Tenet Reports Results for the Third Quarter Ended September 30, 2018

  • Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million or $0.09 per diluted share in the third quarter of 2018 compared to a net loss of $366 million or $3.63 per diluted share in the third quarter of 2017. After adjusting for certain items, which totaled $39 million or $0.38 per share in the third quarter of 2018, Tenet reported Adjusted diluted earnings per share from continuing operations of $0.29 in the third quarter of 2018 compared to an Adjusted diluted loss per share of $0.17 in the third quarter of 2017.
  • Adjusted EBITDA was $577 million in the third quarter of 2018 compared to $507 million in the third quarter of 2017. Adjusted EBITDA in the third quarter of 2018 consisted of $312 million in the Hospital Operations and other segment, $184 million in the Ambulatory Care segment and $81 million in the Conifer segment.
  • Net cash provided by operating activities was $799 million in the nine months ended September 30, 2018, an increase of $90 million when compared to $709 million in the first nine months of 2017. Free Cash Flow was $395 million, an increase of $178 million compared to $217 million in the first nine months of 2017. Adjusted Free Cash Flow was $512 million, a $204 million increase compared to $308 million in the first nine months of 2017.
  • Hospital segment same-hospital net patient revenue grew 6.0 percent. Admissions decreased 2.1 percent, adjusted admissions increased 0.3 percent, and revenue per adjusted admission increased 5.7 percent.
  • Ambulatory Care segment same-facility system-wide revenue grew 6.7 percent, with cases up 5.0 percent and revenue per case up 1.6 percent. Surgical revenue grew 6.6 percent, with cases up 4.0 percent and revenue per surgical case up 2.5 percent.
  • Conifer segment margins increased 210 basis points as a result of cost reduction actions; revenues decreased 7.5 percent primarily due to client attrition following divestitures by Tenet and other customers.
  • The Company has revised its Outlook for 2018. Tenet now expects net income from continuing operations available to Tenet common shareholders of $84 million to $144 million, Adjusted EBITDA of $2.525 billion to $2.575 billion, diluted earnings per share from continuing operations of $0.81 to $1.38 and Adjusted diluted earnings per share from continuing operations of $1.44 to $1.83.
  • Adjusted EBITDA in 2019 expected to be in line with current sell-side consensus expectations; 3 percent to 5 percent Adjusted EBITDA growth anticipated in 2019.
Monday, November 5, 2018 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 attributable to Tenet common shareholders of $9 million in the third quarter of 2018 compared to a $366 million net loss from continuing operations in the third quarter of 2017. Adjusted EBITDA was $577 million in the third quarter of 2018 compared to $507 million in the third quarter of 2017.

Ronald A. Rittenmeyer, Executive Chairman and CEO, said, “We had a solid quarter of results at both USPI and Conifer. Our hospitals did not meet our expectations and we are focusing on specific areas to address those gaps. Strengthening enterprise operations remains our primary focus – and we will continue moving with urgency to implement targeted growth initiatives, achieve operational efficiencies, make further enhancements to our facility portfolio and instill culture changes to drive accountability.”

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were $3.762 billion, down 2.7 percent from the third quarter of 2017, primarily due to hospital divestitures, partially offset by same-hospital revenue growth.

On a same-hospital basis, net patient revenues after implicit price concessions were $3.432 billion, up 6.0 percent from the third quarter of 2017. Adjusted admissions grew 0.3 percent in the third quarter of 2018 and would have been up approximately 1.3 percent on a same-hospital basis excluding service line closures and declines in Detroit. The Company’s decision to discontinue certain services at selected hospitals lowered same-hospital adjusted admissions by approximately 30 basis points in the third quarter of 2018. In addition, volume declines in Detroit lowered same-hospital adjusted admissions by approximately 70 basis points. Revenue per adjusted admission increased 5.7 percent on a same-hospital basis. Same-hospital revenue included $71 million from the California Provider Fee Program in the third quarter of 2018 compared to no revenue in the third quarter of 2017 since the 2017 program was not approved until December 2017; excluding timing differences related to the California Provider Fee, same-hospital revenue per adjusted admission increased 3.6 percent.

Adjusted EBITDA in Tenet’s hospital segment was $312 million, an increase of $43 million or 16.0 percent as compared to $269 million in the third quarter of 2017. Key items impacting the year-over-year comparison in Adjusted EBITDA include: (i) a $71 million increase in California Provider Fee revenue, (ii) a $13 million decline in EBITDA due to facilities that have been divested; (iii) a $16 million gain in the third quarter of 2018 from the sale of a minority interest investment which was recorded as a reduction in other operating expenses, (iv) a $4 million impact from hurricanes in the third quarter of 2018 compared to a $20 million impact in the third quarter of 2017, (v) an unanticipated $21 million loss on risk-based contracts in California in the third quarter of 2018 compared to $2 million of EBITDA in the third quarter of 2017, (vi) $11 million of negative EBITDA in the third quarter of 2018 from three hospitals that are being divested compared to $2 million of negative EBITDA in the third quarter of 2017, and (vii) a $1 million decline in electronic health record incentives. After normalizing for these items, Adjusted EBITDA in the hospital segment declined by $10 million, or 2.9 percent.

Tenet’s health plan business recognized $8 million of revenue and $9 million of Adjusted EBITDA in the third quarter of 2018 versus $10 million of revenue and negative $6 million of Adjusted EBITDA in the third quarter of 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the hospital segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 3.9 percent on a per adjusted admission basis in the third quarter of 2018. Salaries, wages and benefits and supply expense were well managed, increasing 0.9 percent and 4.6 percent per adjusted admission, respectively. Other operating expenses increased 9.5 percent per adjusted admission primarily due to the aforementioned losses on risk-based contracts in California and an increase in malpractice expense, partially offset by the aforementioned $16 million gain on the sale of an asset.

Exchanges

Tenet’s same-hospital exchange outpatient visits increased 8.1 percent to 51,539 in the third quarter of 2018. Same-hospital exchange admissions were 4,577 in the third quarter of 2018, down 4.0 percent from the third quarter of 2017.

Ambulatory Care Segment

During the third quarter of 2018, the Ambulatory segment produced net operating revenues of $502 million, representing an increase of 7.3 percent as compared to $468 million in the third quarter of 2017. In addition, the Ambulatory segment generated Adjusted EBITDA of $184 million, up 15.7 percent from $159 million in the third quarter of 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $116 million, up 11.5 percent from $104 million in the third quarter of 2017.

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze the segment’s results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities. On a same-facility system-wide basis, revenue in the Ambulatory segment increased 6.7 percent, with cases increasing 5.0 percent and revenue per case increasing 1.6 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory segment, same-facility system-wide revenue grew 6.6 percent, with cases up 4.0 percent and revenue per case up 2.5 percent. In the non-surgical business, same-facility system-wide revenue grew 9.4 percent, with visits up 6.6 percent and revenue per visit up 2.5 percent.

Conifer Segment

During the third quarter of 2018, primarily due to client attrition following divestitures by Tenet and other customers, Conifer’s revenue decreased 7.5 percent to $371 million, down from $401 million in the third quarter of 2017. Revenue from third party customers declined 10.7 percent to $225 million.

Conifer generated $81 million of Adjusted EBITDA in the third quarter of 2018, up 2.5 percent from $79 million in the third quarter of 2017. Adjusted EBITDA margins increased 210 basis points to 21.8 percent in the third quarter of 2018, up from 19.7 percent in the third quarter of 2017.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $9 million, or $0.09 per diluted share, in the third quarter of 2018 compared to a net loss of $366 million, or $3.63 per diluted share, in the third quarter of 2017.

As shown on Table #2 at the end of this release, the net loss from continuing operations attributable to Tenet common shareholders of $9 million included: (i) $46 million of pre-tax impairment and restructuring charges and acquisition-related costs including $21 million of employee severance, $5 million of contract and lease termination fees, and $20 million of other items; (ii) $9 million of pre-tax litigation and investigation costs; (iii) $7 million of pre-tax net losses on sales, consolidation and deconsolidation of facilities, and, (iv) $9 million of income from divested and closed businesses. These items collectively lowered pre-tax income by $53 million, after-tax income by $39 million and diluted earnings per share by $0.38.

