Tenet Healthcare Corporation (NYSE: THC) reported a net loss from continuing operations attributable to Tenet shareholders of $230 million in the fourth quarter of 2017 due to the items mentioned above, compared to a $79 million net loss from continuing operations in the fourth quarter of 2016. Adjusted EBITDA was $840 million in the fourth quarter of 2017 compared to $650 million in the fourth quarter of 2016.

"Our results for the fourth quarter were strong in each of our business segments," said Ronald A. Rittenmeyer, executive chairman and CEO. "Volume growth returned in our hospital and Ambulatory segments, cost controls were tight, and our financial results at USPI and Conifer were very strong. Our cost control program is off to a great start and, when combined with improved financial performance in the fourth quarter, we are raising our Outlook for Adjusted EBITDA and Adjusted EPS for 2018."

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment was $4.184 billion, up 3.4 percent from $4.046 billion in the fourth quarter of 2016; in order to improve comparability, these revenue figures exclude revenue generated by the Company's health plans in both periods since the Company is exiting this business.

On a same-hospital basis, patient revenue was $4.126 billion, up 6.1 percent from $3.889 billion in the fourth quarter of 2016, with adjusted admissions up 1.3 percent and revenue per adjusted admission up 4.8 percent. The growth in revenue per adjusted admission was due to a $202 million increase in revenue from the California Provider Fee Program since the 2017 program was not approved until December 2017.

Adjusted EBITDA in Tenet's hospital segment was $538 million, representing an increase of $143 million or 36.2 percent as compared to $395 million in the fourth quarter of 2016. The $143 million increase in Adjusted EBITDA in the hospital segment was primarily driven by: (i) $202 million increase in California Provider Fee revenue, with $267 million of revenue being under the program in the fourth quarter of 2017 compared to $65 million in the fourth quarter of 2016; (ii) $17 million unfavorable comparison due to the sale of the Company's hospitals and related assets in Houston, effective August 1, 2017; (iii) $17 million of previously disclosed executive severance in the fourth quarter of 2017; and, (iv) an $8 million decline in electronic health record incentives.

Tenet's health plan business was breakeven in the fourth quarter of 2017 versus a loss of $29 million on the EBITDA line in the fourth quarter of 2016. The revenue and expenses associated with the Company's health plan operations are included in Tenet's consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.2 percent on a per adjusted admission basis in the fourth quarter of 2017.

Exchanges

Tenet's same-hospital exchange admissions were 4,857 in the fourth quarter of 2017, up 0.2 percent from the fourth quarter of 2016. Same-hospital exchange outpatient visits were 51,451 in the fourth quarter of 2017, up 15.2 percent from the fourth quarter of 2016.

Uncompensated Care

Tenet's provision for doubtful accounts was $325 million in the fourth quarter of 2017, representing a ratio of 6.1 percent of revenues before bad debt, as compared to $354 million in the fourth quarter of 2016, or 6.9 percent of revenues before bad debt (excluding health plan revenues from both periods). The decrease in the bad debt ratio was primarily attributable to a $15 million decrease in same-hospital self-pay revenues, revenue growth in our Ambulatory segment, the sale of our Houston hospitals in 2017, and a full year of the California Provider Fee revenue being recorded in the fourth quarter of 2017.

Tenet's uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, were $1.361 billion and $1.332 billion in the fourth quarters of 2017 and 2016, respectively, including $1.036 billion and $978 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet's Compact with Uninsured Patients. Uncompensated care in the fourth quarter of 2017 represented 21.5 percent of revenue before bad debts, uninsured discounts and charity care write-offs, flat versus the fourth quarter of 2016. Nearly all of Tenet's uncompensated care is associated with the Hospital Operations and other segment.

Uninsured plus charity admissions increased by 317 admissions, or 3.3 percent on a same-hospital basis in the fourth quarter of 2017 compared to the fourth quarter of 2016. Uninsured plus charity outpatient visits increased by 6,237 visits, or 5.6 percent, on a same-hospital basis.

Ambulatory Care Segment

During the fourth quarter of 2017, the Ambulatory segment produced net operating revenues of $545 million, representing an increase of 14.0 percent as compared to $478 million in the fourth quarter of 2016. In addition, the Ambulatory segment generated Adjusted EBITDA of $223 million, up 21.9 percent from $183 million in the fourth quarter of 2016 and Adjusted EBITDA less facility-level noncontrolling interest was $145 million, up 26.1 percent from $115 million in the fourth quarter of 2016.

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze the segment's results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities. On a same-facility system-wide basis, revenue in the Ambulatory segment increased 6.9 percent, with cases increasing 4.6 percent and revenue per case increasing 2.2 percent. The number of surgical days was the same in both periods and did not impact the year-over-year growth rates this quarter.

Conifer Segment

During the fourth quarter of 2017, Conifer's revenue decreased 2.0 percent to $394 million, down from $402 million in the fourth quarter of 2016. Revenue from third party customers was flat at $239 million. Conifer generated $79 million of Adjusted EBITDA in the fourth quarter of 2017, up 9.7 percent from $72 million in the fourth quarter of 2016.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to Tenet shareholders of $230 million, or a loss of $2.28 per diluted share, in the fourth quarter of 2017 compared to a net loss of $79 million, or a loss of $0.79 per diluted share, in the fourth quarter of 2016.

As shown on Table #2, the net loss from continuing operations attributable to Tenet shareholders of approximately $230 million included: (i) a $252 million non-cash partial write-down of the Company's deferred tax assets due to the reduction in the corporate federal income tax rate from 35 percent to 21 percent; (ii) a $138 million pre-tax impairment and restructuring charge consisting of $73 million from the write-down of assets held for sale in the Chicago-area to their estimated fair value, $42 million of restructuring charges primarily related to employee severance associated with the Company's cost reduction initiatives, and $23 million of other impairment and restructuring charges; and, (iii) $9 million of other items. These items collectively lowered pre-tax income by approximately $147 million and lowered after-tax income by approximately $350 million. In addition, there was a noncontrolling interest impact of $23 million substantially due to a non-cash reduction in the deferred tax liabilities of the Company's Ambulatory segment. Collectively, these items lowered diluted earnings per share by approximately $3.68.

After adjusting for the items listed on Table #2, Tenet recorded Adjusted net income from continuing operations attributable to Tenet shareholders of $143 million, or $1.40 per diluted share, during the fourth quarter of 2017, as compared to Adjusted net income from continuing operations attributable to Tenet shareholders of $23 million, or $0.23 per diluted share, in the fourth quarter of 2016.

A reconciliation of GAAP net income (loss) attributable to Tenet shareholders to Adjusted net income (loss) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations attributable to Tenet shareholders is contained in Table #2 at the end of this release.

Cash Flow and Liquidity

Cash and cash equivalents were $611 million at December 31, 2017 compared to $429 million at September 30, 2017. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2017. Accounts receivable days outstanding from continuing operations were 55.2 at December 31, 2017 compared to 55.6 at September 30, 2017 and 56.5 at December 31, 2016. The calculation of accounts receivable days outstanding from continuing operations: (i) includes the accounts receivable of the Company's two hospitals in Philadelphia, the Company's four hospitals in the Chicago-area, Des Peres Hospital in St. Louis, and the Aspen facilities in the United Kingdom, which have been classified in assets held for sale on the Condensed Consolidated Balance Sheet at December 31, 2017; (ii) excludes revenue from our former hospitals and related assets in Houston, which were divested on August 1, 2017, from the 2016 and 2017 periods; (iii) excludes health plan revenues from the 2016 and 2017 periods; and (iv) excludes California Provider Fee revenues from both 2016 and 2017.

