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DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE:THC) reported Adjusted EBITDA of $613 million for the first quarter of 2016, an increase of $84 million, or 15.9 percent, compared to $529 million in the first quarter of 2015.

“I am delighted with Tenet’s very strong start to 2016. Our hospitals and outpatient centers generated strong growth, and the benefits of our diversified strategy are becoming increasingly evident,” said Trevor Fetter, chairman and chief executive officer. “Adjusted EBITDA was ahead of our Outlook range for the first quarter, putting us on a solid path to deliver our 2016 Outlook.”

Hospital Operations and Other Segment

Net operating revenue in the hospital operations and other segment increased to $4.397 billion, up 5.9 percent from $4.151 billion in the first quarter of 2015. On a same-hospital basis, patient revenue increased to $4.016 billion, up 6.0 percent from $3.790 billion in the first quarter of 2015. The increase was driven by a 2.2 percent increase in adjusted patient admissions and a 3.7 percent increase in net patient revenue per adjusted admission.

Adjusted EBITDA in Tenet’s hospital segment was $414 million, representing a decline of 1.0 percent as compared to $418 million in the first quarter of 2015. The decline was primarily driven by divestitures and a decline in electronic health record incentives, and was partially offset by acquisitions. After adjusting for these items, hospital segment EBITDA increased approximately 8 percent.

Total hospital segment selected operating expenses, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.5 percent per adjusted admission in the quarter.

Exchanges

Tenet’s same-hospital exchange admissions were 5,351 in the first quarter of 2016, up 27.6 percent from the first quarter of 2015. Same-hospital exchange outpatient visits were 46,058, up 45.9% from the first quarter of 2015.

Uncompensated Care

Tenet’s bad debt expense ratio was 6.9 percent of revenues before bad debt in the first quarter of 2016, down from 7.6 percent in the first quarter of 2015. Uncompensated care represented 20.6 percent of adjusted revenue in the first quarter of 2016, down from 21.8 percent in the first quarter of 2015. Tenet’s uncompensated care cost was $1.309 billion and $1.236 billion in the first quarters of 2016 and 2015, respectively, including $933 million and $873 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Nearly all of Tenet’s uncompensated care is associated with the hospital segment.

Uninsured plus charity admissions declined by 374 admissions, or 3.8 percent on a same-hospital basis in the first quarter of 2016 compared to the first quarter of 2015. Uninsured plus charity outpatient visits increased by 2,093 visits, or 1.5 percent.

Ambulatory Segment

The results of many of the facilities in which the Ambulatory segment has an investment are not consolidated by Tenet. To help analyze results of operations, management uses system-wide measures which include revenues and cases of both consolidated and unconsolidated facilities. Tenet’s acquisition of a majority interest in USPI and all of Aspen on June 16, 2015 makes the year-over-year comparisons less meaningful since they were not owned for the entire year. In order to improve comparability, Tenet is presenting the results for the ambulatory segment on a pro forma basis, including the results of USPI and Aspen in each comparable period.

During the first quarter of 2016, on a pro forma basis, the ambulatory segment delivered net operating revenue of $429 million, representing an increase of 45.4 percent as compared to $295 million in the first quarter of 2015. On a pro forma same-facility system-wide basis, revenue in the ambulatory segment increased 11.0 percent, with cases increasing 8.6 percent and revenue per case increasing 2.2 percent.

Tenet’s ambulatory segment generated Adjusted EBITDA of $136 million in the first quarter of 2016, up 44.7 percent from $94 million in the first quarter of 2015 on a pro forma basis. After subtracting $46 million and $27 million of net income attributable to noncontrolling interests in the first quarters of 2016 and 2015, respectively, and prior to subtracting noncontrolling interests expense related to minority shareholders in the Company’s USPI joint venture, Adjusted EBITDA less NCI increased 34.3 percent to $90 million in the first quarter of 2016, up from $67 million in the first quarter of 2015. After subtracting an additional $11 million of noncontrolling interests expense in the first quarter of 2016 and $7 million in the first quarter of 2015 on a pro forma basis related to minority shareholders in the USPI joint venture, Adjusted EBITDA less NCI increased 31.7 percent to $79 million in the first quarter of 2016, up from $60 million in the first quarter of 2015. The above noncontrolling interests amounts in the first quarter of 2016 exclude $18 million of noncontrolling interests expense recorded by USPI related to $29 million of gains on the consolidation of certain businesses and an associated $7 million favorable income tax adjustment.