After adjusting for the items listed above and on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $30 million, or $0.29 per diluted share, during the third quarter of 2018, as compared to an Adjusted net loss from continuing operations attributable to Tenet common shareholders of $17 million, or $0.17 per diluted share, in the third quarter of 2017.

A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) 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 $500 million at September 30, 2018 compared to $403 million at June 30, 2018. The Company had no outstanding borrowings on its $1 billion credit line as of September 30, 2018. Accounts receivable days outstanding from continuing operations were 56.3 at September 30, 2018 compared to 55.1 at June 30, 2018 and 55.8 at December 31, 2017.

Net cash provided by operating activities was $799 in the nine months ended September 30, 2018, representing a $90 million increase compared to $709 million in the first nine months of 2017. After subtracting $404 million and $492 million of capital expenditures in the first nine months of 2018 and 2017, respectively, Free Cash Flow was $395 million in the first nine months of 2018, an increase of $178 million compared to $217 million in the first nine months of 2017. Adjusted Free Cash Flow was $512 million in the first nine months of 2018, representing a $204 million increase from $308 million in the first nine months of 2017.

Net cash provided by investing activities was $120 million in the first nine months of 2018 compared to $227 million in the first nine months of 2017. The 2018 period included $663 million of proceeds from the sales of facilities, long-term investments and other assets, primarily from the sale of the Company’s two hospitals in the Philadelphia area, MacNeal Hospital, Des Peres Hospital, the Company’s minority interests in four Dallas-area hospitals and the sale of Aspen in the United Kingdom. The 2018 period also included $140 million of purchases of businesses, joint ventures and equity investments, primarily related to USPI’s acquisition program.

Net cash used in financing activities was $1.030 billion in the first nine months of 2018 compared to $1.223 billion of net cash used in financing activities in the first nine months of 2017. The 2018 period included $643 million in purchases of noncontrolling interests, including approximately $630 million in the second quarter of 2018 to increase Tenet’s ownership in USPI to 95 percent, and $114 million of cash to retire $118 million of debt through open market purchases.

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

Outlook

The Company’s revised Outlook for 2018 includes a $37 million reduction, at the midpoint, in net income from continuing operations available to Tenet common shareholders and a $50 million reduction, at the midpoint, to Adjusted EBITDA. The Adjusted EBITDA revision reflects the following:

  • Hospital Operations and other segment: Reducing the midpoint of the Adjusted EBITDA Outlook by $60 million to a new range of $1.385 billion to $1.415 billion to include: (i) approximately $25 million of losses on risk-based capitated contracts in California, primarily due to adverse claims experience trends; (ii) lower volume and payer mix expectations; and (iii) increased malpractice expense to settle various cases; the date of loss on many of these cases occurred more than five years ago.
  • Ambulatory Care segment: Increasing the midpoint of the Adjusted EBITDA Outlook by $10 million to a new range of $790 million to $800 million.
  • Conifer segment: Maintaining the Adjusted EBITDA Outlook range of $350 million to $360 million.

Other components of the Company’s Outlook for 2018 include:

  • Revenue of $18.1 billion to $18.3 billion,
  • Net income from continuing operations available to Tenet common shareholders of $84 million to $144 million,
  • Adjusted EBITDA of $2.525 billion to $2.575 billion,
  • Net cash provided by operating activities of $1.060 billion to $1.335 billion,
  • Adjusted Free Cash Flow of $600 million to $800 million,
  • Diluted earnings per share from continuing operations of $0.81 to $1.38, and
  • Adjusted diluted earnings per share from continuing operations of $1.44 to $1.83.

The Outlook for 2018 assumes equity in earnings of unconsolidated affiliates of $150 million to $160 million, net income available to noncontrolling interests of $365 million to $385 million and an average diluted share count of 104 million.

The Company’s Outlook for the fourth quarter of 2018 includes:

  • Revenue of $4.420 billion to $4.620 billion,
  • Net income available (loss attributable) from continuing operations to Tenet common shareholders ranging from a loss of $29 million to income of $31 million,
  • Adjusted EBITDA of $649 million to $699 million,
  • Diluted earnings (loss) per share from continuing operations ranging from a loss of $0.28 to earnings of $0.30, and
  • Adjusted diluted earnings per share from continuing operations ranging from $0.10 to $0.48.

The Outlook for the fourth quarter assumes equity in earnings of unconsolidated affiliates of $53 million to $63 million, net income available to noncontrolling interests of $117 million to $137 million, and an average diluted share count of 105 million.

Additional details on Tenet’s Outlook for both the fourth quarter and calendar year 2018 are available in Tables #4, #5 and #6 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 Third Quarter Results

Tenet management will discuss the Company’s third quarter 2018 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on November 6, 2018. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-Q report for the period ended September 30, 2018, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.

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

Tenet Healthcare Corporation is a diversified healthcare services company with 115,000 employees united around a common mission: to help people live happier, healthier lives. Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International, the Company operates general acute care and specialty hospitals, ambulatory surgery centers, urgent care centers and other outpatient facilities. 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,” “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. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2017, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

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

         

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts) Three Months Ended September 30,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 4,941
Less: Provision for doubtful accounts 355  
Net operating revenues $ 4,489 100.0 % 4,586 100.0 % (2.1 )%
Equity in earnings of unconsolidated affiliates 33 0.7 % 38 0.8 % (13.2 )%
Operating expenses:
Salaries, wages and benefits 2,116 47.1 % 2,264 49.4 % (6.5 )%
Supplies 726 16.2 % 740 16.1 % (1.9 )%
Other operating expenses, net 1,094 24.4 % 1,120 24.4 % (2.3 )%
Electronic health record incentives % (1 ) % (100.0 )%
Depreciation and amortization 204 4.5 % 219 4.8 %
Impairment and restructuring charges, and acquisition-related costs 46 1.0 % 329 7.2 %
Litigation and investigation costs 9 0.2 % 6 0.1 %
Net losses (gains) on sales, consolidation and deconsolidation of facilities 7   0.2 % (104 ) (2.3 )%
Operating income 320 7.1 % 51 1.1 %
Interest expense (249 ) (257 )
Other non-operating expense, net (4 )
Loss from early extinguishment of debt   (138 )
Income (loss) from continuing operations, before income taxes 71 (348 )
Income tax benefit (expense) (6 ) 60  
Income (loss) from continuing operations, before discontinued

operations

65 (288 )
Discontinued operations:
Income (loss) from operations (1 )
Income tax benefit (expense)    
Income (loss) from discontinued operations   (1 )
Net income (loss) 65 (289 )
Less: Net income available to noncontrolling interests 74   78  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (9 ) $ (367 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (9 ) $ (366 )
Loss from discontinued operations, net of tax   (1 )
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (9 ) $ (367 )
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.09 ) $ (3.63 )
Discontinued operations   (0.01 )
$ (0.09 ) $ (3.64 )
Diluted
Continuing operations $ (0.09 ) $ (3.63 )
Discontinued operations   (0.01 )
$ (0.09 ) $ (3.64 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,402 100,812
Diluted* 102,402 100,812
 
* Had we generated income from continuing operations available to common shareholders in the three months ended September 30, 2018 and 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 2,173 thousand and 711 thousand shares, respectively.
 