Net cash provided by operating activities in 2017 was $1.200 billion, representing a $642 million increase compared to $558 million in 2016. After subtracting $707 million and $875 million of capital expenditures in 2017 and 2016, respectively, Free Cash Flow was $493 million in 2017, an $810 million improvement compared to an outflow of $317 million in 2016. Adjusted Free Cash Flow was $623 million in 2017, representing a $243 million increase from $380 million in 2016.

Net cash provided by investing activities was $21 million in 2017 compared to $430 million of net cash used in investing activities in 2016. The 2017 period included $827 million of proceeds from the sales of facilities and other assets, primarily from the sale of the Company's Houston-area hospitals effective August 1, 2017 for net pre-tax proceeds of approximately $750 million; the 2016 period included $573 million of proceeds from the sale of the Company's hospitals and related outpatient facilities in Georgia.

Net cash used in financing activities was $1.326 billion in 2017 compared to $232 million of net cash provided by financing activities in 2016. The 2017 period included: (i) $729 million related to purchases of noncontrolling interests, primarily the Company's purchase of an additional 23.7 percent of USPI, which increased Tenet's ownership interest in the USPI joint venture to 80.0 percent; (ii) the refinancing activities that were completed in the second and third quarters of 2017; and (iii) the redemption of $250 million aggregate principal amount of Tenet's 8.0 percent senior unsecured notes due 2020 on September 11, 2017.

Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.

Outlook

The Company's revised Outlook for 2018 includes:
  • Revenue of $17.9 billion to $18.3 billion,
  • Net income from continuing operations attributable to Tenet common shareholders of $95 million to $105 million,
  • Adjusted EBITDA of $2.500 billion to $2.600 billion,
  • Net cash provided by operating activities of $1.245 billion to $1.450 billion,
  • Adjusted Free Cash Flow of $675 million to $875 million,
  • Diluted earnings per share from continuing operations attributable to Tenet shareholders ranging from $0.92 to $1.02, and
  • Adjusted diluted earnings per share from continuing operations attributable to Tenet shareholders of $0.73 to $1.07.

The Company raised the midpoint of its previous 2018 Adjusted EBITDA Outlook range $25 million to reflect: (i) higher expectations for Conifer; (ii) additional Medicaid DSH reimbursement since Medicaid DSH reimbursement cuts have been delayed in both federal fiscal years 2018 and 2019; (iii) greater than previously expected revenue from the California Provider Fee program in 2018; and (iv) a net reduction in estimated EBITDA from to-be-divested facilities in 2018.

The Outlook for 2018 assumes equity in earnings of unconsolidated affiliates of $160 million to $170 million, net income attributable to noncontrolling interests of $415 million to $435 million and an average diluted share count of 103 million.

The Company's Outlook for the first quarter of 2018 includes:
  • Revenue of $4.45 billion to $4.65 billion,
  • Net income from continuing operations attributable to Tenet shareholders of $50 million to $70 million,
  • Adjusted EBITDA of $580 million to $630 million,
  • Earnings per diluted share from continuing operations attributable to Tenet shareholders of $0.49 to $0.69, and
  • Adjusted earnings per diluted share from continuing operations attributable to Tenet shareholders ranging from a loss of $0.10 to earnings of $0.05.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of approximately $30 million to $35 million, net income attributable to noncontrolling interests of $90 million to $100 million, and an average diluted share count of 102 million.

Additional details on Tenet's Outlook for both the first quarter and calendar year 2018 are available in Tables #4 and #5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company's website at www.tenethealth.com/investors.

Management's Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company's fourth quarter 2017 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 27, 2018. Investors can access the webcast through the Company'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 is contained in its Form 10-K report for the twelve months ended December 31, 2017, which will be filed with the Securities and Exchange Commission and posted on the Company's website before the webcast.

This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income (loss) from continuing operations attributable to Tenet shareholders, Adjusted diluted earnings (loss) per share from continuing operations attributable to Tenet shareholders, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measure are contained in the tables at the end of this release.

Tenet Healthcare Corporation is a diversified healthcare services company with 120,000 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, the Company operates general acute care and specialty hospitals, ambulatory surgery centers, urgent care centers and other outpatient facilities in the United States and 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, 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," "estimate," "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, 2017, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

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 December 31,
2017 % 2016 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,303 $ 5,214 1.7 %
Less: Provision for doubtful accounts 325   354   (8.2 )%
Net operating revenues 4,978 100.0 % 4,860 100.0 % 2.4 %
Equity in earnings of unconsolidated affiliates 49 1.0 % 46 0.9 % 6.5 %
Operating expenses:
Salaries, wages and benefits 2,284 45.9 % 2,316 47.7 % (1.4 )%
Supplies 800 16.0 % 773 15.9 % 3.5 %
Other operating expenses, net 1,104 22.2 % 1,205 24.7 % (8.4 )%
Electronic health record incentives (1 ) % (9 ) (0.2 )% (88.9 )%
Depreciation and amortization 208 4.2 % 218 4.5 %
Impairment and restructuring charges, and acquisition-related costs 138 2.8 % 121 2.5 %
Litigation and investigation costs 11 0.2 % 2 %
Gains on sales, consolidation and deconsolidation of facilities (2 ) % 0   %
Operating income 485 9.7 % 280 5.8 %
Interest expense (253 ) (249 )
Other non-operating expense, net (8 ) (2 )
Loss from early extinguishment of debt    
Income from continuing operations, before income taxes 224 29
Income tax expense (324 ) (6 )
Income (loss) from continuing operations, before discontinued operations (100 ) 23
Discontinued operations:
Income (loss) from operations 1 (1 )
Income tax benefit   1  
Income (loss) from discontinued operations 1    
Net income (loss) (99 ) 23
Less: Net income attributable to noncontrolling interests 130   102  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (229 ) $ (79 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (230 ) $ (79 )
Income (loss) from discontinued operations, net of tax 1    
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (229 ) $ (79 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (2.28 ) $ (0.79 )
Discontinued operations 0.01   0.00  
$ (2.27 ) $ (0.79 )
Diluted
Continuing operations $ (2.28 ) $ (0.79 )
Discontinued operations 0.01   0.00  
$ (2.27 ) $ (0.79 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 100,945 99,651
Diluted* 100,945 99,651
 
* Had we generated income from continuing operations in the three months ended December 31, 2017 and 2016 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 908 thousand and 1,277 thousand shares, respectively.
 
         

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 
(Dollars in millions except per share amounts) Years Ended December 31,
2017 % 2016 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 20,613 $ 21,070 (2.2 )%
Less: Provision for doubtful accounts 1,434   1,449   (1.0 )%
Net operating revenues 19,179 100.0 % 19,621 100.0 % (2.3 )%
Equity in earnings of unconsolidated affiliates 144 0.8 % 131 0.7 % 9.9 %
Operating expenses:
Salaries, wages and benefits 9,274 48.4 % 9,328 47.5 % (0.6 )%
Supplies 3,085 16.1 % 3,124 15.9 % (1.2 )%
Other operating expenses, net 4,570 23.8 % 4,891 25.0 % (6.6 )%
Electronic health record incentives (9 ) 0.0 % (32 ) (0.2 )% (71.9 )%
Depreciation and amortization 870 4.5 % 850 4.3 %
Impairment and restructuring charges, and acquisition related costs 541 2.8 % 202 1.1 %
Litigation and investigation costs 23 0.1 % 293 1.5 %
Gains on sales, consolidation and deconsolidation of facilities (144 ) (0.7 )% (151 ) (0.8 )%
Operating income 1,113 5.8 % 1,247 6.4 %
Interest expense (1,028 ) (979 )
Other non-operating expense, net (22 ) (20 )
Loss from early extinguishment of debt (164 )  
Income (loss) from continuing operations, before income taxes (101 ) 248
Income tax expense (219 ) (67 )
Income (loss) from continuing operations, before discontinued operations (320 ) 181
Discontinued operations:
Loss from operations (6 )
Income tax benefit   1  
Loss from discontinued operations   (5 )
Net income (loss) (320 ) 176
Less: Net income attributable to noncontrolling interests 384   368  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (704 ) $ (192 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (704 ) $ (187 )
Loss from discontinued operations, net of tax   (5 )
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (704 ) $ (192 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (7.00 ) $ (1.88 )
Discontinued operations   (0.05 )
$ (7.00 ) $ (1.93 )
Diluted
Continuing operations $ (7.00 ) $ (1.88 )
Discontinued operations   (0.05 )
$ (7.00 ) $ (1.93 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 100,592 99,321
Diluted* 100,592 99,321
 
