued operations, net of tax   (37 )   6  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 92   $ 134  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 1.25 $ 1.06
Discontinued operations   (0.36 )   0.05  
$ 0.89   $ 1.11  
Diluted
Continuing operations $ 1.21 $ 1.03
Discontinued operations   (0.35 )   0.05  
$ 0.86   $ 1.08  

Weighted average shares and dilutive securities outstanding (in thousands):
Basic 103,613 120,204
Diluted 106,904 124,466
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
  September 30,   December 31,
(Dollars in millions) 2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 83 $ 113
Accounts receivable, less allowance for doubtful accounts 1,338 1,278
Inventories of supplies, at cost 154 161
Income tax receivable 13 7
Current portion of deferred income taxes 394 418
Assets held for sale 2
Other current assets   502     378  
Total current assets 2,484 2,357
Investments and other assets 126 156
Deferred income taxes, net of current portion 338 374
Property and equipment, at cost, less accumulated depreciation and amortization 4,173 4,350
Goodwill 771 736
Other intangible assets, at cost, less accumulated amortization   578     489  
Total assets $ 8,470   $ 8,462  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 243 $ 66
Accounts payable 629 760
Accrued compensation and benefits 379 376
Professional and general liability reserves 72 75
Accrued interest payable 110 112
Accrued legal settlement costs 7 64
Other current liabilities   389     362  
Total current liabilities 1,829 1,815
Long-term debt, net of current portion 4,508 4,294
Professional and general liability reserves 322 337
Accrued legal settlement costs 2 2
Other long-term liabilities   524     506  
Total liabilities 7,185 6,954
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 16 16
Equity:
Shareholders’ equity:
Preferred stock 45 334
Common stock 7 7
Additional paid-in capital 4,437 4,427
Accumulated other comprehensive loss (49 ) (52 )
Accumulated deficit (1,337 ) (1,440 )
Common stock in treasury, at cost   (1,879 )   (1,853 )
Total shareholders’ equity 1,224 1,423
Noncontrolling interests   45     69  
Total equity   1,269     1,492  
Total liabilities and equity $ 8,470   $ 8,462  
 
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
(Dollars in millions) Nine Months EndedSeptember 30,
2012   2011
Net income $ 79 $ 160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 314 298
Provision for doubtful accounts 585 536
Deferred income tax expense 58 102
Stock-based compensation expense 24 17
Impairment of long-lived assets and goodwill, and restructuring charges, net 12 18
Litigation and investigation costs 3 24
Amortization of debt discount and debt issuance costs 16 23
Pre-tax loss from discontinued operations 92 17
Other items, net (7 ) (10 )
Changes in cash from changes in operating assets and liabilities:
Accounts receivable (653 ) (618 )
Inventories and other current assets (106 ) (32 )
Income taxes (2 ) (44 )
Accounts payable, accrued expenses and other current liabilities (23 ) (96 )
Other long-term liabilities 20 (10 )
Payments against reserves for restructuring charges and litigation costs and settlements (56 ) (27 )
Net cash used in operating activities from discontinued operations, excluding income taxes   (19 )   (34 )
Net cash provided by operating activities 337 324
Cash flows from investing activities:
Purchases of property and equipment—continuing operations (358 ) (294 )
Purchases of property and equipment—discontinued operations (2 ) (4 )
Purchases of businesses or joint venture interests (38 ) (56 )
Proceeds from sales of facilities and other assets — discontinued operations 45
Proceeds from sales of marketable securities, long-term investments and other assets 9 31
Other items, net   (2 )   (1 )
Net cash used in investing activities (346 ) (324 )
Cash flows from financing activities:
Repayments of borrowings under credit facility (1,458 )
Proceeds from borrowings under credit facility 1,553
Repayments of other borrowings (76 ) (4 )
Proceeds from other borrowings 292
Repurchases of preferred stock (292 )
Deferred debt issuance costs (3 )
Repurchases of common stock (26 ) (196 )
Cash dividends on preferred stock (13 ) (18 )
Distributions paid to noncontrolling interests (9 ) (8 )
Other items, net   11     6  
Net cash used in financing activities   (21 )   (220 )
Net decrease in cash and cash equivalents (30 ) (220 )
Cash and cash equivalents at beginning of period   113     405  
Cash and cash equivalents at end of period $ 83   $ 185  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (288 ) $ (255 )
Income tax (payments) refunds, net $ (9 ) $ 9
 
 

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING HOSPITALS
(Unaudited)
 

 

(Dollars in millions except per patient day, per
     

admission and per visit amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2012   2011   Change 2012   2011   Change
 
Net inpatient revenues $ 1,501 $ 1,444 3.9 % $ 4,656 $ 4,529 2.8 %
Net outpatient revenues $ 789 $ 734 7.5 % $ 2,346 $ 2,192 7.0 %
 