         

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts) Nine Months Ended September 30,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 15,310
Less: Provision for doubtful accounts 1,109  
Net operating revenues $ 13,694 100.0 % 14,201 100.0 % (3.6 )%
Equity in earnings of unconsolidated affiliates 97 0.7 % 95 0.7 % 2.1 %
Operating expenses:
Salaries, wages and benefits 6,478 47.3 % 6,990 49.3 % (7.3 )%
Supplies 2,248 16.4 % 2,285 16.1 % (1.6 )%
Other operating expenses, net 3,181 23.2 % 3,466 24.4 % (8.2 )%
Electronic health record incentives (1 ) % (8 ) (0.1 )% (87.5 )%
Depreciation and amortization 602 4.4 % 662 4.7 %
Impairment and restructuring charges, and acquisition-related costs 123 0.9 % 403 2.8 %
Litigation and investigation costs 28 0.2 % 12 0.1 %
Net gains on sales, consolidation and deconsolidation of facilities (111 ) (0.8 )% (142 ) (1.0 )%
Operating income 1,243 9.1 % 628 4.4 %
Interest expense (758 ) (775 )
Other non-operating expense, net (2 ) (14 )
Loss from early extinguishment of debt (2 ) (164 )
Income (loss) from continuing operations, before income taxes 481 (325 )
Income tax benefit (expense) (120 ) 105  
Income (loss) from continuing operations, before discontinued

operations

361 (220 )
Discontinued operations:
Income (loss) from operations 3 (1 )
Income tax benefit (expense)    
Income (loss) from discontinued operations 3   (1 )
Net income (loss) 364 (221 )
Less: Net income available to noncontrolling interests 248   254  
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 116   $ (475 )
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax $ 113 $ (474 )
Income (loss) from discontinued operations, net of tax 3   (1 )
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 116   $ (475 )
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ 1.11 $ (4.72 )
Discontinued operations 0.03   (0.01 )
$ 1.14   $ (4.73 )
Diluted
Continuing operations $ 1.09 $ (4.72 )
Discontinued operations 0.03   (0.01 )
$ 1.12   $ (4.73 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 101,980 100,475
Diluted* 103,802 100,475
 
* Had we generated income from continuing operations available to common shareholders in the nine months ended September 30, 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 747 thousand shares.
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
September 30, December 31,
(Dollars in millions) 2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 500 $ 611
Accounts receivable, less allowance for doubtful accounts 2,484 2,616
Inventories of supplies, at cost 307 289
Income tax receivable 27 5
Assets held for sale 128 1,017
Other current assets 1,046   1,035  
Total current assets 4,492 5,573
Investments and other assets 1,462 1,543
Deferred income taxes 348 455
Property and equipment, at cost, less accumulated depreciation and amortization 6,888 7,030
Goodwill 7,313 7,018
Other intangible assets, at cost, less accumulated amortization 1,762   1,766  
Total assets $ 22,265   $ 23,385  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 672 $ 146
Accounts payable 1,065 1,175
Accrued compensation and benefits 814 848
Professional and general liability reserves 230 200
Accrued interest payable 330 256
Liabilities held for sale 71 480
Other current liabilities 1,042   1,227  
Total current liabilities 4,224 4,332
Long-term debt, net of current portion 14,178 14,791
Professional and general liability reserves 627 654
Defined benefit plan obligations 476 536
Deferred income taxes 36 36
Other long-term liabilities 622   631  
Total liabilities 20,163 20,980
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 1,444 1,866
Equity:
Shareholders’ equity:
Common stock 7 7
Additional paid-in capital 4,733 4,859
Accumulated other comprehensive loss (202 ) (204 )
Accumulated deficit (2,231 ) (2,390 )
Common stock in treasury, at cost (2,415 ) (2,419 )
Total shareholders’ deficit (108 ) (147 )
Noncontrolling interests 766   686  
Total equity 658   539  
Total liabilities and equity $ 22,265   $ 23,385  
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 
Nine Months Ended
(Dollars in millions) September 30,
2018 2017
Net income (loss) $ 364 $ (221 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 602 662
Provision for doubtful accounts 1,109
Deferred income tax expense (benefit) 110 (145 )
Stock-based compensation expense 34 44
Impairment and restructuring charges, and acquisition-related costs 123 403
Litigation and investigation costs 28 12
Net gains on sales, consolidation and deconsolidation of facilities (111 ) (142 )
Loss from early extinguishment of debt 2 164
Equity in earnings of unconsolidated affiliates, net of distributions received 9 (4 )
Amortization of debt discount and debt issuance costs 33 33
Pre-tax loss (income) from discontinued operations (3 ) 1
Other items, net (22 ) (19 )
Changes in cash from operating assets and liabilities:
Accounts receivable (36 ) (1,046 )
Inventories and other current assets 73 97
Income taxes (14 ) (14 )
Accounts payable, accrued expenses and other current liabilities (194 ) (141 )
Other long-term liabilities (82 ) 7
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (113 ) (88 )
Net cash used in operating activities from discontinued operations, excluding income taxes (4 ) (3 )
Net cash provided by operating activities 799 709
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (404 ) (492 )
Purchases of businesses or joint venture interests, net of cash acquired (97 ) (41 )
Proceeds from sales of facilities and other assets 498 826
Proceeds from sales of marketable securities, long-term investments and other assets 165 20
Purchases of equity investments (43 ) (64 )
Other long-term assets 5 (16 )
Other items, net (4 ) (6 )
Net cash provided by investing activities 120 227
Cash flows from financing activities:
Repayments of borrowings under credit facility (505 ) (850 )
Proceeds from borrowings under credit facility 505 850
Repayments of other borrowings (238 ) (4,099 )
Proceeds from other borrowings 15 3,788
Debt issuance costs (62 )
Distributions paid to noncontrolling interests (217 ) (178 )
Proceeds from sale of noncontrolling interests 14 29
Purchases of noncontrolling interests (643 ) (722 )
Proceeds from exercise of stock options and employee stock purchase plan 15 5
Other items, net 24   16  
Net cash used in financing activities (1,030 ) (1,223 )
Net decrease in cash and cash equivalents (111 ) (287 )
Cash and cash equivalents at beginning of period 611   716  
Cash and cash equivalents at end of period $ 500   $ 429  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (652 ) $ (617 )
Income tax refunds (payments), net $ (24 ) $ (54 )
 
         

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day Three Months Ended September 30, Nine Months Ended September 30,
and per adjusted patient admission amounts) 2018 2017 Change 2018 2017 Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 73 (5 ) * 68 73 (5 ) *
Total admissions 168,201 185,389 (9.3 )% 518,960 572,690 (9.4 )%
Adjusted patient admissions 306,197 332,035 (7.8 )% 933,128 1,021,624 (8.7 )%
Paying admissions (excludes charity and uninsured) 157,193 174,803 (10.1 )% 487,899 541,340 (9.9 )%
Charity and uninsured admissions 11,008 10,586 4.0 % 31,061 31,350 (0.9 )%
Admissions through emergency department 116,727 120,493 (3.1 )% 356,839 368,773 (3.2 )%
Paying admissions as a percentage of total admissions 93.5 % 94.3 % (0.8 )% * 94.0 % 94.5 % (0.5 )% *
Charity and uninsured admissions as a percentage of total admissions 6.5 % 5.7 % 0.8 % * 6.0 % 5.5 % 0.5 % *
Emergency department admissions as a percentage of total admissions 69.4 % 65.0 % 4.4 % * 68.8 % 64.4 % 4.4 % *
Surgeries — inpatient 45,626 50,939 (10.4 )% 139,123 154,822 (10.1 )%
Surgeries — outpatient 61,468 67,321 (8.7 )% 188,281 208,291 (9.6 )%
Total surgeries 107,094 118,260 (9.4 )% 327,404 363,113 (9.8 )%
Patient days — total 761,920 853,059 (10.7 )% 2,387,087 2,651,328 (10.0 )%
Adjusted patient days 1,365,662 1,502,831 (9.1 )% 4,225,281 4,658,831 (9.3 )%
Average length of stay (days) 4.53 4.60 (1.5 )% 4.60 4.63 (0.6 )%
Licensed beds (at end of period) 18,302 19,433 (5.8 )% 18,302 19,433 (5.8 )%
Average licensed beds 18,302 19,783 (7.5 )% 18,450 20,218 (8.7 )%
Utilization of licensed beds 45.3 % 46.9 % (1.6 )% * 47.4 % 48.1 % (0.7 )% *
Outpatient Visits
Total visits 1,722,292 1,867,471 (7.8 )% 5,314,678 5,889,261 (9.8 )%
Paying visits (excludes charity and uninsured) 1,607,184 1,741,815 (7.7 )% 4,966,532 5,499,724 (9.7 )%
Charity and uninsured visits 115,108 125,656 (8.4 )% 348,146 389,537 (10.6 )%
Emergency department visits 638,248 685,096 (6.8 )% 1,978,285 2,142,932 (7.7 )%
Paying visits as a percentage of total visits 93.3 % 93.3 % % * 93.4 % 93.4 % % *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.7 % % * 6.6 % 6.6 % % *
Total emergency department admissions and visits 754,975 805,589 (6.3 )% 2,335,124 2,511,705 (7.0 )%
Revenues
Net patient revenues(3) $ 3,434 $ 3,522 (2.5 )% $ 10,520 $ 10,969 (4.1 )%
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day

