Tenet Reports Third Quarter 2023 Results; Raises 2023 Outlook

  • Net income from continuing operations available to common shareholders in third quarter 2023 was $101 million, or $0.94 per diluted share
  • Adjusted diluted earnings per share from continuing operations1 was $1.44 in third quarter 2023
  • Consolidated Adjusted EBITDA1 in third quarter 2023 was $854 million, including $3 million of grant income
  • Third quarter 2023 Ambulatory Care Adjusted EBITDA of $370 million increased 16.0% over third quarter 2022
  • Same-facility system-wide ambulatory surgical cases increased 4.1% versus third quarter 2022; Same-hospital admissions increased 0.6% versus third quarter 2022, with non-Covid admissions up 4.5%
  • Net cash provided by operating activities was $503 million in third quarter 2023 and free cash flow was $327 million
  • FY 2023 Adjusted EBITDA Outlook increased, now expected to be in the range of $3.365 billion to $3.465 billion

Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended September 30, 2023.

"Sustained same facility revenue growth and effective cost controls drove strong performance in both our ambulatory care and hospital segments in the third quarter," said Saum Sutaria, M.D., Chairman and Chief Executive Officer of Tenet. "Our steadfast commitment to operating discipline and strategic focus fortify our care capabilities and position us for future growth."

Tenet’s results for third quarter 2023 versus third quarter 2022 are as follows:

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in millions, except per share results)

2023

2022

2023

2022

Net operating revenues

$5,066

$4,801

$15,169

$14,184

Net income available to Tenet common shareholders from continuing operations

$101

$131

$367

$308

Net income available to Tenet common shareholders from continuing operations per diluted share

$0.94

$1.16

$3.41

$2.81

Adjusted EBITDA1 excluding grant income

$851

$787

$2,515

$2,418

Adjusted EBITDA1

$854

$841

$2,529

$2,572

Adjusted diluted earnings per share from continuing operations1

$1.44

$1.42

$4.30

$4.80

  • Net income from continuing operations available to the Company’s common shareholders in the third quarter 2023 was $101 million, or $0.94 per diluted share, versus $131 million, or $1.16 per diluted share, in third quarter 2022.
  • Third quarter 2023 included COVID-related stimulus grant income of $3 million pre-tax ($2 million after-tax, or $0.02 per diluted share) versus $54 million pre-tax ($41 million after-tax, or $0.37 per diluted share) in third quarter 2022.
  • The Company recognized additional income tax expense for the three months ended September 30, 2023 of approximately $16 million, or $0.15 per diluted share, and $40 million, or $0.36 per diluted share for the three months ended September 30, 2022, as a result of interest expense limitation tax regulations.
  • Adjusted EBITDA1 excluding grant income in third quarter 2023 was $851 million compared to $787 million in third quarter 2022, reflecting strong volume growth in our Ambulatory Care and Hospital Operations segments, improved contract labor costs, and the recognition of $7 million of income from cybersecurity insurance proceeds. The Company believes this strong volume growth is due in part to patient care deferred as a result of the pandemic. Third quarter 2022 results included a $45 million gain on the sale of a substantial portion of the Company's interest in assets of a group purchasing organization.

Balance Sheet and Cash Flows

  • Cash flows provided by operating activities for the nine months ended September 30, 2023 were $1.550 billion versus $662 million for the nine months ended September 30, 2022 (or $1.542 billion excluding $880 million of repayments associated with Medicare advances).
  • The Company produced free cash flow1 of $1.007 billion for the nine months ended September 30, 2023 versus $190 million for the nine months ended September 30, 2022 (or $1.070 billion excluding the repayment of Medicare advances).
  • In the nine months ended September 30, 2023, the Company repurchased 1,485,983 shares of common stock for $90 million.
  • The Company’s ratio of net debt to Adjusted EBITDA1 was 4.08x at September 30, 2023 compared to 4.14x at June 30, 2023 and 4.10x at December 31, 2022.
  • The Company had no outstanding borrowings on its $1.5 billion line of credit as of September 30, 2023.

Ambulatory Care (Ambulatory) Segment

Tenet’s Ambulatory business segment is comprised of the operations of United Surgical Partners International (USPI). As of September 30, 2023, USPI had interests in 457 ambulatory surgery centers (316 consolidated) and 24 surgical hospitals (eight consolidated) in 35 states. For all periods prior to June 30, 2022, the Company owned 95% of the voting stock of USPI and now owns 100%.