* Had we generated income from continuing operations in the twelve months ended December 31, 2017 and 2016, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 788 thousand and 1,421 thousand shares, respectively.
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)
 
December 31, December 31,
(Dollars in millions) 2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 611 $ 716
Accounts receivable, less allowance for doubtful accounts 2,616 2,897
Inventories of supplies, at cost 289 326
Income tax receivable 5 4
Assets held for sale 1,017 29
Other current assets 1,035   1,285  
Total current assets 5,573 5,257
Investments and other assets 1,543 1,250
Deferred income taxes 455 871
Property and equipment, at cost, less accumulated depreciation and amortization 7,030 8,053
Goodwill 7,018 7,425
Other intangible assets, at cost, less accumulated amortization 1,766   1,845  
Total assets $ 23,385   $ 24,701  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 146 $ 191
Accounts payable 1,175 1,329
Accrued compensation and benefits 848 872
Professional and general liability reserves 200 181
Accrued interest payable 256 210
Liabilities held for sale 480 9
Other current liabilities 1,227   1,242  
Total current liabilities 4,332 4,034
Long-term debt, net of current portion 14,791 15,064
Professional and general liability reserves 654 613
Defined benefit plan obligations 536 626
Deferred income taxes 36 279
Other long-term liabilities 631   610  
Total liabilities 20,980 21,226
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 1,866 2,393
Equity:
Shareholders' equity:
Common stock 7 7
Additional paid-in capital 4,859 4,827
Accumulated other comprehensive loss (204 ) (258 )
Accumulated deficit (2,390 ) (1,742 )
Common stock in treasury, at cost (2,419 ) (2,417 )
Total shareholders' equity (deficit) (147 ) 417
Noncontrolling interests 686   665  
Total equity 539   1,082  
Total liabilities and equity $ 23,385   $ 24,701  
 
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)
 
Years Ended
(Dollars in millions) December 31,
2017   2016
Net income (loss) $ (320 ) $ 176
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 870 850
Provision for doubtful accounts 1,434 1,449
Deferred income tax expense 200 41
Stock-based compensation expense 59 68
Impairment and restructuring charges, and acquisition-related costs 541 202
Litigation and investigation costs 23 293
Gains on sales, consolidation and deconsolidation of facilities (144 ) (151 )
Loss from early extinguishment of debt 164
Equity in earnings of unconsolidated affiliates, net of distributions received (18 ) (13 )
Amortization of debt discount and debt issuance costs 44 41
Pre-tax loss from discontinued operations 6
Other items, net (18 ) (1 )
Changes in cash from operating assets and liabilities:
Accounts receivable (1,448 ) (1,604 )
Inventories and other current assets (35 ) (83 )
Income taxes (38 ) (8 )
Accounts payable, accrued expenses and other current liabilities (10 ) (51 )
Other long-term liabilities 26 40
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (125 ) (691 )
Net cash used in operating activities from discontinued operations, excluding income taxes (5 ) (6 )
Net cash provided by operating activities 1,200 558
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (707 ) (875 )
Purchases of businesses or joint venture interests, net of cash acquired (50 ) (117 )
Proceeds from sales of facilities and other assets 827 573
Proceeds from sales of marketable securities, long-term investments and other assets 36 62
Purchases of equity investments (68 ) (39 )
Other long-term assets (10 ) (31 )
Other items, net (7 ) (3 )
Net cash provided by (used in) investing activities 21 (430 )
Cash flows from financing activities:
Repayments of borrowings under credit facility (970 ) (1,895 )
Proceeds from borrowings under credit facility 970 1,895
Repayments of other borrowings (4,139 ) (154 )
Proceeds from other borrowings 3,795 760
Debt issuance costs (62 ) (12 )
Distributions paid to noncontrolling interests (258 ) (218 )
Proceeds from sale of noncontrolling interests 31 22
Purchases of noncontrolling interests (729 ) (186 )
Proceeds from exercise of stock options and employee stock purchase plan 7 4
Other items, net 29   16  
Net cash provided by (used in) financing activities (1,326 ) 232  
Net increase (decrease) in cash and cash equivalents (105 ) 360
Cash and cash equivalents at beginning of period 716   356  
Cash and cash equivalents at end of period $ 611   $ 716  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (939 ) $ (932 )
Income tax payments, net $ (56 ) $ (33 )
 
   

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS (1)

(Unaudited)
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)
Three Months Ended December 31, Years Ended December 31,
2017   2016   Change 2017   2016   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 72 75 (3 ) * 72 75 (3 ) *
Total admissions 186,185 192,104 (3.1 )% 758,875 792,143 (4.2 )%
Adjusted patient admissions 332,642 338,929 (1.9 )% 1,354,266 1,389,768 (2.6 )%
Paying admissions (excludes charity and uninsured) 176,158 181,617 (3.0 )% 717,498 749,634 (4.3 )%
Charity and uninsured admissions 10,027 10,487 (4.4 )% 41,377 42,509 (2.7 )%
Admissions through emergency department 123,887 120,549 2.8 % 492,660 499,335 (1.3 )%
Paying admissions as a percentage of total admissions 94.6 % 94.5 % 0.1 % * 94.5 % 94.6 % (0.1 )% *
Charity and uninsured admissions as a percentage of total admissions 5.4 % 5.5 % (0.1 )% * 5.5 % 5.4 % 0.1 % *
Emergency department admissions as a percentage of total admissions 66.5 % 62.8 % 3.7 % * 64.9 % 63.0 % 1.9 % *
Surgeries — inpatient 50,292 53,071 (5.2 )% 205,114 217,906 (5.9 )%
Surgeries — outpatient 68,604 73,678 (6.9 )% 276,895 298,974 (7.4 )%
Total surgeries 118,896 126,749 (6.2 )% 482,009 516,880 (6.7 )%
Patient days — total 857,728 888,185 (3.4 )% 3,509,056 3,690,335 (4.9 )%
Adjusted patient days 1,505,130 1,543,490 (2.5 )% 6,163,961 6,395,025 (3.6 )%
Average length of stay (days) 4.61 4.62 (0.2 )% 4.62 4.66 (0.9 )%
Licensed beds (at end of period) 19,141 20,354 (6.0 )% 19,141 20,354 (6.0 )%
Average licensed beds 19,320 20,326 (4.9 )% 19,995 20,651 (3.2 )%
Utilization of licensed beds 48.3 % 47.5 % 0.8 % * 48.1 % 48.8 % (0.7 )% *
Outpatient Visits
Total visits 1,901,864 1,950,549 (2.5 )% 7,791,125 8,144,473 (4.3 )%
Paying visits (excludes charity and uninsured) 1,777,790 1,834,844 (3.1 )% 7,277,514 7,577,799 (4.0 )%
Charity and uninsured visits 124,074 115,705 7.2 % 513,611 566,674 (9.4 )%
Emergency department visits 711,268 701,100 1.5 % 2,854,200 2,914,421 (2.1 )%
Paying visits as a percentage of total visits 93.5 % 94.1 % (0.6 )% * 93.4 % 93.0 % 0.4 % *
Charity and uninsured visits as a percentage of total visits 6.5 % 5.9 % 0.6 % * 6.6 % 7.0 % (0.4 )% *
Total emergency department admissions and visits 835,155 821,649 1.6 % 3,346,860 3,413,756 (2.0 )%
Revenues
Net inpatient revenues $ 2,721 $ 2,606 4.4 % $ 10,319 $ 10,619 (2.8 )%
Net outpatient revenues $ 1,450 $ 1,457 (0.5 )% $ 5,869 $ 5,848 0.4 %
Total patient revenues $ 4,171 $ 4,063 2.7 % $ 16,188 $ 16,467 (1.7 )%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 14,614 $ 13,566 7.7 % $ 13,598 $ 13,405 1.4 %
Net inpatient revenue per patient day $ 3,172 $ 2,934 8.1 % $ 2,941 $ 2,878 2.2 %
Net outpatient revenue per visit $ 762 $ 747 2.0 % $ 753 $ 718 4.9 %
Net patient revenue per adjusted patient admission $ 12,539 $ 11,988 4.6 % $ 11,953 $ 11,849 0.9 %
Net patient revenue per adjusted patient day $ 2,771 $ 2,632 5.3 % $ 2,626 $ 2,575 2.0 %
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission (2) $ 10,492 $ 10,264 2.2 % $ 10,384 $ 10,176 2.0 %
Net Patient Revenues from:
Medicare 18.9 % 20.4 % (1.5 )% * 20.0 % 20.5 % (0.5 )% *
Medicaid 11.9 % 8.2 % 3.7 % * 8.1 % 8.2 % (0.1 )% *
Managed care 59.6 % 61.4 % (1.8 )% * 61.7 % 61.5 % 0.2 % *
Indemnity, self-pay and other 9.6 % 10.0 % (0.4 )% * 10.2 % 9.8 % 0.4 % *
 