Net patient revenue(3) per adjusted patient admission

$ 11,215 $ 10,607 5.7 % $ 11,274 $ 10,737 5.0 %
Net patient revenue(3) per adjusted patient day $ 2,515 $ 2,344 7.3 % $ 2,490 $ 2,354 5.8 %
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) $ 10,771 $ 10,367 3.9 % $ 10,648 $ 10,348 2.9 %
Net Patient Revenues (3) from:
Medicare 19.8 % 22.0 % (2.2 )% * 20.6 % 22.4 % (1.8 )% *
Medicaid 9.8 % 7.1 % 2.7 % * 9.2 % 7.4 % 1.8 % *
Managed care 64.9 % 66.1 % (1.2 )% * 65.3 % 65.7 % (0.4 )% *
Self-pay 0.9 % 0.3 % 0.6 % * 0.7 % 0.4 % 0.3 % *
Indemnity and other 4.6 % 4.5 % 0.1 % * 4.2 % 4.1 % 0.1 % *
(1) Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
 
           

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

 
(Dollars in millions except per adjusted patient day Three Months Ended September 30, Nine Months Ended September 30,
and per adjusted patient admission amounts) 2018 2017 Change 2018 2017 Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 *
Total admissions 168,202 171,766 (2.1 )% 514,526 521,438 (1.3 )%
Adjusted patient admissions 306,199 305,300 0.3 % 924,037 921,715 0.3 %
Paying admissions (excludes charity and uninsured) 157,197 161,743 (2.8 )% 483,655 492,896 (1.9 )%
Charity and uninsured admissions 11,005 10,023 9.8 % 30,871 28,542 8.2 %
Admissions through emergency department 116,727 112,210 4.0 % 354,594 337,463 5.1 %
Paying admissions as a percentage of total admissions 93.5 % 94.2 % (0.7 )% 94.0 % 94.5 % (0.5 )% *
Charity and uninsured admissions as a percentage of total admissions 6.5 % 5.8 % 0.7 % 6.0 % 5.5 % 0.5 % *
Emergency department admissions as a percentage of total admissions 69.4 % 65.3 % 4.1 % 68.9 % 64.7 % 4.2 % *
Surgeries — inpatient 45,626 47,315 (3.6 )% 137,623 141,503 (2.7 )%
Surgeries — outpatient 61,468 61,562 (0.2 )% 186,132 187,316 (0.6 )%
Total surgeries 107,094 108,877 (1.6 )% 323,755 328,819 (1.5 )%
Patient days — total 761,921 789,040 (3.4 )% 2,368,366 2,414,961 (1.9 )%
Adjusted patient days 1,365,664 1,379,096 (1.0 )% 4,186,068 4,203,108 (0.4 )%
Average length of stay (days) 4.53 4.59 (1.3 )% 4.60 4.63 (0.6 )%
Licensed beds (at end of period) 17,934 18,006 (0.4 )% 17,934 18,006 (0.4 )%
Average licensed beds 17,934 18,007 (0.4 )% 17,942 17,983 (0.2 )%
Utilization of licensed beds 46.2 % 47.6 % (1.4 )% 48.4 % 49.2 % (0.8 )% *
Outpatient Visits
Total visits 1,722,292 1,715,650 0.4 % 5,264,505 5,293,076 (0.5 )%
Paying visits (excludes charity and uninsured) 1,607,180 1,600,195 0.4 % 4,919,392 4,951,644 (0.7 )%
Charity and uninsured visits 115,112 115,455 (0.3 )% 345,113 341,432 1.1 %
Emergency department visits 638,248 627,415 1.7 % 1,963,474 1,923,995 2.1 %
Paying visits as a percentage of total visits 93.3 % 93.3 % % 93.4 % 93.5 % (0.1 )% *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.7 % % 6.6 % 6.5 % 0.1 % *
Total emergency department admissions and visits 754,975 739,625 2.1 % 2,318,068 2,261,458 2.5 %
Revenues
Net patient revenues(2) $ 3,432 $ 3,237 6.0 % $ 10,434 $ 9,905 5.3 %
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day

Net patient revenue(2) per adjusted patient admission

$ 11,208 $ 10,603 5.7 % $ 11,292 $ 10,746 5.1 %
Net patient revenue(2) per adjusted patient day $ 2,513 $ 2,347 7.1 % $ 2,493 $ 2,357 5.8 %
Net Patient Revenues (2) from:
Medicare 19.8 % 21.9 % (2.1 )% 20.5 % 22.6 % (2.1 )% *
Medicaid 9.8 % 6.8 % 3.0 % 9.2 % 7.0 % 2.2 % *
Managed care 64.9 % 66.1 % (1.2 )% 65.3 % 65.6 % (0.3 )% *
Self-pay 0.9 % 0.3 % 0.6 % 0.8 % 0.4 % 0.4 % *
Indemnity and other 4.6 % 4.9 % (0.3 )% 4.2 % 4.4 % (0.2 )% *
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
* This change is the difference between the 2018 and 2017 amounts shown.
 
     

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts) Three Months Ended Nine Months Ended
3/31/2018 6/30/2018 9/30/2018 9/30/2018
Net operating revenues $ 4,699 $ 4,506 $ 4,489 $ 13,694
Equity in earnings of unconsolidated affiliates 25 39 33 97
Operating expenses:
Salaries, wages and benefits 2,227 2,135 2,116 6,478
Supplies 774 748 726 2,248
Other operating expenses, net 1,060 1,027 1,094 3,181
Electronic health record incentives (1 ) (1 )
Depreciation and amortization 204 194 204 602
Impairment and restructuring charges, and acquisition-related costs 47 30 46 123
Litigation and investigation costs 6 13 9 28

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

(110 ) (8 ) 7   (111 )
Operating income 517 406 320 1,243
Interest expense (255 ) (254 ) (249 ) (758 )
Other non-operating expense, net (1 ) (1 ) (2 )
Loss from early extinguishment of debt (1 ) (1 )   (2 )
Income from continuing operations, before income taxes 260 150 71 481
Income tax expense (70 ) (44 ) (6 ) (120 )

Income from continuing operations, before discontinued operations

190 106 65 361
Discontinued operations:
Income from operations 1 2 3
Income tax benefit (expense)        
Income from discontinued operations 1   2     3  
Net income 191 108 65 364
Less: Net income available to noncontrolling interests 92   82   74   248  

Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders

$ 99   $ 26   $ (9 ) $ 116  

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Income (loss) from continuing operations, net of tax $ 98 $ 24 $ (9 ) $ 113
Income from discontinued operations, net of tax 1   2     3  

Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders

$ 99   $ 26   $ (9 ) $ 116  
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ 0.97 $ 0.23 $ (0.09 ) $ 1.11
Discontinued operations 0.01   0.02     0.03  
$ 0.98   $ 0.25   $ (0.09 ) $ 1.14  
Diluted
Continuing operations $ 0.95 $ 0.23 $ (0.09 ) 1.09
Discontinued operations 0.01   0.02     $ 0.03  
$ 0.96   $ 0.25   $ (0.09 ) $ 1.12  

Weighted average shares and dilutive securities outstanding (in thousands):

Basic 101,392 102,147 102,402 101,980
Diluted 102,656 104,177 102,402 103,802
 
         

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(Dollars in millions except per share amounts) Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,196 $ 5,173 $ 4,941 $ 5,303 $ 20,613
Less: Provision for doubtful accounts 383   371   355     325   1,434  
Net operating revenues 4,813 4,802 4,586 4,978 19,179
Equity in earnings of unconsolidated affiliates 29 28 38 49 144
Operating expenses:
Salaries, wages and benefits 2,380 2,346 2,264 2,284 9,274
Supplies 765 780 740 800 3,085
Other operating expenses, net 1,187 1,159 1,120 1,104 4,570
Electronic health record incentives (1 ) (6 ) (1 ) (1 ) (9 )
Depreciation and amortization 221 222 219 208 870
Impairment and restructuring charges, and acquisition-related costs 33 41 329 138 541
Litigation and investigation costs 5 1 6 11 23
Net gains on sales, consolidation and deconsolidation of facilities (15 ) (23 ) (104 )   (2 ) (144 )
Operating income 267 310 51 485 1,113
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Loss from early extinguishment of debt   (26 ) (138 )     (164 )

Income (loss) from continuing operations, before income taxes

4 19 (348 ) 224 (101 )
Income tax benefit (expense) 33   12   60     (324 ) (219 )