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

Ambulatory segment results ($ in millions)

2023

2022

2023

2022

Revenues

 

 

 

 

Net operating revenues

$941

$806

$2,788

$2,315

Same-facility system-wide net patient service revenues2

$1,703

$1,578

$5,055

$4,637

Volume Changes versus the Prior-Year Period

 

 

 

 

Same-facility system-wide surgical cases2

4.1%

—%

6.2%

2.4%

Same-facility system-wide surgical cases on same-business day basis2

5.8%

—%

6.8%

1.9%

Adjusted EBITDA, Margins and Noncontrolling Interest (NCI)

 

 

 

 

Adjusted EBITDA excluding grant income

$370

$319

$1,079

$916

Adjusted EBITDA

$370

$319

$1,080

$920

Adjusted EBITDA margin excluding grant income

39.3%

39.6%

38.7%

39.6%

Adjusted EBITDA margin

39.3%

39.6%

38.7%

39.7%

Adjusted EBITDA less facility-level NCI excluding grant income

$233

$208

$678

$603

Adjusted EBITDA less facility-level NCI

$233

$208

$678

$605

Adjusted EBITDA less total NCI excluding grant income

$233

$208

$678

$594

Adjusted EBITDA less total NCI

$233

$208

$678

$596

  • Third quarter 2023 net operating revenues increased 16.7% compared to third quarter 2022 driven by strong same-facility net surgical case growth, acquisitions and opening of de novo facilities, service line growth and improved pricing yield.
  • Surgical business same-facility system-wide net patient service revenues increased 7.9% in third quarter 2023 compared to third quarter 2022, with cases up 4.1% and net revenue per case up 3.7%.
  • Third quarter 2023 Adjusted EBITDA increased 16.0% relative to third quarter 2022, due to strong same-facility system-wide surgical case growth, contributions from acquisitions and de novo facilities, and improved pricing yield.

Hospital Operations and Other (Hospital) Segment

Tenet’s Hospital business segment is primarily comprised of acute care and specialty hospitals, imaging centers, ancillary outpatient facilities, micro-hospitals and physician practices.

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

Hospital segment results ($ in millions)

2023

2022

2023

2022

Revenues

 

 

 

 

Net operating revenues (prior to inter-segment eliminations)

$3,919

$3,778

$11,740

$11,221

Grant income

$3

$54

$13

$150

Same-hospital net patient service revenues3

$3,575

$3,453

$10,711

$10,302

Same-Hospital Volume Changes versus the Prior-Year Period

 

 

 

 

Admissions

0.6%

(5.3)%

2.6%

(6.1)%

Adjusted admissions4

0.4%

(0.7)%

3.3%

(2.5)%

Outpatient visits (including outpatient ER visits)

(2.0)%

(6.9)%

(1.0)%

(5.5)%

Emergency Room visits (inpatient and outpatient)

(0.9)%

(4.1)%

1.3%

3.8%

Hospital surgeries

(0.7)%

(3.6)%

0.5%

(4.1)%

Adjusted EBITDA

 

 

 

 

Adjusted EBITDA excluding grant income

$398

$378

$1,181

$1,227

Adjusted EBITDA

$401

$432

$1,194

$1,377

Adjusted EBITDA margin excluding grant income

10.2%

10.0%

10.1%

10.9%

Adjusted EBITDA margin

10.2%

11.4%

10.2%

12.3%

  • Third quarter 2023 net operating revenues increased 3.7% from third quarter 2022 primarily due to increased adjusted admissions and improved pricing yield.
  • Same-hospital net patient service revenue per adjusted admission increased 3.2% year-over-year for third quarter 2023 primarily due to improved pricing yield and our focus on growing higher acuity services. COVID admissions were 2% of total admissions in the third quarter 2023 versus 6% in the third quarter 2022. Third quarter non-COVID inpatient admissions increased 4.5% over third quarter 2022.
  • Adjusted EBITDA excluding grant income in third quarter 2023 was $398 million compared to $378 million in third quarter 2022, reflecting strong non-COVID adjusted admissions growth and improved contract labor costs, and the recognition of $7 million of income from cybersecurity insurance proceeds, partially offset by higher other operating expenses. Third quarter 2022 results included a $45 million gain on the sale of a substantial portion of the Company's interest in assets of a group purchasing organization and $6 million of income from cybersecurity insurance proceeds.

Conifer Segment

Tenet’s Conifer business segment provides comprehensive end-to-end and focused-point business process services, including hospital and physician revenue cycle management, patient communications and engagement support and value-based care solutions to hospitals, health systems, physician practices, employers, and other clients.

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

Conifer segment results ($ in millions)

2023

2022

2023

2022

Net operating revenues

$315

$333

$962

$990

Adjusted EBITDA

$83

$90

$255

$275

Adjusted EBITDA margin

26.3%

27.0%

26.5%

27.8%

  • Third quarter 2023 net operating revenues and Adjusted EBITDA declined compared to third quarter 2022 primarily reflecting previously announced contract changes with Tenet hospitals and client divestitures.

2023 Outlook1

Tenet’s Outlook for full year 2023 (consolidated and by segment) and fourth quarter 2023 follows:

CONSOLIDATED ($ in millions, except per share amounts)

FY 2023 Outlook

Fourth Quarter

2023 Outlook

Net operating revenues

$20,300 to $20,500

$5,131 to $5,331

Net income from continuing operations available to Tenet common stockholders

$456 to $541

$89 to $174

Adjusted EBITDA

$3,365 to $3,465

$836 to $936

Adjusted EBITDA margin

16.6% to 16.9%

16.3% to 17.6%

Diluted income per common share from continuing operations

$4.25 to $5.06

$0.83 to $1.64

Adjusted net income from continuing operations

$580 to $645

$119 to $184

Adjusted diluted earnings per share from continuing operations

$5.43 to $6.05

$1.12 to $1.74

Equity in earnings of unconsolidated affiliates

$205 to $225

$50 to $70

Depreciation and amortization

$870 to $890

$216 to $236

Interest expense

$895 to $905

$221 to $231

Income tax expense5

$320 to $335

$77 to $92

Net income available to NCI

$675 to $695

$187 to $207

Weighted average diluted common shares

~105 million

~105 million

NCI cash distributions

$565 to $605

 