Conifer Segment

During the first quarter of 2016, Conifer’s revenue increased 12.6 percent to $385 million, up from $342 million in the first quarter of 2015. Excluding revenue from Tenet, Conifer’s revenue from third party customers increased by 19.8 percent to $218 million. Conifer generated $63 million of Adjusted EBITDA in the first quarter of 2016, representing an EBITDA margin of 16.4%. In the first quarter of 2015, Conifer generated $82 million of Adjusted EBITDA which included a non-recurring benefit from the extended and expanded contract with Catholic Health Initiatives.

Net Income and Earnings Per Share

During the first quarter of 2016, Tenet generated Adjusted net income from continuing operations of $45 million, or $0.45 per diluted share. This excludes $100 in after-tax expense for items such as impairment charges, restructuring charges, acquisition-related costs, litigation and investigation costs, gains on sales, consolidation and deconsolidation of facilities, and the related impact on noncontrolling interests. During the first quarter of 2015, the company generated Adjusted net income from continuing operations of $67 million, or $0.67 per diluted share, excluding $21 million of after-tax expense for comparable items.

On a GAAP basis in the first quarter of 2016, including the results of both continuing and discontinued operations, Tenet reported a net loss of $59 million, or $0.60 per share, compared to net income of $47 million, or $0.47 per diluted share, in the first quarter of 2015.

A reconciliation of GAAP net income available (loss attributable) to Tenet Healthcare Corporation common shareholders to Adjusted net income and Adjusted diluted EPS is contained in Table #2.

Cash Flow and Liquidity

Cash and cash equivalents were $728 million at March 31, 2016 compared to $356 million at December 31, 2015. Tenet’s cash and debt balances as of March 31, 2016 reflect the $575 million in cash proceeds that the company received from the sale of our Atlanta-area hospitals which was completed on March 31, 2016. The company had no outstanding borrowings on its $1 billion credit line as of March 31, 2016.

Accounts receivable days outstanding were 50.6 at March 31, 2016 compared to 49.5 at December 31, 2015. The increase in accounts receivable days outstanding is primarily attributable to receivables that were retained from divested hospitals, including the transactions in Atlanta, North Carolina and St. Louis. Adjusted net cash provided by operating activities in the first quarter of 2016 was $219 million, representing a $239 million improvement compared to a $20 million outflow in the first quarter of 2015. After subtracting $208 million and $184 million of capital expenditures in the first quarters of 2016 and 2015, respectively, Adjusted Free Cash Flow was $11 million in the first quarter of 2016, representing a $215 million improvement compared to a $204 million outflow in the first quarter of 2015.

A reconciliation of net cash provided by (used in) operating activities to Adjusted Free Cash Flow from continuing operations is contained in Table #3.

Increase in Litigation Reserves

As previously disclosed, the Company commenced discussions in January 2016 with the U.S. Department of Justice and the State of Georgia regarding potential resolution of the Clinica de la Mama criminal investigation and civil litigation. While these matters remain unresolved, the Company now believes that it has made significant progress toward reaching an agreement in principle on the monetary terms of a global resolution. In the three months ended March 31, 2016, the Company increased its aggregate reserve for the Clinica de la Mama criminal investigation and civil litigation from $238 million to $407 million to reflect an offer made to resolve the matters. This amount is reflected in the consolidated balance sheet as of March 31, 2016 as accrued legal settlement costs. The increase in the reserve and other litigation costs lowered net income by approximately $135 million during the first quarter of 2016. For additional information, see Note 10 to the Consolidated Financial Statements included in the Company’s Form 10-Q for the quarter ended March 31, 2016.

Outlook

The company confirmed its existing Outlook for 2016, including:

• Revenue of $18.8 billion to $19.2 billion,
• Adjusted EBITDA of $2.4 billion to $2.5 billion,
• Adjusted Free Cash Flow of $400 million to $600 million, and
• Adjusted earnings per diluted share of $1.18 to $2.25.

The Outlook for calendar year 2016 assumes equity in earnings of unconsolidated affiliates of $150 million to $170 million, electronic health record incentives of $25 million to $35 million, net income attributable to noncontrolling interests of $320 million to $340 million (excluding the additional $18 million of noncontrolling interests recorded by USPI in the first quarter of 2016, as discussed above) and an average diluted share count of 102 million.

During the second quarter of 2016, Tenet expects to deliver:

• Revenue of $4.8 billion to $5.0 billion,
• Adjusted EBITDA of $600 million to $650 million, and
• Adjusted earnings per diluted share of $0.20 to $0.73.

The Outlook for the second quarter assumes equity in earnings of unconsolidated affiliates of approximately $30 million, electronic health record incentives of approximately $15 million, net income attributable to noncontrolling interests of $80 million to $90 million and an average diluted share count of 102 million.