Number of acute care hospitals (at end of period) 49 49 * 49 49

 

*
Licensed beds (at end of period) 13,216 13,119 0.7 % 13,216 13,119 0.7 %
Average licensed beds 13,216 13,106 0.8 % 13,177 13,113 0.5 %
Utilization of licensed beds 47.8 % 49.1 % (1.3

)%
* 49.5 % 50.9 % (1.4

)%

 

*
Patient days 580,594 591,948 (1.9

)%
1,788,490 1,823,397 (1.9

)%
Adjusted patient days 911,233 909,960 0.1 % 2,778,244 2,770,685 0.3 %
Net inpatient revenue per patient day $ 2,585 $ 2,439 6.0 % $ 2,603 $ 2,484 4.8 %
Total admissions 124,869 125,458 (0.5

)%
381,195 382,487 (0.3

)%
Adjusted patient admissions 197,778 194,965 1.4 % 597,570 586,395 1.9 %
Net inpatient revenue per admission $ 12,021 $ 11,510 4.4 % $ 12,214 $ 11,841 3.2 %
Average length of stay (days) 4.65 4.72 (1.5

)%
4.69 4.77 (1.7

)%
Total surgeries 94,260 92,574 1.8 % 282,910 271,086 4.4 %
Outpatient visits 1,035,236 987,318 4.9 % 3,113,615 2,971,933 4.8 %
Net outpatient revenue per visit $ 762 $ 743 2.6 % $ 753 $ 738 2.0 %
 
Sources of net patient revenue
Medicare 22.1 % 22.5 % (0.4

)%
* 23.8 % 23.1 % 0.7 %

 

*
Medicaid 7.7 % 8.0 % (0.3

)%
* 8.4 % 9.1 % (0.7

)%

 

*
Managed care 58.9 % 58.2 % 0.7 % * 57.2 % 57.0 % 0.2 %

 

*
Indemnity, self-pay and other 11.3 % 11.3 %

%
* 10.6 % 10.8 % (0.2

)%

 

*
 
 

* This change is the difference between the 2012 and 2011 amounts shown.
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal 2012 by Calendar Quarter
(Unaudited)
 
(Dollars in millions except per share amounts)   Three Months Ended  

NineMonthsEnded
03/31/12   06/30/12   09/30/12 09/30/12
 
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 2,491 $ 2,455 $ 2,427 $ 7,373
Less: Provision for doubtful accounts   189     190     206     585  
Net operating revenues 2,302 2,265 2,221 6,788
Operating expenses:
Salaries, wages and benefits 1,062 1,054 1,050 3,166
Supplies 399 389 376 1,164
Other operating expenses, net 531 534 539 1,604
Electronic health record incentives (13 ) (13 )
Depreciation and amortization 100 104 110 314
Impairment of long-lived assets and goodwill, and restructuring charges, net 3 3 6 12
Litigation and investigation costs   2     1         3  
Operating income 205 180 153 538
Interest expense (98 ) (102 ) (103 ) (303 )
Investment earnings   1         1     2  
Income from continuing operations, before income taxes 108 78 51 237
Income tax expense   (42 )   (30 )   (18 )   (90 )
Income from continuing operations, before discontinued operations 66 48 33 147
Discontinued operations:
Income from operations 2 1 4 7
Impairment of long-lived assets and goodwill, and restructuring charges, net (100 ) (100 )
Net gains (losses) on sales of facilities 2 (1 ) 1
Income tax benefit (expense)   (1 )   29     (4 )   24  
Income (loss) from discontinued operations   1     (68 )   (1 )   (68 )
Net income 67 (20 ) 32 79
Less: Preferred stock dividends 6 4 1 11
Less: Net income (loss) attributable to noncontrolling interests   3     (18 )   (9 )   (24 )
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 58   $ (6 ) $ 40   $ 92  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 57 $ 42 $ 30 $ 129
Income (loss) from discontinued operations, net of tax   1     (48 )   10     (37 )
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 58   $ (6 ) $ 40   $ 92  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.55 $ 0.40 $ 0.29 $ 1.25
Discontinued operations   0.01     (0.46 )   0.09     (0.36 )
$ 0.56   $ (0.06 ) $ 0.38   $ 0.89  
Diluted
Continuing operations $ 0.52 $ 0.39 $ 0.28 $ 1.21
Discontinued operations   0.01     (0.45 )   0.09     (0.35 )
$ 0.53   $ (0.06 ) $ 0.37   $ 0.86  

Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,843 103,753 104,244 103,613
Diluted 121,218 106,927 107,311 106,904
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING HOSPITALS
(Unaudited)
       
