Tenet Reports 50% Increase in Adjusted EBITDA for Third Quarter
THC | Quote | Chart | News | PowerRating -- --Key Metrics (all percentage changes compare Q3'09 data to Q3'08 unless otherwise noted):
--$240 million in total-hospital adjusted EBITDA, an increase of 50% 10.6% Adjusted EBITDA margin, an increase of 310 basis points
--$236 million in same-hospital Adjusted EBITDA, an increase of 45.7%
--Operating income increased to $133 million, compared to $70 million in Q3'08
--Net loss attributable to common shareholders of $3 million, compared to net income attributable to common shareholders of $104 million in Q3'08, which included pre-tax gains of $140 million on sales of investments Net loss per share of $0.01, compared net income of $0.22 per share in Q3'08
--$731 million in cash and cash equivalents at Sept. 30, 2009, an increase of $224 million since Dec. 31, 2008
--Adjusted Free Cash Flow from continuing operations of $142 million, an increase of $106 million from Q3'08 Net cash provided by operating activities of $284 million in year-to-date 2009, compared to $141 million in the nine months ended Sept. 30, 2008
--$91 million in capital expenditures in continuing operations in Q3'08
--Same-hospital bad debt ratio of 8.5% of net revenues, an increase of 90 basis points from 7.6% in Q3'08, and an increase of 110 basis points from 7.4% in Q2'09
--0.6% decrease in controllable expenses per adjusted patient day (same-hospital)
--4.2% increase in commercial managed care revenues (same-hospital)
--Volume Metrics (same-hospital) 0.1% increase in total admissions; 0.1% decrease in paying admissions
--4.8% increase in outpatient visits; 5.3% increase in paying outpatient visits
--2.2% increase in total surgeries; 4.4% increase in outpatient surgeries
--4.5% decrease in commercial managed care admissions; flat commercial managed care outpatient visits
Tenet Healthcare Corporation (NYSE:THC) today reported Adjusted EBITDA,
a non-GAAP term defined below, of $240 million for the third quarter
ended Sept. 30, 2009, an increase of $80 million, or 50 percent, as
compared to $160 million for the third quarter of 2008. On a
same-hospital basis, Adjusted EBITDA was $236 million for the third
quarter of 2009, an increase of $74 million, or 45.7 percent, as
compared to $162 million in the third quarter of 2008. The net loss
attributable to common shareholders for the third quarter of 2009 was $3
million, or $0.01 per share, compared to net income attributable to
common shareholders of $104 million, or $0.22 per share, for the third
quarter of 2008. Net income attributable to common shareholders in the
third quarter of 2008 included pre-tax gains on sales of investments of
$140 million.
"Our strategies drove a significant enhancement in earnings through the
first three quarters of 2009, making this the second consecutive quarter
in which we've generated year-over-year Adjusted EBITDA growth of 50
percent or better," said Trevor Fetter, president and chief executive
officer. "Adjusted free cash flow from continuing operations was also
solid at $142 million. Strong revenue growth, excellent cost control,
and robust growth in our outpatient business were more than sufficient
to offset an adverse shift in payer mix. While the economy has had some
effect year-to-date, it remains less than we would have expected in the
context of rising unemployment levels in many of our markets. Given our
strong year-to-date performance, we are raising our range for 2009
Adjusted EBITDA to $925 million to $975 million. Additionally, it is
important to recognize the strong reception Tenet received from the
capital markets this year as it successfully extended more than $2.3
billion of near-term debt maturities and raised fresh capital by
accessing the preferred equity market. These actions reduced our
leverage and created a much stronger and liquid balance sheet."
Continuing Operations
Net loss attributable to common shareholders was $3 million in the third
quarter of 2009, or $0.01 per share, including the following items with
an aggregate, net unfavorable impact of $18 million after-tax, or $0.04
per share:
1. Loss from discontinued operations, net of tax, of $5 million, or
$0.01 per share;
2. Favorable income tax adjustments of $3 million, or zero cents per
share, primarily related to a decrease in the Company's valuation
allowance for deferred tax assets and other tax adjustments;
3. Loss from early extinguishment of debt of $16 million pre-tax, $10
million after-tax before the deferred tax valuation allowance, or $0.02
per share;
4. Litigation and investigation costs of $3 million pre-tax, $2 million
after-tax before the deferred tax valuation allowance, or zero cents per
share; and
5. Impairment of long lived-assets and goodwill, and restructuring
charges of $7 million pre-tax, $4 million after-tax before the tax
valuation allowance, or $0.01 per share.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP term defined below, was $240 million, or a
margin of 10.6 percent of net operating revenues, in the third quarter
of 2009. This represents an increase of $80 million, or 50 percent, from
Adjusted EBITDA of $160 million in the third quarter of 2008, and a
margin increase of 310 basis points as compared to an Adjusted EBITDA
margin of 7.5 percent in the third quarter of 2008.
Same-hospital Adjusted EBITDA was $236 million in the third quarter of
2009, an increase of $74 million, or 45.7 percent, from the $162 million
in the third quarter of 2008. The same-hospital Adjusted EBITDA margin
increased by 290 basis points to 10.5 percent in the third quarter of
2009 compared to 7.6 percent in the third quarter of 2008. Same-hospital
financial data excludes the results from one of the Company's hospitals
as discussed below.
Adjusted EBITDA is a non-GAAP term defined by the Company as net income
(loss) attributable to common shareholders of Tenet Healthcare
Corporation before: (1) the cumulative effect of changes in accounting
principle, net of tax; (2) net income attributable to noncontrolling
interests; (3) preferred stock dividends, (4) income (loss) from
discontinued operations, net of tax; (5) income tax (expense) benefit;
(6) net gains (losses) on sales of investments; (7) investment earnings
(loss); (8) gain (loss) from early extinguishment of debt; (9) interest
expense; (10) litigation and investigation (costs) benefit, net of
insurance recoveries; (11) hurricane insurance recoveries, net of costs;
(12) impairment of long-lived assets and goodwill and restructuring
charges, net of insurance recoveries; (13) amortization; and (14)
depreciation. A reconciliation of Adjusted EBITDA to net income (loss)
attributable to Tenet Healthcare Corporation common shareholders is
provided in Table #1 at the end of this release.
Same-Hospital Data
Same-hospital continuing operations data excludes Sierra Providence East
Medical Center, in El Paso, which opened on May 21, 2008. Same-hospital
continuing operations data is the primary form of tabular data
presentation in the narrative sections of this document. There are
currently 48 hospitals in same-hospital continuing operations. Sierra
Providence East Medical Center will be added to our same-hospital
reporting beginning in the first quarter of 2010.
