Tenet Healthcare Corporation (NYSE:THC) reported Adjusted EBITDA of $568 million for the second quarter of 2015, an increase of $108 million, or 23.5 percent, compared to $460 million in the second quarter of 2014. The results for the second quarter of 2015 included $16 million of Adjusted EBITDA generated by United Surgical Partners International (USPI) and Aspen Healthcare, which were acquired by Tenet on June 16, 2015.

"This was another strong quarter for Tenet with EBITDA that exceeded our expectations," said Trevor Fetter, chairman and chief executive officer. "We continued to focus on aggressive implementation of our strategy to improve care delivery and more closely align our business with key trends shaping the healthcare system. In our hospital business, we made progress on multiple strategic partnerships that will help us achieve leadership positions in our markets, as well as plans to divest facilities. We also completed our joint venture with USPI, which makes us the leader in the fast-growing ambulatory surgery sector. We continue to position Tenet as a partner of choice for not-for-profit health systems, and we remain incredibly optimistic about the many opportunities to grow with new and existing partners through our acute care business, USPI and Conifer."

Discussion of Results (Percentage changes in operating metrics compare Q2'15 to Q2'14 on a same-facility basis unless otherwise noted.)

Tenet generated same-hospital growth in admissions and adjusted admissions of 1.7 percent and 2.3 percent, respectively, compared to the second quarter of 2014. Paying admissions increased 2.1 percent, reflecting growth in the number of newly insured patients. Surgeries performed in our hospital segment increased 1.5 percent and emergency department visits increased 2.4 percent. On a pro forma same-facility system-wide basis, including the results of USPI and Aspen in both the second quarters of 2015 and 2014, surgical and imaging cases in our Ambulatory Care segment grew by 6.8 percent.

The company continues to benefit from declines in uninsured and charity volumes. In the six states in which we operate that expanded their Medicaid programs, same-hospital uninsured plus charity admissions declined by 639 admissions, or 31.5 percent, and Medicaid admissions increased by 767 admissions, or 2.6 percent. Uninsured plus charity outpatient visits decreased by 8,729 visits, or 15.8 percent, and Medicaid outpatient visits grew by 32,714 visits, or 9.2 percent. The six states are comprised of five states that expanded Medicaid in 2014 (Arizona, California, Illinois, Massachusetts and Michigan) and one state that expanded Medicaid in 2015 (Pennsylvania).

Including non-expansion states, same-hospital uninsured plus charity admissions decreased by 539 admissions, or 4.9 percent, and Medicaid admissions increased by 1,082 admissions, or 2.0 percent. There was a decline in same-hospital charity and uninsured outpatient visits of 10,225 visits, or 6.2 percent, and an increase in Medicaid outpatient visits of 38,872 visits, or 7.3 percent.

Tenet's same-hospital exchange volumes were 5,301 admissions and 46,882 outpatient visits in the second quarter. Compared to the first quarter of 2015, the company drove increases in exchange admissions and exchange outpatient visits of 19.6 percent and 35.4 percent, respectively.

Net operating revenues, after the provision for doubtful accounts, grew by $454 million, or 11.2 percent, to $4.492 billion compared to net operating revenues of $4.038 billion in the second quarter of 2014. The majority of the company's revenue growth was driven by a 2.3 percent increase in same-hospital adjusted patient admissions, a 4.5 percent increase in same-hospital net patient revenue per adjusted patient admission, and a $28 million increase in revenue at Conifer from non-Tenet customers, representing a growth rate of 19.0 percent. A portion of the company's 4.5 percent growth in same-hospital net patient revenue per adjusted admission was due to the company recognizing $45 million of revenues in the second quarter of 2015 related to the California provider fee program compared to no revenues in the second quarter of 2014 since the current program was not approved until December 2014. The year-over-year revenue growth also benefitted from acquisitions, joint ventures and newly constructed facilities.

Total hospital selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.1 percent per adjusted admission in the quarter.

Tenet recorded $33 million in electronic health records incentives in the second quarter of 2015, a $25 million decrease compared to $58 million in the second quarter of 2014. Electronic health record incentive payments are recorded based on the timing of when the company's hospitals achieve meaningful use criteria.

The company's bad debt expense ratio was 7.3 percent of revenues before bad debt in both the second quarter of 2015 and 2014. Including $199 million and $240 million of charity care write-offs in the second quarters of 2015 and 2014, respectively, Tenet's uncompensated care expense was $551 million and $560 million, respectively, in these periods. As a percentage of adjusted revenue, uncompensated care expense represented 10.9 percent of adjusted revenue in the second quarter of 2015, down from 12.2 percent in the second quarter of 2014.

Conifer generated $60 million of Adjusted EBITDA in the quarter ended June 30, 2015, representing a 36.4 percent increase compared to $44 million in the second quarter of 2014. Including revenue from Tenet, Conifer's revenue increased by $55 million, or 19.3 percent, to $340 million in the second quarter of 2015 compared to revenues of $285 million in the second quarter of 2014.

Tenet generated adjusted net income from continuing operations of $76 million, or $0.75 per diluted share, in the second quarter of 2015. This excludes $136 million, or $1.35 per share, in after-tax impairment charges, restructuring charges, acquisition-related costs, and litigation and investigation costs. The company generated adjusted net income from continuing operations of $17 million, or $0.17 per diluted share, in the second quarter of 2014, excluding the comparable items that totaled $27 million after-tax, or $0.28 per share.

Including the results of both continuing and discontinued operations, Tenet reported a net loss attributable to common shareholders of $61 million after-tax, or $0.61 per share in the second quarter of 2015, compared to a net loss of $26 million after-tax, or $0.27 per share, in the second quarter of 2014.

