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Tenet Reports First Quarter 2024 Results Well in Excess of Guidance; Raises 2024 Financial Outlook

April 30, 2024
  • Net income from continuing operations available to common shareholders in first quarter 2024 was $2.151 billion, or $21.38 per diluted share, including an after-tax gain of $1.856 billion, or $18.45 per diluted share, associated with previously announced hospital divestitures
  • Adjusted diluted earnings per share from continuing operations1 was $3.22 in first quarter 2024
  • Consolidated Adjusted EBITDA1 in first quarter 2024 of $1.024 billion increased 23.1% over first quarter 2023
  • First quarter 2024 Ambulatory Care Adjusted EBITDA of $394 million increased 15.9% over first quarter 2023
  • FY 2024 Adjusted EBITDA Outlook now expected to be in the range of $3.5 billion to $3.7 billion, a $215 million increase

Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended March 31, 2024.

"We have had an outstanding start to the year highlighted by strong growth in revenues, admissions, and profitability," said Saum Sutaria, M.D., Chairman and Chief Executive Officer of Tenet. "Our operational excellence and focus on continuous improvement helped enable our momentum as we transform our company through strategic portfolio decisions, disciplined capital allocation, and debt reduction."

Tenet’s results for first quarter 2024 versus first quarter 2023 are as follows:

 

Three Months Ended

March 31,

($ in millions, except per share results)

2024

2023

Net operating revenues

$5,368

$5,021

Net income available to Tenet common shareholders from continuing operations

$2,151

$143

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

$21.38

$1.32

Adjusted EBITDA1

$1,024

$832

Adjusted diluted earnings per share from continuing operations1

$3.22

$1.42

  • Net income from continuing operations available to the Company’s common shareholders in the first quarter 2024 was $2.151 billion, or $21.38 per diluted share, versus $143 million, or $1.32 per diluted share, in first quarter 2023. First quarter 2024 results included a pre-tax gain of $2.5 billion ($1.856 billion after-tax, or $18.45 per diluted share) primarily associated with the divestiture of three hospitals in South Carolina and six hospitals in California.
  • Adjusted EBITDA1 in first quarter 2024 was $1.024 billion compared to $832 million in first quarter 2023, reflecting strong same-hospital admission growth, favorable payer mix, and improved contract labor costs, partially offset by higher medical fees. Additionally, in the first quarter of 2024, the Company recognized a $88 million favorable pre-tax impact associated with additional Medicaid supplemental revenues in Michigan, of which approximately half related to the last three months of 2023. First quarter 2023 results included income from the receipt of $27 million cybersecurity insurance proceeds.

Balance Sheet and Cash Flows

  • Cash flows provided by operating activities for the three months ended March 31, 2024 were $586 million versus $449 million for the three months ended March 31, 2023.
  • The Company produced free cash flow1 of $346 million for the three months ended March 31, 2024 versus $214 million for the three months ended March 31, 2023.
  • In the three months ended March 31, 2024, the Company repurchased 2,811,234 shares of common stock for $278 million.
  • The Company’s ratio of net debt to Adjusted EBITDA1 was 2.79x at March 31, 2024 compared to 3.89x at December 31, 2023.

Recent Transactions

  • In first quarter 2024, the Company retired $2.1 billion aggregate principal amount of its 4.875% senior secured first lien notes due in 2026. Tenet expects this transaction will reduce its future annual cash interest payments by $102 million.
  • On April 1, 2024, the Company announced the completion of the sale of four hospitals and related operations in Orange County and Los Angeles County, California to UCI Health and the completion of the sale of two hospitals and related operations in San Luis Obispo County, California to Adventist Health in the first quarter of 2024.

Ambulatory Care (Ambulatory) Segment

Tenet’s Ambulatory business segment is comprised of the operations of United Surgical Partners International (USPI). As of March 31, 2024, USPI had interests in 512 ambulatory surgery centers (372 consolidated) and 25 surgical hospitals (eight consolidated) in 38 states.