Admissions, Patient Days and Surgeries
Admissions, Patient Days and Same-Hospital
Surgeries Continuing Operations
Q3'09 Q3'08 Change (%)
Commercial Managed Care Admissions 33,204 34,759 (4.5)
Governmental Managed Care Admissions 29,539 27,065 9.1
Medicare Admissions 37,131 38,127 (2.6)
Medicaid Admissions 16,694 16,531 1.0
Uninsured Admissions 6,107 6,301 (3.1)
Charity Care Admissions 2,620 2,164 21.1
Other Admissions 3,357 3,578 (6.2)
Total Admissions 128,652 128,525 0.1
Paying Admissions (excludes Charity + Uninsured) 119,925 120,060 (0.1)
Charity Admissions + Uninsured Admissions 8,727 8,465 3.1
Admissions through Emergency Department 73,082 70,741 3.3
Commercial Managed Care Admits / Total Admits (%) 25.8 27.0 (1.2) (a)
Emergency Department Admissions / Total Admits (%) 56.8 55.0 1.8(a)
Uninsured Admissions / Total Admissions (%) 4.7 4.9 (0.2) (a)
Charity Admissions / Total Admissions (%) 2.0 1.7 0.3 (a)
Surgeries - Inpatient 38,828 39,121 (0.7)
Surgeries - Outpatient 52,906 50,655 4.4
Surgeries - Total 91,734 89,776 2.2
Patient Days - Total 616,850 625,702 (1.4)
Adjusted Patient Days (b) 926,344 916,104 1.1
Patient Days - Commercial Managed Care 132,119 136,970 (3.5)
Average Length of Stay (days) 4.8 4.9 (0.1) (a)
Adjusted Patient Admissions (b) 194,568 189,536 2.7
(a) This change is the difference between the Q3'09 and
Q3'08 amounts shown.
(b) "Adjusted Patient Days / Admissions" represents
actual patient days / admissions adjusted to include outpatient
services by multiplying actual patient days / admissions by the
sum of gross inpatient revenues and outpatient revenues and
dividing the results by gross inpatient revenues.
Total admissions were relatively flat in the third quarter with an
increase of 0.1 percent as compared to the third quarter of 2008. In the
third quarter of 2008, total admissions had increased by 1.9 percent as
compared to the third quarter of 2007, providing a strong prior-year
comparative. Commercial managed care admissions declined by 4.5 percent,
which compared favorably to the 5.7 percent decline in the second
quarter of 2009.
The Company's California Region and its Philadelphia Market each
reported positive total admissions growth in the quarter. Tenet's other
regions reported admissions declines in the third quarter. Total surgery
growth remained strong growing by 2.2 percent with outpatient surgeries
growing by 4.4 percent but inpatient surgeries declining by 0.7 percent.
Flu related admissions were not a major factor in the quarter, adding
339 admissions to the third quarter of 2009 as compared to 17 flu
related admissions in the third quarter of 2008, an increase of 322
admissions.
Outpatient Visits
Outpatient Visits Same-Hospital
Continuing Operations
Q3'09 Q3'08 Change (%)
Commercial Managed Care OP Visits 351,592 351,594 -
Governmental Managed Care OP Visits 186,544 155,156 20.2
Medicare OP Visits 212,008 207,515 2.2
Medicaid OP Visits 75,936 68,103 11.5
Uninsured OP Visits 97,189 98,282 (1.1)
Charity Care OP Visits 7,135 5,320 34.1
Other OP Visits 52,685 52,028 1.3
Total OP Visits 983,089 937,998 4.8
Paying OP Visits (excludes Uninsured + Charity) 878,765 834,396 5.3
OP Surgery Visits 52,906 50,655 4.4
Emergency Department OP Visits 357,122 326,769 9.3
Charity + Uninsured OP Visits 104,324 103,602 0.7
Charity + Uninsured OP Visits / Total OP Visits (%) 10.6 11.0 (0.4) (a)
Paying OP Visits / Total OP Visits 89.4 89.0 0.4 (a)
Commercial OP Visits / Total Visits (%) 35.8 37.5 (1.7) (a)
(a) This change is the difference between the Q3'09 and
Q3'08 amounts shown.
Total same-hospital outpatient volume grew by 45,091 visits, or 4.8
percent, in the third quarter of 2009 compared to the third quarter of
2008. Tenet has now reported year-over-year growth in outpatient visits
in six of the last seven quarters.
Changes in outpatient payer mix included growth in paying patients which
rose to 89.4 percent of total outpatient visits, an increase of 40 basis
points as compared to 89.0 percent in the third quarter of 2008, and a
smaller contribution from commercial outpatient visits, which declined
to 35.8 percent of total outpatient visits, a decline of 170 basis
points as compared to 37.5 percent in the third quarter of 2008.
Newly opened or acquired facilities contributed 1,814 visits, net of the
loss of visits from centers which were closed in the period following
September 30, 2008. Excluding this net incremental volume from new
facilities, organic growth in outpatient visits would have been an
increase of 43,277 visits, or growth of 4.6 percent.
Outpatient surgeries also reported a strong quarter increasing by 4.4
percent. Outpatient surgeries grew by 3.5 percent in the second quarter
of 2009. Outpatient imaging also continued its growth trend, increasing
by 2.7 percent relative to the third quarter of 2008. Emergency
Department outpatient visits increased by 30,353 visits, or 9.3 percent,
in the third quarter of 2009 as compared to the third quarter of 2008.
This increase in Emergency Department outpatient visits contributed 67
percent of the increase in total outpatient visits in the quarter.
Charity plus uninsured outpatient visits increased by 0.7 percent as
compared to a decline rate of 3.4 percent in the second quarter of 2009.
Flu-related outpatient visits were 5,271 in the third quarter of 2009 as
compared to 214 in the third quarter of 2008. This increase of 5,057
visits accounted for 11 percent of the total increase in outpatient
visits of 45,091.
All of the Company's regions exhibited growth in outpatient visits in
the third quarter with the strongest growth coming from the Central and
Florida Regions and the Philadelphia Market, each of which saw
outpatient visit growth in excess of 8 percent. The Company's California
and Southern States Regions grew outpatient visits by more than one
percent.
Revenues
Revenues Same-Hospital
($ in millions) Continuing Operations
Q3'09 Q3'08 Change (%)
Net Operating Revenues 2,238 2,127 5.2
Net Patient Revenue from Commercial Managed Care 886 850 4.2
Revenues from the Uninsured 166 152 9.2
Revenue growth remained robust in the third quarter of 2009 with an
increase of $111 million, or 5.2 percent, on a same-hospital basis.
Favorable prior-year cost report adjustments contributed $11 million to
net operating revenues in the third quarter of 2009 as compared to a
contribution of $10 million in the third quarter of 2008. Excluding
prior year cost report adjustments from both quarters, same-hospital
revenues would have shown the same increase of 5.2 percent. Net
operating revenues in the third quarter of 2009 include $6 million of
revenue recognized by the Company's Philadelphia Market related to
calendar year 2008 that was approved for distribution to Tenet in the
third quarter of 2009 by a Philadelphia HMO in which Tenet holds a
minority interest.
Commercial managed care revenues grew by 4.2 percent on a same-hospital
basis, a rate of growth significantly stronger than the 4.5 percent
decline in commercial managed care admissions and the flat commercial
managed care outpatient visits as compared to the third quarter of 2008.
Pricing
Pricing Same-Hospital
($) Continuing Operations
Q3'09 Q3'08 Change (%)
Net Inpatient Revenue per Admission 11,286 10,885 3.7
Net Inpatient Revenue per Patient Day 2,354 2,236 5.3
Net Outpatient Revenue per Visit 711 692 2.7
Net Patient Revenue per Adjusted Patient Admission 11,055 10,805 2.3
Net Patient Revenue per Adjusted Patient Day 2,322 2,236 3.8
Managed Care: Net Inpatient Revenue per Admission 12,133 11,469 5.8
Managed Care: Net Outpatient Revenue per Visit 823 813 1.2
Pricing improvement was evident across all key metrics, primarily
reflecting the improved terms of our commercial managed care contracts.