Net cash provided by operating activities

$1,800 to $2,075

 

Adjusted net cash provided by operating activities

$1,950 to $2,200

 

Capital expenditures

$675 to $725

 

Free cash flow

$1,125 to $1,350

 

Adjusted free cash flow – continuing operations

$1,275 to $1,475

Ambulatory Segment ($ in millions)

FY 2023 Outlook

Net operating revenues

$3,790 to $3,840

Adjusted EBITDA

$1,505 to $1,535

Total NCI (Facility level)

$560 to $570

Adjusted EBITDA less total NCI

$945 to $965

Changes versus prior year6:

 

Surgical cases volumes

Up 5.0% to 6.0%

Net revenues per surgical case

Up 2.0% to 3.0%

Hospital Segment ($ in millions)

FY 2023 Outlook

Net operating revenues (prior to inter-segment eliminations)

$15,675 to $15,795

Adjusted EBITDA

$1,530 to $1,590

NCI

$25 to $30

Changes versus prior year6:

 

Inpatient admissions

Up 2.0% to 3.0%

Adjusted admissions

Up 2.5% to 3.5%

Conifer Segment ($ in millions)

FY 2023 Outlook

Net operating revenues

$1,270 to $1,300

Adjusted EBITDA

$330 to $340

NCI

$90 to $95

Management’s Webcast Discussion of Results

Tenet management will discuss the Company’s third quarter 2023 results in a webcast scheduled for 5:00 p.m. Eastern Time (4:00 p.m. Central Time) on October 30, 2023. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors.

The slide presentation associated with the webcast referenced above, a copy of this earnings press release, and a related supplemental financial disclosures document will be available on the Company’s Investor Relations website on October 30, 2023.

Cautionary Statement

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company’s expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, especially with regards to developments related to COVID-19. Particular uncertainties that could cause the Company’s actual results to be materially different than those expressed in the Company’s forward-looking statements include, but are not limited to the impact of the COVID-19 pandemic, and other factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission.

Footnotes

  1. Tables and discussions throughout this earnings release include certain financial measures, including those related to our fourth quarter and full year 2023 Outlook, that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-6 included at the end of this earnings release. Management’s reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release.
  2. Same-facility system-wide revenues and statistical information include the results of the facilities in which the Ambulatory segment has an investment that 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.
  3. For 2023, same-hospital revenues and statistical data include those for hospitals and hospital-affiliated outpatient centers operated by the Company’s Hospital segment continuously from January 1, 2022 through September 30, 2023. Amounts associated with physician practices are excluded.
  4. Adjusted admissions represent actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.
  5. Income tax expense is calculated by multiplying 24% (the federal corporate tax rate of 21% plus an estimate of state taxes) by the sum of: pretax income less GAAP facility level NCI expense plus permanent differences, and non-deductible interest expense.
  6. Change versus prior year is presented on a same-facility system-wide basis for USPI Ambulatory surgical cases and on a same-hospital basis for hospital statistics.

About Tenet Healthcare

Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas. Our care delivery network includes United Surgical Partners International, the largest ambulatory platform in the country, which operates or has ownership interests in more than 480 ambulatory surgery centers and surgical hospitals. We also operate 61 acute care and specialty hospitals, approximately 110 other outpatient facilities, a network of leading employed physicians and a global business center in Manila, Philippines. Our Conifer Health Solutions subsidiary provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve. For more information, please visit www.tenethealth.com.

Non-GAAP Financial Measures

The Company believes the non-GAAP measures described below 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 use similar non-GAAP financial measures in their presentations and earnings releases. 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.

  • Adjusted EBITDA is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) the cumulative effect of changes in accounting principles, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, net of tax, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation benefit (costs), 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 and closed businesses (i.e., health plan businesses). Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
  • Adjusted diluted earnings (loss) per share from continuing operations is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, divided by the weighted average diluted shares outstanding in the reporting period.
  • Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) income (loss) from discontinued operations, net of tax, (2) gain (loss) from early extinguishment of debt, (3) litigation and investigation benefit (costs), net of insurance recoveries, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) impairment and restructuring charges and acquisition-related costs, (6) income (loss) from divested and closed businesses (i.e., health plan businesses) and (7) the associated impact of these items on taxes and noncontrolling interests. Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
  • Free Cash Flow is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment for continuing operations.
  • Adjusted Free Cash Flow 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 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 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.

The Company uses, and believes investors use, Free Cash Flow and Adjusted Free Cash Flow as supplemental non-GAAP measures to analyze cash flows generated from the Company’s operations. The Company believes these measures are useful to investors in evaluating its ability to fund distributions paid to noncontrolling interests or for 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 the Company’s financial statements, they do not provide a complete measure of the Company’s 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, or (ii) distributions paid to noncontrolling interests. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

See corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures in Tables #1 - 6 below.