Income (loss) from continuing operations, before discontinued operations

37 31 (288 ) (100 ) (320 )
Discontinued operations:
Income (loss) from operations (2 ) 2 (1 ) 1
Income tax benefit (expense) 1   (1 )        
Income (loss) from discontinued operations (1 ) 1   (1 )   1    
Net income (loss) 36 32 (289 ) (99 ) (320 )
Less: Net income available to noncontrolling interests 89   87   78     130   384  

Net loss attributable to Tenet Healthcare Corporation common shareholders

$ (53 ) $ (55 ) $ (367 )   $ (229 ) $ (704 )

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Loss from continuing operations, net of tax $ (52 ) $ (56 ) $ (366 ) $ (230 ) $ (704 )
Income (loss) from discontinued operations, net of tax (1 ) 1   (1 )   1    

Net loss attributable to Tenet Healthcare Corporation common shareholders

$ (53 ) $ (55 ) $ (367 )   $ (229 ) $ (704 )

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:

Basic
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 )   0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 )   $ (2.27 ) $ (7.00 )
Diluted
Continuing operations $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Discontinued operations (0.01 ) 0.01   (0.01 )   0.01    
$ (0.53 ) $ (0.55 ) $ (3.64 )   $ (2.27 ) $ (7.00 )

Weighted average shares and dilutive securities outstanding (in thousands):

Basic 100,000 100,612 100,812 100,945 100,592
Diluted 100,000 100,612 100,812 100,945 100,592
 
     

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

Three Months Ended

Nine Months
Ended

3/31/2018 6/30/2018 9/30/2018 09/30/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 69 68 68 68
Total admissions 182,306 168,453 168,201 518,960
Adjusted patient admissions 320,868 306,063 306,197 933,128
Paying admissions (excludes charity and uninsured) 172,490 158,216 157,193 487,899
Charity and uninsured admissions 9,816 10,237 11,008 31,061
Admissions through emergency department 125,076 115,036 116,727 356,839
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 93.5 % 94.0 %
Charity and uninsured admissions as a percentage of total admissions 5.4 % 6.1 % 6.5 % 6.0 %
Emergency department admissions as a percentage of total admissions 68.6 % 68.3 % 69.4 % 68.8 %
Surgeries — inpatient 47,223 46,274 45,626 139,123
Surgeries — outpatient 63,008 63,805 61,468 188,281
Total surgeries 110,231 110,079 107,094 327,404
Patient days — total 858,648 766,519 761,920 2,387,087
Adjusted patient days 1,486,139 1,373,480 1,365,662 4,225,281
Average length of stay (days) 4.71 4.55 4.53 4.60
Licensed beds (at end of period) 18,457 18,314 18,302 18,302
Average licensed beds 18,685 18,362 18,302 18,450
Utilization of licensed beds 51.1 % 45.9 % 45.3 % 47.4 %
Outpatient Visits
Total visits 1,842,539 1,749,847 1,722,292 5,314,678
Paying visits (excludes charity and uninsured) 1,725,976 1,633,372 1,607,184 4,966,532
Charity and uninsured visits 116,563 116,475 115,108 348,146
Emergency department visits 697,001 643,036 638,248 1,978,285
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.3 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.7 % 6.6 %
Total emergency department admissions and visits 822,077 758,072 754,975 2,335,124
Revenues
Net patient revenues(3) $ 3,643 $ 3,443 $ 3,434 $ 10,520
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(3) per adjusted patient admission $ 11,354 $ 11,249 $ 11,215 $ 11,274
Net patient revenue(3) per adjusted patient day $ 2,451 $ 2,507 $ 2,515 $ 2,490
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) $ 10,561 $ 10,619 $ 10,771 $ 10,648
Net Patient Revenues (3) from:
Medicare 21.5 % 20.4 % 19.8 % 20.6 %
Medicaid 8.8 % 9.1 % 9.8 % 9.2 %
Managed care 65.0 % 66.0 % 64.9 % 65.3 %
Self-pay 1.0 % 0.2 % 0.9 % 0.7 %
Indemnity and other 3.7 % 4.3 % 4.6 % 4.2 %
 
(1) Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
 
         

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 76 76 73 72 72
Total admissions 196,907 190,394 185,389 186,185 758,875
Adjusted patient admissions 347,150 342,439 332,035 332,642 1,354,266
Paying admissions (excludes charity and uninsured) 186,648 179,889 174,803 176,158 717,498
Charity and uninsured admissions 10,259 10,505 10,586 10,027 41,377
Admissions through emergency department 126,473 121,807 120,493 123,887 492,660
Paying admissions as a percentage of total admissions 94.8 % 94.5 % 94.3 % 94.6 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.2 % 5.5 % 5.7 % 5.4 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.2 % 64.0 % 65.0 % 66.5 % 64.9 %
Surgeries — inpatient 51,800 52,083 50,939 50,292 205,114
Surgeries — outpatient 69,604 71,366 67,321 68,604 276,895
Total surgeries 121,404 123,449 118,260 118,896 482,009
Patient days — total 923,339 874,930 853,059 857,728 3,509,056
Adjusted patient days 1,603,698 1,552,302 1,502,831 1,505,130 6,163,961
Average length of stay (days) 4.69 4.60 4.60 4.61 4.62
Licensed beds (at end of period) 20,439 20,435 19,433 19,141 19,141
Average licensed beds 20,440 20,435 19,783 19,320 19,995
Utilization of licensed beds 50.2 % 47.0 % 46.9 % 48.3 % 48.1 %
Outpatient Visits
Total visits 2,039,942 1,981,848 1,867,471 1,901,864 7,791,125
Paying visits (excludes charity and uninsured) 1,908,212 1,849,697 1,741,815 1,777,790 7,277,514
Charity and uninsured visits 131,730 132,151 125,656 124,074 513,611
Emergency department visits 733,051 724,785 685,096 711,268 2,854,200
Paying visits as a percentage of total visits 93.5 % 93.3 % 93.3 % 93.5 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.5 % 6.7 % 6.7 % 6.5 % 6.6 %
Total emergency department admissions and visits 859,524 846,592 805,589 835,155 3,346,860
Revenues
Net patient revenues(3) $ 3,728 $ 3,719 $ 3,522 $ 3,860 $ 14,829
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(3) per adjusted patient admission $ 10,739 $ 10,860 $ 10,607 $ 11,604 $ 10,950
Net patient revenue(3) per adjusted patient day $ 2,325 $ 2,396 $ 2,344 $ 2,565 $ 2,406
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) $ 10,288 $ 10,394 $ 10,367 $ 10,492 $ 10,384
Net Patient Revenues (3) from:
Medicare 23.1 % 22.0 % 22.0 % 20.4 % 21.9 %
Medicaid 7.4 % 7.5 % 7.1 % 12.9 % 8.8 %
Managed care 65.2 % 65.9 % 66.1 % 61.5 % 64.6 %
Self-pay 0.3 % 0.5 % 0.3 % 1.3 % 0.6 %
Indemnity and other 4.0 % 4.1 % 4.5 % 3.9 % 4.1 %
 
(1) Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
(3) Less implicit price concessions and provision for doubtful accounts.
 
