Tenet Reports Results for the Fourth Quarter Ended December 31, 2016 and Issues Outlook for 2017

  • Reported a net loss from continuing operations of $187 million or $1.88 per share in 2016 and a net loss from continuing operations of $79 million or $0.79 per share in the fourth quarter.
  • Adjusted EBITDA was $2.413 billion in 2016 and $613 million in the fourth quarter. Adjusted diluted earnings per share from continuing operations was $1.04 in 2016 and $0.06 in the fourth quarter.
  • Same-hospital patient revenue grew 3.2% in the fourth quarter and reflects a 3.7% increase in revenue per adjusted admission partially offset by a 0.5% decline in adjusted admissions. Hospital segment Adjusted EBITDA totaled $358 million in the quarter.
  • Ambulatory Care segment revenue increased 5.9% on a same-facility system-wide basis in the fourth quarter, with cases increasing 1.7% and revenue per case increasing 4.1%. Adjusted EBITDA for the ambulatory segment was $183 million in the fourth quarter, a 15.8% increase, and representing a margin of 38.3%.
  • Revenue from Conifer Health Solutions increased 4.7% in the fourth quarter with revenue from third parties increasing 16.0%. Conifer generated $72 million of Adjusted EBITDA in the fourth quarter, an 18.0% increase, and representing a margin of 17.9%.
  • Net cash provided by operating activities during 2016 was $558 million, a $468 million decline when compared to $1.026 billion in 2015, and was primarily impacted by the payment related to the resolution of the Clinica de la Mama matter in the fourth quarter of 2016. Adjusted Free Cash Flow was $380 million in 2016, a $25 million decline when compared to $405 million in 2015.
  • Issues Outlook for 2017; includes net income from continuing operations attributable to Tenet common shareholders of $105 million to $135 million and Adjusted EBITDA of $2.5 billion to $2.6 billion.
Monday, February 27, 2017 3:15 pm CST

Dateline:

DALLAS

Public Company Information:

NYSE:
THC

DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE:THC) reported a net loss from continuing operations of $79 million in the fourth quarter of 2016, a $21 million improvement when compared to a $100 million net loss from continuing operations in the fourth quarter of 2015. Adjusted EBITDA was $613 million in both the fourth quarters of 2016 and 2015.

Trevor Fetter, chairman and chief executive officer, stated, “Demand for higher acuity services in our hospitals drove growth in same-hospital patient revenue and revenue per adjusted admission in the fourth quarter. Our Ambulatory and Conifer Health businesses delivered strong revenue and Adjusted EBITDA growth. Our expectations for continued growth in 2017 reflect confidence in our strategy to strengthen our hospital portfolio, expand our network of ambulatory facilities, and solidify Conifer’s leadership in healthcare business services.”

Hospital Operations and Other Segment

Net operating revenue in the Hospital Operations and other segment was $4.143 billion, down 6.3 percent from $4.423 billion in the fourth quarter of 2015 due to hospitals that have been divested since that time. On a same-hospital basis, patient revenue increased to $3.782 billion, up 3.2 percent from $3.666 billion in the fourth quarter of 2015. The increase included growth of 3.7 percent in net patient revenue per adjusted admission, offset by a 0.5 percent decrease in adjusted patient admissions.

Adjusted EBITDA in Tenet’s hospital segment was $358 million, representing a decline of 9.1 percent as compared to $394 million in the fourth quarter of 2015. The decline was driven by divestitures in 2015 and 2016 and an expected decrease in electronic health record incentives, and was partially offset by acquisitions in 2015.

Tenet’s health plan business lowered Adjusted EBITDA by $29 million in the fourth quarter of 2016. For the full year, the health plan business lowered Adjusted EBITDA by $37 million, whereas the Company had anticipated at the outset of 2016 that the results for its health plans would be essentially breakeven. As previously announced, the Company has begun the process of selling or otherwise exiting its health plan business.

Total hospital segment selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.8 percent on a per adjusted admission basis in the quarter. Approximately one-third of the increase was attributable to an increase in claim costs of Tenet’s health plans due to an increase in covered lives in 2016.

Exchanges

Tenet’s same-hospital exchange admissions were 4,916 in the fourth quarter of 2016, up 13.6 percent from the fourth quarter of 2015. Same-hospital exchange outpatient visits were 48,435 up 26.4 percent from the fourth quarter of 2015.

Uncompensated Care

Tenet’s provision for doubtful accounts was $354 million in the fourth quarter of 2016, representing a ratio of 6.8 percent of revenues before bad debt, as compared to $391 million in the fourth quarter of 2015, or 7.2 percent of revenues before bad debt. Tenet’s uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, was $1.332 billion and $1.420 billion in the fourth quarters of 2016 and 2015, respectively, including $978 million and $1.029 billion, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care in the fourth quarter of 2016 represented 21.5 percent of revenue before bad debts, uninsured discounts and charity care write-offs, down from 22.0 percent in the fourth quarter of 2015. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.

Uninsured plus charity admissions increased by 444 admissions, or 4.9 percent on a same-hospital basis in the fourth quarter of 2016 compared to the fourth quarter of 2015. Uninsured plus charity outpatient visits decreased by 14,330 visits, or 11.4 percent, on a same-hospital basis.

Ambulatory Care Segment

During the fourth quarter of 2016, the Ambulatory segment produced net operating revenue of $478 million, representing an increase of 20.4 percent as compared to $397 million in the fourth quarter of 2015. In addition, the Ambulatory segment generated Adjusted EBITDA of $183 million, up 15.8 percent from $158 million in the fourth quarter of 2015.

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze the segment’s results of operations, management uses system-wide measures which include revenues and cases of both consolidated and unconsolidated facilities. On a same-facility system-wide basis, revenue in the Ambulatory segment increased 5.9 percent, with cases increasing 1.7 percent and revenue per case increasing 4.1 percent. One less surgical day lowered revenue growth and case growth in the Ambulatory segment by approximately 1.6 percent in the fourth quarter of 2016.

Conifer Segment

During the fourth quarter of 2016, Conifer’s revenue increased 4.7 percent to $402 million, up from $384 million in the fourth quarter of 2015. Revenue from third party customers increased 16.0 percent to $239 million. Conifer generated $72 million of Adjusted EBITDA in the fourth quarter of 2016, up 18.0 percent from $61 million in the fourth quarter of 2015.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations of $79 million, or $0.79 per share, in the fourth quarter of 2016 compared to a net loss of $100 million, or $1.01 per share, in the fourth quarter of 2015.

After adjusting for certain items which are listed on Table #2, Tenet generated Adjusted net income from continuing operations of $6 million, or $0.06 per diluted share, during the fourth quarter of 2016, as compared to Adjusted net income from continuing operations of $35 million, or $0.35 per diluted share, in the fourth quarter of 2015.

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

Cash Flow and Liquidity

Cash and cash equivalents were $716 million at December 31, 2016 compared to $649 million at September 30, 2016. On December 1, 2016, the Company completed a private offering of $750 million aggregate principal amount senior secured second lien notes maturing in 2022 (the “notes”). The net proceeds of the notes were used, after payment of fees and expenses, to repay indebtedness outstanding under Tenet’s senior secured revolving credit facility and for general corporate purposes. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2016. Accounts receivable days outstanding were 54.8 at December 31, 2016 compared to 52.9 at September 30, 2016 and 49.5 at December 31, 2015.