Additional details on Tenet’s Outlook for both the second quarter and calendar year 2016 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 First Quarter Results

Tenet management will discuss the Company’s first quarter 2016 results on a webcast scheduled for 10:00 a.m. EDT (9:00 a.m. CDT) on May 3, 2016. 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-Q report for the three months ended March 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. A reconciliation of Adjusted EBITDA to net income attributable to Tenet common shareholders is included in the financial 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 79 general acute care hospitals, 20 short-stay surgical hospitals and over 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, 2015 and other filings with the Securities and Exchange Commission. Among other things, these factors include adverse regulatory developments, government investigations or litigation, including any significant monetary resolution or other undesirable consequences of the Clinica de la Mama qui tam action and criminal investigation described in Note 10 to the Consolidated Financial Statements included in our Form 10-Q for the three months ended March 31, 2016. The terms of a final resolution, if any, of the Clinica de la Mama matter may require us to pay significant fines and penalties and give rise to other costs or adverse consequences that materially exceed the reserve we have established and could have a material adverse effect on our business, financial condition, results of operations or cash flows.

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 March 31,
			2016					%				2015					%				Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts			$	5,420								$	4,787								13.2	%
Less: Provision for doubtful accounts				376									363								3.6	%
Net operating revenues				5,044				100.0	%				4,424				100.0	%			14.0	%
Equity in earnings of unconsolidated affiliates				24				0.5	%				4				0.1	%			500.0	%
Operating expenses:
Salaries, wages and benefits				2,402				47.6	%				2,125				48.0	%			13.0	%
Supplies				811				16.1	%				687				15.5	%			18.0	%
Other operating expenses, net				1,242				24.6	%				1,093				24.7	%			13.6	%
Electronic health record incentives				—				—	%				(6	)			(0.2	)%			(100.0	)%
Depreciation and amortization				212				4.2	%				207				4.7	%
Impairment and restructuring charges, and acquisition-related costs				28				0.6	%				29				0.7	%
Litigation and investigation costs				173				3.4	%				3				0.1	%
Gains on sales, consolidation and deconsolidation of facilities				(147	)			(2.9	)%				—				—	%
Operating income				347				6.9	%				290				6.6	%
Interest expense				(243	)								(199	)
Investment earnings				1									—
Net income from continuing operations, before income taxes				105									91
Income tax expense				(67	)								(16	)
Net income from continuing operations, before discontinued operations				38									75
Discontinued operations:
Loss from operations				(5	)								(1	)
Litigation and investigation costs				—									3
Income tax benefit (expense)				1									(1	)
Net income (loss) from discontinued operations				(4	)								1
Net income				34									76
Less: Net income attributable to noncontrolling interests				93									29
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders			$	(59	)							$	47
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Net income (loss) from continuing operations, net of tax			$	(55	)							$	46
Net income (loss) from discontinued operations, net of tax				(4	)								1
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders			$	(59	)							$	47
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations			$	(0.56	)							$	0.47
Discontinued operations				(0.04	)								0.01
			$	(0.60	)							$	0.48
Diluted
Continuing operations			$	(0.56	)							$	0.46
Discontinued operations				(0.04	)								0.01
			$	(0.60	)							$	0.47
Weighted average shares and dilutive securities outstanding (in thousands):
Basic				98,768									98,699
Diluted*				98,768									100,872

*Had we generated income from continuing operations in the three months ended March 31, 2016 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,567 shares.

TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
			March 31,					December 31,
(Dollars in millions)				2016					2015
ASSETS
Current assets:
Cash and cash equivalents			$	728				$	356
Accounts receivable, less allowance for doubtful accounts				2,807					2,704
Inventories of supplies, at cost				312					309
Income tax receivable				—					7
Assets held for sale				2					550
Other current assets				1,280					1,245
Total current assets				5,129					5,171
Investments and other assets				1,142					1,175
Deferred income taxes				726					776
Property and equipment, at cost, less accumulated depreciation and amortization				7,961					7,915
Goodwill				7,122					6,970
Other intangible assets, at cost, less accumulated amortization				1,686					1,675
Total assets			$	23,766				$	23,682
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt			$	172				$	127
Accounts payable				1,228					1,380
Accrued compensation and benefits				772					880
Professional and general liability reserves				161					177
Accrued interest payable				307					205
Liabilities held for sale				—					101
Accrued legal settlement costs				423					294
Other current liabilities				1,205					1,144
Total current liabilities				4,268					4,308
Long-term debt, net of current portion				14,350					14,383
Professional and general liability reserves				623					578
Defined benefit plan obligations				593					595
Other long-term liabilities				625					594
Total liabilities				20,459					20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries				2,381					2,266
Equity:
Shareholders’ equity:
Common stock				7					7
Additional paid-in capital				4,804					4,815
Accumulated other comprehensive loss				(160	)				(164	)
Accumulated deficit				(1,609	)				(1,550	)
Common stock in treasury, at cost				(2,417	)				(2,417	)
Total shareholders’ equity				625					691
Noncontrolling interests				301					267
Total equity				926					958
Total liabilities and equity			$	23,766				$	23,682

TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
			Three Months Ended
(Dollars in millions)			March 31,
				2016					2015
Net Income			$	34				$	76
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization				212					207
Provision for doubtful accounts				376					363
Deferred income tax expense				31					12
Stock-based compensation expense				16					15
Impairment and restructuring charges, and acquisition-related costs				28					29
Litigation and investigation costs				173					3
Gains on sales, consolidation and deconsolidation of facilities				(147	)				—
Equity in earnings of unconsolidated affiliates, net of distributions received				12					(4	)
Amortization of debt discount and debt issuance costs				10					7
Pre-tax loss (income) from discontinued operations				5					(2	)
Other items, net				2					(4	)
Changes in cash from operating assets and liabilities:
Accounts receivable				(453	)				(484	)
Inventories and other current assets				(18	)				(74	)
Income taxes				28					8
Accounts payable, accrued expenses and other current liabilities				(114	)				(200	)
Other long-term liabilities				24					28
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements				(69	)				(33	)
Net cash used in operating activities from discontinued operations, excluding income taxes				(3	)				(4	)
Net cash provided by (used in) operating activities				147					(57	)
Cash flows from investing activities:
Purchases of property and equipment — continuing operations				(208	)				(184	)
Purchases of businesses or joint venture interests, net of cash acquired				(29	)				(11	)
Proceeds from sales of facilities and other assets				573					—
Proceeds from sales of marketable securities, long-term investments and other assets				12					6
Purchases of equity investments				(18	)				—
Other long-term assets				(10	)				2
Net cash provided by (used in) investing activities				320					(187	)
Cash flows from financing activities:
Repayments of borrowings under credit facility				(995	)				(690	)
Proceeds from borrowings under credit facility				995					820
Repayments of other borrowings				(38	)				(32	)
Proceeds from other borrowings				1					401
Debt issuance costs				—					(4	)
Distributions paid to noncontrolling interests				(44	)				(11	)
Contributions from noncontrolling interests				—					2
Purchase of noncontrolling interests				—					(254	)
Proceeds from exercise of stock options				—					7
Other items, net				(14	)				(3	)
Net cash provided by (used in) financing activities				(95	)				236
Net increase in cash and cash equivalents				372					(8	)
Cash and cash equivalents at beginning of period				356					193
Cash and cash equivalents at end of period			$	728				$	185
Supplemental disclosures:
Interest paid, net of capitalized interest			$	(132	)			$	(117	)
Income tax refunds (payments), net			$	(6	)			$	1

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 March 31,
and per visit amounts)				2016					2015				Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)				80					80				—			*
Total admissions				211,799					208,333				1.7	%
Adjusted patient admissions				362,819					349,097				3.9	%
Paying admissions (excludes charity and uninsured)				201,436					197,383				2.1	%
Charity and uninsured admissions				10,363					10,950				(5.4	)%
Admissions through emergency department				136,056					133,544				1.9	%
Paying admissions as a percentage of total admissions				95.1					94.7				0.4	%		*
Charity and uninsured admissions as a percentage of total admissions				4.9					5.3				(0.4	)%		*
Emergency department admissions as a percentage of total admissions				64.2					64.1				0.1	%		*
Surgeries — inpatient				55,755					53,710				3.8	%
Surgeries — outpatient				76,829					67,693				13.5	%
Total surgeries				132,584					121,403				9.2	%
Patient days — total				1,010,514					975,912				3.5	%
Adjusted patient days				1,714,369					1,618,516				5.9	%
Average length of stay (days)				4.77					4.68				1.9	%
Licensed beds (at end of period)				21,529					20,826				3.4	%
Average licensed beds				21,524					20,823				3.4	%
Utilization of licensed beds				51.6					52.1				(0.5	)%		*
Outpatient Visits
Total visits				2,146,618					1,994,573				7.6	%
Paying visits (excludes charity and uninsured)				1,984,515					1,837,376				8.0	%
Charity and uninsured visits				162,103					157,197				3.1	%
Emergency department visits				789,916					741,533				6.5	%
Paying visits as a percentage of total visits				92.4					92.1				0.3	%		*
Charity and uninsured visits as a percentage of total visits				7.6					7.9				(0.3	)%		*
Revenues
Net inpatient revenues			$	2,781				$	2,691				3.3	%
Net outpatient revenues			$	1,514				$	1,412				7.2	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission			$	13,130				$	12,917				1.6	%
Net inpatient revenue per patient day			$	2,752				$	2,757				(0.2	)%
Net outpatient revenue per visit			$	705				$	708				(0.4	)%
Net patient revenue per adjusted patient admission			$	11,838				$	11,750				0.7	%
Net patient revenue per adjusted patient day			$	2,505				$	2,534				(1.1	)%
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission			$	10,537				$	10,284				2.5	%
Net Patient Revenues from:
Medicare				20.0	%				21.9	%			(1.9	)%		*
Medicaid				8.7	%				9.4	%			(0.7	)%		*
Managed care				61.1	%				58.6	%			2.5	%		*
Indemnity, self-pay and other				10.2	%				10.1	%			0.1	%		*