(1) Represents the consolidated results of Tenet's acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
* This change is the difference between the 2017 and 2016 amounts shown.
 
   

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)
Three Months Ended December 31, Years Ended December 31,
2017   2016   Change 2017   2016   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 72 72 * 72 72 *
Total admissions 184,877 184,561 0.2 % 738,528 753,673 (2.0 )%
Adjusted patient admissions 324,495 320,445 1.3 % 1,294,913 1,310,962 (1.2 )%
Paying admissions (excludes charity and uninsured) 175,025 175,026 % 699,613 715,198 (2.2 )%
Charity and uninsured admissions 9,852 9,535 3.3 % 38,915 38,475 1.1 %
Admissions through emergency department 123,102 116,374 5.8 % 480,180 476,068 0.9 %
Paying admissions as a percentage of total admissions 94.7 % 94.8 % (0.1 )% * 94.7 % 94.9 % (0.2 )% *
Charity and uninsured admissions as a percentage of total admissions 5.3 % 5.2 % 0.1 % * 5.3 % 5.1 % 0.2 % *
Emergency department admissions as a percentage of total admissions 66.6 % 63.1 % 3.5 % * 65.0 % 63.2 % 1.8 % *
Surgeries — inpatient 50,070 50,971 (1.8 )% 199,871 207,609 (3.7 )%
Surgeries — outpatient 68,432 71,129 (3.8 )% 271,228 286,761 (5.4 )%
Total surgeries 118,502 122,100 (2.9 )% 471,099 494,370 (4.7 )%
Patient days — total 853,217 857,118 (0.5 )% 3,423,934 3,515,087 (2.6 )%
Adjusted patient days 1,485,209 1,481,787 0.2 % 5,964,002 6,080,456 (1.9 )%
Average length of stay (days) 4.62 4.64 (0.4 )% 4.64 4.66 (0.4 )%
Licensed beds (at end of period) 19,035 19,306 (1.4 )% 19,035 19,306 (1.4 )%
Average licensed beds 19,214 19,278 (0.3 )% 19,277 19,315 (0.2 )%
Utilization of licensed beds 48.3 % 48.3 % % * 48.7 % 49.9 % (1.2 )% *
Outpatient Visits
Total visits 1,865,781 1,869,272 (0.2 )% 7,495,754 7,697,302 (2.6 )%
Paying visits (excludes charity and uninsured) 1,747,285 1,757,013 (0.6 )% 7,028,688 7,200,453 (2.4 )%
Charity and uninsured visits 118,496 112,259 5.6 % 467,066 496,849 (6.0 )%
Emergency department visits 676,705 650,573 4.0 % 2,664,448 2,689,519 (0.9 )%
Paying visits as a percentage of total visits 93.6 % 94.0 % (0.4 )% * 93.8 % 93.5 % 0.3 % *
Charity and uninsured visits as a percentage of total visits 6.4 % 6.0 % 0.4 % * 6.2 % 6.5 % (0.3 )% *
Total emergency department admissions and visits 799,807 766,947 4.3 % 3,144,628 3,165,587 (0.7 )%
Revenues
Net inpatient revenues $ 2,695 $ 2,518 7.0 % $ 10,037 $ 10,089 (0.5 )%
Net outpatient revenues $ 1,431 $ 1,371 4.4 % $ 5,626 $ 5,452 3.2 %
Total patient revenues $ 4,126 $ 3,889 6.1 % $ 15,663 $ 15,541 0.8 %
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 14,577 $ 13,643 6.8 % $ 13,591 $ 13,386 1.5 %
Net inpatient revenue per patient day $ 3,159 $ 2,938 7.5 % $ 2,931 $ 2,870 2.1 %
Net outpatient revenue per visit $ 767 $ 733 4.6 % $ 751 $ 708 6.1 %
Net patient revenue per adjusted patient admission $ 12,715 $ 12,136 4.8 % $ 12,096 $ 11,855 2.0 %
Net patient revenue per adjusted patient day $ 2,778 $ 2,625 5.8 % $ 2,626 $ 2,556 2.7 %
Net Patient Revenues from:
Medicare 18.9 % 20.8 % (1.9 )% * 20.3 % 21.0 % (0.7 )% *
Medicaid 12.1 % 8.2 % 3.9 % * 8.1 % 8.2 % (0.1 )% *
Managed care 59.3 % 61.2 % (1.9 )% * 61.6 % 61.6 % % *
Indemnity, self-pay and other 9.7 % 9.8 % (0.1 )% * 10.0 % 9.2 % 0.8 % *
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 72 hospitals operated throughout the twelve months ended December 31, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016.
* This change is the difference between the 2017 and 2016 amounts shown.
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 
(Dollars in millions except per share amounts) Three Months Ended Year Ended
3/31/2017   6/30/2017   9/30/2017   12/31/2017 12/31/2017
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,196 $ 5,173 $ 4,941 $ 5,303 $ 20,613
Less: Provision for doubtful accounts 383   371   355   325   1,434  
Net operating revenues 4,813 4,802 4,586 4,978 19,179
Equity in earnings of unconsolidated affiliates 29 28 38 49 144
Operating expenses:
Salaries, wages and benefits 2,380 2,346 2,264 2,284 9,274
Supplies 765 780 740 800 3,085
Other operating expenses, net 1,187 1,159 1,120 1,104 4,570
Electronic health record incentives (1 ) (6 ) (1 ) (1 ) (9 )
Depreciation and amortization 221 222 219 208 870
Impairment and restructuring charges, and acquisition-related costs 33 41 329 138 541
Litigation and investigation costs 5 1 6 11 23
Gains on sales, consolidation and deconsolidation of facilities (15 ) (23 ) (104 ) (2 ) (144 )
Operating income 267 310 51 485 1,113
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Loss from early extinguishment of debt   (26 ) (138 )   (164 )
Income (loss) from continuing operations, before income taxes 4 19 (348 ) 224 (101 )
Income tax benefit (expense) 33   12   60   (324 ) (219 )
Income (loss) from continuing operations, before discontinued operations 37 31 (288 ) (100 ) (320 )
Discontinued operations:
Income (loss) from operations (2 ) 2 (1 ) 1
Income tax benefit (expense) 1   (1 )      
Income (loss) from discontinued operations (1 ) 1   (1 ) 1    
Net income (loss) 36 32 (289 ) (99 ) (320 )
Less: Net income attributable to noncontrolling interests 89   87   78   130   384  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (52 ) $ (56 ) $ (366 ) $ (230 ) $ (704 )
Income (loss) from discontinued operations, net of tax (1 ) 1   (1 ) 1    
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 ) 0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 ) $ (2.27 ) $ (7.00 )
Diluted
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 ) 0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 ) $ (2.27 ) $ (7.00 )
Weighted average shares and dilutive securities outstanding in thousands):
Basic 100,000 100,612 100,812 100,945 100,592
Diluted 100,000 100,612 100,812 100,945 100,592
 