The growth in net inpatient revenue per admission of 3.7 percent was
adversely impacted by a mix shift, including a decline in commercial
managed care admissions as a percent of total admissions to 25.8 percent
in the third quarter of 2009 as compared to 27.0 percent of total
admissions in the third quarter of 2008.
In a similar fashion, the 2.7 percent growth in outpatient revenue per
visit was constrained by the decline of commercial outpatient visits as
a percent of total outpatient visits to 35.8 percent in the third
quarter of 2009 as compared to 37.5 percent of total outpatient visits
in the third quarter of 2008.
Controllable Operating Expenses
Controllable Operating Expenses Same-Hospital
Continuing Operations
Q3'09 Q3'08 Change (%)
Salaries, Wages & Benefits ($mm) 945 937 0.9
Supplies ($mm) 386 375 2.9
Other Operating Expenses ($mm) 481 491 (2.0)
Total Controllable Operating Expenses ($mm) 1,812 1,803 0.5
Rent / Lease Expense (a) ($mm) 34 35 (2.9)
Unit Cost Statistics
Salaries, Wages & Benefits per Adjusted Patient Day ($) 1,020 1,023 (0.3)
Supplies per Adjusted Patient Day ($) 417 409 2.0
Other Operating Expenses per Adjusted Patient Day ($) 519 536 (3.2)
Total Controllable Operating Expenses per Adjusted Patient Day ($) 1,956 1,968 (0.6)
(a) Included in Other Operating Expenses
Salaries, wages and benefits per adjusted patient day decreased by 0.3
percent in the third quarter of 2009 compared to the third quarter of
2008. This decrease is primarily due to a decline in full-time employee
headcount, reduced contract labor expense, lower 401(k) match expense,
and lower overtime costs. These cost efficiencies were partially offset
by higher health benefits costs, and increased accruals for annual
incentive compensation. Contract labor expense, which is included in
salaries, wages and benefits, was $16 million in the third quarter of
2009, a decrease of $18 million, or 53 percent, compared to the third
quarter of 2008. The third quarter of 2009 also included a $3 million
favorable pension expense adjustment related to the termination of a
fully funded and frozen retirement plan of a previously acquired company.
Supplies expense per adjusted patient day increased by 2.0 percent
compared to the third quarter of 2008. The increase in supplies expense
is primarily due to the increase in the number of surgeries which grew
by 2.2 percent, and the increased utilization of high cost implants. A
portion of the increase in supplies expense was offset by revenue growth
related to payments we receive from certain payers.
Other operating expenses per adjusted patient day decreased by 3.2
percent compared to the third quarter of 2008. Contributing to this
decrease was a $4 million, or 12.9 percent, decline in total hospital
malpractice expense to $27 million, compared to $31 million in the third
quarter of 2008. This decrease is primarily attributable to improved
claims experience. Declines in consulting costs, utility costs and
information systems implementation costs also had a favorable impact on
other operating expenses. The favorable impact of these items was
partially offset by increases in costs of contracted services and a
reduction in information systems and business office costs allocable to
discontinued operations.
Total controllable operating expenses, which is defined as salaries,
wages & benefits, supplies, and other operating expenses, declined by
0.6 percent on a per adjusted patient day basis compared to the third
quarter of 2008.
Provision for Doubtful Accounts
Bad Debt Same-Hospital
Continuing Operations
Q3'09 Q3'08 Change (%)
Provision for Doubtful Accounts ("Bad Debt") ($mm) 190 162 17.3
Bad Debt / Net Operating Revenues (%) 8.5 7.6 0.9 (a)
Collection Rate from Self-Pay (b) 30.3 33.3 (3.0) (a)
Collection Rate from Managed Care Payers (%) 97.8 97.9 (0.1) (a)
(a) This change is the difference between the Q3'09 and
Q3'08 amounts shown.
(b) "Self-pay" accounts receivable are comprised of
both uninsured and balance-after insurance receivables.
Bad debt expense increased by $28 million, or 17.3 percent, compared to
the third quarter of 2008. The increase in bad debt expense was related
to higher pricing, and decreased collection rates from self-pay
accounts, partially offset by a decline in uninsured volumes and
improved managed care accounts receivable aging categories.
The Company's self-pay collection rate, which is the aggregate
collection rate for uninsured and balance-after insurance accounts
receivable, declined to approximately 30.3 percent in the third quarter
of 2009 compared to 33.3 percent in the third quarter of 2008, and 30.8
percent in the second quarter of 2009.
The estimated direct and allocated costs (based on selected operating
expenses, which include salaries, wages and benefits, supplies and other
operating expenses) of caring for uninsured patients were $100 million
and $93 million, respectively, for the third quarters of 2009 and 2008.
Accounts Receivable
Consolidated accounts receivable were approximately $1.195 billion at
September 30, 2009 and $1.225 billion at June 30, 2009. Accounts
receivable days outstanding from continuing operations were 47 days at
September 30, 2009 compared to 48 days at June 30, 2009 and 50 days at
December 31, 2008. This amount is calculated as accounts receivable from
continuing operations divided by net revenue from continuing operations
divided by the number of days in the quarter.
Cash Flow
Cash and cash equivalents were $731 million at September 30, 2009, a
decrease of $27 million from $758 million at June 30, 2009.
Significant cash flow items in the three months ended September 30, 2009
included:
--
Payments of $383 million to purchase $376 million aggregate principal
amount of our senior notes due in 2011, 2012, 2014, 2015 and 2031;
--
Net proceeds of $334 million from the issuance of 345,000 shares of
7.0% mandatory convertible preferred stock;
--
Interest payments of $100 million, including $4 million of payments
that were accelerated and paid in the three months ended September 30,
2009 as a result of our repurchase of $308 million aggregate principal
amount of our senior notes due in 2015 and $20 million of interest
payments under an interest rate swap agreement that has the effect of
converting our 7a...oe% senior notes due 2013 from a fixed interest rate
paid semi-annually to a variable interest rate paid monthly based on
the one-month LIBOR plus a floating rate spread of approximately 5.46%;
--
$18 million received under the interest rate swap agreement discussed
above;
--
Cash distributions of $3 million received related to the Company's
investment in the Reserve Yield Plus Fund, which are classified as
investing activity cash flows;
--
Capital expenditures of $91 million;
--
$23 million in principal payments classified as operating cash
outflows from continuing operations related to our 2006 civil
settlement with the federal government;
--
$81 million in payments classified as operating cash outflows from
continuing operations related to our 2009 settlement of wage and hour
actions; and;
--
Income tax payments of $7 million.
Outlook for 2009
The Company is raising its 2009 outlook range for Adjusted EBITDA by $25
million to a new 2009 outlook range of $925 million to $975 million. The
outlook for net income attributable to common shareholders for 2009 is
in a range from $66 million to $130 million. A reconciliation of the
Company's outlook for 2009 Adjusted EBITDA to the outlook for net income
attributable to common shareholders of Tenet Healthcare Corporation for
the year ending Dec. 31, 2009 is provided in Table #3 below.
This favorable refinement to the 2009 outlook range reflects the
Company's stronger than anticipated results of operations in the third
quarter.
Management's Webcast Discussion of Third Quarter Results
Tenet management will discuss third quarter 2009 results on a webcast
scheduled for 10:00 AM (ET) on Nov. 3, 2009. This webcast may be
accessed through Tenet's website at www.tenethealth.com/investors.
A set of slides, which the Company will refer to on the call, will be
posted to the Company's website at approximately 7:30 AM (ET).