Net cash provided by operating activities in the twelve months ended December 31, 2016 was $558 million, representing a $468 million decline compared to $1.026 billion in 2015. After subtracting $875 million and $842 million of capital expenditures in the twelve months ended December 31, 2016 and December 31, 2015, respectively, Free Cash Flow was an outflow of $317 million in the twelve months ended December 31, 2016, representing a $501 million decline compared to $184 million in the comparable period in 2015. This decline was primarily attributable to approximately $517 million of payments related to the resolution of the Clinica de la Mama matter, which were made in the fourth quarter of 2016. Adjusted Free Cash Flow was $380 million in the twelve months ended December 31, 2016, representing a $25 million decline from $405 million in the comparable period in 2015. Adjusted Free Cash Flow was below the Company’s Outlook of $400 million to $600 million in 2016, primarily due to an unanticipated increase in accounts receivable days sales outstanding in the fourth quarter of 2016 and an $80 million delay by the State of California in processing Provider Fee program payments.

Net cash used in investing activities was $430 million in the twelve months ended December 31, 2016 compared to $1.317 billion of net cash used in investing activities in the comparable period in 2015. Net cash provided by financing activities was $232 million in the twelve months ended December 31, 2016 compared to $454 million of net cash provided by financing activities in the comparable period in 2015.

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

Outlook

The Company’s Outlook for 2017 includes:

  • Revenue of $19.7 billion to $20.1 billion,
  • Net income from continuing operations attributable to Tenet common shareholders of $107 million to $133 million,
  • Adjusted EBITDA of $2.5 billion to $2.6 billion,
  • Net cash provided by operating activities of $1.300 billion to $1.550 billion,
  • Adjusted Free Cash Flow of $600 million to $800 million, and
  • Diluted earnings per share and adjusted diluted earnings per share from continuing operations of $1.05 to $1.30 per diluted share.

The Outlook for 2017 assumes equity in earnings of unconsolidated affiliates of $145 million to $155 million, electronic health record incentives of $8 million to $10 million, net income attributable to noncontrolling interests of $390 million to $410 million and an average diluted share count of 102 million. In addition, the Outlook assumes that CMS will approve the proposed California Provider Fee for the 30-month period from January 2017 through June 2019 during the fourth quarter of 2017 and further assumes that the Company will record approximately $220 million to $230 million of revenue and Adjusted EBITDA during 2017 as a result of this program. In 2016, the Company recorded $232 million of revenue under the California Provider Fee program. The Company will not be able to recognize any revenue under the 2017 program during the year until CMS approves the program. Finally, the Outlook includes a full year of financial results from hospitals which may be divested in 2017 and the Adjusted EBITDA Outlook excludes approximately $30 million of losses in 2017 that the Company expects to incur in its health plan business.

The Company’s Outlook for the first quarter of 2017 includes:

  • Revenue of $4.750 billion to $4.950 billion,
  • Net loss from continuing operations attributable to Tenet common shareholders ranging from a loss of $60 million to a loss of $45 million,
  • Adjusted EBITDA of $475 million to $525 million, and
  • A loss per basic share and an adjusted loss per basic share from continuing operations ranging from a loss of $0.60 to a loss of $0.45.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of approximately $25 million, electronic health record incentives of approximately $1 million, net income attributable to noncontrolling interests of $85 million to $95 million and an average share count of 100 million. The Outlook for the first quarter of 2017 does not include any revenue or Adjusted EBITDA associated with the California Provider Fee program, whereas the Company’s results in the first quarter of 2016 included $57 million of revenue and Adjusted EBITDA associated with the program. This difference is expected to lower the Company’s same-hospital revenue per adjusted admission by approximately 1.5 percent in the first quarter of 2017. In addition, the Company’s Adjusted EBITDA in the first quarter of 2016 included approximately $25 million from its hospitals in Georgia, which were divested on March 31, 2016.

Additional details on Tenet’s Outlook for both the first quarter and calendar year 2017 are available in Tables 4 and 5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company’s fourth quarter 2016 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 28, 2017. Investors can access the webcast through Tenet’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-K report for the twelve months ended December 31, 2016, which will be filed with the Securities and Exchange Commission and posted on the Tenet website before the webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income from continuing operations, Adjusted diluted earnings per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measure are contained in the tables at the end of this release.

Tenet Healthcare Corporation is a diversified healthcare services company with 130,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International, the Company operates 80 general acute care hospitals, 20 short-stay surgical hospitals and approximately 470 outpatient centers in the United States, as well as nine facilities in the United Kingdom. Tenet’s Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans. For more information, please visit www.tenethealth.com.

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

This release contains “forward-looking statements” – that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2016 and other filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to investors about the Company including the posting of important announcements regarding financial performance and corporate developments.

 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)     Three Months Ended December 31,
  2016       %       2015       %     Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,214 $ 5,417 (3.7 )%
Less: Provision for doubtful accounts   354     391   (9.5 )%
Net operating revenues 4,860 100.0 % 5,026 100.0 % (3.3 )%
Equity in earnings of unconsolidated affiliates 46 0.9 % 51 1.0 % (9.8 )%
Operating expenses:
Salaries, wages and benefits 2,324 47.8 % 2,443 48.6 % (4.9 )%
Supplies 773 15.9 % 817 16.3 % (5.4 )%
Other operating expenses, net 1,205 24.8 % 1,230 24.5 % (2.0 )%
Electronic health record incentives (9 ) (0.2 )% (26 ) (0.5 )% (65.4 )%
Depreciation and amortization 218 4.5 % 208 4.1 %
Impairment and restructuring charges, and acquisition-related costs 121 2.5 % 52 1.0 %
Litigation and investigation costs 2 % 224 4.4 %
Gains on sales, consolidation and deconsolidation of facilities     %   (186 ) (3.7 )%
Operating income 272 5.6 % 315 6.3 %
Interest expense (249 ) (248 )
Loss from early extinguishment of debt (1 )
Investment earnings   6     1  
Net income from continuing operations, before income taxes 29 67
Income tax expense   (6 )   (68 )
Net income (loss) from continuing operations, before discontinued operations 23 (1 )
Discontinued operations:
Net loss from operations (1 ) (1 )
Litigation and investigation (costs) benefit 5
Income tax expense (benefit)   1     (1 )
Net income from discontinued operations       3  
Net income 23 2
Less: Net income attributable to noncontrolling interests   102     99  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (79 ) $ (97 )
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax $ (79 ) $ (100 )
Net income from discontinued operations, net of tax       3  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (79 ) $ (97 )
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.79 ) $ (1.01 )
Discontinued operations       0.03  
$ (0.79 ) $ (0.98 )
Diluted
Continuing operations $ (0.79 ) $ (1.01 )
Discontinued operations       0.03  
$ (0.79 ) $ (0.98 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 99,651 99,188
Diluted* 99,651 99,188

*

Had the Company generated income from continuing operations in the three months ended December 31, 2016 and 2015 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,277 shares and 2,173 shares, respectively.