   

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS (1)

(Unaudited)
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)
Three Months Ended Year Ended
3/31/2017   6/30/2017   9/30/2017   12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 76 76 73 72 72
Total admissions 196,907 190,394 185,389 186,185 758,875
Adjusted patient admissions 347,150 342,439 332,035 332,642 1,354,266
Paying admissions (excludes charity and uninsured) 186,648 179,889 174,803 176,158 717,498
Charity and uninsured admissions 10,259 10,505 10,586 10,027 41,377
Admissions through emergency department 126,473 121,807 120,493 123,887 492,660
Paying admissions as a percentage of total admissions 94.8 % 94.5 % 94.3 % 94.6 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.2 % 5.5 % 5.7 % 5.4 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.2 % 64.0 % 65.0 % 66.5 % 64.9 %
Surgeries — inpatient 51,800 52,083 50,939 50,292 205,114
Surgeries — outpatient 69,604 71,366 67,321 68,604 276,895
Total surgeries 121,404 123,449 118,260 118,896 482,009
Patient days — total 923,339 874,930 853,059 857,728 3,509,056
Adjusted patient days 1,603,698 1,552,302 1,502,831 1,505,130 6,163,961
Average length of stay (days) 4.69 4.60 4.60 4.61 4.62
Licensed beds (at end of period) 20,439 20,435 19,433 19,141 19,141
Average licensed beds 20,440 20,435 19,783 19,320 19,995
Utilization of licensed beds 50.2 % 47.0 % 46.9 % 48.3 % 48.1 %
Outpatient Visits
Total visits 2,039,942 1,981,848 1,867,471 1,901,864 7,791,125
Paying visits (excludes charity and uninsured) 1,908,212 1,849,697 1,741,815 1,777,790 7,277,514
Charity and uninsured visits 131,730 132,151 125,656 124,074 513,611
Emergency department visits 733,051 724,785 685,096 711,268 2,854,200
Paying visits as a percentage of total visits 93.5 % 93.3 % 93.3 % 93.5 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.5 % 6.7 % 6.7 % 6.5 % 6.6 %
Total emergency department admissions and visits 859,524 846,592 805,589 835,155 3,346,860
Revenues
Net inpatient revenues $ 2,609 $ 2,555 $ 2,434 $ 2,721 $ 10,319
Net outpatient revenues $ 1,482 $ 1,511 $ 1,426 $ 1,450 $ 5,869
Total patient revenues $ 4,091 $ 4,066 $ 3,860 $ 4,171 $ 16,188
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,250 $ 13,420 $ 13,129 $ 14,614 $ 13,598
Net inpatient revenue per patient day $ 2,826 $ 2,920 $ 2,853 $ 3,172 $ 2,941
Net outpatient revenue per visit $ 726 $ 762 $ 764 $ 762 $ 753
Net patient revenue per adjusted patient admission $ 11,785 $ 11,874 $ 11,625 $ 12,539 $ 11,953
Net patient revenue per adjusted patient day $ 2,551 $ 2,619 $ 2,568 $ 2,771 $ 2,626
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission (2) $ 10,290 $ 10,394 $ 10,367 $ 10,492 $ 10,384
Net Patient Revenues from:
Medicare 21.0 % 20.1 % 20.0 % 18.9 % 20.0 %
Medicaid 6.7 % 6.9 % 6.5 % 11.9 % 8.1 %
Managed care 62.3 % 62.5 % 62.5 % 59.6 % 61.7 %
Indemnity, self-pay and other 10.0 % 10.5 % 11.0 % 9.6 % 10.2 %
 
(1) Represents the consolidated results of Tenet's acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
 
     

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)
Three Months Ended Year Ended
3/31/2017   6/30/2017   9/30/2017 12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 72 72 72 72 72
Total admissions 189,071 182,610 181,970 184,877 738,528
Adjusted patient admissions 326,533 323,064 320,821 324,495 1,294,913
Paying admissions (excludes charity and uninsured) 179,763 173,034 171,791 175,025 699,613
Charity and uninsured admissions 9,308 9,576 10,179 9,852 38,915
Admissions through emergency department 121,749 116,968 118,361 123,102 480,180
Paying admissions as a percentage of total admissions 95.1 % 94.8 % 94.4 % 94.7 % 94.7 %
Charity and uninsured admissions as a percentage of total admissions 4.9 % 5.2 % 5.6 % 5.3 % 5.3 %
Emergency department admissions as a percentage of total admissions 64.4 % 64.1 % 65.0 % 66.6 % 65.0 %
Surgeries — inpatient 49,735 49,992 50,074 50,070 199,871
Surgeries — outpatient 67,375 68,939 66,482 68,432 271,228
Total surgeries 117,110 118,931 116,556 118,502 471,099
Patient days — total 889,667 842,835 838,215 853,217 3,423,934
Adjusted patient days 1,527,316 1,485,211 1,466,266 1,485,209 5,964,002
Average length of stay (days) 4.71 4.62 4.61 4.62 4.64
Licensed beds (at end of period) 19,285 19,281 19,327 19,035 19,035
Average licensed beds 19,286 19,281 19,328 19,214 19,277
Utilization of licensed beds 51.3 % 48.0 % 47.1 % 48.3 % 48.7 %
Outpatient Visits
Total visits 1,937,168 1,879,210 1,813,595 1,865,781 7,495,754
Paying visits (excludes charity and uninsured) 1,821,837 1,763,098 1,696,468 1,747,285 7,028,688
Charity and uninsured visits 115,331 116,112 117,127 118,496 467,066
Emergency department visits 674,547 666,865 646,331 676,705 2,664,448
Paying visits as a percentage of total visits 94.0 % 93.8 % 93.5 % 93.6 % 93.8 %
Charity and uninsured visits as a percentage of total visits 6.0 % 6.2 % 6.5 % 6.4 % 6.2 %
Total emergency department admissions and visits 796,296 783,833 764,692 799,807 3,144,628
Revenues
Net inpatient revenues $ 2,505 $ 2,446 $ 2,391 $ 2,695 $ 10,037
Net outpatient revenues $ 1,390 $ 1,419 $ 1,386 $ 1,431 $ 5,626
Total patient revenues $ 3,895 $ 3,865 $ 3,777 $ 4,126 $ 15,663
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,249 $ 13,395 $ 13,140 $ 14,577 $ 13,591
Net inpatient revenue per patient day $ 2,816 $ 2,902 $ 2,852 $ 3,159 $ 2,931
Net outpatient revenue per visit $ 718 $ 755 $ 764 $ 767 $ 751
Net patient revenue per adjusted patient admission $ 11,928 $ 11,964 $ 11,773 $ 12,715 $ 12,096
Net patient revenue per adjusted patient day $ 2,550 $ 2,602 $ 2,576 $ 2,778 $ 2,626
Net Patient Revenues from:
Medicare 21.6 % 20.6 % 20.1 % 18.9 % 20.3 %
Medicaid 6.8 % 6.8 % 6.6 % 12.1 % 8.1 %
Managed care 62.2 % 62.6 % 62.3 % 59.3 % 61.6 %
Indemnity, self-pay and other 9.4 % 10.0 % 11.0 % 9.7 % 10.0 %
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 72 hospitals operated throughout the twelve months ended December 31, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016.
 