(1)		Represents the 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 March 31,
and per visit amounts)				2016					2015				Change
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period)				72					72				—			*
Total admissions				193,980					194,143				(0.1	)%
Adjusted patient admissions				330,575					323,577				2.2	%
Paying admissions (excludes charity and uninsured)				184,436					184,225				0.1	%
Charity and uninsured admissions				9,544					9,918				(3.8	)%
Admissions through emergency department				125,004					124,492				0.4	%
Paying admissions as a percentage of total admissions				95.1					94.9				0.2	%		*
Charity and uninsured admissions as a percentage of total admissions				4.9					5.1				(0.2	)%		*
Emergency department admissions as a percentage of total admissions				64.4					64.1				0.3	%		*
Surgeries — inpatient				50,563					50,447				0.2	%
Surgeries — outpatient				66,467					62,949				5.6	%
Total surgeries				117,030					113,396				3.2	%
Patient days — total				911,651					909,116				0.3	%
Adjusted patient days				1,537,812					1,499,932				2.5	%
Average length of stay (days)				4.70					4.68				0.4	%
Licensed beds (at end of period)				19,293					19,393				(0.5	)%
Average licensed beds				19,288					19,390				(0.5	)%
Utilization of licensed beds				52.5					52.1				0.4	%		*
Outpatient Visits
Total visits				1,949,159					1,852,780				5.2	%
Paying visits (excludes charity and uninsured)				1,804,947					1,710,661				5.5	%
Charity and uninsured visits				144,212					142,119				1.5	%
Emergency department visits				726,730					688,242				5.6	%
Paying visits as a percentage of total visits				92.6					92.3				0.3	%		*
Charity and uninsured visits as a percentage of total visits				7.4					7.7				(0.3	)%		*
Revenues
Net inpatient revenues			$	2,616				$	2,501				4.6	%
Net outpatient revenues			$	1,400				$	1,289				8.6	%
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission			$	13,486				$	12,882				4.7	%
Net inpatient revenue per patient day			$	2,870				$	2,751				4.3	%
Net outpatient revenue per visit			$	718				$	696				3.2	%
Net patient revenue per adjusted patient admission			$	12,149				$	11,713				3.7	%
Net patient revenue per adjusted patient day			$	2,612				$	2,527				3.4	%
Net Patient Revenues from:
Medicare				20.6	%				21.8	%			(1.2	)%		*
Medicaid				8.2	%				9.0	%			(0.8	)%		*
Managed care				61.5	%				59.1	%			2.4	%		*
Indemnity, self-pay and other				9.7	%				10.1	%			(0.4	)%		*