 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)     Years Ended December 31,
  2016       %       2015       %     Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 21,070 $ 20,111 4.8 %
Less: Provision for doubtful accounts   1,449     1,477   (1.9 )%
Net operating revenues 19,621 100.0 % 18,634 100.0 % 5.3 %
Equity in earnings of unconsolidated affiliates 131 0.7 % 99 0.5 % 32.3 %
Operating expenses:
Salaries, wages and benefits 9,356 47.7 % 9,011 48.4 % 3.8 %
Supplies 3,124 15.9 % 2,963 15.9 % 5.4 %
Other operating expenses, net 4,891 25.0 % 4,555 24.4 % 7.4 %
Electronic health record incentives (32 ) (0.2 )% (72 ) (0.4 )% (55.6 )%
Depreciation and amortization 850 4.3 % 797 4.3 %
Impairment and restructuring charges, and acquisition-related costs 202 1.1 % 318 1.7 %
Litigation and investigation costs 293 1.5 % 291 1.5 %
Gains on sales, consolidation and deconsolidation of facilities   (151 ) (0.8 )%   (186 ) (1.0 )%
Operating income 1,219 6.2 % 1,056 5.7 %
Interest expense (979 ) (912 )
Loss from early extinguishment of debt (1 )
Investment earnings   8     1  
Net income from continuing operations, before income taxes 248 144
Income tax expense   (67 )   (68 )
Net income from continuing operations, before discontinued operations 181 76
Discontinued operations:
Loss from operations (6 ) (5 )
Litigation and investigation (costs) benefit 8
Income tax benefit (expense)   1     (1 )
Net income (loss) from discontinued operations   (5 )   2  
Net income 176 78
Less: Net income attributable to noncontrolling interests   368     218  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (192 ) $ (140 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax $ (187 ) $ (142 )
Net income (loss) from discontinued operations, net of tax   (5 )   2  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (192 ) $ (140 )
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (1.88 ) $ (1.43 )
Discontinued operations   (0.05 )   0.02  
$ (1.93 ) $ (1.41 )
Diluted
Continuing operations $ (1.88 ) $ (1.43 )
Discontinued operations   (0.05 )   0.02  
$ (1.93 ) $ (1.41 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 99,321 99,167
Diluted* 99,321 99,167

*

Had the Company generated income from continuing operations in the years ended December 31 2016 and 2015 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,421 shares and 2,380 shares, respectively.

 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    December 31,     December 31,
(Dollars in millions)   2016     2015  
ASSETS
Current assets:
Cash and cash equivalents $ 716 $ 356
Accounts receivable, less allowance for doubtful accounts 2,897 2,704
Inventories of supplies, at cost 326 309
Income tax receivable 4 7
Assets held for sale 29 550
Other current assets   1,285     1,245  
Total current assets 5,257 5,171
Investments and other assets 1,250 1,175
Deferred income taxes 871 776
Property and equipment, at cost, less accumulated depreciation and amortization 8,053 7,915
Goodwill 7,425 6,970
Other intangible assets, at cost, less accumulated amortization   1,845     1,675  
Total assets $ 24,701   $ 23,682  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 191 $ 127
Accounts payable 1,329 1,380
Accrued compensation and benefits 872 880
Professional and general liability reserves 181 177
Accrued interest payable 210 205
Liabilities held for sale 9 101
Accrued legal settlement costs 8 294
Other current liabilities   1,234     1,144  
Total current liabilities 4,034 4,308
Long-term debt, net of current portion 15,064 14,383
Professional and general liability reserves 613 578
Defined benefit plan obligations 626 595
Deferred income taxes 279 37
Other long-term liabilities   610     557  
Total liabilities 21,226 20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 2,393 2,266
Equity:
Shareholders’ equity:
Common stock 7 7
Additional paid-in capital 4,827 4,815
Accumulated other comprehensive loss (258 ) (164 )
Accumulated deficit (1,742 ) (1,550 )
Common stock in treasury, at cost   (2,417 )   (2,417 )
Total shareholders’ equity 417 691
Noncontrolling interests   665     267  
Total equity   1,082     958  
Total liabilities and equity $ 24,701   $ 23,682  
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 
(Dollars in millions)     Years Ended December 31,
  2016         2015  
Net Income $ 176 $ 78
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 850 797
Provision for doubtful accounts 1,449 1,477
Deferred income tax expense 41 42
Stock-based compensation expense 68 69
Impairment and restructuring charges, and acquisition-related costs 202 318
Litigation and investigation costs 293 291
Loss from early extinguishment of debt 1
Gains on sales, consolidation and deconsolidation of facilities (151 ) (186 )
Equity in earnings of unconsolidated affiliates, net of distributions received (13 ) (99 )
Amortization of debt discount and debt issuance costs 41 41
Pre-tax (income) loss from discontinued operations 6 (3 )
Other items, net (1 ) 59
Changes in cash from operating assets and liabilities:
Accounts receivable (1,604 ) (1,632 )
Inventories and other current assets (83 ) (130 )
Income taxes (8 ) 18
Accounts payable, accrued expenses and other current liabilities (51 ) 68
Other long-term liabilities 40 38
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (691 ) (200 )
Net cash used in operating activities from discontinued operations, excluding income taxes   (6 )   (21 )
Net cash provided by operating activities 558 1,026
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (875 ) (842 )
Purchases of businesses or joint venture interests, net of cash acquired (117 ) (940 )
Proceeds from sales of facilities and other assets 573 549
Proceeds from sales of marketable securities, long-term investments and other assets 62 60
Purchases of equity investments (39 ) (134 )
Other assets (31 ) (4 )
Other items, net   (3 )   (6 )
Net cash used in investing activities (430 ) (1,317 )
Cash flows from financing activities:
Repayments of borrowings under credit facility (1,895 ) (2,815 )
Proceeds from borrowings under credit facility 1,895 2,595
Repayments of other borrowings (154 ) (2,049 )
Proceeds from other borrowings 760 3,158
Repurchases of common stock (40 )
Debt issuance costs (12 ) (80 )
Distributions paid to noncontrolling interests (218 ) (110 )
Proceeds from sale of noncontrolling interests 22 11
Purchase of noncontrolling interests (186 ) (268 )
Proceeds from exercise of stock options 4 15
Other items, net   16     37  
Net cash provided by financing activities   232     454  
Net increase in cash and cash equivalents 360 163
Cash and cash equivalents at beginning of period   356     193  
Cash and cash equivalents at end of period $ 716   $ 356  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (932 ) $ (859 )
Income tax payments, net $ (33 ) $ (7 )
 
 
TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)
 