     

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

Three Months Ended

Nine Months
Ended

3/31/2018 6/30/2018 9/30/2018 9/30/2018
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68
Total admissions 178,189 168,135 168,202 514,526
Adjusted patient admissions 312,297 305,541 306,199 924,037
Paying admissions (excludes charity and uninsured) 168,554 157,904 157,197 483,655
Charity and uninsured admissions 9,635 10,231 11,005 30,871
Admissions through emergency department 122,922 114,945 116,727 354,594
Paying admissions as a percentage of total admissions 94.6 % 93.9 % 93.5 % 94.0 %
Charity and uninsured admissions as a percentage of total admissions 5.4 % 6.1 % 6.5 % 6.0 %
Emergency department admissions as a percentage of total admissions 69.0 % 68.4 % 69.4 % 68.9 %
Surgeries — inpatient 45,940 46,057 45,626 137,623
Surgeries — outpatient 61,049 63,615 61,468 186,132
Total surgeries 106,989 109,672 107,094 323,755
Patient days — total 840,786 765,659 761,921 2,368,366
Adjusted patient days 1,448,356 1,372,048 1,365,664 4,186,068
Average length of stay (days) 4.72 4.55 4.53 4.60
Licensed beds (at end of period) 17,946 17,946 17,934 17,934
Average licensed beds 17,946 17,946 17,934 17,942
Utilization of licensed beds 52.1 % 46.9 % 46.2 % 48.4 %
Outpatient Visits
Total visits 1,793,901 1,748,312 1,722,292 5,264,505
Paying visits (excludes charity and uninsured) 1,680,249 1,631,963 1,607,180 4,919,392
Charity and uninsured visits 113,652 116,349 115,112 345,113
Emergency department visits 682,603 642,623 638,248 1,963,474
Paying visits as a percentage of total visits 93.7 % 93.3 % 93.3 % 93.4 %
Charity and uninsured visits as a percentage of total visits 6.3 % 6.7 % 6.7 % 6.6 %
Total emergency department admissions and visits 805,525 757,568 754,975 2,318,068
Revenues
Net patient revenues(2) $ 3,570 $ 3,432 $ 3,432 $ 10,434
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(2) per adjusted patient admission $ 11,431 $ 11,233 $ 11,208 $ 11,292
Net patient revenue(2) per adjusted patient day $ 2,465 $ 2,501 $ 2,513 $ 2,493
Net Patient Revenues (2) from:
Medicare 21.3 % 20.4 % 19.8 % 20.5 %
Medicaid 8.8 % 9.1 % 9.8 % 9.2 %
Managed care 64.9 % 66.1 % 64.9 % 65.3 %
Self-pay 1.3 % 0.1 % 0.9 % 0.8 %
Indemnity and other 3.7 % 4.3 % 4.6 % 4.2 %
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
 
         

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1)

(Unaudited)

(Dollars in millions except per adjusted patient day

and per adjusted patient admission amounts)

Three Months Ended Year Ended
3/31/2017 6/30/2017 9/30/2017 12/31/2017 12/31/2017
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 68 68 68 68
Total admissions 177,624 172,048 171,766 175,152 696,590
Adjusted patient admissions 310,137 306,278 305,300 310,485 1,232,200
Paying admissions (excludes charity and uninsured) 168,523 162,630 161,743 165,400 658,296
Charity and uninsured admissions 9,101 9,418 10,023 9,752 38,294
Admissions through emergency department 114,767 110,486 112,210 116,901 454,364
Paying admissions as a percentage of total admissions 94.9 % 94.5 % 94.2 % 94.4 % 94.5 %
Charity and uninsured admissions as a percentage of total admissions 5.1 % 5.5 % 5.8 % 5.6 % 5.5 %
Emergency department admissions as a percentage of total admissions 64.6 % 64.2 % 65.3 % 66.7 % 65.2 %
Surgeries — inpatient 46,900 47,288 47,315 47,350 188,853
Surgeries — outpatient 62,112 63,642 61,562 63,410 250,726
Total surgeries 109,012 110,930 108,877 110,760 439,579
Patient days — total 833,761 792,160 789,040 805,567 3,220,528
Adjusted patient days 1,433,858 1,390,154 1,379,096 1,402,038 5,605,146
Average length of stay (days) 4.69 4.60 4.59 4.60 4.62
Licensed beds (at end of period) 17,964 17,980 18,006 17,946 17,946
Average licensed beds 17,964 17,980 18,007 17,970 17,980
Utilization of licensed beds 51.6 % 48.4 % 47.6 % 48.7 % 49.1 %
Outpatient Visits
Total visits 1,810,801 1,766,625 1,715,650 1,771,336 7,064,412
Paying visits (excludes charity and uninsured) 1,698,917 1,652,532 1,600,195 1,653,581 6,605,225
Charity and uninsured visits 111,884 114,093 115,455 117,755 459,187
Emergency department visits 650,777 645,803 627,415 659,617 2,583,612
Paying visits as a percentage of total visits 93.8 % 93.5 % 93.3 % 93.4 % 93.5 %
Charity and uninsured visits as a percentage of total visits 6.2 % 6.5 % 6.7 % 6.6 % 6.5 %
Total emergency department admissions and visits 765,544 756,289 739,625 776,518 3,037,976
Revenues
Net patient revenues(2) $ 3,343 $ 3,325 $ 3,237 $ 3,609 $ 13,514
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(2) per adjusted patient admission $ 10,780 $ 10,856 $ 10,603 $ 11,624 $ 10,967
Net patient revenue(2) per adjusted patient day $ 2,331 $ 2,392 $ 2,347 $ 2,574 $ 2,411
Net Patient Revenues (2) from:
Medicare 23.5 % 22.3 % 21.9 % 20.3 % 21.9 %
Medicaid 7.0 % 7.1 % 6.8 % 13.2 % 8.7 %
Managed care 65.0 % 65.8 % 66.1 % 61.0 % 64.4 %
Self-pay 0.3 % 0.6 % 0.3 % 1.5 % 0.7 %
Indemnity and other 4.2 % 4.2 % 4.9 % 4.0 % 4.3 %
 
(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 68 hospitals operated throughout the nine months ended September 30, 2018 and 2017 and associated outpatient facilities, but excludes the results of hospitals Tenet divested since January 1, 2017.
(2) Less implicit price concessions and provision for doubtful accounts.
 
       

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 
(Dollars in millions) September 30, December 31,
2018 2017
Assets
Hospital Operations and other $ 15,556 $ 16,466
Ambulatory Care 5,640 5,822
Conifer 1,069   1,097  
Total $ 22,265   $ 23,385  
 
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Capital expenditures:
Hospital Operations and other $ 115 $ 122 $ 343 $ 441
Ambulatory Care 18 16 46 37
Conifer 3   6   15   14  
Total $ 136   $ 144   $ 404   $ 492  
 
Net operating revenues:
Hospital Operations and other total prior to inter-segment eliminations(1) $ 3,762 $ 3,866 $ 11,442 $ 12,066
Ambulatory Care 502 468 1,531 1,395
Conifer
Tenet 146 149 440 463
Other customers 225   252   721   740  
Total Conifer revenues 371 401 1,161 1,203
Inter-segment eliminations (146 ) (149 ) (440 ) (463 )
Total $ 4,489   $ 4,586   $ 13,694   $ 14,201  
 
Equity in earnings of unconsolidated affiliates:
Hospital Operations and other $ 2 $ 4 $ 6 $ 4
Ambulatory Care 31   34   91   91  
Total $ 33   $ 38   $ 97   $ 95  
 
Adjusted EBITDA:
Hospital Operations and other(2) $ 312 $ 269 $ 1,059 $ 924
Ambulatory Care 184 159 547 476
Conifer 81   79   270   204  
Total $ 577   $ 507   $ 1,876   $ 1,604  
 
Depreciation and amortization:
Hospital Operations and other $ 175 $ 185 $ 514 $ 560
Ambulatory Care 17 22 51 66
Conifer 12   12   37   36  
Total $ 204   $ 219   $ 602   $ 662  
 
(1) Hospital Operations and other revenues includes health plan revenues of $8 million and $14 million for the three and nine months ended September 30, 2018, respectively and $10 million and $100 million for the three and nine months ended September 30, 2017, respectively.
(2) Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of $9 million for both of the three and nine month periods ended September 30, 2018 and $(6) million and $(41) million for the three and nine months ended September 30, 2017, respectively.
 
       

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

 
(Dollars in millions) Three Months Ended September 30,
2018 2017
 

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 $ 477 $ 518
Less: Provision for doubtful accounts 9   11  
Net operating revenues (1) $ 502 $ 546 468 507
Equity in earnings of unconsolidated affiliates (2) 31 34
Operating expenses:
Salaries, wages and benefits 157 137 155 122
Supplies 104 143 95 133
Other operating expenses, net 88 114 93 93
Depreciation and amortization 17 18 22 17
Impairment and restructuring charges, and acquisition-related costs 13     62    
Operating income 154 134 75 142
Interest expense (33 ) (7 ) (35 ) (6 )
Other 3     2    
Net income from continuing operations, before income taxes 124 127 42 136
Income tax expense (14 ) (2 ) (20 ) (2 )
Net income 110 $ 125   22 $ 134  
Less: Net income available to noncontrolling interests 70   61  
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 40   $ (39 )
Equity in earnings of unconsolidated affiliates $ 31 $ 34
 
(1) On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 6.7% during the three months ended September 30, 2018, with cases increasing 5.0% and revenue per case increasing 1.6%.
(2) At September 30, 2018, 107 of the 335 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 228 facilities and account for these investments as consolidated subsidiaries.
 