 

Tenet Healthcare Corporation

Financial Statements and Reconciliations

Third Quarter Earnings Release

 

Table of Contents

Description

Page

Consolidated Statements of Operations

13

Consolidated Balance Sheets

15

Consolidated Statements of Cash Flows

16

Segment Reporting

17

Table #1 – Reconciliations of Net Income to Adjusted Net Income

18

Table #2 – Reconciliations of Net Income to Adjusted EBITDA

19

Table #3 – Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow

20

Table #4 – Reconciliations of Outlook Net Income to Outlook Adjusted Net Income

21

Table #5 – Reconciliations of Outlook Net Income to Outlook Adjusted EBITDA

22

Table #6 – Reconciliations of Outlook Net Cash Provided by Operating Activities to Outlook Free Cash Flow and Outlook Adjusted Free Cash Flow

23

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

(Dollars in millions, except per share amounts)

 

Three Months Ended September 30,

 

 

2023

 

 

%

 

 

2022

 

 

%

 

Change

Net operating revenues

 

$

5,066

 

 

100.0

%

 

$

4,801

 

 

100.0

%

 

5.5

%

Grant income

 

 

3

 

 

0.1

%

 

 

54

 

 

1.1

%

 

(94.4

)%

Equity in earnings of unconsolidated affiliates

 

 

51

 

 

1.0

%

 

 

51

 

 

1.1

%

 

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

2,288

 

 

45.2

%

 

 

2,230

 

 

46.4

%

 

2.6

%

Supplies

 

 

877

 

 

17.3

%

 

 

817

 

 

17.0

%

 

7.3

%

Other operating expenses, net

 

 

1,101

 

 

21.7

%

 

 

1,018

 

 

21.3

%

 

8.2

%

Depreciation and amortization

 

 

224

 

 

4.5

%

 

 

209

 

 

4.4

%

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

47

 

 

0.9

%

 

 

24

 

 

0.5

%

 

 

Litigation and investigation costs

 

 

14

 

 

0.3

%

 

 

12

 

 

0.2

%

 

 

Net losses on sales, consolidation and deconsolidation of facilities

 

 

1

 

 

%

 

 

 

 

%

 

 

Operating income

 

 

568

 

 

11.2

%

 

 

596

 

 

12.4

%

 

 

Interest expense

 

 

(227

)

 

 

 

 

(222

)

 

 

 

 

Other non-operating income, net

 

 

4

 

 

 

 

 

6

 

 

 

 

 

Income from continuing operations, before income taxes

 

 

345

 

 

 

 

 

380

 

 

 

 

 

Income tax expense

 

 

(79

)

 

 

 

 

(112

)

 

 

 

 

Net income

 

 

266

 

 

 

 

 

268

 

 

 

 

 

Less: Net income available to noncontrolling interests

 

 

165

 

 

 

 

 

137

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

101

 

 

 

 

$

131

 

 

 

 

 

Earnings per share available to Tenet Healthcare Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.99

 

 

 

 

$

1.21

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.94

 

 

 

 

$

1.16

 

 

 

 

 

Weighted average shares and dilutive securities outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

 

 

101,544

 

 

 

 

 

107,923

 

 

 

 

 

Diluted

 

 

104,425

 

 

 

 

 

109,888

 

 

 

 

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

(Dollars in millions, except per share amounts)

 

Nine Months Ended September 30,

 

 

2023

 

 

%

 

 

2022

 

 

%

 

Change

Net operating revenues

 

$

15,169

 

 

100.0

%

 

$

14,184

 

 

100.0

%

 

6.9

%

Grant income

 

 

14

 

 

0.1

%

 

 

154

 

 

1.1

%

 

(90.9

)%

Equity in earnings of unconsolidated affiliates

 

 

155

 

 

1.0

%

 

 

151

 

 

1.1

%

 

2.6

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

6,831

 

 

45.0

%

 

 

6,538

 

 

46.1

%

 

4.5

%

Supplies

 

 

2,659

 

 

17.5

%

 

 

2,413

 

 

17.0

%

 

10.2

%

Other operating expenses, net

 

 

3,319

 

 

21.9

%

 

 

2,966

 

 

20.9

%

 

11.9

%

Depreciation and amortization

 

 

654

 

 

4.3

%

 

 

628

 

 

4.4

%

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

84

 

 

0.6

%

 

 

97

 

 

0.7

%

 

 

Litigation and investigation costs

 

 

28

 

 

0.2

%

 

 

50

 

 

0.4

%

 

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(12

)

 

(0.1

)%

 

 

 

 

%

 

 

Operating income

 

 

1,775

 

 

11.7

%

 

 

1,797

 

 

12.7

%

 

 

Interest expense

 

 

(674

)

 

 

 

 

(671

)

 

 

 

 

Other non-operating income, net

 

 

8

 

 

 

 

 

6

 

 

 

 

 

Loss from early extinguishment of debt

 

 

(11

)

 

 

 

 

(109

)

 

 

 

 

Income from continuing operations, before income taxes

 

 

1,098

 

 

 

 

 

1,023

 

 

 

 

 

Income tax expense

 

 

(243

)

 

 

 

 

(297

)

 

 

 

 

Income from continuing operations, before discontinued operations

 