Tenet Healthcare Corporation is a health care services company whose
subsidiaries and affiliates own and operate acute care hospitals,
ambulatory surgery centers and diagnostic imaging centers. Tenet's
hospitals and related healthcare facilities are committed to providing
high quality care to patients in the communities they serve. For more
information, please visit www.tenethealth.com.
Some of the statements in this release may constitute forward-looking
statements. Such forward-looking statements are based on our current
expectations and could be affected by numerous factors and are subject
to various risks and uncertainties discussed in our filings with the
Securities and Exchange Commission, including our annual report on Form
10-K for the year ended Dec. 31, 2008, our quarterly reports on Form
10-Q, and periodic reports on Form 8-K. Do not rely on any
forward-looking statement, as we cannot predict or control many of the
factors that ultimately may affect our ability to achieve the results
estimated. We make no promise to update any forward-looking statement,
whether as a result of changes in underlying factors, new information,
future events or otherwise.
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
(Unaudited)
(Dollars in millions except per share amounts) Three Months Ended September 30,
2009 % 2008 % Change
Net operating revenues $ 2,262 100.0 % $ 2,140 100.0 % 5.7 %
Operating expenses:
Salaries, wages and benefits (954 ) (42.2 %) (943 ) (44.1 %) 1.2 %
Supplies (389 ) (17.2 %) (376 ) (17.6 %) 3.5 %
Provision for doubtful accounts (193 ) (8.5 %) (164 ) (7.7 %) 17.7 %
Other operating expenses, net (486 ) (21.5 %) (497 ) (23.1 %) (2.2 %)
Depreciation (85 ) (3.8 %) (84 ) (3.9 %) 1.2 %
Amortization (12 ) (0.5 %) (10 ) (0.5 %) 20.0 %
Impairment of long-lived assets and goodwill, and restructuring (7 ) (0.3 %) (1 ) --
charges
Litigation and investigation (costs) benefit, net of insurance (3 ) (0.1 %) 5 0.2 %
recoveries
Operating income 133 5.9 % 70 3.3 %
Interest expense (112 ) (106 )
Loss from early extinguishment of debt (16 ) --
Investment earnings 2 12
Net gain on sales of investments -- 140
Income from continuing operations, before income taxes 7 116
Income tax (expense) benefit (3 ) 4
Income from continuing operations, before discontinued operations 4 120
Discontinued operations:
Loss from operations (2 ) (33 )
Impairment of long-lived assets and goodwill, and restructuring (1 ) (21 )
charges
Net losses on sales of facilities -- (3 )
Litigation settlements, net of insurance recoveries -- 39
Income tax (expense) benefit (2 ) 4
Loss from discontinued operations (5 ) (14 )
Net income (loss) (1 ) 106
Less: Preferred stock dividends -- --
Less: Net income attributable to noncontrolling interests 2 2
Net income (loss) attributable to Tenet Healthcare Corporation $ (3 ) $ 104
common shareholders
Earnings (loss) per share attributable to Tenet Healthcare
Corporation common shareholders
Basic
Continuing operations $ -- $ 0.25
Discontinued operations (0.01 ) (0.03 )
$ (0.01 ) $ 0.22
Diluted
Continuing operations $ -- $ 0.25
Discontinued operations (0.01 ) (0.03 )
$ (0.01 ) $ 0.22
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 481,008 476,898
Diluted 498,084 480,789
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
(Unaudited)
(Dollars in millions except per share amounts) Nine Months Ended September 30,
2009 % 2008 % Change
Net operating revenues $ 6,753 100.0 % $ 6,408 100.0 % 5.4 %
Operating expenses:
Salaries, wages and benefits (2,868 ) (42.5 %) (2,822 ) (44.0 %) 1.6 %
Supplies (1,175 ) (17.4 %) (1,126 ) (17.6 %) 4.4 %
Provision for doubtful accounts (516 ) (7.6 %) (462 ) (7.2 %) 11.7 %
Other operating expenses, net (1,430 ) (21.2 %) (1,459 ) (22.8 %) (2.0 %)
Depreciation (257 ) (3.8 %) (249 ) (3.9 %) 3.2 %
Amortization (34 ) (0.5 %) (28 ) (0.4 %) 21.4 %
Impairment of long-lived assets and goodwill, and restructuring (13 ) (0.2 %) (4 ) (0.1 %)
charges
Litigation and investigation costs, net of insurance recoveries (13 ) (0.2 %) (45 ) (0.7 %)
Operating income 447 6.6 % 213 3.3 %
Interest expense (342 ) (312 )
Gain from early extinguishment of debt 97 --
Investment earnings (loss) (1 ) 21
Net gain on sales of investments 15 140
Income from continuing operations, before income taxes 216 62
Income tax (expense) benefit (12 ) 19
Income from continuing operations, before discontinued operations 204 81
Discontinued operations:
Loss from operations (14 ) (25 )
Impairment of long-lived assets and goodwill, and restructuring (16 ) (38 )
charges
Net gains (losses) on sales of facilities (2 ) 5
Litigation settlements, net of insurance recoveries -- 39
Income tax expense (4 ) (1 )
Loss from discontinued operations (36 ) (20 )
Net income 168 61
Less: Preferred stock dividends -- --
Less: Net income attributable to noncontrolling interests 8 3
Net income attributable to Tenet Healthcare Corporation common $ 160 $ 58
shareholders
Earnings (loss) per share attributable to Tenet Healthcare
Corporation common shareholders
Basic
Continuing operations $ 0.41 $ 0.16
Discontinued operations (0.08 ) (0.04 )
$ 0.33 $ 0.12
Diluted
Continuing operations $ 0.40 $ 0.16
Discontinued operations (0.07 ) (0.04 )
$ 0.33 $ 0.12
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 479,942 476,091
Diluted 489,688 478,662
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
September 30, December 31,
(Dollars in Millions) 2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 731 $ 507
Investments in Reserve Yield Plus Fund 3 14
Investments in marketable securities 16 2
Accounts receivable, less allowance for doubtful accounts 1,195 1,337
Inventories of supplies, at cost 153 161
Income tax receivable -- 6
Deferred income taxes 80 82
Assets held for sale 37 310
Other current assets 324 290
Total current assets 2,539 2,709
Investments and other assets 181 242
Property and equipment, at cost, less accumulated depreciation and 4,172 4,291
amortization
Goodwill 607 609
Other intangible assets, at cost, less accumulated amortization 377 323
Total assets $ 7,876 $ 8,174
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 2 $ 2
Accounts payable 638 686
Accrued compensation and benefits 380 414
Professional and general liability reserves 114 127