(Dollars in millions except per patient day,                        
per admission, per adjusted admission Three Months Ended December 31, Years Ended December 31,
and per visit amounts)   2016     2015   Change   2016     2015   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 75 86 (11 ) * 75 86 (11 ) *
Total admissions 192,104 211,991 (9.4 )% 792,143 824,102 (3.9 )%
Adjusted patient admissions 338,929 371,994 (8.9 )% 1,389,768 1,422,588 (2.3 )%
Paying admissions (excludes charity and uninsured) 181,617 200,462 (9.4 )% 749,634 779,766 (3.9 )%
Charity and uninsured admissions 10,487 11,529 (9.0 )% 42,509 44,336 (4.1 )%
Admissions through emergency department 120,549 133,108 (9.4 )% 499,335 521,272 (4.2 )%
Paying admissions as a percentage of total admissions 94.5 % 94.6 % (0.1 )% * 94.6 % 94.6 % % *
Charity and uninsured admissions as a percentage of total admissions 5.5 % 5.4 % 0.1 % * 5.4 % 5.4 % % *
Emergency department admissions as a percentage of total admissions 62.8 % 62.8 % % * 63.0 % 63.3 % (0.3 )% *
Surgeries — inpatient 53,071 58,894 (9.9 )% 217,906 223,863 (2.7 )%
Surgeries — outpatient 73,678 79,370 (7.2 )% 298,974 293,264 1.9 %
Total surgeries 126,749 138,264 (8.3 )% 516,880 517,127 %
Patient days — total 888,185 983,856 (9.7 )% 3,690,335 3,817,572 (3.3 )%
Adjusted patient days 1,543,490 1,710,620 (9.8 )% 6,395,025 6,520,289 (1.9 )%
Average length of stay (days) 4.62 4.64 (0.4 )% 4.66 4.63 0.6 %
Licensed beds (at end of period) 20,354 22,525 (9.6 )% 20,354 22,525 (9.6 )%
Average licensed beds 20,326 22,549 (9.9 )% 20,651 21,092 (2.1 )%
Utilization of licensed beds 47.5 % 47.4 % 0.1 % * 48.8 % 49.6 % (0.8 )% *
Outpatient Visits
Total visits 1,950,549 2,198,005 (11.3 )% 8,144,473 8,332,139 (2.3 )%
Paying visits (excludes charity and uninsured) 1,834,844 2,024,725 (9.4 )% 7,577,799 7,669,971 (1.2 )%
Charity and uninsured visits 115,705 173,280 (33.2 )% 566,674 662,168 (14.4 )%
Emergency department visits 701,100 778,148 (9.9 )% 2,914,421 3,010,625 (3.2 )%
Paying visits as a percentage of total visits 94.1 % 92.1 % 2.0 % * 93.0 % 92.1 % 0.9 % *
Charity and uninsured visits as a percentage of total visits 5.9 % 7.9 % (2.0 )% * 7.0 % 7.9 % (0.9 )% *
Total emergency department admissions and visits 821,649 911,256 (9.8 )% 3,413,756 3,531,897 (3.3 )%
Revenues
Net inpatient revenues $ 2,606 $ 2,736 (4.8 )% $ 10,619 $ 10,652 (0.3 )%
Net outpatient revenues $ 1,457 $ 1,616 (9.8 )% $ 5,848 $ 6,027 (3.0 )%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,566 $ 12,906 5.1 % $ 13,405 $ 12,926 3.7 %
Net inpatient revenue per patient day $ 2,934 $ 2,781 5.5 % $ 2,878 $ 2,790 3.2 %
Net outpatient revenue per visit $ 747 $ 735 1.6 % $ 718 $ 723 (0.7 )%
Net patient revenue per adjusted patient admission $ 11,988 $ 11,699 2.5 % $ 11,849 $ 11,724 1.1 %
Net patient revenue per adjusted patient day $ 2,632 $ 2,544 3.5 % $ 2,575 $ 2,558 0.7 %
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission $ 10,743 $ 10,451 2.8 % $ 10,651 $ 10,351 2.9 %
 
Net Patient Revenues from:
Medicare 20.4 % 19.3 % 1.1 % * 20.5 % 20.4 % 0.1 % *
Medicaid 8.2 % 8.2 % % * 8.2 % 8.7 % (0.5 )% *
Managed care 61.4 % 61.6 % (0.2 )% * 61.5 % 60.6 % 0.9 % *
Indemnity, self-pay and other 10.0 % 10.9 % (0.9 )% * 9.8 % 10.3 % (0.5 )% *
(1)   Represents the consolidated results of Tenet’s Hospital Operations and other segment.
* This change is the difference between the 2016 and 2015 amounts shown
 
 
TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)
 
(Dollars in millions except per patient day,                        
per admission, per adjusted admission Three Months Ended December 31, Years Ended December 31,
and per visit amounts)   2016     2015   Change   2016     2015   Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 67 67 * 67 67 *
Total admissions 175,672 176,051 (0.2 )% 715,502 717,218 (0.2 )%
Adjusted patient admissions 303,912 305,436 (0.5 )% 1,239,324 1,228,039 0.9 %
Paying admissions (excludes charity and uninsured) 166,139 166,962 (0.5 )% 677,361 680,837 (0.5 )%
Charity and uninsured admissions 9,533 9,089 4.9 % 38,141 36,381 4.8 %
Admissions through emergency department 110,674 110,291 0.3 % 451,785 452,593 (0.2 )%
Paying admissions as a percentage of total admissions 94.6 % 94.8 % (0.2 )% * 94.7 % 94.9 % (0.2 )% *
Charity and uninsured admissions as a percentage of total admissions 5.4 % 5.2 % 0.2 % * 5.3 % 5.1 % 0.2 % *
Emergency department admissions as a percentage of total admissions 63.0 % 62.6 % 0.4 % * 63.1 % 63.1 % % *
Surgeries — inpatient 48,264 49,239 (2.0 )% 195,641 196,352 (0.4 )%
Surgeries — outpatient 64,053 65,046 (1.5 )% 256,301 254,932 0.5 %
Total surgeries 112,317 114,285 (1.7 )% 451,942 451,284 0.1 %
Patient days — total 798,205 803,037 (0.6 )% 3,269,558 3,286,026 (0.5 )%
Adjusted patient days 1,370,960 1,379,612 (0.6 )% 5,612,240 5,567,041 0.8 %
Average length of stay (days) 4.54 4.56 (0.4 )% 4.57 4.58 (0.2 )%
Licensed beds (at end of period) 18,118 18,130 (0.1 )% 18,118 18,130 (0.1 )%
Average licensed beds 18,090 18,154 (0.4 )% 18,127 18,217 (0.5 )%
Utilization of licensed beds 48.0 % 48.1 % (0.1 )% * 49.4 % 49.4 % % *
Outpatient Visits
Total visits 1,782,614 1,806,125 (1.3 )% 7,273,671 7,176,650 1.4 %
Paying visits (excludes charity and uninsured) 1,671,428 1,680,609 (0.5 )% 6,784,173 6,670,711 1.7 %
Charity and uninsured visits 111,186 125,516 (11.4 )% 489,498 505,939 (3.2 )%
Emergency department visits 620,622 626,280 (0.9 )% 2,560,308 2,520,481 1.6 %
Paying visits as a percentage of total visits 93.8 % 93.1 % 0.7 % * 93.3 % 93.0 % 0.3 % *
Charity and uninsured visits as a percentage of total visits 6.2 % 6.9 % (0.7 )% * 6.7 % 7.0 % (0.3 )% *
Total emergency department admissions and visits 731,296 736,571 (0.7 )% 3,012,093 2,973,074 1.3 %
Revenues
Net inpatient revenues $ 2,442 $ 2,358 3.6 % $ 9,776 $ 9,334 4.7 %
Net outpatient revenues $ 1,340 $ 1,308 2.4 % $ 5,347 $ 5,103 4.8 %
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,901 $ 13,394 3.8 % $ 13,663 $ 13,014 5.0 %
Net inpatient revenue per patient day $ 3,059 $ 2,936 4.2 % $ 2,990 $ 2,841 5.2 %
Net outpatient revenue per visit $ 752 $ 724 3.9 % $ 735 $ 711 3.4 %
Net patient revenue per adjusted patient admission $ 12,444 $ 12,003 3.7 % $ 12,203 $ 11,756 3.8 %
Net patient revenue per adjusted patient day $ 2,759 $ 2,657 3.8 % $ 2,695 $ 2,593 3.9 %
 