Cash and cash equivalents were $299 million at June 30, 2015 compared to $193 million at December 31, 2014. Tenet's outstanding borrowings on its credit line were $100 million as of June 30, 2015. Accounts receivable days outstanding were 50.7 at June 30, 2015 compared to 49.5 days at December 31, 2014. On a pro forma basis, including the revenue from USPI and Aspen for the entire second quarter, accounts receivable days outstanding would have been 48.8 at June 30, 2015. Adjusted net cash provided by operating activities in the quarter ended June 30, 2015 was $467 million; after subtracting $175 million of capital expenditures, adjusted free cash flow was $292 million.

Revised Outlook for 2015

During 2015, Tenet expects to generate net operating revenues of $18.1 billion to $18.5 billion, Adjusted EBITDA of $2.225 billion to $2.325 billion, Adjusted free cash flow of $225 million to $425 million, and Adjusted earnings per share of $1.32 to $2.21. This includes approximately $65 million of electronic health record incentives.

In the third quarter of 2015, Tenet expects to generate net operating revenues of $4.65 billion to $4.85 billion, Adjusted EBITDA of $550 million to $600 million and Adjusted earnings per share of $0.05 to $0.49. This includes approximately $8 million of electronic health record incentives.

These Outlook amounts include the estimated impact of acquisitions, divestitures and joint ventures using either the actual completion date of transactions that have already occurred or estimated completion dates later this year. Each transaction that has not yet been completed is subject to normal closing conditions and regulatory review, and in the case of the potential hospital sales in Georgia and North Carolina, the negotiation of acceptable terms and the execution of definitive agreements. The Outlook for both calendar year 2015 and the third quarter of 2015 include the following transactions that were completed or are assumed to be completed by the end of 2015:
  • Tenet's joint venture with USPI, which was completed on June 16, 2015. Tenet is the majority owner and is now consolidating the results of USPI.
  • Tenet's acquisition of Aspen Healthcare, which was completed on June 16, 2015. Tenet owns 100% of Aspen and is now consolidating its financial results.
  • Tenet's announced joint venture with Baylor Scott & White Health in Dallas. Tenet will be a minority owner in the partnership and will de-consolidate the results of its four hospitals in Dallas. If completed, Tenet will account for its ownership in these hospitals under the equity method of accounting.
  • Tenet's announced joint venture with Baptist Health System in Birmingham, Alabama. If completed, Tenet will be the majority owner and will consolidate the financial results of this partnership.
  • Tenet's announced joint venture with Dignity Health and Ascension to own and operate the Carondelet Health Network in Tucson, Arizona. If completed, Tenet will be the majority owner and will consolidate the financial results of this partnership.
  • Tenet's acquisition via a long-term lease of Hi-Desert Medical Center in Joshua Tree, California, which was completed on July 15, 2015. Tenet will be consolidating the financial results of Hi-Desert.
  • Tenet's announced sale of Saint Louis University Hospital in St. Louis, Missouri; and,
  • The potential sales of Tenet's hospitals in Georgia and North Carolina.

Tenet expects to generate net cash proceeds of approximately $1 billion from the transactions listed above, excluding the cash payments for USPI and Aspen. Tenet's estimate of approximately $1 billion of net cash proceeds includes the anticipated working capital proceeds and the buyers' assumption of Tenet's capital lease obligations at certain hospitals. The company anticipates using these net proceeds for general corporate purposes, including the potential to repay portions of Tenet's existing debt.

Management's Webcast Discussion of Second Quarter Results

Tenet management will discuss the Company's second quarter 2015 results on a webcast scheduled for 10:00 a.m. ET (9:00 a.m. CT) on August 4, 2015. Investors can access the webcast through Tenet's website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company's website.

Additional information regarding Tenet's quarterly results of operations, including detailed tabular operational data, is contained in its Form 10-Q report for the three months ended June 30, 2015, which will be filed with the Securities and Exchange Commission and posted on the Tenet 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 is a diversified healthcare services company with more than 125,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International (USPI), the company operates 81 general acute care hospitals, 19 short-stay surgical hospitals and over 400 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet's Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks (IDN), physician groups, self-insured organizations and health plans. For more information, please visit www.tenethealth.com.

The terms "THC," "Tenet Healthcare Corporation," "the company," "we," "us" or "our" refer to Tenet Healthcare Corporation or one or more of its subsidiaries or affiliates as applicable.

This release contains "forward-looking statements" - that is, statements that relate 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," "assume," "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, 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, 2014 and other filings with the Securities and Exchange Commission. In addition, the Company's 2015 outlook could be materially affected if any of the acquisitions or divestiture transactions do not close within the anticipated timeframe, the terms of the transactions materially change or the closing conditions for such transactions are not satisfied. The information contained in this release is as of the date hereof. The company assumes no obligation to update forward-looking statements contained in this release as a result of new information or future events or developments.