Accrued interest payable 123 125
Accrued legal settlement costs 96 168
Other current liabilities 419 427
Total current liabilities 1,772 1,949
Long-term debt, net of current portion 4,267 4,778
Professional and general liability reserves 486 536
Accrued legal settlement costs -- 72
Other long-term liabilities 562 591
Deferred income taxes 116 101
Total liabilities 7,203 8,027
Commitments and contingencies
Equity:
Shareholders' equity:
Preferred stock 334 --
Common stock 26 26
Additional paid-in capital 4,464 4,445
Accumulated other comprehensive loss (27 ) (37 )
Accumulated deficit (2,692 ) (2,852 )
Less common stock in treasury, at cost (1,479 ) (1,479 )
Total shareholders' equity 626 103
Noncontrolling interests 47 44
Total equity 673 147
Total liabilities and equity $ 7,876 $ 8,174
TENET HEALTHCARE CORPORATION
CONSOLIDATED CASH FLOW DATA
(Unaudited)
(Dollars in Millions) Nine Months Ended
September 30,
2009 2008
Net income $ 168 $ 61
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 291 277
Provision for doubtful accounts 516 462
Net gain on sales of investments (15 ) (140 )
Deferred income tax expense 17 11
Stock-based compensation expense 18 27
Impairment of long-lived assets and goodwill, and restructuring 13 4
charges
Litigation and investigation costs, net of insurance recoveries 13 45
Net gain from early extinguishment of debt (97 ) --
Fair market value adjustments related to interest rate swap and (1 ) --
LIBOR cap agreements
Proceeds from interest rate swap agreement 18 --
Pretax loss from discontinued operations 32 19
Other items, net (2 ) (3 )
Changes in cash from changes in operating assets and liabilities:
Accounts receivable (498 ) (478 )
Inventories and other current assets (25 ) 6
Income taxes 13 (32 )
Accounts payable, accrued expenses and other current liabilities (37 ) (45 )
Other long-term liabilities (6 ) (27 )
Payments against reserves for restructuring charges and (165 ) (79 )
litigation costs
Net cash provided by operating activities from discontinued 31 33
operations, excluding income taxes
Net cash provided by operating activities 284 141
Cash flows from investing activities:
Purchases of property and equipment--Continuing operations (216 ) (332 )
Purchases of property and equipment--Discontinued operations (1 ) (16 )
Construction of new and replacement hospitals (47 ) (65 )
Purchase of business -- (92 )
Proceeds from sales of facilities and other assets - discontinued 221 160
operations
Proceeds from sales of marketable securities, long-term investments 55 192
and other assets
Proceeds from hospital authority bonds 49 8
Purchases of marketable securities (17 ) (17 )
Distributions received from (reclassification of) investments in 11 (48 )
Reserve Yield Plus Fund
Proceeds from cash surrender value or basis reduction of insurance -- 4
policies
Other items, net -- 3
Net cash provided by (used in) investing activities 55 (203 )
Cash flows from financing activities:
Repayments of borrowings (1,285 ) (1 )
Proceeds from borrowings 885 1
Deferred debt issuance costs (47 ) (3 )
Proceeds from issuance of mandatory convertible preferred stock 334 --
Cash dividends on preferred stock -- --
Contributions from noncontrolling interests -- 7
Distributions paid to noncontrolling interests (5 ) (2 )
Other items, net 3 --
Net cash provided by (used in) financing activities (115 ) 2
Net increase (decrease) in cash and cash equivalents 224 (60 )
Cash and cash equivalents at beginning of period 507 572
Cash and cash equivalents at end of period $ 731 $ 512
Supplemental disclosures:
Interest paid, net of capitalized interest $ (340 ) $ (321 )
Income tax refunds (payments), net $ 15 $ (3 )
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING SAME HOSPITALS
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended September 30, Nine Months Ended September 30,
per visit amounts)
2009 2008 Change 2009 2008 Change
Net inpatient revenues $ 1,452 $ 1,399 3.8 % $ 4,380 $ 4,254 3.0 %
Net outpatient revenues $ 699 $ 649 7.7 % $ 2,050 $ 1,914 7.1 %
Number of general hospitals (at end of period) 48 48 -- * 48 48 -- *
Licensed beds (at end of period) 13,309 13,256 0.4 % 13,309 13,256 0.4 %
Average licensed beds 13,309 13,261 0.4 % 13,303 13,276 0.2 %
Utilization of licensed beds 50.4 % 51.3 % (0.9 %) * 52.5 % 53.8 % (1.3 %) *
Patient days 616,850 625,702 (1.4 %) 1,908,053 1,955,366 (2.4 %)
Adjusted patient days 926,344 916,104 1.1 % 2,828,112 2,815,525 0.4 %
Net inpatient revenue per patient day $ 2,354 $ 2,236 5.3 % $ 2,296 $ 2,176 5.5 %
Admissions 128,652 128,525 0.1 % 391,362 393,378 (0.5 %)
Adjusted patient admissions 194,568 189,536 2.7 % 584,011 570,619 2.3 %
Net inpatient revenue per admission $ 11,286 $ 10,885 3.7 % $ 11,192 $ 10,814 3.5 %
Average length of stay (days) 4.8 4.9 (0.1 ) * 4.9 5.0 (0.1 ) *
Surgeries 91,734 89,776 2.2 % 272,385 266,719 2.1 %
Net outpatient revenue per visit $ 711 $ 692 2.7 % $ 701 $ 676 3.7 %
Outpatient visits 983,089 937,998 4.8 % 2,924,685 2,829,706 3.4 %
Sources of net patient revenue
Medicare 24.4 % 25.1 % (0.7 %) * 25.2 % 25.5 % (0.3 %) *
Medicaid 8.5 % 8.6 % (0.1 %) * 8.3 % 8.5 % (0.2 %) *
Managed care governmental 14.8 % 13.2 % 1.6 % * 14.8 % 13.2 % 1.6 % *
Managed care commercial 41.2 % 41.5 % (0.3 %) * 41.2 % 41.2 % -- *
Indemnity, self-pay and other 11.1 % 11.6 % (0.5 %) * 10.5 % 11.6 % (1.1 %) *
* This change is the difference between the 2009 and 2008 amounts
shown
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended September 30, Nine Months Ended September 30,
per visit amounts)
2009 2008 Change 2009 2008 Change
Net inpatient revenues $ 1,466 $ 1,405 4.3 % $ 4,421 $ 4,261 3.8 %
Net outpatient revenues $ 709 $ 657 7.9 % $ 2,079 $ 1,924 8.1 %
Number of general hospitals (at end of period) 49 49 -- * 49 49 -- *
Licensed beds (at end of period) 13,419 13,366 0.4 % 13,419 13,366 0.4 %
Average licensed beds 13,419 13,371 0.4 % 13,413 13,337 0.6 %
Utilization of licensed beds 50.4 % 51.0 % (0.6 %) * 52.6 % 53.6 % (1.0 %) *
Patient days 622,427 627,942 (0.9 %) 1,924,777 1,958,219 (1.7 %)
Adjusted patient days 935,375 920,430 1.6 % 2,854,688 2,821,176 1.2 %
Net inpatient revenue per patient day $ 2,355 $ 2,237 5.3 % $ 2,297 $ 2,176 5.6 %
Admissions 130,258 129,205 0.8 % 395,901 394,276 0.4 %