   

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS - CONTINUING SAME HOSPITALS (1)

(Unaudited)
 

(Dollars in millions except per patient day, per admission, per adjusted admission and per visit amounts)
Three Months Ended Year Ended
3/31/2016   6/30/2016   9/30/2016   12/31/2016 12/31/2016
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 72 72 72 72 72
Total admissions 195,679 186,668 186,765 184,561 753,673
Adjusted patient admissions 335,006 327,551 327,960 320,445 1,310,962
Paying admissions (excludes charity and uninsured) 186,706 177,090 176,376 175,026 715,198
Charity and uninsured admissions 8,973 9,578 10,389 9,535 38,475
Admissions through emergency department 125,406 118,054 116,234 116,374 476,068
Paying admissions as a percentage of total admissions 95.4 % 94.9 % 94.4 % 94.8 % 94.9 %
Charity and uninsured admissions as a percentage of total admissions 4.6 % 5.1 % 5.6 % 5.2 % 5.1 %
Emergency department admissions as a percentage of total admissions 64.1 % 63.2 % 62.2 % 63.1 % 63.2 %
Surgeries - inpatient 51,719 52,363 52,556 50,971 207,609
Surgeries - outpatient 72,054 73,372 70,206 71,129 286,761
Total surgeries 123,773 125,735 122,762 122,100 494,370
Patient days - total 929,061 865,808 863,100 857,118 3,515,087
Adjusted patient days 1,579,483 1,510,969 1,508,217 1,481,787 6,080,456
Average length of stay (days) 4.75 4.64 4.62 4.64 4.66
Licensed beds (at end of period) 19,332 19,332 19,292 19,306 19,306
Average licensed beds 19,327 19,332 19,319 19,278 19,315
Utilization of licensed beds 53.4 % 49.2 % 48.6 % 48.3 % 49.9 %
Outpatient Visits
Total visits 1,969,133 1,945,124 1,913,773 1,869,272 7,697,302
Paying visits (excludes charity and uninsured) 1,841,053 1,819,407 1,782,980 1,757,013 7,200,453
Charity and uninsured visits 128,080 125,717 130,793 112,259 496,849
Emergency department visits 702,777 673,544 662,625 650,573 2,689,519
Paying visits as a percentage of total visits 93.5 % 93.5 % 93.2 % 94.0 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.5 % 6.5 % 6.8 % 6.0 % 6.5 %
Total emergency department admissions and visits 828,183 791,598 778,859 766,947 3,165,587
Revenues
Net inpatient revenues $ 2,568 $ 2,470 $ 2,533 $ 2,518 $ 10,089
Net outpatient revenues $ 1,370 $ 1,377 $ 1,334 $ 1,371 $ 5,452
Total patient revenues $ 3,938 $ 3,847 $ 3,867 $ 3,889 $ 15,541
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,124 $ 13,232 $ 13,562 $ 13,643 $ 13,386
Net inpatient revenue per patient day $ 2,764 $ 2,853 $ 2,935 $ 2,938 $ 2,870
Net outpatient revenue per visit $ 696 $ 708 $ 697 $ 733 $ 708
Net patient revenue per adjusted patient admission $ 11,755 $ 11,745 $ 11,791 $ 12,136 $ 11,855
Net patient revenue per adjusted patient day $ 2,493 $ 2,546 $ 2,564 $ 2,625 $ 2,556
Net Patient Revenues from:
Medicare 20.4 % 22.3 % 20.5 % 20.8 % 21.0 %
Medicaid 8.7 % 7.6 % 8.4 % 8.2 % 8.2 %
Managed care 61.7 % 59.5 % 64.3 % 61.2 % 61.6 %
Indemnity, self-pay and other 9.2 % 10.6 % 6.8 % 9.8 % 9.2 %
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 72 hospitals operated throughout the twelve months ended December 31, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016.
 
       

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)
 
(Dollars in millions) December 31, December 31,
2017 2016
Assets
Hospital Operations and other $ 16,466 $ 17,871
Ambulatory Care 5,822 5,722
Conifer 1,097   1,108  
Total $ 23,385   $ 24,701  
 
Three Months Ended Years Ended
December 31, December 31,
2017 2016 2017 2016
Capital expenditures:
Hospital Operations and other $ 184 $ 242 $ 625 $ 799
Ambulatory Care 23 9 60 51
Conifer 8   10   22   25  
Total $ 215   $ 261   $ 707   $ 875  
 
Net operating revenues:
Hospital Operations and other total prior to inter-segment eliminations (1) $ 4,194 $ 4,143 $ 16,260 $ 16,904
Ambulatory Care 545 478 1,940 1,797
Conifer
Tenet 155 163 618 651
Other clients 239   239   979   920  
Total Conifer revenues 394 402 1,597 1,571
Inter-segment eliminations (155 ) (163 ) (618 ) (651 )
Total $ 4,978   $ 4,860   $ 19,179   $ 19,621  
 
Equity in earnings of unconsolidated affiliates:
Hospital Operations and other $ $ 3 $ 4 $ 9
Ambulatory Care 49   43   140   122  
Total $ 49   $ 46   $ 144   $ 131  
 
Adjusted EBITDA:
Hospital Operations and other (2) $ 538 $ 395 $ 1,462 $ 1,586
Ambulatory Care 223 183 699 615
Conifer 79   72   283   277  
Total $ 840   $ 650   $ 2,444   $ 2,478  
 
Depreciation and amortization:
Hospital Operations and other $ 176 $ 184 $ 736 $ 709
Ambulatory Care 18 22 84 91
Conifer 14   12   50   50  
Total $ 208   $ 218   $ 870   $ 850  
 
(1) Hospital Operations and other revenues includes health plan revenues of $10 million and $110 million for the three and twelve months ended December 31, 2017, respectively and $97 million and $482 million for the three and twelve months ended December 31, 2016, respectively.
(2) Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of less than one million and $(41) million for the three and twelve months ended December 31, 2017, respectively and $(29) million and $(37) million for the three and twelve months ended December 31, 2016, respectively.
 