(Dollars in millions except per patient day, per Nine Months

admission and per visit amounts)
Three Months Ended Ended
03/31/12 06/30/12 09/30/12 09/30/12
 
Net inpatient revenues $ 1,607 $ 1,548 $ 1,501 $ 4,656
Net outpatient revenues $ 766 $ 791 $ 789 $ 2,346
 
Number of acute care hospitals (at end of period) 49 49 49 49
Licensed beds (at end of period) 13,175 13,176 13,216 13,216
Average licensed beds 13,138 13,176 13,216 13,177
Utilization of licensed beds 51.6 % 49.2 % 47.8 % 49.5 %
Patient days 617,459 590,437 580,594 1,788,490
Adjusted patient days 947,116 919,895 911,233 2,778,244
Net inpatient revenue per patient day $ 2,603 $ 2,622 $ 2,585 $ 2,603
Total admissions 131,190 125,136 124,869 381,195
Adjusted patient admissions 202,860 196,932 197,778 597,570
Net inpatient revenue per admission $ 12,249 $ 12,371 $ 12,021 $ 12,214
Average length of stay (days) 4.71 4.72 4.65 4.69
Total surgeries 93,228 95,422 94,260 282,910
Outpatient visits 1,031,611 1,046,768 1,035,236 3,113,615
Net outpatient revenue per visit $ 743 $ 756 $ 762 $ 753
 
Sources of net patient revenue
Medicare 26.5 % 22.7 % 22.1 % 23.8 %
Medicaid 7.5 % 10.0 % 7.7 % 8.4 %
Managed care 55.9 % 56.8 % 58.9 % 57.2 %
Indemnity, self-pay and other 10.1 % 10.5 % 11.3 % 10.6 %
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal 2011 by Calendar Quarter

(Unaudited)
   
(Dollars in millions except per share amounts) Three Months Ended Year Ended
03/31/11   06/30/11   09/30/11   12/31/11 12/31/11
 
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 2,429 $ 2,300 $ 2,289 $ 2,353 $ 9,371
Less: Provision for doubtful accounts   179     168     189     181     717  
Net operating revenues 2,250 2,132 2,100 2,172 8,654
Operating expenses:
Salaries, wages and benefits 1,017 982 1,002 1,014 4,015
Supplies 396 392 379 381 1,548
Other operating expenses, net 491 508 527 494 2,020
Electronic health record incentives (25 ) (25 ) (5 ) (55 )
Depreciation and amortization 98 100 100 100 398
Impairment of long-lived assets and goodwill, and restructuring charges, net 8 2 8 2 20
Litigation and investigation costs   11     8     5     31     55  
Operating income 254 165 79 155 653
Interest expense (118 ) (98 ) (59 ) (100 ) (375 )
Loss from early extinguishment of debt (117 ) (117 )
Investment earnings   1     1     1         3  
Income (loss) from continuing operations, before income taxes 137 68 21 (62 ) 164
Income tax benefit (expense)   (50 )   (19 )   (4 )   12     (61 )

Income (loss) from continuing operations, before discontinued operations
87 49 17 (50 ) 103
Discontinued operations:
Loss from operations (10 ) (5 ) (2 ) (1 ) (18 )
Impairment of long-lived assets and goodwill, and restructuring charges, net (6 ) (6 )
Litigation settlements, and investigation costs (17 ) (17 )
Income tax benefit   5     19         8     32  
Income (loss) from discontinued operations   (5 )   14     (2 )   (16 )   (9 )
Net income (loss) 82 63 15 (66 ) 94
Less: Preferred stock dividends 6 6 6 6 24
Less: Net income attributable to noncontrolling interests   3     2     3     4     12  
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 73   $ 55   $ 6   $ (76 ) $ 58  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax $ 80 $ 40 $ 8 $ (60 ) $ 68
Income (loss) from discontinued operations, net of tax   (7 )   15     (2 )   (16 )   (10 )
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 73   $ 55   $ 6   $ (76 ) $ 58  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.66 $ 0.33 $ 0.07 $ (0.55 ) $ 0.58
Discontinued operations   (0.06 )   0.12     (0.02 )   (0.15 )   (0.09 )
$ 0.60   $ 0.45   $ 0.05   $ (0.70 ) $ 0.49  
Diluted
Continuing operations $ 0.61 $ 0.32 $ 0.07 $ (0.55 ) $ 0.56
Discontinued operations   (0.05 )   0.12     (0.02 )   (0.15 )   (0.08 )
$ 0.56   $ 0.44   $ 0.05   $ (0.70 ) $ 0.48  

Weighted average shares and dilutive securities outstanding (in thousands):
Basic 121,726 121,699 117,188 108,114 117,182
Diluted 141,295 125,937 120,908 108,114 121,295
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING HOSPITALS

(Unaudited)
           