(1)		Represents the 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																				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)				72					72					72					72					72
Total admissions				194,143					187,983					185,752					184,959					752,837
Adjusted patient admissions				323,577					322,882					320,880					320,338					1,287,677
Paying admissions (excludes charity and uninsured)				184,225					178,501					175,537					175,025					713,288
Charity and uninsured admissions				9,918					9,482					10,215					9,934					39,549
Admissions through emergency department				124,492					119,793					116,402					116,573					477,260
Paying admissions as a percentage of total admissions				94.9	%				94.9	%				94.9	%				94.9	%				94.9	%
Charity and uninsured admissions as a percentage of total admissions				5.1	%				5.1	%				5.1	%				5.1	%				5.1	%
Emergency department admissions as a percentage of total admissions				64.1	%				63.7	%				62.7	%				63.0	%				63.4	%
Surgeries — inpatient				50,447					51,618					51,879					51,469					205,413
Surgeries — outpatient				62,949					67,113					67,528					67,806					265,396
Total surgeries				113,396					118,731					119,407					119,275					470,809
Patient days — total				909,116					864,961					850,411					850,561					3,475,049
Adjusted patient days				1,499,932					1,469,406					1,451,654					1,458,288					5,879,280
Average length of stay (days)				4.68	%				4.60	%				4.58	%				4.60	%				4.62	%
Licensed beds (at end of period)				19,393					19,393					19,350					19,279					19,279
Average licensed beds				19,390					19,393					19,382					19,303					19,366
Utilization of licensed beds				52.1	%				49.0	%				47.7	%				47.9	%				49.2	%
Outpatient Visits
Total visits				1,852,780					1,911,152					1,890,417					1,903,228					7,557,577
Paying visits (excludes charity and uninsured)				1,710,661					1,767,482					1,737,062					1,758,284					6,973,489
Charity and uninsured visits				142,119					143,670					153,355					144,944					584,088
Emergency department visits				688,242					687,398					681,754					681,941					2,739,335
Paying visits as a percentage of total visits				92.3	%				92.5	%				91.9	%				92.4	%				92.3	%
Charity and uninsured visits as a percentage of total visits				7.7	%				7.5	%				8.1	%				7.6	%				7.7	%
Revenues
Net inpatient revenues			$	2,501				$	2,430				$	2,408				$	2,477				$	9,816
Net outpatient revenues			$	1,289				$	1,347				$	1,358				$	1,381				$	5,375
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
Net inpatient revenue per admission			$	12,882				$	12,927				$	12,964				$	13,392				$	13,039
Net inpatient revenue per patient day			$	2,751				$	2,809				$	2,832				$	2,912				$	2,825
Net outpatient revenue per visit			$	696				$	705				$	718				$	726				$	711
Net patient revenue per adjusted patient admission			$	11,713				$	11,698				$	11,736				$	12,044				$	11,797
Net patient revenue per adjusted patient day			$	2,527				$	2,570				$	2,594				$	2,646				$	2,584
Net Patient Revenues from:
Medicare				21.8	%				20.7	%				20.1	%				19.9	%				20.6	%
Medicaid				9.0	%				8.1	%				8.4	%				7.8	%				8.3	%
Managed care				59.1	%				61.4	%				61.9	%				61.7	%				61.1	%
Indemnity, self-pay and other				10.1	%				9.8	%				9.6	%				10.6	%				10.0	%

(1)		Represents the results of Tenet’s Hospital Operations and other segment.
*		This change is the difference between the 2016 and 2015 amounts shown

TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
(Dollars in millions)			March 31,					December 31,
				2016					2015
Assets
Hospital Operations and other			$	17,131				$	17,353
Ambulatory Care				5,467					5,159
Conifer				1,168					1,170
Total			$	23,766				$	23,682
			Three Months Ended
			March 31,
				2016					2015
Capital expenditures:
Hospital Operations and other			$	191				$	176
Ambulatory Care				12					4
Conifer				5					4
Total			$	208				$	184
Net operating revenues:
Hospital Operations and other			$	4,397				$	4,151
Ambulatory Care				429					91
Conifer
Tenet				167					160
Other customers				218					182
Total Conifer revenues				385					342
Intercompany eliminations				(167	)				(160	)
Total			$	5,044				$	4,424
Adjusted EBITDA:
Hospital Operations and other			$	414				$	418
Ambulatory Care				136					29
Conifer				63					82
Total			$	613				$	529
Depreciation and amortization:
Hospital Operations and other			$	174				$	192
Ambulatory Care				25					4
Conifer				13					11
Total			$	212				$	207
Adjusted EBITDA			$	613				$	529
Depreciation and amortization				(212	)				(207	)
Impairments and restructuring charges, and acquisition-related costs				(28	)				(29	)
Litigation and investigation costs				(173	)				(3	)
Interest expense				(243	)				(199	)
Gains on sales, consolidation and deconsolidation of facilities				147					—
Investment Earnings				1					—
Income from continuing operations before income taxes			$	105				$	91