Net Patient Revenues from:
Medicare 19.9 % 19.9 % % * 20.1 % 20.7 % (0.6 )% *
Medicaid 8.1 % 8.3 % (0.2 )% * 8.2 % 8.7 % (0.5 )% *
Managed care 61.4 % 61.8 % (0.4 )% * 61.7 % 61.1 % 0.6 % *
Indemnity, self-pay and other 10.6 % 10.0 % 0.6 % * 10.0 % 9.5 % 0.5 % *
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the years ended December 31, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals Tenet divested, since January 1, 2015.
* This change is the difference between the 2016 and 2015 amounts shown
 
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
(Dollars in millions except per share amounts)     Three Months Ended     Year Ended
  3/31/2016         6/30/2016         9/30/2016         12/31/2016     12/31/2016  
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,420 $ 5,220 $ 5,216 $ 5,214 $ 21,070
Less: Provision for doubtful accounts   376     352     367     354     1,449  
Net operating revenues 5,044 4,868 4,849 4,860 19,621
Equity in earnings of unconsolidated affiliates 24 30 31 46 131
Operating expenses:
Salaries, wages and benefits 2,402 2,316 2,314 2,324 9,356
Supplies 811 773 767 773 3,124
Other operating expenses, net 1,242 1,213 1,231 1,205 4,891
Electronic health record incentives (21 ) (2 ) (9 ) (32 )
Depreciation and amortization 212 215 205 218 850
Impairment and restructuring charges, and acquisition-related costs 28 22 31 121 202
Litigation and investigation costs 173 114 4 2 293
Gains on sales, consolidation and deconsolidation of facilities   (147 )   (1 )   (3 )       (151 )
Operating income 347 267 333 272 1,219
Interest expense (243 ) (244 ) (243 ) (249 ) (979 )
Investment earnings (loss)   1     2     (1 )   6     8  
Net income from continuing operations, before income taxes 105 25 89 29 248
Income tax benefit (expense)   (67 )   16     (10 )   (6 )   (67 )
Net income from continuing operations, before discontinued operations 38 41 79 23 181
Discontinued operations:
Income (loss) from operations (5 ) (2 ) 2 (1 ) (6 )
Income tax benefit (expense)   1         (1 )   1     1  
Net Income (loss) from discontinued operations   (4 )   (2 )   1         (5 )
Net income 34 39 80 23 176
Less: Net income attributable to noncontrolling interests   93     85     88     102     368  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (59 ) $ (46 ) $ (8 ) $ (79 ) $ (192 )
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net loss from continuing operations, net of tax $ (55 ) $ (44 ) $ (9 ) $ (79 ) $ (187 )
Net income (loss) from discontinued operations, net of tax   (4 )   (2 )   1         (5 )
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (59 ) $ (46 ) $ (8 ) $ (79 ) $ (192 )
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.56 ) $ (0.44 ) $ (0.09 ) $ (0.79 ) $ (1.88 )
Discontinued operations   (0.04 )   (0.02 )   0.01         (0.05 )
$ (0.60 ) $ (0.46 ) $ (0.08 ) $ (0.79 ) $ (1.93 )
Diluted
Continuing operations $ (0.56 ) $ (0.44 ) $ (0.09 ) $ (0.79 ) $ (1.88 )
Discontinued operations   (0.04 )   (0.02 )   0.01         (0.05 )
$ (0.60 ) $ (0.46 ) $ (0.08 ) $ (0.79 ) $ (1.93 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 98,768 99,341 99,523 99,651 99,321
Diluted 98,768 99,341 99,523 99,651 99,321
 
 
TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)
 
(Dollars in millions except per patient day,                    
per admission, per adjusted admission Three Months Ended Year Ended
and per visit amounts)   3/31/2016     6/30/2016     9/30/2016     12/31/2016     12/31/2016  
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 80 75 75 75 75
Total admissions 211,799 193,898 194,342 192,104 792,143
Adjusted patient admissions 362,819 342,813 345,207 338,929 1,389,768
Paying admissions (excludes charity and uninsured) 201,436 183,539 183,042 181,617 749,634
Charity and uninsured admissions 10,363 10,359 11,300 10,487 42,509
Admissions through emergency department 136,056 122,283 120,447 120,549 499,335
Paying admissions as a percentage of total admissions 95.1 % 94.7 % 94.2 % 94.5 % 94.6 %
Charity and uninsured admissions as a percentage of total admissions 4.9 % 5.3 % 5.8 % 5.5 % 5.4 %
Emergency department admissions as a percentage of total admissions 64.2 % 63.1 % 62.0 % 62.8 % 63.0 %
Surgeries — inpatient 55,755 54,379 54,701 53,071 217,906
Surgeries — outpatient 76,829 75,821 72,646 73,678 298,974
Total surgeries 132,584 130,201 127,346 126,749 516,880
Patient days — total 1,010,514 897,313 894,323 888,185 3,690,335
Adjusted patient days 1,714,369 1,569,272 1,567,894 1,543,490 6,395,025
Average length of stay (days) 4.77 4.63 4.60 4.62 4.66
Licensed beds (at end of period) 21,529 20,380 20,340 20,354 20,354
Average licensed beds 21,524 20,380 20,367 20,326 20,651
Utilization of licensed beds 51.6 % 48.4 % 47.7 % 47.5 % 48.8 %
Outpatient Visits
Total visits 2,146,618 2,038,287 2,009,019 1,950,549 8,144,473
Paying visits (excludes charity and uninsured) 1,984,515 1,896,394 1,862,046 1,834,844 7,577,799
Charity and uninsured visits 162,103 141,893 146,973 115,705 566,674
Emergency department visits 789,916 715,692 707,713 701,100 2,914,421
Paying visits as a percentage of total visits 92.4 % 93.0 % 92.7 % 94.1 % 93.0 %
Charity and uninsured visits as a percentage of total visits 7.6 % 7.0 % 7.3 % 5.9 % 7.0 %
Total emergency department admissions and visits 925,972 837,975 828,160 821,649 3,413,756
Revenues
Net inpatient revenues $ 2,781 $ 2,588 $ 2,644 $ 2,606 $ 10,619
Net outpatient revenues $ 1,514 $ 1,460 $ 1,417 $ 1,457 $ 5,848
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,130 $ 13,347 $ 13,605 $ 13,566 $ 13,405
Net inpatient revenue per patient day $ 2,752 $ 2,884 $ 2,956 $ 2,934 $ 2,878
Net outpatient revenue per visit $ 705 $ 716 $ 705 $ 747 $ 718
Net patient revenue per adjusted patient admission $ 11,838 $ 11,808 $ 11,764 $ 11,988 $ 11,849
Net patient revenue per adjusted patient day $ 2,505 $ 2,580 $ 2,590 $ 2,632 $ 2,575
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission $ 10,537 $ 10,668 $ 10,666 10,743 $ 10,651
 
Net Patient Revenues from:
Medicare 20.0 % 21.7 % 19.9 % 20.4 % 20.5 %
Medicaid 8.7 % 7.4 % 8.4 % 8.2 % 8.2 %
Managed care 61.1 % 59.4 % 64.0 % 61.4 % 61.5 %
Indemnity, self-pay and other 10.2 % 11.5 % 7.7 % 10.0 % 9.8 %
(1)   Represents the consolidated results of Tenet’s Hospital Operations and other segment.
 