 

855

 

 

 

 

 

726

 

 

 

 

 

Income from discontinued operations

 

 

 

 

 

 

 

1

 

 

 

 

 

Net income

 

 

855

 

 

 

 

 

727

 

 

 

 

 

Less: Net income available to noncontrolling interests

 

 

488

 

 

 

 

 

418

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

367

 

 

 

 

$

309

 

 

 

 

 

Amounts available to Tenet Healthcare Corporation common shareholders

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

367

 

 

 

 

$

308

 

 

 

 

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

1

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

367

 

 

 

 

$

309

 

 

 

 

 

Earnings per share available to Tenet Healthcare Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

3.60

 

 

 

 

$

2.86

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

0.01

 

 

 

 

 

 

 

$

3.60

 

 

 

 

$

2.87

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

3.41

 

 

 

 

$

2.81

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

0.01

 

 

 

 

 

 

 

$

3.41

 

 

 

 

$

2.82

 

 

 

 

 

Weighted average shares and dilutive securities outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

 

 

101,869

 

 

 

 

 

107,732

 

 

 

 

 

Diluted

 

 

105,021

 

 

 

 

 

112,288

 

 

 

 

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in millions)

 

September 30,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,054

 

 

$

858

 

Accounts receivable

 

 

2,897

 

 

 

2,943

 

Inventories of supplies, at cost

 

 

413

 

 

 

405

 

Assets held for sale

 

 

140

 

 

 

 

Other current assets

 

 

1,855

 

 

 

1,775

 

Total current assets

 

 

6,359

 

 

 

5,981

 

Investments and other assets

 

 

3,152

 

 

 

3,147

 

Deferred income taxes

 

 

4

 

 

 

19

 

Property and equipment, at cost, less accumulated depreciation and amortization

 

 

6,260

 

 

 

6,462

 

Goodwill

 

 

10,415

 

 

 

10,123

 

Other intangible assets, at cost, less accumulated amortization

 

 

1,400

 

 

 

1,424

 

Total assets

 

$

27,590

 

 

$

27,156

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

141

 

 

$

145

 

Accounts payable

 

 

1,202

 

 

 

1,504

 

Accrued compensation and benefits

 

 

787

 

 

 

778

 

Professional and general liability reserves

 

 

264

 

 

 

255

 

Accrued interest payable

 

 

273

 

 

 

213

 

Liabilities held for sale

 

 

17

 

 

 

 

Contract liabilities

 

 

86

 

 

 

110

 

Other current liabilities

 

 

1,662

 

 

 

1,471

 

Total current liabilities

 

 

4,432

 

 

 

4,476

 

Long-term debt, net of current portion

 

 

14,901

 

 

 

14,934

 

Professional and general liability reserves

 

 

787

 

 

 

790

 

Defined benefit plan obligations

 

 

327

 

 

 

331

 

Deferred income taxes

 

 

278

 

 

 

217

 

Other long-term liabilities

 

 

1,684

 

 

 

1,800

 

Total liabilities

 

 

22,409

 

 

 

22,548

 

Commitments and contingencies

 

 

 

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

2,303

 

 

 

2,149

 

Equity:

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

4,818

 

 

 

4,778

 

Accumulated other comprehensive loss

 

 

(176

)

 

 

(181

)

Accumulated deficit

 

 

(436

)

 

 

(803

)

Common stock in treasury, at cost

 

 

(2,750

)

 

 

(2,660

)

Total shareholders’ equity

 

 

1,464

 

 

 

1,142

 

Noncontrolling interests

 

 

1,414

 

 

 

1,317

 

Total equity

 

 

2,878

 

 

 

2,459

 

Total liabilities and equity

 

$

27,590

 

 

$

27,156

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

(Dollars in millions)

 

Nine Months Ended

 

September 30,

 

 

2023

 

 

 

2022

 

Net income

 

$

855

 

 

$

727

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

654

 

 

 

628

 

Deferred income tax expense

 

 

75

 

 

 

208

 

Stock-based compensation expense

 

 

48

 

 

 

47

 

Impairment and restructuring charges, and acquisition-related costs

 

 

84

 

 

 

97

 

Litigation and investigation costs

 

 

28

 

 

 

50

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(12

)

 

 

 

Loss from early extinguishment of debt

 

 

11

 

 

 

109

 

Equity in earnings of unconsolidated affiliates, net of distributions received

 

 

5

 

 

 

14

 

Amortization of debt discount and debt issuance costs

 

 

25

 

 

 

23

 

Pre-tax income from discontinued operations

 

 

 

 

 

(1

)

Net gains from the sale of investments and long-lived assets

 

 

(25

)

 

 

(115

)

Other items, net

 

 

(1

)

 

 

12

 

Changes in cash from operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

31

 

 

 

(39

)

Inventories and other current assets

 

 

(49

)

 

 

89

 

Income taxes

 

 

(46

)

 

 

(59

)

Accounts payable, accrued expenses, contract liabilities and other current liabilities

 

 

(38

)

 

 

(942

)

Other long-term liabilities

 

 

10

 

 

 

(28

)

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

 

 

(105

)

 

 

(157

)

Net cash used in operating activities from discontinued operations, excluding income taxes