TENET HEALTHCARE CORPORATION
STATEMENT OF OPERATIONS – AMBULATORY CARE SEGMENT
INCLUDING PRO FORMA USPI AND ASPEN FOR ALL PERIODS
(Unaudited)
(Dollars in millions)			Three Months Ended March 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			$	437				$	479				$	300				$	486
Less: Provision for doubtful accounts				(8	)				(14	)				(5	)				(12	)
Net operating revenues(1)				429					465					295					474
Equity in earnings of unconsolidated affiliates(2)				25					—					21					—
Operating expenses:
Salaries, wages and benefits				146					118					98					120
Supplies				86					123					51					123
Other operating expenses, net				86					102					73					108
Depreciation and amortization				25					18					13					20
Impairment and restructuring charges, and acquisition-related costs				1					—					—					—
Gains on sales, consolidation and deconsolidation of facilities				(29	)				(4	)				—					—
Operating income				139					108					81					103
Interest expense				(35	)				(6	)				(34	)				(7	)
Net income from continuing operations, before income taxes				104					102					47					96
Income tax expense				(8	)				(2	)				(9	)				(2	)
Net income				96				$	100					38				$	94
Less: Net income attributable to noncontrolling interests(3)				75										34
Net income attributable to Tenet Healthcare Corporation common shareholders			$	21									$	4
Equity in earnings of unconsolidated affiliates								$	25									$	21

(1)		On a same-facility system-wide basis, net revenue in Tenet’s Ambulatory Care segment increased 11.0% during the three months ended March 31, 2016, with cases increasing 8.6% and revenue per case increasing 2.2%.
(2)		At March 31, 2016, 122 of the 335 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. We control our remaining 213 facilities and account for these investments as consolidated subsidiaries.
(3)		During the three months ended March 31, 2016, the Company recorded $18 million of noncontrolling interests expense related to a $29 million gain on the consolidation of facilities (the gain is not included in Adjusted EBITDA) and an associated $7 million income tax benefit.

(1) Reconciliation of Non-GAAP Financial Measurers

Adjusted EBITDA, a non-GAAP term, 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, net of tax, (2) net loss (income) attributable to noncontrolling interests, (3) preferred stock dividends, (4) income (loss) from discontinued operations, net of tax, (5) income tax benefit (expense), (6) investment earnings (loss), (7) gain (loss) from early extinguishment of debt, (8) net gain (loss) on sales of investments, (9) interest expense, (10) litigation and investigation (costs) benefit, net of insurance recoveries, (11) hurricane insurance recoveries, net of costs, (12) net gains (losses) on sales, consolidation and deconsolidation of facilities, (13) impairment and restructuring charges and acquisition-related costs, and (14) depreciation and amortization. The company’s Adjusted EBITDA may not be comparable to EBITDA reported by other companies.

Adjusted Free Cash Flow, a non-GAAP term, is defined by the company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations. Adjusted net cash provided by (used in) operating activities is defined 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’s Adjusted Free Cash Flow may not be comparable to free cash flow reported by other companies.

The company provides this information as a supplement to GAAP information to assist itself and investors in understanding the impact of various items on its financial statements, some of which are recurring or involve cash payments. The company uses this information in its analysis of the performance of its business excluding items that it does not consider as relevant in the performance of its continuing operations. The Company and investors also use this information to compare our operating results with other companies in the health care industry. In addition, from time to time the company uses these measures to define certain performance targets under our compensation programs. Neither Adjusted EBITDA nor Adjusted Free Cash Flow are measures of liquidity, but are measures of operating performance that management uses in its business as an alternative to net income (loss) attributable to Tenet Healthcare Corporation common shareholders. Because Adjusted EBITDA and Adjusted Free Cash Flow exclude many items that are included in our financial statements, they do not provide a complete measure of our operating performance. Accordingly, investors are encouraged to use GAAP measures when evaluating the company’s financial performance.

The reconciliation of net income (loss) attributable to Tenet Healthcare Corporation common shareholders, the most comparable GAAP term to Adjusted EBITDA, is set forth in the table below for the three months ended March 31, 2016 and 2015.

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #1 – Reconciliation of Non-GAAP Financial Measurers to Net Income Available
(Loss Attributable) to Tenet Healthcare Corporation Common Shareholders
(Unaudited)
(Dollars in millions)			Three Months Ended
			March 31,
				2016					2015
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders			$	(59	)			$	47
Less: Net income attributable to noncontrolling interests				(93	)				(29	)
Net income (loss) from discontinued operations, net of tax				(4	)				1
Net income from continuing operations				38					75
Income tax expense				(67	)				(16	)
Investment earnings				1					—
Interest expense				(243	)				(199	)
Operating income				347					290
Litigation and investigation costs				(173	)				(3	)
Gains on sales, consolidation and deconsolidation of facilities				147					—
Impairment and restructuring charges, and acquisition-related costs				(28	)				(29	)
Depreciation and amortization				(212	)				(207	)
Adjusted EBITDA			$	613				$	529
Net operating revenues			$	5,044				$	4,424
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)				12.2	%				12.0	%