       

TENET HEALTHCARE CORPORATION

STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT

(Unaudited)

 
(Dollars in millions) Nine Months Ended September 30,
2018 2017
 

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 $ 1,422 $ 1,492
Less: Provision for doubtful accounts 27   31  
Net operating revenues (1) $ 1,531 $ 1,586 1,395 1,461
Equity in earnings of unconsolidated affiliates (2) 91 91
Operating expenses:
Salaries, wages and benefits 484 391 458 352
Supplies 316 417 285 383
Other operating expenses, net 275 333 267 290
Depreciation and amortization 51 51 66 49
Impairment and restructuring charges, and acquisition-related costs 20 70 1
Net gains on sales, consolidation and deconsolidation of facilities (1 )   (7 )  
Operating income 477 394 347 386
Interest expense (106 ) (17 ) (109 ) (17 )
Other 6   1   5    
Net income from continuing operations, before income taxes 377 378 243 369
Income tax expense (47 ) (6 ) (58 ) (6 )
Net income 330 $ 372   185 $ 363  
Less: Net income available to noncontrolling interests 209   193  
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 121   $ (8 )
Equity in earnings of unconsolidated affiliates $ 91 $ 91
 
(1) On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 5.6% during the nine months ended September 30, 2018, with cases increasing 4.3% and revenue per case increasing 1.3%.
(2) At September 30, 2018, 107 of the 335 facilities in the Company’s Ambulatory segment were not consolidated based on the nature of the segment’s joint venture relationships with physicians and prominent healthcare systems. Although revenues of the segment’s unconsolidated facilities are not recorded as revenues by the Company, equity in earnings of unconsolidated affiliates is nonetheless a significant portion of the Company’s overall earnings. To help analyze results of operations, management also uses system-wide operating measures such as system-wide revenue growth, which includes revenues of both consolidated and unconsolidated facilities. We control our remaining 228 facilities and account for these investments as consolidated subsidiaries.
 

Non-GAAP Financial Measures

Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, (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 (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested operations and closed businesses (i.e., the Company’s health plan businesses). Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.

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

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

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

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

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

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

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

A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted EBITDA is set forth in Table #1 below for each quarter in 2017 and 2018. A reconciliation of net income available (loss attributable) to Tenet Healthcare Corporation common shareholders, the most comparable GAAP measure, to Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders is set forth in Table #2 below for each quarter in 2017 and 2018. A reconciliation of net cash provided by operating activities, the most comparable GAAP measure, to Free Cash Flow and Adjusted Free Cash Flow is set forth in Table #3 below for each quarter in 2017 and 2018.

 

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2018

(Unaudited)

 
(Dollars in millions) 2018
1st Qtr   2nd Qtr   3rd Qtr   YTD
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 99 $ 26 $ (9 ) $ 116
Less: Net income available to noncontrolling interests (92 ) (82 ) (74 ) (248 )
Income from discontinued operations, net of tax 1   2     3  
Income from continuing operations 190 106 65 361
Income tax expense (70 ) (44 ) (6 ) (120 )
Loss from early extinguishment of debt (1 ) (1 ) (2 )
Other non-operating expense, net (1 ) (1 ) (2 )
Interest expense (255 ) (254 ) (249 ) (758 )
Operating income 517 406 320 1,243
Litigation and investigation costs (6 ) (13 ) (9 ) (28 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 110 8 (7 ) 111
Impairment and restructuring charges, and acquisition-related costs (47 ) (30 ) (46 ) (123 )
Depreciation and amortization (204 ) (194 ) (204 ) (602 )
Income (loss) from divested and closed businesses (1 ) 1   9   9  
Adjusted EBITDA $ 665   $ 634   $ 577   $ 1,876  
 
Net operating revenues $ 4,699 $ 4,506 $ 4,489 $ 13,694
Less: Net operating revenues from health plans 6     8   14  
Adjusted net operating revenues $ 4,693   $ 4,506   $ 4,481   $ 13,680  
 
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders as a % of net operating revenues 2.1 % 0.6 % (0.2 )% 0.8 %
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) 14.2 % 14.1 % 12.9 % 13.7 %
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2017

(Unaudited)

 
(Dollars in millions) 2017
1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Total
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Less: Net income available to noncontrolling interests (89 ) (87 ) (78 ) (130 ) (384 )
Income (loss) from discontinued operations, net of tax (1 ) 1   (1 ) 1    
Income (loss) from continuing operations 37 31 (288 ) (100 ) (320 )
Income tax benefit (expense) 33 12 60 (324 ) (219 )
Loss from early extinguishment of debt (26 ) (138 ) (164 )
Other non-operating expense, net (5 ) (5 ) (4 ) (8 ) (22 )
Interest expense (258 ) (260 ) (257 ) (253 ) (1,028 )
Operating income 267 310 51 485 1,113
Litigation and investigation costs (5 ) (1 ) (6 ) (11 ) (23 )
Net gains on sales, consolidation and deconsolidation of facilities 15 23 104 2 144
Impairment and restructuring charges, and acquisition-related costs (33 ) (41 ) (329 ) (138 ) (541 )
Depreciation and amortization (221 ) (222 ) (219 ) (208 ) (870 )
Loss from divested and closed businesses (16 ) (19 ) (6 )   (41 )
Adjusted EBITDA $ 527   $ 570   $ 507   $ 840   $ 2,444  
 
Net operating revenues $ 4,813 $ 4,802 $ 4,586 $ 4,978 $ 19,179
Less: Net operating revenues from health plans 65   25   10   10   110  
Adjusted net operating revenues $ 4,748   $ 4,777   $ 4,576   $ 4,968   $ 19,069  
 
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues (1.1 )% (1.1 )% (8.0 )% (4.6 )% (3.7 )%
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) 11.1 % 11.9 % 11.1 % 16.9 % 12.8 %
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliation of Net Income Available (Loss Attributable) to

Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2018

(Unaudited)

 
(Dollars in millions except per share amounts) 2018
1st Qtr   2nd Qtr   3rd Qtr   YTD
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 99 $ 26 $ (9 )   $ 116
Net income from discontinued operations 1   $ 2     3  
Net income (loss) from continuing operations 98 24 (9 ) 113
Less: Impairment and restructuring charges, and acquisition-related costs (47 ) (30 ) (46 ) (123 )
Litigation and investigation costs (6 ) (13 ) (9 ) (28 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 110 8 (7 ) 111
Loss from early extinguishment of debt (1 ) (1 ) (2 )
Income (loss) from divested and closed businesses (1 ) 1 9 9
Tax impact of above items (16 ) 8   14   6  
Adjusted net income available from continuing operations to common shareholders $ 59   $ 51   $ 30   $ 140  
 
Diluted earnings (loss) per share from continuing operations $ 0.95 $ 0.23 $ (0.09 ) $ 1.09
Less: Impairment and restructuring charges, and acquisition-related costs (0.46 ) (0.29 ) (0.44 ) (1.18 )
Litigation and investigation costs (0.06 ) (0.12 ) (0.09 ) (0.27 )
Net gains (losses) on sales, consolidation and deconsolidation of facilities 1.08 0.07 (0.07 ) 1.07
Loss from early extinguishment of debt (0.01 ) (0.01 ) (0.02 )
Income (loss) from divested and closed businesses (0.01 ) 0.01 0.09 0.09
Tax impact of above items (0.16 ) 0.08   0.13   0.06  
Adjusted diluted earnings per share from continuing operations $ 0.57   $ 0.49   $ 0.29   $ 1.35  
 

Weighted average basic shares outstanding (in thousands)

101,392 102,147 102,402 101,980

Weighted average dilutive shares outstanding (in thousands)

102,656 104,177 104,575 103,802
 
 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliation of Net Loss Attributable to

Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available (Loss Attributable) from Continuing Operations to Common Shareholders for 2017

(Unaudited)