Adjusted patient admissions 197,164 190,843 3.3 % 591,223 572,398 3.3 %
Net inpatient revenue per admission $ 11,255 $ 10,874 3.5 % $ 11,167 $ 10,807 3.3 %
Average length of stay (days) 4.8 4.9 (0.1 ) * 4.9 5.0 (0.1 ) *
Surgeries 92,437 90,146 2.5 % 274,243 267,199 2.6 %
Net outpatient revenue per visit $ 712 $ 695 2.4 % $ 702 $ 678 3.5 %
Outpatient visits 995,968 945,569 5.3 % 2,962,755 2,839,708 4.3 %
Sources of net patient revenue
Medicare 24.4 % 25.1 % (0.7 %) * 25.1 % 25.5 % (0.4 %) *
Medicaid 8.5 % 8.6 % (0.1 %) * 8.3 % 8.5 % (0.2 %) *
Managed care governmental 14.8 % 13.3 % 1.5 % * 14.8 % 13.1 % 1.7 % *
Managed care commercial 41.2 % 41.6 % (0.4 %) * 41.2 % 41.2 % -- % *
Indemnity, self-pay and other 11.1 % 11.4 % (0.3 %) * 10.6 % 11.7 % (1.1 %) *
* This change is the difference between the 2009 and 2008 amounts
shown
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
Fiscal 2009 by Calendar Quarter
(Unaudited)
(Dollars in millions except per share amounts) Three Months Ended Nine
Months
Ended
3/31/09 6/30/09 9/30/09 9/30/09
Net operating revenues $ 2,262 $ 2,229 $ 2,262 $ 6,753
Operating expenses:
Salaries, wages and benefits (965 ) (949 ) (954 ) (2,868 )
Supplies (391 ) (395 ) (389 ) (1,175 )
Provision for doubtful accounts (156 ) (167 ) (193 ) (516 )
Other operating expenses, net (472 ) (472 ) (486 ) (1,430 )
Depreciation (85 ) (87 ) (85 ) (257 )
Amortization (11 ) (11 ) (12 ) (34 )
Impairment of long-lived assets and goodwill, and restructuring (5 ) (1 ) (7 ) (13 )
charges
Litigation and investigation costs (1 ) (9 ) (3 ) (13 )
Operating income 176 138 133 447
Interest expense (110 ) (120 ) (112 ) (342 )
Gain (loss) from early extinguishment of debt 134 (21 ) (16 ) 97
Investment earnings (loss) 2 (5 ) 2 (1 )
Net gain on sales of investments -- 15 -- 15
Income from continuing operations, before income taxes 202 7 7 216
Income tax expense (5 ) (4 ) (3 ) (12 )
Income from continuing operations, before discontinued operations 197 3 4 204
Discontinued operations:
Loss from operations (1 ) (11 ) (2 ) (14 )
Impairment of long-lived assets and goodwill, and restructuring (9 ) (6 ) (1 ) (16 )
charges
Net losses on sales of facilities (2 ) -- -- (2 )
Income tax expense (2 ) -- (2 ) (4 )
Loss from discontinued operations (14 ) (17 ) (5 ) (36 )
Net income (loss) 183 (14 ) (1 ) 168
Less: Preferred stock dividends -- -- -- --
Less: Net income attributable to noncontrolling interests 5 1 2 8
Net income (loss) attributable to Tenet Healthcare Corporation $ 178 $ (15 ) $ (3 ) $ 160
common shareholders
Diluted earnings (loss) per share attributable to Tenet
Healthcare Corporation common shareholders
Continuing operations $ 0.40 $ 0.01 $ -- $ 0.40
Discontinued operations (0.03 ) (0.04 ) (0.01 ) (0.07 )
$ 0.37 $ (0.03 ) $ (0.01 ) $ 0.33
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 478,372 480,447 481,008 479,942
Diluted 479,512 488,244 498,084 489,688
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING SAME HOSPITALS
Fiscal 2009 by Calendar Quarter
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended Nine
per visit amounts) Months
Ended
3/31/09 6/30/09 9/30/09 9/30/09
Net inpatient revenues $ 1,501 $ 1,427 $ 1,452 $ 4,380
Net outpatient revenues $ 659 $ 692 $ 699 $ 2,050
Number of general hospitals (at end of period) 48 48 48 48
Licensed beds (at end of period) 13,305 13,309 13,309 13,309
Average licensed beds 13,299 13,301 13,309 13,303
Utilization of licensed beds 55.7 % 51.6 % 50.4 % 52.5 %
Patient days 667,078 624,125 616,850 1,908,053
Adjusted patient days 970,266 931,502 926,344 2,828,112
Net inpatient revenue per patient day $ 2,250 $ 2,286 $ 2,354 $ 2,296
Admissions 133,892 128,818 128,652 391,362
Adjusted patient admissions 195,871 193,572 194,568 584,011
Net inpatient revenue per admission $ 11,211 $ 11,078 $ 11,286 $ 11,192
Average length of stay (days) 5.0 4.9 4.8 4.9
Surgeries 89,076 91,575 91,734 272,385
Net outpatient revenue per visit $ 688 $ 704 $ 711 $ 701
Outpatient visits 958,501 983,095 983,089 2,924,685
Sources of net patient revenue
Medicare 27.0 % 24.0 % 24.4 % 25.2 %
Medicaid 8.0 % 8.4 % 8.5 % 8.3 %
Managed care governmental 14.8 % 14.8 % 14.8 % 14.8 %
Managed care commercial 40.6 % 41.8 % 41.2 % 41.2 %
Indemnity, self-pay and other 9.6 % 11.0 % 11.1 % 10.5 %
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS
Fiscal 2009 by Calendar Quarter
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended Nine
per visit amounts) Months
Ended
3/31/09 6/30/09 9/30/09 9/30/09
Net inpatient revenues $ 1,514 $ 1,441 $ 1,466 $ 4,421
Net outpatient revenues $ 668 $ 702 $ 709 $ 2,079
Number of general hospitals (at end of period) 49 49 49 49
Licensed beds (at end of period) 13,415 13,419 13,419 13,419
Average licensed beds 13,409 13,411 13,419 13,413
Utilization of licensed beds 55.7 % 51.6 % 50.4 % 52.6 %
Patient days 672,636 629,714 622,427 1,924,777
Adjusted patient days 978,841 940,472 935,375 2,854,688
Net inpatient revenue per patient day $ 2,251 $ 2,288 $ 2,355 $ 2,297
Admissions 135,335 130,308 130,258 395,901
Adjusted patient admissions 198,097 195,962 197,164 591,223
Net inpatient revenue per admission $ 11,187 $ 11,058 $ 11,255 $ 11,167
Average length of stay (days) 5.0 4.8 4.8 4.9
Surgeries 89,640 92,166 92,437 274,243
Net outpatient revenue per visit $ 688 $ 704 $ 712 $ 702
Outpatient visits 970,319 996,468 995,968 2,962,755
Sources of net patient revenue
Medicare 26.9 % 24.0 % 24.4 % 25.1 %
Medicaid 7.9 % 8.3 % 8.5 % 8.3 %
Managed care governmental 14.8 % 14.9 % 14.8 % 14.8 %
Managed care commercial 40.6 % 41.9 % 41.2 % 41.2 %
Indemnity, self-pay and other 9.8 % 10.9 % 11.1 % 10.6 %
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
Fiscal 2008 by Calendar Quarter
(Unaudited)
(Dollars in millions except per share amounts) Three Months Ended Year Ended
3/31/08 6/30/08 9/30/08 12/31/08 12/31/08
Net operating revenues $ 2,156 $ 2,112 $ 2,140 $ 2,177 $ 8,585
Operating expenses:
Salaries, wages and benefits (945 ) (934 ) (943 ) (957 ) (3,779 )
Supplies (374 ) (376 ) (376 ) (385 ) (1,511 )
Provision for doubtful accounts (145 ) (153 ) (164 ) (166 ) (628 )
Other operating expenses, net (476 ) (486 ) (497 ) (469 ) (1,928 )
Depreciation (81 ) (84 ) (84 ) (84 ) (333 )