 

Three Months Ended

March 31,

Ambulatory segment results ($ in millions)

2024

2023

Revenues

 

 

Net operating revenues

$995

$905

Same-facility system-wide net patient service revenues2

$1,763

$1,657

Volume Changes versus the Prior-Year Period

 

 

Same-facility system-wide surgical cases2

(0.4) %

7.9 %

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

(0.4) %

7.9 %

Adjusted EBITDA, Margins and NCI

 

 

Adjusted EBITDA

$394

$340

Adjusted EBITDA margin

39.6%

37.6%

Adjusted EBITDA less NCI

$241

$214

  • First quarter 2024 net operating revenues increased 9.9% compared to first quarter 2023 driven by strong net revenue per case growth, acquisitions and opening of de novo facilities, and increased service lines.
  • Surgical business same-facility system-wide net patient service revenues increased 6.4% in first quarter 2024 compared to first quarter 2023, with cases down 0.4% and net revenue per case up 6.8%. Net revenue per case growth was driven by higher acuity associated with favorable case mix.
  • First quarter 2024 Adjusted EBITDA increased 15.9% compared to first quarter 2023, due to strong net revenue per case growth, disciplined expense management, and contributions from acquisitions and de novo facilities.

Hospital Operations and Services (Hospital) Segment

Tenet’s Hospital business segment is primarily comprised of acute care and specialty hospitals, imaging centers, ancillary outpatient facilities, micro-hospitals and physician practices. It also provides comprehensive end-to-end and focused point services, including hospital and physician revenue cycle management, patient communications and engagement support and value-based care solutions. We have combined Conifer with the former Hospital Segment and all prior periods have been revised for this change.

 

Three Months Ended

March 31,

Hospital segment results ($ in millions)

2024

2023

Revenues

 

 

Net operating revenues

$4,373

$4,116

Same-hospital net patient service revenues3

$3,471

$3,133

Same-Hospital Volume Changes versus the Prior-Year Period

 

 

Admissions

4.2%

4.3%

Adjusted admissions4

1.8%

6.7%

Outpatient visits (including outpatient ER visits)

(0.8)%

—%

Emergency Room visits (inpatient and outpatient)

3.9%

4.8%

Hospital surgeries

(2.0)%

2.3%

Adjusted EBITDA

 

 

Adjusted EBITDA

$630

$492

Adjusted EBITDA margin

14.4%

12.0%

  • First quarter 2024 net operating revenues increased 6.2% from first quarter 2023 primarily due to increased admissions, favorable payer mix, and improved pricing yield, partially offset by the impact of hospital sales in first quarter 2024.
  • Same-hospital net patient service revenue per adjusted admission increased 8.8% year-over-year for first quarter 2024 primarily due to improved pricing yield, favorable payer mix, and our focus on growing higher acuity services.
  • Adjusted EBITDA in first quarter 2024 was $630 million compared to $492 million in first quarter 2023, reflecting strong admissions growth, favorable payer mix and improved contract labor costs, partially offset by higher medical fees. Additionally, in the first quarter of 2024, the Company recognized an $88 million favorable pre-tax impact associated with additional Medicaid supplemental revenues in Michigan, of which approximately half related to the last three months of 2023. First quarter 2023 results included income from the receipt of $27 million cybersecurity insurance proceeds.

2024 Outlook1

Tenet’s Outlook for full year 2024 (consolidated and by segment) and second quarter 2024 follows. This outlook reflects the completion of the sale of three Coastal South Carolina hospitals on January 31, 2024 and the completion of the sale of six California hospitals on March 31, 2024.

CONSOLIDATED ($ in millions, except per share amounts)

FY 2024 Outlook

Second Quarter

2024 Outlook

Net operating revenues

$20,000 to $20,400

$4,900 to $5,100

Net income from continuing operations available to Tenet common stockholders

$2,622 to $2,762

$150 to $195

Adjusted EBITDA

$3,500 to $3,700

$835 to $885

Adjusted EBITDA margin

17.5% to 18.1%

17.0% to 17.4%

Diluted income per common share from continuing operations

$25.96 to $27.35

$1.49 to $1.93

Adjusted net income from continuing operations

$845 to $950

$160 to $200

Adjusted diluted earnings per share from continuing operations

$8.37 to $9.41

$1.58 to $1.98

Equity in earnings of unconsolidated affiliates

$220 to $230

$50 to $60

Depreciation and amortization

$830 to $860

$210 to $220

Interest expense

$825 to $835

$220 to $230

Income tax expense5

$945 to $995

$80 to $95

Net income available to NCI

$750 to $800

$160 to $170

Weighted average diluted common shares

~101 million

~101 million

NCI cash distributions

$665 to $715

 