 
(Dollars in millions except per share amounts) 2017
1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Total
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (53 ) $ (55 ) $ (367 ) $ (229 ) $ (704 )
Net income (loss) from discontinued operations (1 ) $ 1   (1 ) 1    
Net loss from continuing operations (52 ) (56 ) (366 ) (230 ) (704 )
Less: Impairment and restructuring charges, and acquisition-related costs (33 ) (41 ) (329 ) (138 ) (541 )
Litigation and investigation costs (5 ) (1 ) (6 ) (11 ) (23 )
Net gains on sales, consolidation and deconsolidation of facilities 15 23 104 2 144
Loss from early extinguishment of debt (26 ) (138 ) (164 )
Loss from divested and closed businesses (16 ) (19 ) (6 ) (41 )
Tax impact of above items 14 25 26 49 114
Tax reform adjustment (252 ) (252 )
Noncontrolling interests impact of above items       (23 ) (23 )
Adjusted net income available (loss attributable) from continuing operations to common shareholders $ (27 ) $ (17 ) $ (17 ) $ 143   $ 82  
 
Diluted loss per share from continuing operation $ (0.52 ) $ (0.56 ) $ (3.63 ) $ (2.28 ) $ (7.00 )
Less: Impairment and restructuring charges, and acquisition-related costs (0.33 ) (0.41 ) (3.26 ) (1.35 ) (5.34 )
Litigation and investigation costs (0.05 ) (0.01 ) (0.06 ) (0.11 ) (0.23 )
Net gains on sales, consolidation and deconsolidation of facilities 0.15 0.23 1.03 0.02 1.42
Loss from early extinguishment of debt (0.26 ) (1.37 ) (1.62 )
Loss from divested and closed businesses (0.16 ) (0.19 ) (0.06 ) (0.40 )
Tax impact of above items 0.14 0.25 0.26 0.48 1.12
Tax reform adjustment (2.47 ) (2.49 )
Noncontrolling interests impact of above items       (0.23 ) (0.23 )
Adjusted diluted earnings (loss) per share from continuing operations $ (0.27 ) $ (0.17 ) $ (0.17 ) $ 1.40   $ 0.81  
 

Weighted average basic shares outstanding (in thousands)

100,000 100,612 100,812 100,945 100,592

Weighted average dilutive shares outstanding (in thousands)

100,848 101,294 101,523 101,853 101,380
 
 

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)

 
(Dollars in millions) 2018
1st Qtr   2nd Qtr   3rd Qtr   YTD
Net cash provided by operating activities $ 113 $ 348 $ 338 $ 799
Purchases of property and equipment (143 ) (125 ) (136 ) (404 )
Free cash flow $ (30 ) $ 223   $ 202   $ 395  
 
Net cash provided by (used in) investing activities $ 373 $ (148 ) $ (105 ) $ 120
Net cash used in financing activities $ (123 ) $ (771 ) $ (136 ) $ (1,030 )
 
Net cash provided by operating activities $ 113 $ 348 $ 338 $ 799
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (33 ) (30 ) (50 ) (113 )
Net cash used in operating activities from discontinued operations (1 ) (2 ) (1 ) (4 )
Adjusted net cash provided by operating activities from continuing operations 147 380 389 916
Purchases of property and equipment (143 ) (125 ) (136 ) (404 )
Adjusted free cash flow – continuing operations $ 4   $ 255   $ 253   $ 512  
 
 
(Dollars in millions) 2017
1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Total
Net cash provided by operating activities $ 186 $ 215 $ 308 $ 491 $ 1,200
Purchases of property and equipment (198 ) (150 ) (144 ) (215 ) (707 )
Free cash flow $ (12 ) $ 65   $ 164   $ 276   $ 493  
 
Net cash provided by (used in) investing activities $ (189 ) $ (119 ) $ 535 $ (206 ) $ 21
Net cash used in financing activities $ (141 ) $ (193 ) $ (889 ) $ (103 ) $ (1,326 )
 
Net cash provided by operating activities $ 186 $ 215 $ 308 $ 491 $ 1,200

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

(24 ) (38 ) (26 ) (37 ) (125 )
Net cash provided by (used in) operating activities from discontinued operations 2   (4 ) (1 ) (2 ) (5 )
Adjusted net cash provided by operating activities from continuing operations 208 257 335 530 1,330
Purchases of property and equipment (198 ) (150 ) (144 ) (215 ) (707 )
Adjusted free cash flow – continuing operations $ 10   $ 107   $ 191   $ 315   $ 623  
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 
(Dollars in millions) Q4 2018 2018
Low   High Low   High
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ (32 ) $ 33 $ 84 $ 149
Less: Net income available to noncontrolling interests (117 ) (137 ) (365 ) (385 )
Net income (loss) from discontinued operations, net of tax (3 ) 2 5
Income tax expense (55 ) (70 ) (175 ) (190 )
Interest expense (252 ) (242 ) (1,010 ) (1,000 )
Loss from early extinguishment of debt(1) (2 ) (2 )
Other non-operating expense, net (3 ) (3 ) (5 ) (5 )
Net gains on sales, consolidation and deconsolidation of facilities(1) 111 111
Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(2) (39 ) (19 ) (190 ) (170 )
Depreciation and amortization (208 ) (198 ) (810 ) (800 )
Income (loss) from divested and closed businesses (4 ) 1   5   10  
Adjusted EBITDA $ 649   $ 699   $ 2,525   $ 2,575  
 
Income (loss) from continuing operations $ (29 ) $ 31 $ 84 $ 144
Net operating revenues $ 4,420 $ 4,620 $ 18,100 $ 18,300
Income (loss) from continuing operations as a % of operating revenues (0.7 )% 0.7 % 0.5 % 0.8 %
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) 14.7 % 15.1 % 14.0 % 14.1 %
 
(1) The Company does not generally forecast losses from the early extinguishment of debt or net gains (losses) 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. The figures shown represent the Company's actual year-to-date results for these items.
(2) The Company has provided an estimate of restructuring charges and related payments that it anticipates in 2018. The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.
 
   

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders

(Unaudited)

 
(Dollars in millions except per share amounts) Q4 2018 2018
Low   High Low   High
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ (32 ) $ 33 $ 84 $ 149
Net income (loss) from discontinued operations, net of tax (3 ) $ 2     5  
Net income (loss) from continuing operations (29 ) 31 84 144
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements (39 ) (19 ) (190 ) (170 )
Net gains on sales, consolidation and deconsolidation of facilities 111 111
Loss from early extinguishment of debt (2 ) (2 )
Income (loss) from divested and closed businesses (4 ) 1 5 10
Tax impact of above items 4   (1 ) 10   5  
Adjusted net income available from continuing operations to common shareholders $ 10   $ 50   $ 150   $ 190  
 
Diluted earnings (loss) per share from continuing operations $ (0.28 ) $ 0.30 $ 0.81 $ 1.38
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements (0.37 ) (0.18 ) (1.83 ) (1.63 )
Net gains on sales, consolidation and deconsolidation of facilities 1.07 1.07
Loss from early extinguishment of debt (0.02 ) (0.02 )
Income (loss) from divested and closed businesses (0.04 ) 0.01 0.05 0.10
Tax impact of above items 0.04   (0.01 ) 0.10   0.05  
Adjusted diluted earnings per share from continuing operations $ 0.10   $ 0.48   $ 1.44   $ 1.83  
 
Weighted average basic shares outstanding (in thousands) 102,000 102,000 102,000 102,000
Weighted average dilutive shares outstanding (in thousands) 105,000 105,000 104,000 104,000
 
               

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #6 – Reconciliation of Outlook Net Cash Provided by Operating Activities to Outlook Adjusted Free Cash Flow from Continuing Operations

 
(Dollars in millions) 2018
Low High
Net cash provided by operating activities $ 1,060 $ 1,335
Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1) (160 ) (140 )
Net cash used in operating activities from discontinued operations (5 )  
Adjusted net cash provided by operating activities – continuing operations 1,225 1,475
Purchases of property and equipment – continuing operations (625 ) (675 )
Adjusted free cash flow – continuing operations (2) $ 600   $ 800  
 
(1) The Company has provided an estimate of payments that it anticipates in 2018 related to restructuring charges. The Company does not generally forecast payments related to acquisition-related costs and litigation costs and settlements because the Company does not believe that it can forecast these items with sufficient accuracy since some of these items may be indeterminable at the time the Company provides its financial Outlook.
(2) The Company's definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interests, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interests.

Contact:

Tenet Healthcare Corporation
Investor Contact
Brendan Strong
469-893-6992
investorrelations@tenethealth.com
or
Media Contact
Lesley Bogdanow
469-893-2640
mediarelations@tenethealth.com