Tenet uses its company website 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 June 30,
2015     %     2014     %     Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 4,844 $ 4,358 11.2 %
Less: Provision for doubtful accounts   352     320   10.0 %
Net operating revenues 4,492 100.0 % 4,038 100.0 % 11.2 %
Equity in earnings of unconsolidated affiliates 16 0.4 % 4 0.1 % 300.0 %
Operating expenses:
Salaries, wages and benefits 2,185 48.6 % 1,956 48.4 % 11.7 %
Supplies 707 15.7 % 649 16.1 % 8.9 %
Other operating expenses, net 1,081 24.1 % 1,035 25.6 % 4.4 %
Electronic health record incentives (33 ) (0.7 )% (58 ) (1.4 )% (43.1 ) %
Depreciation and amortization 197 4.4 % 209 5.2 %
Impairment and restructuring charges, and acquisition-related costs 193 4.3 % 32 0.8 %
Litigation and investigation costs   14   0.3 %   12   0.3 %
Operating income 164 3.7 % 207 5.1 %
Interest expense (217 ) (190 )
Investment earnings (losses)   (1 )    
Net income (loss) from continuing operations, before income taxes (54 ) 17
Income tax benefit (expense)   27     (8 )
Net income (loss) from continuing operations, before discontinued operations (27 ) 9
Discontinued operations:
Loss from operations (2 ) (7 )
Litigation and investigation costs (18 )
Income tax benefit   1     9  
Net loss from discontinued operations   (1 )   (16 )
Net loss (28 ) (7 )
Less: Net income attributable to noncontrolling interests   33     19  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (61 ) $ (26 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax $ (60 ) $ (10 )
Net loss from discontinued operations, net of tax   (1 )   (16 )
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (61 ) $ (26 )
Net loss per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.60 ) $ (0.11 )
Discontinued operations   (0.01 )   (0.16 )
$ (0.61 ) $ (0.27 )
Diluted
Continuing operations $ (0.60 ) $ (0.11 )
Discontinued operations   (0.01 )   (0.16 )
$ (0.61 ) $ (0.27 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 99,244 97,677
Diluted* 99,244 97,677

*Had we generated income from continuing operations in the three months ended June 30, 2015 and 2014, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 2,673 and 2,123 shares respectively.
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)     Six Months Ended June 30,
2015     %     2014     %     Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 9,631 $ 8,663 11.2 %
Less: Provision for doubtful accounts   715     700   2.1 %
Net operating revenues 8,916 100.0 % 7,963 100.0 % 12.0 %
Equity in earnings of unconsolidated affiliates 20 0.2 % 5 0.1 % 300.0 %
Operating expenses:
Salaries, wages and benefits 4,310 48.3 % 3,877 48.7 % 11.2 %
Supplies 1,394 15.6 % 1,277 16.0 % 9.2 %
Other operating expenses, net 2,174 24.4 % 2,034 25.5 % 6.9 %
Electronic health record incentives (39 ) (0.4 )% (67 ) (0.8 )% (41.8 )%
Depreciation and amortization 404 4.5 % 402 5.0 %
Impairment and restructuring charges, and acquisition-related costs 222 2.5 % 53 0.7 %
Litigation and investigation costs   17   0.2 %   15   0.2 %
Operating income 454 5.1 % 377 4.7 %
Interest expense (416 ) (372 )
Investment earnings (losses)   (1 )    
Net income from continuing operations, before income taxes 37 5
Income tax benefit (expense)   11     (7 )
Net income (loss) from continuing operations, before discontinued operations 48 (2 )
Discontinued operations:
Loss from operations (3 ) (15 )
Litigation and investigation costs 3 (18 )
Income tax benefit       12  
Net loss from discontinued operations       (21 )
Net income (loss) 48 (23 )
Less: Net income attributable to noncontrolling interests   62     35  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (14 ) $ (58 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax $ (14 ) $ (37 )
Net loss from discontinued operations, net of tax       (21 )
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (14 ) $ (58 )
Net loss per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.14 ) $ (0.38 )
Discontinued operations       (0.22 )
$ (0.14 ) $ (0.60 )
Diluted
Continuing operations $ (0.14 ) $ (0.38 )
Discontinued operations       (0.22 )
$ (0.14 ) $ (0.60 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 98,972 97,419
Diluted* 98,972 97,419

*Had we generated income from continuing operations in the six months ended June 30, 2015 and 2014, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 2,423 and 2,053 shares, respectively.
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    June 30,     December 31,
(Dollars in millions)   2015     2014  
ASSETS
Current assets:
Cash and cash equivalents $ 299 $ 193
Accounts receivable, less allowance for doubtful accounts 2,505 2,404
Inventories of supplies, at cost 261 276
Income tax receivable 27 2
Current portion of deferred income taxes 637 747
Assets held for sale 1,170 2
Other current assets   1,110     1,093  
Total current assets 6,009 4,717
Investments and other assets 1,017 384
Deferred income taxes, net of current portion 89 116
Property and equipment, at cost, less accumulated depreciation and amortization 7,135 7,733
Goodwill 6,602 3,913
Other intangible assets, at cost, less accumulated amortization   1,894     1,278  
Total assets $ 22,746   $ 18,141  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 117 $ 112
Accounts payable 1,149 1,179
Accrued compensation and benefits 770 852
Professional and general liability reserves 204 189
Accrued interest payable 204 194
Liabilities held for sale 244
Other current liabilities   1,086     1,051  
Total current liabilities 3,774 3,577
Long-term debt, net of current portion 14,637 11,695
Professional and general liability reserves 546 492
Defined benefit plan obligations 627 633
Other long-term liabilities   553     558  
Total liabilities 20,137 16,955
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 1,591 401
Equity:
Shareholders' equity:
Common stock 7 7
Additional paid-in capital 4,774 4,614
Accumulated other comprehensive loss (177 ) (182 )
Accumulated deficit (1,424 ) (1,410 )
Common stock in treasury, at cost   (2,377 )   (2,378 )
Total shareholders' equity 803 651
Noncontrolling interests   215     134  
Total equity   1,018     785  
Total liabilities and equity $ 22,746   $ 18,141  
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 
    Six Months Ended
(Dollars in millions) June 30,
  2015         2014  
Net income (loss) $ 48 $ (23 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 404 402
Provision for doubtful accounts 715 700
Deferred income tax benefit (27 ) (7 )
Stock-based compensation expense 33 26
Impairment and restructuring charges, and acquisition-related costs 222 53
Litigation and investigation costs 17 15
Amortization of debt discount and debt issuance costs 21 14
Pre-tax loss from discontinued operations 33
Other items, net (25 ) (9 )
Changes in cash from operating assets and liabilities:
Accounts receivable (779 ) (937 )
Inventories and other current assets 36 78
Income taxes 9 (17 )
Accounts payable, accrued expenses and other current liabilities (267 ) (32 )
Other long-term liabilities 40 47
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (86 ) (84 )
Net cash used in operating activities from discontinued operations, excluding income taxes   (8 )   (12 )
Net cash provided by operating activities 353 247
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (359 ) (523 )
Purchases of businesses or joint venture interests, net of cash acquired (636 ) (42 )
Proceeds from sales of marketable securities, long-term investments and other assets 9 3
Other long-term assets (14 )
Other items, net   1      
Net cash used in investing activities (985 ) (576 )
Cash flows from financing activities:
Repayments of borrowings under credit facility (1,315 ) (1,300 )
Proceeds from borrowings under credit facility 1,195 895
Repayments of other borrowings (1,992 ) (68 )
Proceeds from other borrowings 3,187 1,108
Deferred debt issuance costs (72 ) (19 )
Distributions paid to noncontrolling interests (23 ) (20 )
Contributions from noncontrolling interests 3 13
Purchase of noncontrolling interests (254 )
Proceeds from exercise of stock options 9 11
Other items, net       2  
Net cash provided by financing activities   738     622  
Net increase in cash and cash equivalents 106 293
Cash and cash equivalents at beginning of period   193     113  
Cash and cash equivalents at end of period $ 299   $ 406  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (385 ) $ (360 )
Income tax refunds (payments), net $ (8 ) $ (19 )
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS (1)