 

 

 

 

 

(1

)

Net cash provided by operating activities

 

 

1,550

 

 

 

662

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(543

)

 

 

(472

)

Purchases of businesses or joint venture interests, net of cash acquired

 

 

(110

)

 

 

(224

)

Proceeds from sales of facilities and other assets

 

 

38

 

 

 

209

 

Proceeds from sales of marketable securities, long-term investments and other assets

 

 

40

 

 

 

61

 

Purchases of marketable securities and equity investments

 

 

(54

)

 

 

(68

)

Other items, net

 

 

(7

)

 

 

(8

)

Net cash used in investing activities

 

 

(636

)

 

 

(502

)

Cash flows from financing activities:

 

 

 

 

Repayments of borrowings

 

 

(1,478

)

 

 

(2,786

)

Proceeds from borrowings

 

 

1,368

 

 

 

2,020

 

Repurchases of common stock

 

 

(90

)

 

 

 

Debt issuance costs

 

 

(16

)

 

 

(24

)

Distributions paid to noncontrolling interests

 

 

(425

)

 

 

(432

)

Proceeds from the sale of noncontrolling interests

 

 

37

 

 

 

16

 

Purchases of noncontrolling interests

 

 

(127

)

 

 

(61

)

Other items, net

 

 

13

 

 

 

(49

)

Net cash used in financing activities

 

 

(718

)

 

 

(1,316

)

Net increase (decrease) in cash and cash equivalents

 

 

196

 

 

 

(1,156

)

Cash and cash equivalents at beginning of period

 

 

858

 

 

 

2,364

 

Cash and cash equivalents at end of period

 

$

1,054

 

 

$

1,208

 

Supplemental disclosures:

 

 

 

 

Interest paid, net of capitalized interest

 

$

(589

)

 

$

(601

)

Income tax payments, net

 

$

(212

)

 

$

(148

)

 

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in millions)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net operating revenues:

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

941

 

 

$

806

 

 

$

2,788

 

 

$

2,315

 

Hospital Operations and other (prior to inter-segment eliminations)

 

 

3,919

 

 

 

3,778

 

 

 

11,740

 

 

 

11,221

 

Conifer

 

 

 

 

 

 

 

 

Tenet

 

 

109

 

 

 

116

 

 

 

321

 

 

 

342

 

Other clients

 

 

206

 

 

 

217

 

 

 

641

 

 

 

648

 

Total Conifer revenues

 

 

315

 

 

 

333

 

 

 

962

 

 

 

990

 

Inter-segment eliminations

 

 

(109

)

 

 

(116

)

 

 

(321

)

 

 

(342

)

Total

 

$

5,066

 

 

$

4,801

 

 

$

15,169

 

 

$

14,184

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates:

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

50

 

 

$

49

 

 

$

149

 

 

$

143

 

Hospital Operations and other

 

 

1

 

 

 

2

 

 

 

6

 

 

 

8

 

Total

 

$

51

 

 

$

51

 

 

$

155

 

 

$

151

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (including grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

370

 

 

$

319

 

 

$

1,080

 

 

$

920

 

Hospital Operations and other

 

 

401

 

 

 

432

 

 

 

1,194

 

 

 

1,377

 

Conifer

 

 

83

 

 

 

90

 

 

 

255

 

 

 

275

 

Total

 

$

854

 

 

$

841

 

 

$

2,529

 

 

$

2,572

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margins (including grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

 

39.3

%

 

 

39.6

%

 

 

38.7

%

 

 

39.7

%

Hospital Operations and other

 

 

10.2

%

 

 

11.4

%

 

 

10.2

%

 

 

12.3

%

Conifer

 

 

26.3

%

 

 

27.0

%

 

 

26.5

%

 

 

27.8

%

Total

 

 

16.9

%

 

 

17.5

%

 

 

16.7

%

 

 

18.1

%

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margins (excluding grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

 

39.3

%

 

 

39.6

%

 

 

38.7

%

 

 

39.6

%

Hospital Operations and other

 

 

10.2

%

 

 

10.0

%

 

 

10.1

%

 

 

10.9

%

Conifer

 

 

26.3

%

 

 

27.0

%

 

 

26.5

%

 

 

27.8

%

Total

 

 

16.8

%

 

 

16.4

%

 

 

16.6

%

 

 

17.0

%

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

20

 

 

$

18

 

 

$

58

 

 

$

58

 

Hospital Operations and other

 

 

153

 

 

 

143

 

 

 

477

 

 

 

405

 

Conifer

 

 

3

 

 

 

4

 

 

 

8

 

 

 

9

 

Total

 

$

176

 

 

$

165

 

 

$

543

 

 

$

472

 

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in millions, except per share amounts)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

101

 

 

$

131

 

 

$

367

 

 

$

309

 

Less:

 

 

 

 

 

 

 

 

Net income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

1

 

Net income from continuing operations

 

 

101

 

 

 

131

 

 

 

367

 

 

 

308

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(47

)

 

 

(24

)

 

 

(84

)

 

 

(97

)

Litigation and investigation costs

 

 

(14

)

 

 

(12

)

 

 

(28

)

 

 

(50

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

 

 