 
TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)
 
(Dollars in millions except per patient day,                    
per admission, per adjusted admission Three Months Ended Year Ended
and per visit amounts)   3/31/2016     6/30/2016       9/30/2016     12/31/2016     12/31/2016  
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 67 67 67 67 67
Total admissions 185,053 177,151 177,626 175,672 715,502
Adjusted patient admissions 315,787 309,372 310,253 303,912 1,239,324
Paying admissions (excludes charity and uninsured) 176,286 167,717 167,219 166,139 677,361
Charity and uninsured admissions 8,767 9,434 10,407 9,533 38,141
Admissions through emergency department 118,578 111,994 110,539 110,674 451,785
Paying admissions as a percentage of total admissions 95.3 % 94.7 % 94.1 % 94.6 % 94.7 %
Charity and uninsured admissions as a percentage of total admissions 4.7 % 5.3 % 5.9 % 5.4 % 5.3 %
Emergency department admissions as a percentage of total admissions 64.1 % 63.2 % 62.2 % 63.0 % 63.1 %
Surgeries — inpatient 48,547 49,222 49,608 48,264 195,641
Surgeries — outpatient 63,999 65,678 62,571 64,053 256,301

Total surgeries

112,546 114,900 112,179 112,317 451,942
Patient days — total 862,138 805,662 803,553 798,205 3,269,558
Adjusted patient days 1,456,580 1,394,486 1,390,214 1,370,960 5,612,240
Average length of stay (days) 4.66 4.55 4.52 4.54 4.57
Licensed beds (at end of period) 18,144 18,144 18,104 18,118 18,118
Average licensed beds 18,139 18,144 18,131 18,090 18,127
Utilization of licensed beds 52.8 % 48.8 % 48.2 % 48.0 % 49.4 %
Outpatient Visits
Total visits 1,854,735 1,830,522 1,805,800 1,782,614 7,273,671
Paying visits (excludes charity and uninsured) 1,728,684 1,707,375 1,676,686 1,671,428 6,784,173
Charity and uninsured visits 126,051 123,147 129,114 111,186 489,498
Emergency department visits 670,678 640,774 628,234 620,622 2,560,308
Paying visits as a percentage of total visits 93.2 % 93.3 % 92.9 % 93.8 % 93.3 %
Charity and uninsured visits as a percentage of total visits 6.8 % 6.7 % 7.1 % 6.2 % 6.7 %
Total emergency department admissions and visits 789,256 752,768 738,773 731,296 3,012,093
Revenues
Net inpatient revenues $ 2,499 $ 2,400 $ 2,435 $ 2,442 $ 9,776
Net outpatient revenues $ 1,331 $ 1,343 $ 1,333 $ 1,340 $ 5,347
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 13,504 $ 13,548 $ 13,709 $ 13,901 $ 13,663
Net inpatient revenue per patient day $ 2,899 $ 2,979 $ 3,030 $ 3,059 $ 2,990
Net outpatient revenue per visit $ 718 $ 734 $ 738 $ 752 $ 735
Net patient revenue per adjusted patient admission $ 12,128 $ 12,099 $ 12,145 $ 12,444 $ 12,203
Net patient revenue per adjusted patient day $ 2,629 $ 2,684 $ 2,710 $ 2,759 $ 2,695
 
Net Patient Revenues from:
Medicare 20.6 % 20.1 % 19.7 % 19.9 % 20.1 %
Medicaid 8.5 % 7.8 % 8.5 % 8.1 % 8.2 %
Managed care 61.5 % 62.1 % 61.7 % 61.4 % 61.7 %
Indemnity, self-pay and other 9.4 % 10.0 % 10.1 % 10.6 % 10.0 %
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the years ended December 31, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals Tenet divested, since January 1, 2015.
 
 
TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)
 
(Dollars in millions except per patient day,                    
per admission, per adjusted admission Three Months Ended Year Ended
and per visit amounts)   03/31/15     06/30/15     9/30/2015     12/31/2015     12/31/2015  
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 67 67 67 67 67
Total admissions 185,147 179,135 176,885 176,051 717,218
Adjusted patient admissions 308,729 307,958 305,916 305,436 1,228,039
Paying admissions (excludes charity and uninsured) 176,023 170,389 167,463 166,962 680,837
Charity and uninsured admissions 9,124 8,746 9,422 9,089 36,381
Admissions through emergency department 118,326 113,741 110,235 110,291 452,593
Paying admissions as a percentage of total admissions 95.1 % 95.1 % 94.7 % 94.8 % 94.9 %
Charity and uninsured admissions as a percentage of total admissions 4.9 % 4.9 % 5.3 % 5.2 % 5.1 %
Emergency department admissions as a percentage of total admissions 63.9 % 63.5 % 62.3 % 62.6 % 63.1 %
Surgeries — inpatient 48,295 49,291 49,527 49,239 196,352
Surgeries — outpatient 60,494 64,407 64,985 65,046 254,932

Total surgeries

108,789 113,698 114,512 114,285 451,284
Patient days — total 860,927 817,881 804,181 803,037 3,286,026
Adjusted patient days 1,421,505 1,391,305 1,374,619 1,379,612 5,567,041
Average length of stay (days) 4.65 4.57 4.55 4.56 4.58
Licensed beds (at end of period) 18,244 18,244 18,201 18,130 18,130
Average licensed beds 18,241 18,244 18,233 18,154 18,217
Utilization of licensed beds 52.4 % 49.3 % 47.9 % 48.1 % 49.4 %
Outpatient Visits
Total visits 1,762,868 1,815,393 1,792,264 1,806,125 7,176,650
Paying visits (excludes charity and uninsured) 1,639,131 1,691,554 1,659,417 1,680,609 6,670,711
Charity and uninsured visits 123,737 123,839 132,847 125,516 505,939
Emergency department visits 636,860 632,470 624,871 626,280 2,520,481
Paying visits as a percentage of total visits 93.0 % 93.2 % 92.6 % 93.1 % 93.0 %
Charity and uninsured visits as a percentage of total visits 7.0 % 6.8 % 7.4 % 6.9 % 7.0 %
Total emergency department admissions and visits 755,186 746,211 735,106 736,571 2,973,074
Revenues
Net inpatient revenues $ 2,382 $ 2,305 $ 2,289 $ 2,358 $ 9,334
Net outpatient revenues $ 1,226 $ 1,281 $ 1,288 $ 1,308 $ 5,103
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission $ 12,865 $ 12,867 $ 12,941 $ 13,394 $ 13,014
Net inpatient revenue per patient day $ 2,767 $ 2,818 $ 2,846 $ 2,936 $ 2,841
Net outpatient revenue per visit $ 695 $ 706 $ 719 $ 724 $ 711
Net patient revenue per adjusted patient admission $ 11,687 $ 11,644 $ 11,693 $ 12,003 $ 11,756
Net patient revenue per adjusted patient day $ 2,538 $ 2,577 $ 2,602 $ 2,657 $ 2,593
 
Net Patient Revenues from:
Medicare 21.9 % 20.7 % 20.2 % 19.9 % 20.7 %
Medicaid 9.4 % 8.3 % 8.8 % 8.3 % 8.7 %
Managed care 59.1 % 61.6 % 61.7 % 61.8 % 61.1 %
Indemnity, self-pay and other 9.6 % 9.4 % 9.3 % 10.0 % 9.5 %
(1)   Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 67 hospitals operated throughout the years ended December 31, 2016 and 2015, associated outpatient facilities and excludes the results of eight hospitals that Tenet acquired, as well as hospitals Tenet divested, since January 1, 2015.
 