(Unaudited)
 
(Dollars in millions except per patient day,                        
per admission and per visit amounts) Three Months Ended June 30, Six Months Ended June 30,
2015

2014 (2)
Change

2015 (2)

2014 (2)
Change
 
Net inpatient revenues $ 2,623 $ 2,393 9.6 % $ 5,313 $ 4,834 9.9 %
Net outpatient revenues $ 1,484 $ 1,367 8.6 % $ 2,896 $ 2,643 9.6 %
 
Number of acute care hospitals (at end of period) 80 79 1 * 80 79 1 *
Licensed beds (at end of period) 20,826 20,553 1.3 % 20,826 20,553 1.3 %
Average licensed beds 20,826 20,370 2.2 % 20,823 20,313 2.5 %
Utilization of licensed beds 49.1 % 48.9 % 0.2 % * 50.6 % 49.9 % 0.7 % *
Patient days - total 929,840 907,093 2.5 % 1,905,752 1,836,257 3.8 %
Adjusted patient days 1,589,567 1,540,290 3.2 % 3,207,969 3,063,611 4.7 %
Net inpatient revenue per patient day $ 2,821 $ 2,638 6.9 % $ 2,788 $ 2,633 5.9 %
Total admissions 201,908 194,641 3.7 % 410,241 388,914 5.5 %
Adjusted patient admissions 349,122 333,927 4.6 % 698,191 655,841 6.5 %
Charity and uninsured admissions 10,535 10,927 (3.6 )% 21,485 23,457 (8.4 )%
Net inpatient revenue per admission $ 12,991 $ 12,294 5.7 % $ 12,951 $ 12,429 4.2 %
Average length of stay (days) 4.61 4.66 (1.1 )% 4.65 4.72 (1.5 )%
Total surgeries 127,523 123,660 3.1 % 248,926 241,503 3.1 %
Admissions through emergency department 128,570 122,086 5.3 % 262,114 244,687 7.1 %
Emergency department visits 742,951 702,009 5.8 % 1,484,484 1,367,011 8.6 %
Total emergency department admissions and visits 871,521 824,095 5.8 % 1,746,598 1,611,698 8.4 %
Outpatient visits 2,063,037 1,927,597 7.0 % 4,057,610 3,747,229 8.3 %
Charity and uninsured outpatient visits 159,634 166,725 (4.3 )% 316,831 328,850 (3.7 )%
Net outpatient revenue per visit $ 719 $ 709 1.4 % $ 714 $ 705 1.3 %
Net patient revenue per adjusted patient admission $ 11,764 $ 11,260 4.5 % $ 11,758 $ 11,401 3.1 %
Net patient revenue per adjusted patient day $ 2,584 $ 2,441 5.9 % $ 2,559 $ 2,441 4.8 %
 
Net Patient Revenues from:
Medicare 20.7 % 22.6 % (1.9 )% * 21.3 % 22.6 % (1.3 )% *
Medicaid 8.5 % 10.1 % (1.6 )% * 9.0 % 9.0 % % *
Managed care 60.8 % 57.8 % 3.0 % * 59.9 % 58.0 % 1.9 % *
Indemnity, self-pay and other 10.0 % 9.5 % 0.5 % * 9.8 % 10.4 % (0.6 )% *
(1)   Represents the results of Tenet's Hospital Operations and other segment.
(2) The results for 2014 and the quarter ended March 31, 2015 have been restated to exclude the results of the surgery and imaging centers that Tenet contributed to the joint venture with United Surgical Partners International. The results for these surgery and imaging centers are now reported in Tenet's Ambulatory Care segment.
* This change is the difference between the 2015 and 2014 amounts shown
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 
(Dollars in millions except per patient day,                        
per admission and per visit amounts) Three Months Ended June 30, Six Months Ended June 30,

2015

2014 (2)
Change

2015 (2)

2014 (2)
Change
 
Net inpatient revenues $ 2,576 $ 2,400 7.3 % $ 5,224 $ 4,840 7.9 %
Net outpatient revenues $ 1,438 $ 1,355 6.1 % $ 2,815 $ 2,632 7.0 %
 