Amortization (9 ) (9 ) (10 ) (10 ) (38 )
Impairment of long-lived assets and goodwill, and restructuring (1 ) (2 ) (1 ) (12 ) (16 )
charges
Litigation and investigation (costs) benefit, net of insurance (47 ) (3 ) 5 4 (41 )
recoveries
Operating income 78 65 70 98 311
Interest expense (104 ) (102 ) (106 ) (106 ) (418 )
Investment earnings 5 4 12 1 22
Net gain (loss) on sales of investments -- -- 140 (1 ) 139
Income (loss) from continuing operations, before income taxes (21 ) (33 ) 116 (8 ) 54
Income tax (expense) benefit (1 ) 16 4 6 25
Income (loss) from continuing operations, before discontinued (22 ) (17 ) 120 (2 ) 79
operations
Discontinued operations:
Income (loss) from operations 4 4 (33 ) 23 (2 )
Impairment of long-lived assets and goodwill, and restructuring (10 ) (7 ) (21 ) (57 ) (95 )
charges
Net gains (losses) on sales of facilities -- 8 (3 ) 1 6
Litigation settlements, net of insurance recoveries -- -- 39 -- 39
Income tax (expense) benefit (2 ) (3 ) 4 6 5
Income (loss) from discontinued operations (8 ) 2 (14 ) (27 ) (47 )
Net income (loss) (30 ) (15 ) 106 (29 ) 32
Less: Net income attributable to noncontrolling interests 1 -- 2 4 7
Net income (loss) attributable to Tenet Healthcare Corporation $ (31 ) $ (15 ) $ 104 $ (33 ) $ 25
common shareholders
Diluted earnings (loss) per share attributable to Tenet
Healthcare Corporation common shareholders:
Continuing operations $ (0.05 ) $ (0.03 ) $ 0.25 $ (0.01 ) $ 0.15
Discontinued operations (0.01 ) -- (0.03 ) (0.06 ) (0.10 )
$ (0.06 ) $ (0.03 ) $ 0.22 $ (0.07 ) $ 0.05
Weighted average shares and dilutive securities outstanding (in
thousands):
Basic 475,066 476,308 476,898 477,126 476,349
Diluted 475,066 476,308 480,789 477,126 478,606
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING SAME HOSPITALS
Fiscal 2008 by Calendar Quarter
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended Year Ended
per visit amounts)
3/31/08 6/30/08 9/30/08 12/31/08 12/31/08
Net inpatient revenues $ 1,464 $ 1,391 $ 1,399 $ 1,431 $ 5,685
Net outpatient revenues $ 620 $ 645 $ 649 $ 641 $ 2,555
Number of general hospitals (at end of period) 48 48 48 48 48
Licensed beds (at end of period) 13,273 13,270 13,256 13,287 13,287
Average licensed beds 13,292 13,272 13,261 13,272 13,274
Utilization of licensed beds 57.0 % 53.1 % 51.3 % 51.7 % 53.2 %
Patient days 688,852 640,812 625,702 630,821 2,586,187
Adjusted patient days 971,476 927,945 916,104 918,560 3,734,085
Net inpatient revenue per patient day $ 2,125 $ 2,171 $ 2,236 $ 2,268 $ 2,198
Admissions 135,513 129,340 128,525 129,235 522,613
Adjusted patient admissions 192,387 188,696 189,536 189,357 759,976
Net inpatient revenue per admission $ 10,803 $ 10,755 $ 10,885 $ 11,073 $ 10,878
Average length of stay (days) 5.1 5.0 4.9 4.9 4.9
Surgeries 86,690 90,253 89,776 89,744 356,463
Net outpatient revenue per visit $ 652 $ 686 $ 692 $ 694 $ 681
Outpatient visits 951,195 940,513 937,998 923,317 3,753,023
Sources of net patient revenue
Medicare 26.3 % 25.1 % 25.1 % 25.6 % 25.5 %
Medicaid 8.4 % 8.4 % 8.6 % 8.2 % 8.4 %
Managed care governmental 13.2 % 13.0 % 13.2 % 13.9 % 13.3 %
Managed care commercial 40.2 % 41.9 % 41.5 % 41.9 % 41.4 %
Indemnity, self-pay and other 11.9 % 11.6 % 11.6 % 10.4 % 11.4 %
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS - CONTINUING TOTAL HOSPITALS
Fiscal 2008 by Calendar Quarter
(Unaudited)
(Dollars in millions except per patient day, per admission and Three Months Ended Year Ended
per visit amounts)
3/31/08 6/30/08 9/30/08 12/31/08 12/31/08
Net inpatient revenues $ 1,464 $ 1,392 $ 1,405 $ 1,439 $ 5,700
Net outpatient revenues $ 620 $ 647 $ 657 $ 648 $ 2,572
Number of general hospitals (at end of period) 48 49 49 49 49
Licensed beds (at end of period) 13,273 13,380 13,366 13,397 13,397
Average licensed beds 13,292 13,345 13,371 13,382 13,347
Utilization of licensed beds 57.0 % 52.8 % 51.0 % 51.5 % 53.1 %
Patient days 688,852 641,425 627,942 634,421 2,592,640
Adjusted patient days 971,476 929,270 920,430 924,595 3,745,771
Net inpatient revenue per patient day $ 2,125 $ 2,170 $ 2,237 $ 2,268 $ 2,199
Admissions 135,513 129,558 129,205 130,265 524,541
Adjusted patient admissions 192,387 189,168 190,843 191,069 763,467
Net inpatient revenue per admission $ 10,803 $ 10,744 $ 10,874 $ 11,047 $ 10,867
Average length of stay (days) 5.1 5.0 4.9 4.9 4.9
Surgeries 86,690 90,363 90,146 90,166 357,365
Net outpatient revenue per visit $ 652 $ 686 $ 695 $ 695 $ 682
Outpatient visits 951,195 942,944 945,569 932,678 3,772,386
Sources of net patient revenue
Medicare 26.3 % 25.0 % 25.1 % 25.5 % 25.5 %
Medicaid 8.4 % 8.4 % 8.6 % 8.2 % 8.4 %
Managed care governmental 13.3 % 13.0 % 13.3 % 13.9 % 13.4 %
Managed care commercial 40.2 % 41.9 % 41.6 % 41.9 % 41.4 %
Indemnity, self-pay and other 11.8 % 11.7 % 11.4 % 10.5 % 11.3 %
(1) Reconciliation of Adjusted EBITDA
Adjusted EBITDA, a non-GAAP term, is defined by the Company as net
income (loss) attributable to Tenet Healthcare Corporation common
shareholders before (1) cumulative effect of changes in accounting
principle, net of tax, (2) net income attributable to noncontrolling
interests, (3) preferred stock dividends, (4) income (loss) from
discontinued operations, net of tax, (5) income tax (expense) benefit,
(6) net gain (loss) on sales of investments, (7) investment earnings
(loss), (8) gain (loss) from early extinguishment of debt, (9) interest
expense, (10) litigation and investigation (costs) benefit, net of
insurance recoveries, (11) hurricane insurance recoveries, net of costs,
(12) impairment of long-lived assets and goodwill and restructuring
charges, net of insurance recoveries, (13) amortization, and (14)
depreciation. 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. Adjusted EBITDA is not a measure of liquidity,
but is a measure of operating performance that management uses in its
business as an alternative to net income (loss) attributable to Tenet
Healthcare Corporation common shareholders. Because Adjusted EBITDA
excludes many items that are included in our financial statements, it
does not provide a complete measure of our operating performance.
Accordingly, investors are encouraged to use GAAP measures when
evaluating the Company's financial performance.