 
TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
 
            December 31,     December 31,
  2016     2015  
Assets
Hospital Operations and other $ 17,871 $ 17,353
Ambulatory Care 5,722 5,159
Conifer   1,108     1,170  
Total $ 24,701   $ 23,682  
 
Three Months Ended Years Ended
December 31, December 31,
  2016     2015    

2016

    2015  
Capital expenditures:
Hospital Operations and other $ 242 $ 250 $ 799 $ 786
Ambulatory Care 9 14 51 28
Conifer   10     12     25     28  
Total $ 261   $ 276   $ 875   $ 842  
 
Net operating revenues:
Hospital Operations and other $ 4,143 $ 4,423 $ 16,904 $ 16,928
Ambulatory Care 478 397 1,797 959
Conifer
Tenet 163 178 651 666
Other customers   239     206     920     747  
Total Conifer revenues   402     384     1,571     1,413  
Intercompany eliminations   (163 )   (178 )   (651 )   (666 )
Total $ 4,860   $ 5,026   $ 19,621   $ 18,634  
 
Equity in earnings of unconsolidated affiliates:
Hospital Operations and other $ 3 $ 4 $ 9 $ 16
Ambulatory Care   43     47     122     83  
Total $ 46   $ 51   $ 131   $ 99  
 
Adjusted EBITDA:
Hospital Operations and other $ 358 $ 394 $ 1,521 $ 1,653
Ambulatory Care 183 158 615 358
Conifer   72     61     277     265  
Total $ 613   $ 613   $ 2,413   $ 2,276  
 
Depreciation and amortization:
Hospital Operations and other $ 184 $ 177 $ 709 $ 702
Ambulatory Care 22 18 91 46
Conifer   12     13     50     49  
Total $ 218   $ 208   $ 850   $ 797  
 
 
TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
(Unaudited)
 
(Dollars in millions)     Three Months Ended December 31,
2016     2015
       
Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 487 $ 582 $ 404 $ 637
Less: Provision for doubtful accounts   (9 )   (12 )   (7 )   (13 )

Net operating revenues (1)

478

570

397

624

Equity in earnings of unconsolidated affiliates (2)

43

47

Operating expenses:

 

Salaries, wages and benefits 157 124 130 135
Supplies 99 145 79 148
Other operating expenses, net 83 101 78 111
Electronic health record incentives (1 ) (1 )
Depreciation and amortization 22 17 18 20
Impairment and restructuring charges, and acquisition-related costs 17 3 (2 )
(Gains) loss on sales, consolidation and deconsolidation of facilities       4     (32 )    
Operating income 144 179 169 212
Interest expense (35 ) (6 ) (35 ) (7 )
Other   2              
Net income from continuing operations, before income taxes 111 173 134 205
Income tax expense   (17 )   (3 )   (16 )   (3 )
Net income $ 94 $ 170   $ 118 $ 202  
Less: Net income attributable to noncontrolling interests(3)   81     85  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 13   $ 33  
Equity in earnings of unconsolidated affiliates $ 43 $ 47
(1)   On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 5.9% during the three months ended December 31, 2016, with cases increasing 1.7% and revenue per case increasing 4.1%.
(2) At December 31, 2016, 108 of the 323 facilities in the Company’s newly formed Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. The Company controls its remaining 215 facilities and account for these investments as consolidated subsidiaries.
(3)

During the three months ended December 31, 2016, the Company recorded a $5 million noncontrolling interests benefit related to $17 million of impairment and restructuring charges, and acquisition-related costs not included in Adjusted EBITDA.

 
 
TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS
(Unaudited)
 
    Years Ended December 31,
2016     2015
       
Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates Ambulatory Care as Reported Under GAAP Unconsolidated Affiliates
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 1,833 $ 2,073 $ 1,366 $ 2,213
Less: Provision for doubtful accounts   (36 )   (53 )   (23 )   (53 )
Net operating revenues (1) 1,797 2,020 1,343 2,160
Equity in earnings of unconsolidated affiliates (2) 122 126
Operating expenses:
Salaries, wages and benefits 594 477 438 514
Supplies 365 520 253 542
Other operating expenses, net 346 404 290 448
Electronic health record incentives (1 ) (1 )
Depreciation and amortization 91 68 64 80
Impairment and restructuring charges, and acquisition-related costs 26 1 5 1
(Gains) loss on sales, consolidation and deconsolidation of facilities   (33 )   7     (32 )    
Operating income 531 543 452 575
Interest expense (140 ) (24 ) (137 ) (28 )
Other   2     6         (2 )
Net income from continuing operations, before income taxes 393 525 315 545
Income tax expense   (54 )   (8 )   (52 )   (8 )
Net Income $ 339 $ 517   $ 263 $ 537  
Less: Net income attributable to noncontrolling interests(3)   285     206  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 54   $ 57  
Equity in earnings of unconsolidated affiliates $ 122 $ 126
(1)   On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 9.6% during the year ended December 31, 2016, with cases increasing 5.2% and revenue per case increasing 4.2%.
(2) At December 31, 2016, 108 of the 323 facilities in the Company’s newly formed Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. The Company controls its remaining 215 facilities and account for these investments as consolidated subsidiaries.
(3)

During the year ended December 31, 2016, the Company recorded $14 million of net noncontrolling interests expense related to a $33 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA) and an associated $7 million income tax benefit, net of $26 million of impairment and restructuring charges, and acquisition-related costs not included in Adjusted EBITDA.

 
 

Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss (income) attributable to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax benefit (expense), (5) investment earnings (losses), (6) gain (loss) from early extinguishment of debt, (7) interest expense, (8) litigation and investigation (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, and (11) depreciation and amortization. Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.

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

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

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

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

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

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

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

A reconciliation of Adjusted EBITDA to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #1 below for the three and twelve months ended December 31, 2016 and 2015. A reconciliation of Adjusted net income from continuing operations to net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, is set forth in Table #2 below for the three and twelve months ended December 31, 2016 and 2015. A reconciliation of Free Cash Flow and Adjusted Free Cash Flow to net cash provided by (used in) operating activities, the most comparable GAAP measure, is set forth in Table #3 below for the three and twelve months ended December 31, 2016 and 2015.