Number of acute care hospitals (at end of period) 77 77 * 77 77 *
Licensed beds (at end of period) 20,419 20,355 0.3 % 20,419 20,355 0.3 %
Average licensed beds 20,419 20,304 0.6 % 20,416 20,280 0.7 %
Utilization of licensed beds 49.1 % 49.0 % 0.1 % * 50.6 % 50.0 % 0.6 % *
Patient days - total 913,127 905,839 0.8 % 1,871,492 1,835,003 2.0 %
Adjusted patient days 1,558,637 1,538,038 1.3 % 3,145,127 3,061,358 2.7 %
Net inpatient revenue per patient day $ 2,821 $ 2,649 6.5 % $ 2,791 $ 2,638 5.8 %
Total admissions 197,390 194,167 1.7 % 401,205 388,440 3.3 %
Adjusted patient admissions 340,791 333,073 2.3 % 681,626 654,988 4.1 %
Charity and uninsured admissions 10,361 10,900 (4.9 )% 21,148 23,430 (9.7 )%
Net inpatient revenue per admission $ 13,050 $ 12,360 5.6 % $ 13,021 $ 12,460 4.5 %
Average length of stay (days) 4.63 4.67 (0.9 )% 4.66 4.72 (1.3 )%
Total surgeries 125,347 123,459 1.5 % 244,977 241,302 1.5 %
Admissions through emergency department 125,468 121,872 3.0 % 255,709 244,473 4.6 %
Emergency department visits 715,897 699,423 2.4 % 1,429,931 1,364,425 4.8 %
Total emergency department admissions and visits 841,365 821,295 2.4 % 1,685,640 1,608,898 4.8 %
Outpatient visits 2,013,926 1,924,572 4.6 % 3,958,900 3,744,204 5.7 %
Charity and uninsured outpatient visits 155,701 165,926 (6.2 )% 309,115 328,051 (5.8 )%
Net outpatient revenue per visit $ 714 $ 704 1.4 % $ 711 $ 703 1.1 %
Net patient revenue per adjusted patient admission $ 11,778 $ 11,274 4.5 % $ 11,794 $ 11,408 3.4 %
Net patient revenue per adjusted patient day $ 2,575 $ 2,441 5.5 % $ 2,556 $ 2,441 4.7 %
 
Net Patient Revenues from:
Medicare 20.6 % 22.6 % (2.0 )% * 21.2 % 22.7 % (1.5 )% *
Medicaid 8.5 % 10.1 % (1.6 )% * 8.9 % 9.0 % (0.1 )% *
Managed care 61.0 % 57.9 % 3.1 % * 59.8 % 57.9 % 1.9 % *
Indemnity, self-pay and other 9.9 % 9.4 % 0.5 % * 10.1 % 10.4 % (0.3 )% *
(1)   Represents the results of Tenet's Hospital Operations and other segment.
(2) The results for 2014 and the quarter ended March 31, 2015 have been restated to exclude the results of the surgery and imaging centers that Tenet contributed to the joint venture with United Surgical Partners International. The results for these surgery and imaging centers are now reported in Tenet's Ambulatory Care segment.
* This change is the difference between the 2015 and 2014 amounts shown
 
 

TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)     Three Months Ended     Six Months Ended
  03/31/15         06/30/15     06/30/15  
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 4,787 $ 4,844 $ 9,631
Less: Provision for doubtful accounts   363     352     715  
Net operating revenues 4,424 4,492 8,916
Equity in earnings of unconsolidated affiliates 4 16 20
Operating expenses:
Salaries, wages and benefits 2,125 2,185 4,310
Supplies 687 707 1,394
Other operating expenses, net 1,093 1,081 2,174
Electronic health record incentives (6 ) (33 ) (39 )
Depreciation and amortization 207 197 404
Impairment and restructuring charges, and acquisition-related costs 29 193 222
Litigation and investigation costs   3     14     17  
Operating income 290 164 454
Interest expense (199 ) (217 ) (416 )
Investment earnings (losses)       (1 )   (1 )
Net income (loss) from continuing operations, before income taxes 91 (54 ) 37
Income tax benefit (expense)   (16 )   27     11  
Net income (loss) from continuing operations, before discontinued operations 75 (27 ) 48
Discontinued operations:
Loss from operations (1 ) (2 ) (3 )
Litigation and investigation costs 3 3
Income tax benefit (expense)   (1 )   1      
Net income (loss) from discontinued operations   1     (1 )    
Net income (loss) 76 (28 ) 48
Less: Net income attributable to noncontrolling interests   29     33     62  
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 47   $ (61 ) $ (14 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Net income (loss) from continuing operations, net of tax $ 46 $ (60 ) $ (14 )
Net income (loss) from discontinued operations, net of tax   1     (1 )    
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 47   $ (61 ) $ (14 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ 0.47 $ (0.60 ) $ (0.14 )
Discontinued operations   0.01     (0.01 )    
$ 0.48   $ (0.61 ) $ (0.14 )
Diluted
Continuing operations $ 0.46 $ (0.60 ) $ (0.14 )
Discontinued operations   0.01     (0.01 )    
$ 0.47   $ (0.61 ) $ (0.14 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 98,699 99,244 98,972
Diluted 100,872 99,244 98,972
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS((1))

(Unaudited)
 
(Dollars in millions except per patient day,          
per admission and per visit amounts) Three Months Ended Six Months Ended

03/31/15 (2)
06/30/15 06/30/15
 
Net inpatient revenues $ 2,690 $ 2,623 $ 5,313
Net outpatient revenues $ 1,412 $ 1,484 $ 2,896
 