(1

)

 

 

 

 

 

12

 

 

 

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(11

)

 

 

(109

)

Tax and noncontrolling interests impact of above items

 

 

10

 

 

 

7

 

 

 

17

 

 

 

33

 

Adjusted net income available from continuing operations to common shareholders

 

$

153

 

 

$

160

 

 

$

461

 

 

$

531

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

0.94

 

 

$

1.16

 

 

$

3.41

 

 

$

2.81

 

Less:

 

 

 

 

 

 

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(0.45

)

 

 

(0.22

)

 

 

(0.80

)

 

 

(0.86

)

Litigation and investigation costs

 

 

(0.13

)

 

 

(0.11

)

 

 

(0.27

)

 

 

(0.45

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

 

 

(0.01

)

 

 

 

 

 

0.12

 

 

 

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(0.10

)

 

 

(0.97

)

Tax and noncontrolling interests impact of above items

 

 

0.09

 

 

 

0.07

 

 

 

0.16

 

 

 

0.29

 

Adjusted diluted earnings per share from continuing operations

 

$

1.44

 

 

$

1.42

 

 

$

4.30

 

 

$

4.80

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

101,544

 

 

 

107,923

 

 

 

101,869

 

 

 

107,732

 

Weighted average dilutive shares outstanding (in thousands)

 

 

104,425

 

 

 

109,888

 

 

 

105,021

 

 

 

112,288

 

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in millions)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

101

 

 

$

131

 

 

$

367

 

 

$

309

 

Less:

 

 

 

 

 

 

 

 

Net income available to noncontrolling interests

 

 

(165

)

 

 

(137

)

 

 

(488

)

 

 

(418

)

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

1

 

Income from continuing operations

 

 

266

 

 

 

268

 

 

 

855

 

 

 

726

 

Income tax expense

 

 

(79

)

 

 

(112

)

 

 

(243

)

 

 

(297

)

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(11

)

 

 

(109

)

Other non-operating income, net

 

 

4

 

 

 

6

 

 

 

8

 

 

 

6

 

Interest expense

 

 

(227

)

 

 

(222

)

 

 

(674

)

 

 

(671

)

Operating income

 

 

568

 

 

 

596

 

 

 

1,775

 

 

 

1,797

 

Litigation and investigation costs

 

 

(14

)

 

 

(12

)

 

 

(28

)

 

 

(50

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

 

 

(1

)

 

 

 

 

 

12

 

 

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(47

)

 

 

(24

)

 

 

(84

)

 

 

(97

)

Depreciation and amortization

 

 

(224

)

 

 

(209

)

 

 

(654

)

 

 

(628

)

Adjusted EBITDA

 

$

854

 

 

$

841

 

 

$

2,529

 

 

$

2,572

 

 

 

 

 

 

 

 

 

 

Net operating revenues

 

$

5,066

 

 

$

4,801

 

 

$

15,169

 

 

$

14,184

 

 

 

 

 

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues

 

 

2.0

%

 

 

2.7

%

 

 

2.4

%

 

 

2.2

%

 

 

 

 

 

 

 

 

 

Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)

 

 

16.9

%

 

 

17.5

%

 

 

16.7

%

 

 

18.1

%

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 – Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations

(Unaudited)

 

 

 

2023

(Dollars in millions)

 

Q3

 

YTD

Net cash provided by operating activities

 

$

503

 

 

$

1,550

 

Purchases of property and equipment

 

 

(176

)

 

 

(543

)

Free cash flow – continuing operations

 

$

327

 

 

$

1,007

 

 

 

 

 

 

Net cash used in investing activities

 

$

(169

)

 

$

(636

)

Net cash used in financing activities

 

$

(214

)

 

$

(718

)

 

 

 

 

 

Net cash provided by operating activities

 

$

503

 

 

$

1,550

 

Less:

 

 

 

 

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

 

 

(27

)

 

 

(105

)

Adjusted net cash provided by operating activities from continuing operations

 

 

530

 

 

 

1,655

 

Purchases of property and equipment

 

 

(176

)

 

 

(543

)

Adjusted free cash flow – continuing operations

 

$

354

 

 

$

1,112

 

 

 

2022

(Dollars in millions)

 

Q3

 

YTD

Net cash provided by operating activities

 

$

315

 

 

$

662

 

Purchases of property and equipment

 

 

(165

)

 

 

(472

)

Free cash flow - continuing operations

 

 

150

 

 

 

190

 

Add back:

 

 

 

 

Medicare Advance Repayments

 

 

405

 

 

 

880

 

Free cash flow – continuing operations, excluding repayments of Medicare Advances

 

$

555

 

 

$

1,070

 

 

 

 

 

 

Net cash used in investing activities

 

$

(302

)

 

$

(502

)

Net cash used in financing activities

 

$

(156

)

 

$

(1,316

)

 

 

 

 

 

Net cash provided by operating activities

 

$

315

 

 

$

662

 

Less:

 

 

 

 

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

 

 

(59

)

 

 

(157

)

Net cash used in operating activities from discontinued operations

 

 

(1

)

 

 

(1

)

Adjusted net cash provided by operating activities from continuing operations

 

 

375

 

 

 

820

 