       

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS - AMBULATORY CARE SEGMENT

(Unaudited)
 
(Dollars in millions) Three Months Ended December 31,
2017 2016
 

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 $ 556 $ 625 $ 487 $ 582
Less: Provision for doubtful accounts (11 ) (10 ) (9 ) (12 )
Net operating revenues (1) 545 615 478 570
Equity in earnings of unconsolidated affiliates (2) 49 43
Operating expenses:
Salaries, wages and benefits 165 131 157 124
Supplies 113 157 99 145
Other operating expenses, net 93 104 83 101
Electronic health record incentives (1 )
Depreciation and amortization 18 16 22 17
Impairment and restructuring charges, and acquisition-related costs 4 17
(Gains) losses on sales, consolidation and deconsolidation of facilities (2 )     4  
Operating income 203 207 144 179
Interest expense (36 ) (5 ) (35 ) (6 )
Other non-operating income (expense), net 1   (1 ) 2    
Income from continuing operations, before income taxes 168 201 111 173
Income tax benefit (expense) 73   (3 ) (17 ) (3 )
Net income 241 $ 198   94 $ 170  
Less: Net income attributable to noncontrolling interests (3) 111   81  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 130   $ 13  
Equity in earnings of unconsolidated affiliates $ 49 $ 43
 
(1) On a same-facility system-wide basis, net revenue in Tenet's Ambulatory Care segment increased 6.9% during the three months ended December 31, 2017, with cases increasing 4.6% and revenue per case increasing 2.2%.
(2) At December 31, 2017, 106 of the 333 facilities in the Company's 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 227 facilities and account for these investments as consolidated subsidiaries
(3) During the three months ended December 31, 2017, the Company recorded $22 million of noncontrolling interests expense on a tax benefit of $109 million, as a result of the reduction in the corporate income tax rate from 35% to 21%.
 
       

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS - AMBULATORY CARE SEGMENT

(Unaudited)
 
(Dollars in millions) Years Ended December 31,
2017 2016
 

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 $ 1,978 $ 2,117 $ 1,833 $ 2,073
Less: Provision for doubtful accounts (38 ) (41 ) (36 ) (53 )
Net operating revenues (1) 1,940 2,076 1,797 2,020
Equity in earnings of unconsolidated affiliates (2) 140 122
Operating expenses:
Salaries, wages and benefits 623 483 594 477
Supplies 398 540 365 520
Other operating expenses, net 360 394 346 404
Electronic health record incentives (1 )
Depreciation and amortization 84 65 91 68
Impairment and restructuring charges, and acquisition-related costs 74 1 26 1
(Gains) losses on sales, consolidation and deconsolidation of facilities (9 )   (33 ) 7  
Operating income 550 593 531 543
Interest expense (145 ) (22 ) (140 ) (24 )
Other non-operating income (expense), net 6   (1 ) 2   6  
Income from continuing operations, before income taxes 411 570 393 525
Income tax benefit (expense) 15   (9 ) (54 ) (8 )
Net Income 426 $ 561   339 $ 517  
Less: Net income attributable to noncontrolling interests (3) 304   285  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 122   $ 54  
Equity in earnings of unconsolidated affiliates $ 140 $ 122
 
(1) On a same-facility system-wide basis, net revenue in Tenet's Ambulatory Care segment increased 4.6% during the twelve months ended December 31, 2017, with cases increasing 0.6% and revenue per case increasing 3.9%.
(2) At December 31, 2017, 106 of the 333 facilities in the Company's 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 227 facilities and account for these investments as consolidated subsidiaries.
(3) During the twelve months ended December 31, 2017, the Company recorded $22 million of noncontrolling interests expense on a tax benefit of $109 million, as a result of the reduction in the corporate income tax rate from 35% to 21%. During the twelve months ended December 31, 2016, the Company recorded $14 million of noncontrolling interests expense related to a $33 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA) and an associated $7 million income tax benefit, net of $26 million of impairment and restructuring charges, and acquisition-related costs not included in Adjusted EBITDA.
 

Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP measure, 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, (2) net loss (income) attributable to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax benefit (expense), (5) other non-operating income (expense), net, (6) gain (loss) from early extinguishment of debt, (7) interest expense, (8) litigation and investigation (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested operations and closed businesses (i.e., the Company's health plan businesses). Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.

Adjusted net income (loss) from continuing operations attributable to Tenet Healthcare Corporation common shareholders, a non-GAAP measure, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) impairment and restructuring charges, and acquisition-related costs, (2) litigation and investigation costs, (3) gains on sales, consolidation and deconsolidation of facilities, (4) gain (loss) from early extinguishment of debt, (5) income (loss) from divested operations and closed businesses, (6) the associated impact of these five items on taxes and noncontrolling interests, and (7) income (loss) from discontinued operations. Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP term, is defined by the Company as Adjusted net income (loss) from continuing operations attributable to Tenet Healthcare Corporation common shareholders divided by the weighted average primary or diluted shares outstanding in the reporting period.

Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment from continuing operations.

Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations. Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.

The Company believes the foregoing non-GAAP measures are useful to investors and analysts because they present additional information on the Company's financial performance. Investors, analysts, Company management and the Company's Board of Directors utilize these non-GAAP measures, in addition to GAAP measures, to track the Company's financial and operating performance and compare the Company's performance to its peer companies, which utilize similar non-GAAP measures in their presentations. The Human Resources Committee of the Company's Board of Directors also uses certain of these measures to evaluate management's performance for the purpose of determining incentive compensation. Additional information regarding the purpose and utility of specific non-GAAP measures used in this release is set forth below.

The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the estimated fair value of shares of the Company's common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment. The Company does not use Adjusted EBITDA to measure liquidity, but instead to measure operating performance.

We use, and we believe investors and analysts use, Free Cash Flow and Adjusted Free Cash Flow as supplemental measures to analyze cash flows generated from our operations because we believe it is useful to investors in evaluating our ability to fund distributions paid to noncontrolling interests, acquisitions, purchasing equity interests in joint ventures or repaying debt.

These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in our financial statements, they do not provide a complete measure of our operating performance. For example, the Company's definitions of Free Cash Flow and Adjusted Free Cash Flow do not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company's financial performance.

A reconciliation of Adjusted EBITDA to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #1 below for the three and twelve months ended December 31, 2017 and 2016. A reconciliation of Adjusted net income from continuing operations attributable to Tenet Healthcare Corporation common shareholders to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #2 below for the three and twelve months ended December 31, 2017 and 2016. A reconciliation of Free Cash Flow and Adjusted Free Cash Flow to net cash provided by (used in) operating activities, the most comparable GAAP measure, is set forth in Table #3 below for the three and twelve months ended December 31, 2017 and 2016.
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 - Reconciliation of Adjusted EBITDA to Net Loss

Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)
 
(Dollars in millions) Three Months Ended Years Ended
December 31, December 31,
2017 2016 2017 2016
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (229 ) $ (79 ) $ (704 ) $ (192 )
Less: Net income attributable to noncontrolling interests (130 ) (102 ) (384 ) (368 )
Income (loss) from discontinued operations, net of tax 1       (5 )
Income (loss) from continuing operations (100 ) 23 (320 ) 181
Income tax expense (324 ) (6 ) (219 ) (67 )
Loss from early extinguishment of debt (164 )
Other non-operating expense, net (8 ) (2 ) (22 ) (20 )
Interest expense (253 ) (249 ) (1,028 ) (979 )
Operating income 485 280 1,113 1,247
Litigation and investigation costs (11 ) (2 ) (23 ) (293 )
Gains on sales, consolidation and deconsolidation of facilities 2 144 151
Impairment and restructuring charges, and acquisition-related costs (138 ) (121 ) (541 ) (202 )
Depreciation and amortization (208 ) (218 ) (870 ) (850 )
Loss from divested and closed businesses   (29 ) (41 ) (37 )
Adjusted EBITDA $ 840   $ 650   $ 2,444   $ 2,478  
 
Net operating revenues $ 4,978 $ 4,860 $ 19,179 $ 19,621
Less: Net operating revenues from health plans 10   97   110   482  
Adjusted net operating revenues $ 4,968   $ 4,763   $ 19,069   $ 19,139  
 
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues (4.6 )% (1.6 )% (3.7 )% (1.0 )%
 
Adjusted EBITDA as % of adjusted net operating revenues (Adjusted EBITDA margin) 16.9 % 13.6 % 12.8 % 12.9 %
 