Number of acute care hospitals (at end of period) 80 80 80
Licensed beds (at end of period) 20,826 20,826 20,826
Average licensed beds 20,823 20,826 20,823
Utilization of licensed beds 52.1 % 49.1 % 50.6 %
Patient days - total 975,912 929,840 1,905,752
Adjusted patient days 1,618,402 1,589,567 3,207,969
Net inpatient revenue per patient day $ 2,755 $ 2,821 $ 2,788
Total admissions 208,333 201,908 410,241
Adjusted patient admissions 349,069 349,122 698,191
Charity and uninsured admissions 10,950 10,535 21,485
Net inpatient revenue per admission $ 12,907 $ 12,991 $ 12,951
Average length of stay (days) 4.68 4.61 4.65
Total surgeries 121,403 127,523 248,926
Admissions through emergency department 133,544 128,570 262,114
Emergency department visits 741,533 742,951 1,484,484
Total emergency department admissions and visits 875,077 871,521 1,746,598
Outpatient visits 1,994,573 2,063,037 4,057,610
Charity and uninsured outpatient visits 157,197 159,634 316,831
Net outpatient revenue per visit $ 708 $ 719 $ 714
Net patient revenue per adjusted patient admission $ 11,748 $ 11,764 $ 11,758
Net patient revenue per adjusted patient day $ 2,534 $ 2,584 $ 2,559
 
Net Patient Revenues from:
Medicare 21.9 % . 20.7 % 21.3 %
Medicaid 9.4 % 8.5 % 9.0 %
Managed care 58.6 % 60.8 % 59.9 %
Indemnity, self-pay and other 10.2 % 10.0 % 9.8 %
(1)   Represents the results of Tenet's Hospital Operations and other segment.
(2) The results for the quarter ended March 31, 2015 have been restated to exclude the results of the surgery and imaging centers that Tenet contributed to the joint venture with United Surgical Partners International. The results for these surgery and imaging centers are now reported in Tenet's Ambulatory Care segment.
 
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 
(Dollars in millions except per patient day,            
per admission and per visit amounts) Three Months Ended Six Months Ended

03/31/15 (2)

06/30/15

06/30/15
 
Net inpatient revenues $ 2,648 $ 2,576 $ 5,224
Net outpatient revenues $ 1,377 $ 1,438 $ 2,815
 
Number of acute care hospitals (at end of period) 77 77 77
Licensed beds (at end of period) 20,419 20,419 20,419
Average licensed beds 20,416 20,419 20,416
Utilization of licensed beds 52.2 % 49.1 % 50.6 %
Patient days - total 958,365 913,127 1,871,492
Adjusted patient days 1,586,490 1,558,637 3,145,127
Net inpatient revenue per patient day $ 2,763 $ 2,821 $ 2,791
Total admissions 203,815 197,390 401,205
Adjusted patient admissions 340,835 340,791 681,626
Charity and uninsured admissions 10,787 10,361 21,148
Net inpatient revenue per admission $ 12,992 $ 13,050 $ 13,021
Average length of stay (days) 4.70 4.63 4.66
Total surgeries 119,630 125,347 244,977
Admissions through emergency department 130,241 125,468 255,709
Emergency department visits 714,034 715,897 1,429,931
Total emergency department admissions and visits 844,275 841,365 1,685,640
Outpatient visits 1,944,974 2,013,926 3,958,900
Charity and uninsured outpatient visits 153,414 155,701 309,115
Net outpatient revenue per visit $ 708 $ 714 $ 711
Net patient revenue per adjusted patient admission $ 11,809 $ 11,778 $ 11,794
Net patient revenue per adjusted patient day $ 2,537 $ 2,575 $ 2,556
 
Net Patient Revenues from:
Medicare 21.8 % 20.6 % 21.2 %
Medicaid 9.4 % 8.5 % 8.9 %
Managed care 58.7 % 61.0 % 59.8 %
Indemnity, self-pay and other 10.1 % 9.9 % 10.1 %
(1)   Represents the results of Tenet's Hospital Operations and other segment.
(2) The results for the quarter ended March 31, 2015 have been restated to exclude the results of the surgery and imaging centers that Tenet contributed to the joint venture with United Surgical Partners International. The results for these surgery and imaging centers are now reported in Tenet's Ambulatory Care segment.
 
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 
(Dollars in millions except per patient day,                    
per admission and per visit amounts) Three Months Ended Year Ended
  03/31/14     06/30/14     9/30/2014     12/31/2014     12/31/2014  
 
Net inpatient revenues $ 2,440 $ 2,400 $ 2,418 $ 2,670 $ 9,928
Net outpatient revenues $ 1,277 $ 1,355 $ 1,350 $ 1,406 $ 5,388
 
Number of acute care hospitals (at end of period) 77 77 77 77 77
Licensed beds (at end of period) 20,255 20,355 20,355 20,407 20,407
Average licensed beds 20,255 20,304 20,355 20,398 20,328
Utilization of licensed beds 51.0 % 49.0 % 48.5 % 49.1 % 49.4 %
Patient days - total 929,164 905,839 908,885 921,926 3,665,814
Adjusted patient days 1,523,320 1,538,038 1,538,618 1,549,184 6,149,160
Net inpatient revenue per patient day $ 2,626 $ 2,649 $ 2,660 $ 2,896 $ 2,708
Total admissions 194,273 194,167 196,609 198,219 783,268
Adjusted patient admissions 321,915 333,073 336,848 337,170 1,329,006
Charity and uninsured admissions 12,530 10,900 10,774 11,080 45,284
Net inpatient revenue per admission $ 12,560 $ 12,360 $ 12,299 $ 13,470 $ 12,675
Average length of stay (days) 4.78 4.67 4.62 4.65 4.68
Total surgeries 117,843 123,459 125,179 126,136 492,617
Admissions through emergency department 122,601 121,872 120,933 124,600 490,006
Emergency department visits 665,002 699,423 699,505 711,351 2,775,281
Total emergency department admissions and visits 787,603 821,295 820,438 835,951 3,265,287
Outpatient visits 1,819,632 1,924,572 1,940,024 1,950,782 7,635,010
Charity and uninsured outpatient visits 162,125 165,926 161,808 161,827 651,686
Net outpatient revenue per visit $ 702 $ 704 $ 696 $ 721 $ 706
Net patient revenue per adjusted patient admission $ 11,547 $ 11,274 $ 11,186 $ 12,089 $ 11,524
Net patient revenue per adjusted patient day $ 2,440 $ 2,441 $ 2,449 $ 2,631 $ 2,491
 