Purchases of property and equipment

 

 

(165

)

 

 

(472

)

Adjusted free cash flow – continuing operations

 

 

210

 

 

 

348

 

Add back:

 

 

 

 

Medicare Advance Repayments

 

 

405

 

 

 

880

 

Adjusted free cash flow – continuing operations, excluding repayments of Medicare Advances

 

$

615

 

 

$

1,228

 

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders

(Unaudited)

 

 

 

Fourth Quarter 2023

 

FY 2023

(Dollars in millions, except per share amounts)

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

89

 

 

$

174

 

 

$

456

 

 

$

541

 

Less:

 

 

 

 

 

 

 

 

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(1)

 

 

(38

)

 

 

(13

)

 

 

(150

)

 

 

(125

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

 

 

 

 

 

 

12

 

 

 

12

 

Loss from early extinguishment of debt(2)

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

Tax and noncontrolling interests impact of above items

 

 

8

 

 

 

3

 

 

 

25

 

 

 

20

 

Adjusted net income available from continuing operations to common shareholders

 

$

119

 

 

$

184

 

 

$

580

 

 

$

645

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

0.83

 

 

$

1.64

 

 

$

4.25

 

 

$

5.06

 

Less:

 

 

 

 

 

 

 

 

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements

 

 

(0.37

)

 

 

(0.13

)

 

 

(1.43

)

 

 

(1.19

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

 

 

 

 

 

 

0.11

 

 

 

0.11

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(0.10

)

 

 

(0.10

)

Tax and noncontrolling interests impact of above items

 

 

0.08

 

 

 

0.03

 

 

 

0.24

 

 

 

0.19

 

Adjusted diluted earnings per share from continuing operations

 

$

1.12

 

 

$

1.74

 

 

$

5.43

 

 

$

6.05

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

102,000

 

 

 

102,000

 

 

 

102,000

 

 

 

102,000

 

Weighted average dilutive shares outstanding (in thousands)

 

 

105,000

 

 

 

105,000

 

 

 

105,000

 

 

 

105,000

 

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it 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.

(2)

The Company does not generally forecast losses from the early extinguishment of debt because the Company does not believe that it can forecast this item with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to the debt repurchased or refinanced by the Company in 2023.

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA

(Unaudited)

 

 

 

Fourth Quarter 2023

 

FY 2023

(Dollars in millions)

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

89

 

 

$

174

 

 

$

456

 

 

$

541

 

Less:

 

 

 

 

 

 

 

 

Net income available to noncontrolling interests

 

 

(187

)

 

 

(207

)

 

 

(675

)

 

 

(695

)

Income tax expense

 

 

(77

)

 

 

(92

)

 

 

(320

)

 

 

(335

)

Interest expense

 

 

(231

)

 

 

(221

)

 

 

(905

)

 

 

(895

)

Loss from early extinguishment of debt(2)

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

Other non-operating income, net

 

 

2

 

 

 

7

 

 

 

10

 

 

 

15

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

 

 

 

 

 

 

12

 

 

 

12

 

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(1)

 

 

(38

)

 

 

(13

)

 

 

(150

)

 

 

(125

)

Depreciation and amortization

 

 

(216

)

 

 

(236

)

 

 

(870

)

 

 

(890

)

Adjusted EBITDA

 

$

836

 

 

$

936

 

 

$

3,365

 

 

$

3,465

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

89

 

 

$

174

 

 

$

456

 

 

$

541

 

Net operating revenues

 

$

5,131

 

 

$

5,331

 

 

$

20,300

 

 

$

20,500

 

Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues

 

 

1.7

%

 

 

3.3

%

 

 

2.2

%

 

 

2.6

%

Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)

 

 

16.3

%

 

 

17.6

%

 

 

16.6

%

 

 

16.9

%

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it 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.

(2)

The Company does not generally forecast losses from the early extinguishment of debt because the Company does not believe that it can forecast this item with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to the debt repurchased or refinanced by the Company in 2023.

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #6 – Reconciliations of Outlook Net Cash Provided by Operating Activities

to Outlook Free Cash Flow Continuing Operations and Outlook Adjusted Free Cash

Flow Continuing Operations

(Unaudited)

 

(Dollars in millions)

 

FY 2023

 

 

Low

 

High

Net cash provided by operating activities

 

$

1,800

 

 

$

2,075

 

Purchases of property and equipment

 

 

(675

)

 

 

(725

)

Free cash flow – continuing operations

 

$

1,125

 

 

$

1,350

 

 

 

 

 

 

Net cash provided by operating activities

 

$

1,800

 

 

$

2,075

 

Less:

 

 

 

 

Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1)

 

 

(150

)

 

 

(125

)

Adjusted net cash provided by operating activities – continuing operations

 

 

1,950

 

 

 

2,200

 

Purchases of property and equipment

 

 

(675

)

 

 

(725

)

Adjusted free cash flow – continuing operations(2)

 

$

1,275

 

 

$

1,475

 

(1)

The figures shown represent the Company's estimate for restructuring payments plus the actual year-to-date payments for restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast payments for acquisition-related costs, and litigation costs and settlements because it 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.

(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, and (ii) distributions paid to noncontrolling interests.

 

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