Net cash provided by operating activities6

$1,725 to $2,075

 

Adjusted net cash provided by operating activities6

$1,825 to $2,125

 

Capital expenditures

$775 to $875

 

Free cash flow – continuing operations6

$950 to $1,200

 

Adjusted free cash flow – continuing operations6

$1,050 to $1,250

Ambulatory Segment ($ in millions)

FY 2024 Outlook

Net operating revenues

$4,150 to $4,300

Adjusted EBITDA

$1,645 to $1,715

NCI

$640 to $670

Adjusted EBITDA less NCI

$1,005 to $1,045

Changes versus prior year7:

 

Surgical cases volumes

Up 1.0% to 3.0%

Net revenues per surgical case

Up 2.0% to 3.0%

Hospital Segment ($ in millions)

FY 2024 Outlook

Net operating revenues

$15,850 to $16,100

Adjusted EBITDA

$1,855 to $1,985

NCI

$110 to $130

Changes versus prior year7:

 

Inpatient admissions

Up 1.0% to 3.0%

Adjusted admissions

Up 1.0% to 3.0%

Management’s Webcast Discussion of Results

Tenet management will discuss the Company’s first quarter 2024 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on April 30, 2024. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors.

The slide presentation associated with the webcast referenced above, a copy of this earnings press release, and a related supplemental financial disclosures document will be available on the Company’s Investor Relations website on April 30, 2024.

Cautionary Statement

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company’s expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause the Company’s actual results to be materially different than those expressed in the Company’s forward-looking statements include, but are not limited to the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2023 and other filings with the Securities and Exchange Commission.

Footnotes

  1. Tables and discussions throughout this earnings release include certain financial measures, including those related to our second quarter and full year 2024 Outlook, that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-6 included at the end of this earnings release. Management’s reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release.
  2. Same-facility system-wide revenues and statistical information include the results of the facilities in which the Ambulatory segment has an investment that are not consolidated by Tenet. To help analyze the segment’s results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities.
  3. For 2024, same-hospital revenues and statistical data include those for hospitals and hospital-affiliated outpatient centers operated by the Company’s Hospital segment continuously from January 1, 2023 through March 31, 2024. Amounts associated with physician practices are excluded.
  4. Adjusted admissions represent actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.
  5. Income tax expense is calculated by multiplying 24% (the federal corporate tax rate of 21% plus an estimate of state taxes) by the sum of: pretax income less GAAP facility level NCI expense plus permanent differences, and non-deductible interest expense.
  6. For 2024, Outlook for net cash provided by operating activities, Adjusted net cash provided by operating activities, Free cash flow - continuing operations and Adjusted free cash flow - continuing operations include an estimated $687 million of income tax payments associated with the gains on sale of the three hospitals and related operations in South Carolina and the six hospitals and related operations in California.
  7. Change versus prior year is presented on a same-facility system-wide basis for USPI Ambulatory surgical cases and on a same-hospital basis for hospital statistics.

About Tenet Healthcare

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

Non-GAAP Financial Measures

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

  • Adjusted EBITDA is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) the cumulative effect of changes in accounting principles, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, net of tax, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation benefit (costs), net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested and closed businesses (i.e., health plan businesses). Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
  • Adjusted diluted earnings (loss) per share from continuing operations is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, divided by the weighted average diluted shares outstanding in the reporting period.
  • Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) income (loss) from discontinued operations, net of tax, (2) gain (loss) from early extinguishment of debt, (3) litigation and investigation benefit (costs), net of insurance recoveries, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) impairment and restructuring charges and acquisition-related costs, (6) income (loss) from divested and closed businesses (i.e., health plan businesses) and (7) the associated impact of these items on taxes and noncontrolling interests. Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
  • Free Cash Flow is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment for continuing operations.
  • Adjusted Free Cash Flow is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations.
  • Adjusted net cash provided by (used in) operating activities is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.