Net Patient Revenues from:
Medicare 22.7 % 22.6 % 21.5 % 21.0 % 21.9 %
Medicaid 7.8 % 10.1 % 8.9 % 11.2 % 9.5 %
Managed care 57.8 % 57.9 % 60.4 % 57.7 % 58.5 %
Indemnity, self-pay and other 11.7 % 9.4 % 9.2 % 10.1 % 10.1 %
(1)   Represents the results of Tenet's Hospital Operations and other segment. The results for 2014 have been restated to exclude the results of the surgery and imaging centers that Tenet contributed to the joint venture with United Surgical Partners International. The results for these surgery and imaging centers are now reported in Tenet's Ambulatory Care segment.
 
 
TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
 
            June 30,     December 31,
  2015     2014  
Assets
Hospital Operations and other

$
16,678

$
17,008
Conifer 1,151 929
Ambulatory Care   4,917     204  
Total

$
22,746  

$
18,141  
 
Three Months Ended Six Months Ended
June 30, June 30,
  2015     2014     2015     2014  
Capital expenditures:
Hospital Operations and other

$
166

$
235

$
341

$
506
Conifer 6 5 11 13
Ambulatory Care   3     2     7     4  
Total

$
175  

$
242  

$
359  

$
523  
 
Net operating revenues:
Hospital Operations and other

$
4,175

$
3,811

$
8,326

$
7,523
Conifer
Tenet 165 138 325 278
Other customers   175     147     357     292  
Total Conifer revenues   340     285     682     570  
Ambulatory Care 142 80 233 148
Intercompany eliminations   (165 )   (138 )   (325 )   (278 )
Total

$
4,492  

$
4,038  

$
8,916  

$
7,963  
 
Adjusted EBITDA:
Hospital Operations and other $ 459 $ 390 $ 877 $ 711
Conifer 60 44 142 92
Ambulatory Care   49     26     78     44  
Total

$
568  

$
460  

$
1,097  

$
847  
 
Depreciation and amortization:
Hospital Operations and other

$
178

$
200

$
369

$
385
Conifer 12 5 24 10
Ambulatory Care   7     4     11     7  
Total

$
197  

$
209  

$
404  

$
402  
 
Adjusted EBITDA

$
568

$
460

$
1,097

$
847
Depreciation and amortization (197 ) (209 ) (404 ) (402 )
Impairments and restructuring charges, and acquisition-related costs (193 ) (32 ) (222 ) (53 )
Litigation and investigation costs (14 ) (12 ) (17 ) (15 )
Interest expense (217 ) (190 ) (416 ) (372 )
Investment Expense   (1 )       (1 )    
Income (loss) from continuing operations before income taxes

$
(54 )

$
17  

$
37  

$
5  
 
 
TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS - AMBULATORY CARE SEGMENT
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS
(Unaudited)
 
    Three Months Ended June 30,
2015     2014

Ambulatory Care as Reported Under GAAP
   

Unconsolidated Affiliates

Ambulatory Care as Reported Under GAAP
   

Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 327 $ 534 $ 290 $ 469
Less: Provision for doubtful accounts   (5 )   (14 )   (4 )   (11 )
Net operating revenues (1) 322 520 286 458
Equity in earnings of unconsolidated affiliates (2) 28 28
Operating expenses:
Salaries, wages and benefits 104 127 91 110
Supplies 59 133 49 113
Other operating expenses, net 72 112 64 97
Depreciation and amortization 16 20 15 18
Impairment and restructuring charges, and acquisition-related costs       3         (4 )
Operating income 99 125 95 124
Interest expense   (34 )   (7 )   (30 )   (7 )
Net income from continuing operations, before income taxes 65 118 65 117
Income tax benefit (expense)   (13 )   (1 )   (13 )   (1 )
Net income 52

$
117   52

$
116  
Less: Net income attributable to noncontrolling interests   41     39  
Net income attributable to Tenet Healthcare Corporation common shareholders

$

11
 

$
13  
Equity in earnings of unconsolidated affiliates

$
28

$
28
(1)  

On a pro forma same-facility system-wide basis, net revenue in Tenet's Ambulatory Care segment increased 6.9% during the three months ended June 30, 2015, with cases increasing 6.8% and revenue per case increasing 0.1%.
(2) At June 30, 2015, 155 of the 296 facilities in the Company's newly formed Ambulatory segment were not consolidated based on the nature of the segment's joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment's unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company's overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 141 facilities and account for these investments as consolidated subsidiaries.
 