(Dollars in millions except per patient day, per
admission and per visit amounts) Three Months Ended Year Ended
03/31/11 06/30/11 09/30/11   12/31/11 12/31/11
 
Net inpatient revenues $ 1,619 $ 1,466 $ 1,444 $ 1,499 $ 6,028
Net outpatient revenues $ 720 $ 738 $ 734 $ 736 $ 2,928
 
Number of acute care hospitals (at end of period) 49 49 49 49 49
Licensed beds (at end of period) 13,123 13,086 13,119 13,119 13,119
Average licensed beds 13,123 13,111 13,106 13,119 13,115
Utilization of licensed beds 53.8 % 50.0 % 49.1 % 48.9 % 50.4 %
Patient days 635,463 595,986 591,948 589,848 2,413,245
Adjusted patient days 948,356 912,369 909,960 902,762 3,673,447
Net inpatient revenue per patient day $ 2,548 $ 2,460 $ 2,439 $ 2,541 $ 2,498
Total admissions 131,437 125,592 125,458 125,347 507,834
Adjusted patient admissions 197,459 193,971 194,965 193,631 780,026
Net inpatient revenue per admission $ 12,318 $ 11,673 $ 11,510 $ 11,959 $ 11,870
Average length of stay (days) 4.83 4.75 4.72 4.71 4.75
Total surgeries 87,507 91,005 92,574 91,200 362,286
Outpatient visits 990,411 994,204 987,318 982,083 3,954,016
Net outpatient revenue per visit $ 727 $ 742 $ 743 $ 749 $ 741
 
Sources of net patient revenue
Medicare 23.2 % 23.5 % 22.5 % 23.1 % 23.1 %
Medicaid 11.5 % 7.5 % 8.0 % 8.6 % 9.0 %
Managed care 54.6 % 58.2 % 58.2 % 58.1 % 57.2 %
Indemnity, self-pay and other 10.7 % 10.8 % 11.3 % 10.2 % 10.7 %
 
 
TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)
       
September 30,   December 31,
  2012 2011
Assets
Hospital Operations and other $ 8,381 $ 8,389
Conifer   89     73  
Total $ 8,470   $ 8,462  
 
Three Months Ended

September 30,
Nine Months Ended

September 30,
2012 2011 2012 2011
Capital expenditures:
Hospital Operations and other $ 105 $ 98 $ 352 $ 289
Conifer   3     2     8     9  
Total $ 108   $ 100   $ 360   $ 298  
 
Net operating revenues:
Hospital Operations and other $ 2,193 $ 2,076 $ 6,725 $ 6,425
Conifer
Tenet 94 68 274 192
Other customers   28     24     63     57  
2,315 2,168 7,062 6,674
Intercompany eliminations   (94 )   (68 )   (274 )   (192 )
Total $ 2,221   $ 2,100   $ 6,788   $ 6,482  
 
Adjusted EBITDA:
Hospital Operations and other $ 245 $ 180 $ 793 $ 812
Conifer   24     12     74     26  
Total $ 269   $ 192   $ 867   $ 838  
 
Depreciation and amortization:
Hospital Operations and other $ 108 $ 98 $ 307 $ 292
Conifer   2     2     7     6  
Total $ 110   $ 100   $ 314   $ 298  
 
Adjusted EBITDA $ 269 $ 192 $ 867 $ 838
Depreciation and amortization (110 ) (100 ) (314 ) (298 )
Interest expenses (103 ) (59 ) (303 ) (275 )
Litigation and investigation costs (5 ) (3 ) (24 )
Impairments of long-lived assets (6 ) (8 ) (12 ) (18 )
Investment earnings   1     1     2     3  
Income before income taxes $ 51   $ 21   $ 237   $ 226  
 

Due to the fact that Conifer’s revenues from providing services to Tenet’s hospitals were based on third-party billing terms in 2012 but not in 2011, the following table presents 2012 Adjusted EBITDA on a comparable basis to the 2011 presentation.
       
Three Months Ended

September 30,
Nine Months Ended

September 30,
2012   2011 2012   2011
Adjusted supplemental EBITDA:
Hospital Operations and other $ 260 $ 180 $ 840 $ 812
Conifer   9   12   27   26
Total $ 269 $ 192 $ 867 $ 838
 

(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) cumulative effect of changes in accounting principle, net of tax, (2) net income attributable to noncontrolling interests, (3) preferred stock dividends, (4) income (loss) from discontinued operations, net of tax, (5) income tax (expense) benefit, (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 (costs) benefit, net of insurance recoveries, (11) hurricane insurance recoveries, net of costs, (12) impairment of long-lived assets and goodwill and restructuring charges, net of insurance recoveries, 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 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 EndedSeptember 30,     Nine Months EndedSeptember 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.

Copyright Business Wire 2010

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