 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Adjusted EBITDA to Loss Attributable
to Tenet Healthcare Corporation Common Shareholders

(Unaudited)

 
(Dollars in millions)     Three Months Ended     Years Ended
December 31, December 31,
  2016         2015     2016         2015  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (79 ) $ (97 ) $ (192 ) $ (140 )
Less: Net income attributable to noncontrolling interests (102 ) (99 ) (368 ) (218 )
Net income (loss) from discontinued operations, net of tax       3     (5 )   2  
Net income (loss) from continuing operations 23 (1 ) 181 76
Income tax expense (6 ) (68 ) (67 ) (68 )
Investment earnings 6 1 8 1
Loss from early extinguishment of debt (1 ) (1 )
Interest expense   (249 )   (248 )   (979 )   (912 )
Operating income 272 315 1,219 1,056
Litigation and investigation costs (2 ) (224 ) (293 ) (291 )
Gains on sales, consolidation and deconsolidation of facilities 186 151 186
Impairment and restructuring charges, and acquisition-related costs (121 ) (52 ) (202 ) (318 )
Depreciation and amortization   (218 )   (208 )   (850 )   (797 )
Adjusted EBITDA $ 613   $ 613   $ 2,413   $ 2,276  
 
Net operating revenues $ 4,860   $ 5,026   $ 19,621   $ 18,634  
 
Net loss from continuing operations as a % of operating revenues (1.6 )% (2.0 )% (1.0 )% (0.8 )%
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 12.6 % 12.2 % 12.3 % 12.2 %
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Pre-Tax, After-Tax and Earnings Per Share Impact of Certain Items
on Continuing Operations

(Unaudited)

 
    Three Months Ended     Years Ended
(Dollars in millions except per share amounts) December 31, December 31,
  2016         2015     2016         2015  
Adjustments to calculate Adjusted Diluted EPS (Expense) Income
Impairment and restructuring charges, and acquisition-related costs $ (121 ) $ (52 ) $ (202 ) $ (318 )
Litigation and investigation costs (2 ) (224 ) (293 ) (291 )
Loss from early extinguishment of debt (1 ) (1 )
Gain on sales, consolidation and deconsolidation of facilities       186     151     186  
Pre-tax impact $ (123 ) $ (91 ) $ (344 ) $ (424 )
Tax impact of above items $ 33   $ (24 ) $ 66   $ 94  
Total after-tax impact $ (90 ) $ (115 ) $ (278 ) $ (330 )
Noncontrolling interests impact   5     (20 )   (14 )   (20 )
Total loss from items above $ (85 ) $ (135 ) $ (292 ) $ (350 )
 
Net income available (loss attributable) to common shareholders $ (79 ) $ (97 ) $ (192 ) $ (140 )
Less net income (loss) discontinued operations, net of tax       3     (5 )   2  
Net loss from continuing operations, net of tax $ (79 ) $ (100 ) $ (187 ) $ (142 )
Net loss from adjustments above   85     135     292     350  
Adjusted net income from continuing operations $ 6   $ 35   $ 105   $ 208  
 
Weighted average dilutive shares outstanding (in thousands) 100,928 101,361 100,742 101,547
Diluted loss per share from continuing operations $ (0.79 ) $ (1.01 ) $ (1.88 ) $ (1.43 )
Adjusted diluted EPS from continuing operations $ 0.06 $ 0.35 $ 1.04 $ 2.05
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 
    Three Months Ended     Years Ended
(Dollars in millions) December 31, December 31,
  2016         2015     2016         2015  
Net cash provided by (used in) operating activities $ (293 ) $ 191 $ 558 $ 1,026
Purchases of property and equipment   (261 )   (276 )   (875 )   (842 )
Free cash flow $ (554 ) $ (85 ) $ (317 ) $ 184  
 
Net cash provided by (used in) investing activities $ (280 ) $ (45 ) $ (430 ) $ (1,317 )
Net cash provided by (used in) financing activities $ 640 $ (240 ) $ 232 $ 454
 
Net cash provided by (used in) operating activities $ (293 ) $ 191 $ 558 $ 1,026
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (559 ) (43 ) (691 ) (200 )
Net cash used in operating activities from discontinued operations   (7 )   (3 )   (6 )   (21 )
Adjusted net cash provided by operating activities – continuing operations 273 237 1,255 1,247
Purchases of property and equipment – continuing operations   (261 )   (276 )   (875 )   (842 )
Adjusted free cash flow – continuing operations $ 12   $ (39 ) $ 380   $ 405  
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 – Reconciliation of Outlook Adjusted EBITDA to
Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)

 
(Dollars in millions)     Q1 2017     2017
Low     High Low     High
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $(65 ) $ (45 ) $ 97 $ 133
Less: Net (income) loss attributable to noncontrolling interests (85 ) (95 ) (390 ) (410 )
Net loss from discontinued operations, net of tax (5 )   -     (10 )   -  
Income from continuing operations 25 50 497 543
Income tax benefit (expense) 15     10     (118 )   (142 )
Income from continuing operations, before income taxes 10 40 615 685
Interest expense (250 )   (260 )   (1,025 )   (1,035 )
Operating income 260 300 1,640 1,720
Depreciation and amortization (215 )   (225 )   (860 )   (880 )
Adjusted EBITDA $475   $ 525   $ 2,500   $ 2,600  
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 10.0 % 10.6 % 12.7 % 12.9 %
 
Net income (loss) from continuing operations $(60 ) $ (45 ) $ 107 $ 133
 
Net income (loss) from continuing operations as a % of operating revenues (1.3 )% (0.9 )% 0.5 % 0.7 %
     
Net operating revenues $4,750   $ 4,950   $ 19,700   $ 20,100  
 
Adjusted EBITDA $475 $ 525 $ 2,500 $ 2,600
Depreciation and amortization (215 ) (225 ) (860 ) (880 )
Interest expense (250 )   (260 )   (1,025 )   (1,035 )
Adjusted income from continuing operations before income taxes 10 40 615 685
Income tax benefit (expense) 15     10     (118 )   (142 )
Adjusted income from continuing operations 25 50 497 543
Net income attributable to noncontrolling interests (85 )   (95 )   (390 )   (410 )
Adjusted net income (loss) attributable to common shareholders $(60 ) $ (45 ) $ 107   $ 133  
 
Basic weighted average shares outstanding (in millions) 100 100 100 100
 
Fully diluted weighted average shares outstanding (in millions) 101 101 102 102
 
Diluted earnings (loss) per share from continuing operations $(0.60 ) $ (0.45 ) $ 1.05 $ 1.30
 
Adjusted diluted earnings (loss) per share from continuing operations $(0.60 ) $ (0.45 ) $ 1.05 $ 1.30
The Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements and gains on sales, consolidation and deconsolidation of facilities because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2017
 
(Dollars in millions)     2017
Low     High
Net cash provided by operating activities $ 1,295 $ 1,550
Less:
Net cash used in operating activities from discontinued operations   (5 )   0  
Adjusted net cash provided by operating activities – continuing operations $ 1,300 $ 1,550
Purchases of property and equipment – continuing operations   (700 )   (750 )
Adjusted free cash flow – continuing operations (1) $ 600   $ 800  
    The Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook.
(1) The Company’s definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest.

Contact:

Tenet Healthcare Corporation
Corporate Communications
Charles Nicolas, 469-893-2640
mediarelations@tenethealth.com
or
Investor Relations
Brendan Strong, 469-893-6992
investorrelations@tenethealth.com