 

TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS - AMBULATORY CARE SEGMENT
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS
(Unaudited)
 
    Six Months Ended June 30,
2015     2014

Ambulatory Care as Reported Under GAAP
   

Unconsolidated Affiliates

Ambulatory Care as Reported Under GAAP
   

Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 627 $ 1,020 $ 552 $ 887
Less: Provision for doubtful accounts   (10 )   (26 )   (7 )   (22 )
Net operating revenues (1) 617 994 545 865
Equity in earnings of unconsolidated affiliates (2) 49 46
Operating expenses:
Salaries, wages and benefits 202 247 178 216
Supplies 110 256 95 217
Other operating expenses, net 145 220 129 189
Depreciation and amortization 29 40 28 37
Impairment and restructuring charges, and acquisition-related costs       3     1     (6 )
Operating income 180 228 160 212
Interest expense (68 ) (14 ) (60 ) (14 )
Other               1  
Net income from continuing operations, before income taxes 112 214 100 199
Income tax expense   (22 )   (3 )   (19 )   (4 )
Net Income 90

$
211   81

$
195  
Less: Net income attributable to noncontrolling interests   75     63  
Net income attributable to Tenet Healthcare Corporation common shareholders

$
15     18  
Equity in earnings of unconsolidated affiliates $ 49 $ 46
(1)  

On a pro forma same-facility system-wide basis, net revenue in Tenet's Ambulatory Care segment increased 8.2% during the six months ended June 30, 2015, with cases increasing 7.3% and revenue per case increasing 0.8%.
(2) At June 30, 2015, 155 of the 296 facilities in the Company's newly formed Ambulatory segment were not consolidated based on the nature of the segment's joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment's unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company's overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 141 facilities and account for these investments as consolidated subsidiaries.
 
 

(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 and six months ended June 30, 2015 and 2014.
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures
Table #1 - Reconciliation of Adjusted EBITDA to Net Loss Attributable to
Tenet Healthcare Corporation Common Shares
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
  2015         2014     2015         2014  
 
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (61 ) $ (26 ) $ (14 ) $ (58 )
Less: Net loss attributable to noncontrolling interests (33 ) (19 ) (62 ) (35 )
Net loss from discontinued operations, net of tax   (1 )   (16 )       (21 )
Income (loss) from continuing operations (27 ) 9 48 (2 )
Income tax benefit (expense) 27 (8 ) 11 (7 )
Investment expense (1 ) (1 )
Interest expense   (217 )   (190 )   (416 )   (372 )
Operating income 164 207 454 377
Litigation and investigation costs (14 ) (12 ) (17 ) (15 )
Impairment and restructuring charges, and acquisition-related costs (193 ) (32 ) (222 ) (53 )
Depreciation and amortization   (197 )   (209 )   (404 )   (402 )
Adjusted EBITDA $

568
  $

460
  $

1,097
  $

847
 
 
Net operating revenues $

4,492
  $

4,038
  $

8,916
  $

7,963
 
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)

12.6

%

11.4

%

12.3

%

10.6

%
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures
Table #2 - Reconciliation of Adjusted Free Cash Flow
(Unaudited)
 
    Three Months Ended     Six Months Ended
(Dollars in millions) June 30, June 30,
  2015         2014     2015         2014  
Net cash provided by operating activities $ 410 $ 266 $ 353 $ 247
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (53 ) (54 ) (86 ) (84 )
Net cash used in operating activities from discontinued operations   (4 )   2     (8 )   (12 )
Adjusted net cash provided by (used in) operating activities - continuing operations 467 318 447 343
Purchases of property and equipment - continuing operations   (175 )   (242 )   (359 )   (523 )
Adjusted free cash flow - continuing operations $

292
  $

76
  $

88
  $

(180

)
 
 

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, 2015
(Unaudited)
 
(Dollars in millions)     Q3 2015     2015
Low     High Low     High
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 3 $ 50 $ (14 ) $ 81
Less: Net (income) attributable to noncontrolling interests (55 ) (65 ) (190 ) (210 )
Loss from discontinued operations, net of tax   (2 )   -     (5 )   -  
Income from continuing operations 60 $ 115 $ 181 $ 291
Income tax expense   (25 )   (50 )   (40 )   (90 )
Income from continuing operations, before income taxes 85 $ 165 $ 221 $ 381
Interest expense, net   (245 )   (235 )   (900 )   (880 )
Operating income 330 $ 400 $ 1,121 $ 1,261
Impairment and restructuring charges, acquisition-related costs
and litigation costs and settlements (a) - - (239 ) (239 )
Depreciation and amortization   (220 )   (200 )   (865 )   (825 )
Adjusted EBITDA $ 550   $ 600   $ 2,225   $ 2,325  
 
Net operating revenues $ 4,650   $ 4,850   $ 18,100   $ 18,500  
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 11.8 % 12.4 % 12.3 % 12.6 %

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

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, 2015
(Unaudited)
 
(Dollars in millions)     Q3 2015     2015
Low     High Low     High
Adjusted EBITDA $ 550 $ 600 $ 2,225 $ 2,325
Depreciation and amortization (220 ) (200 ) (865 ) (825 )
Interest expense, net   (245 )   (235 )   (900 )   (880 )
Income (loss) from continuing operations before income taxes 85 $ 165 $ 460 $ 620
Income tax (expense) benefit   (25 )   (50 )   (135 )   (185 )
Normalized income (loss) from continuing operations 60 $ 115 $ 325 $ 435
Net (income) attributable to noncontrolling interests   (55 )   (65 )   (190 )   (210 )
Net income (loss) attributable to common shareholders $ 5   $ 50   $ 135   $ 225  
 
Fully diluted weighted average shares outstanding (in millions) 102 102 102 102
 
Normalized fully diluted earnings per share - continuing operations

$
0.05

$
0.49

$
1.32

$
2.21
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures
Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2015
 
(Dollars in millions)     2015
Low   High
Net cash provided by operating activities $ 1,119 $ 1,229
Less:
Payments for restructuring charges, acquisition-related costs and litigation costs and settlements (a) (86) (86)
Net cash used in operating activities from discontinued operations   (20)   (10)
Adjusted net cash provided by operating activities - continuing operations $ 1,225 $ 1,325
Purchases of property and equipment - continuing operations   (1,000)   (900)
Adjusted free cash flow - continuing operations $ 225 $ 425

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

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