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
(Dollars in millions except per share amounts)			March 31,
				2016					2015
Adjustments to calculate Adjusted Diluted EPS			(Expense) Income
Impairment and restructuring charges, and acquisition-related costs			$	(28	)			$	(29	)
Litigation and investigation costs				(173	)				(3	)
Gain on sales, consolidation and deconsolidation of facilities				147					—
Pre-tax impact				(54	)				(32	)
Total after-tax impact				(82	)				(21	)
Noncontrolling interests impact				(18	)				—
Total income (loss) from items above			$	(100	)			$	(21	)
Net income available (loss attributable) to common shareholders			$	(59	)			$	47
Less net income (loss) discontinued operations, net of tax				(4	)				1
Net income (loss) from continuing operations, net of tax				(55	)				46
Net loss (income) from adjustments above				100					21
Adjusted net income (loss)			$	45				$	67
Weighted average dilutive shares outstanding (in thousands)				100,335					100,872
Adjusted diluted EPS			$	0.45				$	0.67

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #3 – Reconciliation of Adjusted Free Cash Flow
(Unaudited)
			Three Months Ended
(Dollars in millions)			March 31,
				2016					2015
Net cash provided by (used in) operating activities			$	147				$	(57	)
Less:
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements				(69	)				(33	)
Net cash used in operating activities from discontinued operations				(3	)				(4	)
Adjusted net cash provided by operating activities – continuing operations				219					(20	)
Purchases of property and equipment – continuing operations				(208	)				(184	)
Adjusted free cash flow – continuing operations			$	11				$	(204	)

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
for the Year Ending December 31, 2016
(Unaudited)
(Dollars in millions)			Q2 2016										2016
			Low					High					Low					High
Net income attributable to Tenet Healthcare Corporation common shareholders			$	18				$	75				$	26				$	141
Less: Net income attributable to noncontrolling interests				(90	)				(80	)				(360	)				(340	)
Net loss from discontinued operations, net of tax				(2	)				-					(10	)				(5	)
Income from continuing operations				110					155					396					486
Income tax expense				(25	)				(60	)				(130	)				(200	)
Income from continuing operations, before income taxes				135					215					526					686
Interest expense				(245	)				(235	)				(970	)				(950	)
Operating income				380					450					1,496					1,636
Gains on sales, consolidation and deconsolidation of facilities(a)				-					-					147					147
Impairment and restructuring charges, acquisition-related costs
and litigation costs and settlements(a)				-					-					(201	)				(201	)
Depreciation and amortization				(220	)				(200	)				(850	)				(810	)
Adjusted EBITDA			$	600				$	650				$	2,400				$	2,500
Net operating revenues			$	4,800				$	5,000				$	18,800				$	19,200
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)				12.5	%				13.0	%				12.8	%				13.0	%

(a)

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.

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #5 – Reconciliation of Outlook Adjusted EBITDA to
Outlook Normalized Income from Continuing Operations
for the Year Ending December 31, 2016
(Unaudited)
(Dollars in millions except per share amounts)			Q2 2016										2016
			Low					High					Low					High
Adjusted EBITDA			$	600				$	650				$	2,400				$	2,500
Depreciation and amortization				(220	)				(200	)				(850	)				(810	)
Interest expense				(245	)				(235	)				(970	)				(950	)
Normalized income from continuing operations before income taxes				135					215					580					740
Income tax expense				(25	)				(60	)				(120	)				(190	)
Normalized income from continuing operations				110					155					460					550
Net income attributable to noncontrolling interests				(90	)				(80	)				(340	)				(320	)
Normalized net income attributable to common shareholders			$	20				$	75				$	120				$	230
Fully diluted weighted average share outstanding (in millions)				102					102					102					102
Normalized fully diluted earnings per share – continuing operations			$	0.20				$	0.73				$	1.18				$	2.25

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #6 – Reconciliation of Outlook Adjusted Free Cash Flow
for the Year Ending December 31, 2016
(Dollars in millions)			2016
			Low				High
Net cash provided by operating activities			$	1,206			$	1,366
Less:
Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(a)				(69	)			(69	)
Net cash used in operating activities from discontinued operations				(25	)			(15	)
Adjusted net cash provided by operating activities – continuing operations			$	1,300			$	1,450
Purchases of property and equipment – continuing operations				(900	)			(850	)
Adjusted free cash flow – continuing operations			$	400			$	600

(a)

Company does not forecast impairment and restructuring charges, acquisition-related costs and litigation costs and settlements