The reconciliation of net income (loss) attributable to Tenet Healthcare
Corporation common shareholders, the most comparable GAAP term, to
Adjusted EBITDA, is set forth in the first table below for the three and
nine months ended September 30, 2009 and 2008.
(2) Adjusted Free Cash Flow
Adjusted Free Cash Flow, a non-GAAP term, is defined by the Company as
cash provided by (used in) operating activities less income tax refunds
(payments), payments against reserves for restructuring charges and
litigation costs and settlements, operating cash flows from discontinued
operations, capital expenditures in continuing operations, and new
hospital construction expenditures. The Company believes the use of
Adjusted Free Cash Flow is meaningful as the use of this financial
measure provides the Company and the users of its financial statements
with supplemental information about the impact on the Company's cash
flows from the items specified above. 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 cash
flows, some of which are recurring. The Company uses this information in
its analysis of its cash flows excluding items that it does not consider
relevant to the liquidity of its hospitals in continuing operations.
Adjusted Free Cash Flow is a measure of liquidity that management uses
in its business as an alternative to net cash provided by (used in)
operating activities. Because Adjusted Free Cash Flow excludes many
items that are included in our financial statements, it does not provide
a complete measure of our liquidity. Accordingly, investors are
encouraged to use GAAP measures when evaluating the Company's financial
performance or liquidity. The reconciliation of net cash provided by
(used in) operating activities, the most comparable GAAP term, to
Adjusted Free Cash Flow is set forth in the second table below for the
three and nine months ended September 30, 2009 and 2008.
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #1 - Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to Tenet Healthcare Corporation Common Shareholders
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
(Dollars in millions) 2009 2008 2009 2008
Net income (loss) attributable to Tenet Healthcare Corporation $ (3 ) $ 104 $ 160 $ 58
common shareholders
Less: Net income attributable to noncontrolling interests (2 ) (2 ) (8 ) (3 )
Preferred stock dividends -- -- -- --
Income (loss) from discontinued operations, net of tax (5 ) (14 ) (36 ) (20 )
Income (loss) from continuing operations 4 120 204 81
Income tax (expense) benefit (3 ) 4 (12 ) 19
Investment earnings (loss) 2 12 (1 ) 21
Gain (loss) from early extinguishment of debt (16 ) -- 97 --
Net gain on sales of investments -- 140 15 140
Interest expense (112 ) (106 ) (342 ) (312 )
Operating income 133 70 447 213
Litigation and investigation (costs) benefit, net of insurance (3 ) 5 (13 ) (45 )
recoveries
Impairment of long-lived assets and goodwill, and restructuring (7 ) (1 ) (13 ) (4 )
charges
Amortization (12 ) (10 ) (34 ) (28 )
Depreciation (85 ) (84 ) (257 ) (249 )
Adjusted EBITDA $ 240 $ 160 $ 764 $ 539
Less: Adjusted EBITDA of hospital without full calendar year of 4 (2 ) 12 (10 )
operating results
Same-hospital Adjusted EBITDA $ 236 $ 162 $ 752 $ 549
Net operating revenues $ 2,262 $ 2,140 $ 6,753 $ 6,408
Less: Revenues of hospital without full calendar year of operating 24 13 70 15
results
Same-hospital net operating revenues $ 2,238 $ 2,127 $ 6,683 $ 6,393
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA 10.6 % 7.5 % 11.3 % 8.4 %
margin)
Adjusted same-hospital EBITDA as % of same-hospital net 10.5 % 7.6 % 11.3 % 8.6 %
operating revenues (Adjusted same-hospital EBITDA margin)
Additional Supplemental Non-GAAP Disclosures
Table #2 - Reconciliation of Adjusted Free Cash Flow
(Unaudited)
(Dollars in millions) Three Months Nine Months
Ended Ended
September 30, September 30,
2009 2008 2009 2008
Net cash provided by operating activities $ 120 $ 151 $ 284 $ 141
Less:
Income tax refunds (payments), net (7 ) -- 15 (3 )
Payments against reserves for restructuring charges and litigation (109 ) (23 ) (165 ) (79 )
costs and settlements
Net cash provided by operating activities from discontinued 3 29 31 33
operations
Adjusted net cash provided by operating activities - continuing 233 145 403 190
operations
Purchases of property and equipment - continuing operations (78 ) (100 ) (216 ) (332 )
Construction of new and replacement hospitals (13 ) (9 ) (47 ) (65 )
Adjusted Free Cash Flow - continuing operations $ 142 $ 36 $ 140 $ (207 )
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 Year Ending December 31, 2009
(Unaudited)
(Dollars in millions) Low High
Net income attributable to Tenet Healthcare Corporation common $ 66 $ 130
shareholders
Less:
Net income attributable to noncontrolling interests (8 ) (13 )
Preferred stock dividends (6 ) (6 )
Loss from discontinued operations, net of tax (60 ) (40 )
Income from continuing operations 140 189
Income tax (expense) benefit 5 (5 )
Income from continuing operations, before income taxes 135 194
Net gain on sales of investments (a) 15 15
Interest expense, net (460 ) (445 )
Net gain from early extinguishment of debt (a) 97 97
Operating income 483 527
Litigation and investigation costs (25 ) (15 )
Impairment of long-lived assets and goodwill, and restructuring (17 ) (13 )
charges
Depreciation and amortization (400 ) (420 )
Adjusted EBITDA $ 925 $ 975
Net operating revenues $ 9,000 $ 9,100
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA 10.3 % 10.7 %
margin)
(a) Management is not providing a forecast of these items
for the remainder of 2009.
Additional Supplemental Non-GAAP Disclosures
Table #4 - Reconciliation of Outlook Adjusted EBITDA to Outlook
Normalized Net Income Attributable to Tenet Healthcare Corporation
Common Shareholders for Year Ending December 31, 2009
(Unaudited)
(Dollars in millions except per share amounts) Low High
Adjusted EBITDA (from Table # 3, above) $ 925 $ 975
Depreciation and amortization (400 ) (420 )
Interest expense, net (460 ) (445 )
Normalized income from continuing operations before income taxes 65 110
Normalized income tax expense (a) (24 ) (41 )
Normalized income from continuing operations 41 69
Preferred stock dividends (6 ) (6 )
Net income attributable to noncontrolling interests (8 ) (13 )
Normalized net income attributable to Tenet Healthcare Corporation $ 27 $ 50
common shareholders (a)
Weighted average shares outstanding (in millions) 492 492
Normalized earnings per share - continuing operations (a) $ 0.05 $ 0.10
(a) Uses normalized tax rate of 37.1 percent.
Table #5 - Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2009
(Unaudited)
(Dollars in millions)
Low High
Net cash provided by operating activities $ 253 $ 343
Less:
Income tax refunds, net 15 25
Payments against reserves for restructuring charges and litigation (195 ) (185 )
costs
Net cash provided by operating activities from discontinued 28 38
operations
Adjusted net cash provided by operating activities - continuing 405 465
operations
Purchases of property and equipment - continuing operations (345 ) (310 )
Construction of new and replacement hospitals (80 ) (90 )
Adjusted Free Cash Flow - continuing operations $ (20 ) $ 65
SOURCE: Tenet Healthcare Corporation
Tenet Healthcare Corporation
Media:
Rick Black, 469-893-2647
Rick.Black@tenethealth.com
or
Investors:
Thomas Rice, 469-893-2522
Thomas.Rice@tenethealth.com
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