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 - Pre-Tax, After-Tax and Earnings (Loss) Per Share Impact of Certain Items

on Continuing Operations

(Unaudited)
 
Three Months Ended Years Ended
(Dollars in millions except per share amounts) December 31, December 31,
2017 2016 2017 2016
Adjustments to calculate Adjusted Diluted EPS
Impairment and restructuring charges, and acquisition-related costs (1) $ (138 ) $ (121 ) $ (541 ) $ (202 )
Litigation and investigation costs (11 ) (2 ) (23 ) (293 )
Gain on sales, consolidation and deconsolidation of facilities (2) 2 144 151
Loss from early extinguishment of debt (3) (164 )
Loss from divested and closed businesses   (28 ) (41 ) (39 )
Pre-tax impact (147 ) (151 ) (625 ) (383 )
Tax impact of above items 49 44 114 81
Tax reform adjustment (252 )   (252 )  
Total after-tax impact (350 ) (107 ) (763 ) (302 )
Noncontrolling interests impact (4) (23 ) 5   (23 ) (14 )
Total loss from items above $ (373 ) $ (102 ) $ (786 ) $ (316 )
 
Net loss attributable to common shareholders $ (229 ) $ (79 ) $ (704 ) $ (192 )
Less income (loss) from discontinued operations, net of tax 1       (5 )
Loss from continuing operations, net of tax (230 ) (79 ) (704 ) (187 )
Loss from adjustments above 373   102   786   316  
Adjusted net income from continuing operations attributable to common shareholders $ 143   $ 23   $ 82   $ 129  
 
Weighted average dilutive shares outstanding (in thousands) 101,853 100,928 101,380 100,742
Diluted loss per share from continuing operations $ (2.28 ) $ (0.79 ) $ (7.00 ) $ (1.88 )
Adjusted diluted earnings per share from continuing operations $ 1.40 $ 0.23 $ 0.81 $ 1.28
 
(1) Impairment and restructuring charges, and acquisition-related costs of $541 million in the year ended December 31, 2017 were primarily related to the write-down of assets held for sale in Chicago, Philadelphia and the United Kingdom to their estimated fair value less the estimated costs to sell.
(2) Gain on sales, consolidation and deconsolidation of facilities of $144 million in the year ended December 31, 2017 was primarily related to a gain on sale of the Company's former hospitals, physician practices and related assets in Houston, Texas.
(3) Loss from early extinguishment of debt of $164 million in the year ended December 31, 2017 was related to the Company's refinancing transactions and debt redemptions.
(4) During the three months ended December 31, 2017, the Company recorded $22 million of noncontrolling interests expense on a tax benefit of $109 million, as a result of the reduction in the corporate income tax rate from 35% to 21%.
 
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 - Reconciliations of Free Cash Flow and Adjusted Free Cash Flow

(Unaudited)
 
Three Months Ended Years Ended
(Dollars in millions) December 31, December 31,
2017 2016 2017 2016
Net cash provided by (used in) operating activities $ 491 $ (293 ) $ 1,200 $ 558
Purchases of property and equipment (215 ) (261 ) (707 ) (875 )
Free cash flow $ 276   $ (554 ) $ 493   $ (317 )
 
Net cash provided by (used in) investing activities $ (206 ) $ (280 ) $ 21 $ (430 )
Net cash provided by (used in) financing activities $ (103 ) $ 640 $ (1,326 ) $ 232
 
Net cash provided by (used in) operating activities $ 491 $ (293 ) $ 1,200 $ 558
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (37 ) (559 ) (125 ) (691 )
Net cash used in operating activities from discontinued operations (2 ) (7 ) (5 ) (6 )
Adjusted net cash provided by operating activities - continuing operations 530 273 1,330 1,255
Purchases of property and equipment - continuing operations (215 ) (261 ) (707 ) (875 )
Adjusted free cash flow - continuing operations $ 315   $ 12   $ 623   $ 380  
 
       

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 - Reconciliation of Outlook Adjusted EBITDA to Outlook Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)
 
(Dollars in millions, except per share amounts) Q1 2018 2018
Low High Low High
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $ 45 $ 70 $ 90 $ 105
Less: Net income attributable to noncontrolling interests (90 ) (100 ) (415 ) (435 )
Loss from discontinued operations, net of tax (5 )   (5 )  
Income from continuing operations 140 170 510 540
Income tax expense (75 ) (80 ) (215 ) (220 )
Income from continuing operations, before income taxes 215 250 725 760
Interest expense (250 ) (260 ) (1,000 ) (1,010 )
Loss on early extinguishment of debt (5 )
Other non-operating expense, net (5 ) (5 ) (20 ) (25 )
Operating income 470 515 1,750 1,795
Gains on sales, consolidation and deconsolidation of facilities (1) 100 120 100 120
Impairment and restructuring charges, acquisition-related costs and litigation costs and settlements (1) (15 ) (25 ) (50 ) (100 )
Depreciation and amortization (195 ) (205 ) (790 ) (810 )
Loss from divested and closed businesses   (5 ) (10 ) (15 )
Adjusted EBITDA $ 580   $ 630   $ 2,500   $ 2,600  
Income from continuing operations $ 50 $ 70 $ 95 $ 105
Income from continuing operations as a % of operating revenues 1.1 % 1.5 % 0.5 % 0.6 %
Net operating revenues $ 4,450 $ 4,650 $ 17,900 $ 18,300
Adjusted EBITDA as % of adjusted net operating revenues (Adjusted EBITDA margin) 13.0 % 13.5 % 14.0 % 14.2 %
Adjusted EBITDA $ 580 $ 630 $ 2,500 $ 2,600
Depreciation and amortization (195 ) (205 ) (790 ) (810 )
Interest expense (250 ) (260 ) (1,000 ) (1,010 )
Other non-operating expense, net (5 ) (5 ) (20 ) (25 )
Adjusted income from continuing operations before income taxes 130 160 690 755
Income tax benefit (expense) (50 ) (55 ) (200 ) (210 )
Adjusted income from continuing operations 80 105 490 545
Net income attributable to noncontrolling interests (90 ) (100 ) (415 ) (435 )
Adjusted net income (loss) from continuing operations attributable to common shareholders $ (10 ) $ 5   $ 75   $ 110  
Basic weighted average shares outstanding (in millions) 101 101 102 102
Fully diluted weighted average shares outstanding (in millions) 102 102 103 103
Diluted earnings per share from continuing operations $ 0.49 $ 0.69 $ 0.92 $ 1.02
Adjusted diluted earnings (loss) per share from continuing operations $ (0.10 ) $ 0.05 $ 0.73 $ 1.07
 
(1) The Company has provided an estimate of restructuring charges that it anticipates in 2018. The Company does not forecast impairment charges, acquisition-related costs and litigation costs and settlements, because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook. Gains on sales, consolidation and deconsolidation of facilities includes only an estimate for the MacNeal and Baylor joint venture restructuring transactions, which are currently expected to close in the first quarter of 2018.
 
               

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow

for the Year Ending December 31, 2018
 
(Dollars in millions) 2018
Low High
Net cash provided by operating activities $ 1,245 $ 1,450
Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements (1) (50 ) (100 )

Net cash used in operating activities from discontinued operations
(5 )  
Adjusted net cash provided by operating activities - continuing operations 1,300 1,550
Purchases of property and equipment - continuing operations (625 ) (675 )
Adjusted free cash flow - continuing operations (2) $ 675   $ 875  
 
(1) The Company has provided an estimate of payments that it anticipates in 2018 related to restructuring charges. The Company does not forecast payments related to acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook.
(2) The Company's definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interests, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interests.
 

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