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

The Company uses, and believes investors use, Free Cash Flow and Adjusted Free Cash Flow as supplemental non-GAAP measures to analyze cash flows generated from the Company’s operations. The Company believes these measures are useful to investors in evaluating its ability to fund distributions paid to noncontrolling interests or for acquisitions, purchasing equity interests in joint ventures or repaying debt.

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

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

Tenet Healthcare Corporation

Financial Statements and Reconciliations

First Quarter Earnings Release

Table of Contents

Description

Page

Consolidated Statements of Operations

12

Consolidated Balance Sheets

13

Consolidated Statements of Cash Flows

14

Segment Reporting

15

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

16

Table #2 – Reconciliations of Net Income to Adjusted EBITDA

17

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

18

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

19

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

20

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

21

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

(Dollars in millions, except per share amounts)

 

Three Months Ended March 31,

 

2024

 

%

 

2023

 

%

 

Change

Net operating revenues

 

$

5,368

 

 

100.0

%

 

$

5,021

 

 

100.0

%

 

6.9

%

Grant income

 

 

 

 

%

 

 

3

 

 

0.1

%

 

(100.0

)%

Equity in earnings of unconsolidated affiliates

 

 

59

 

 

1.1

%

 

 

50

 

 

1.0

%

 

18.0

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

2,321

 

 

43.2

%

 

 

2,258

 

 

45.0

%

 

2.8

%

Supplies

 

 

928

 

 

17.3

%

 

 

891

 

 

17.7

%

 

4.2

%

Other operating expenses, net

 

 

1,154

 

 

21.5

%

 

 

1,093

 

 

21.9

%

 

5.6

%

Depreciation and amortization

 

 

208

 

 

3.9

%

 

 

217

 

 

4.3

%

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

27

 

 

0.5

%

 

 

21

 

 

0.4

%

 

 

Litigation and investigation costs

 

 

4

 

 

0.1

%

 

 

4

 

 

0.1

%

 

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(2,500

)

 

(46.6

)%

 

 

(13

)

 

(0.3

)%

 

 

Operating income

 

 

3,285

 

 

61.2

%

 

 

603

 

 

12.0

%

 

 

Interest expense

 

 

(218

)

 

 

 

 

(221

)

 

 

 

 

Other non-operating income (expense), net

 

 

25

 

 

 

 

 

(2

)

 

 

 

 

Loss from early extinguishment of debt

 

 

(8

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

3,084

 

 

 

 

 

380

 

 

 

 

 

Income tax expense

 

 

(750

)

 

 

 

 

(84

)

 

 

 

 

Net income

 

 

2,334

 

 

 

 

 

296

 

 

 

 

 

Less: Net income available to noncontrolling interests

 

 

183

 

 

 

 

 

153

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

2,151

 

 

 

 

$

143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share available to Tenet Healthcare Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

21.60

 

 

 

 

$

1.40

 

 

 

 

 

Diluted

 

$

21.38

 

 

 

 

$

1.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares and dilutive securities outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

 

 

99,581

 

 

 

 

 

102,289

 

 

 

 

 

Diluted

 

 

100,598

 

 

 

 

 

106,006

 

 

 

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in millions)

 

March 31,

 

December 31,

 

2024

 

2023

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

2,481

 

 

$

1,228

 

Accounts receivable

 

 

3,148

 

 

 

2,914

 

Inventories of supplies, at cost

 

 

395

 

 

 

411

 

Assets held for sale

 

 

22

 

 

 

775

 

Other current assets

 

 

1,775

 

 

 

1,839

 

Total current assets

 

 

7,821

 

 

 

7,167

 

Investments and other assets

 

 

3,244

 

 

 

3,157

 

Deferred income taxes

 

 

20

 

 

 

77

 

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

 

 

5,855

 

 

 

6,236

 

Goodwill

 

 

10,568

 

 

 

10,307

 

Other intangible assets, at cost, less accumulated amortization

 

 

1,399

 

 

 

1,368

 

Total assets

 

$

28,907

 

 

$

28,312

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

107

 

 

$

120

 

Accounts payable

 

 

1,335

 

 

 

1,408

 

Accrued compensation and benefits

 

 

775

 

 

 

930

 

Professional and general liability reserves

 

 

266

 

 

 

254

 

Accrued interest payable

 

 

249

 

 

 

200

 

Liabilities held for sale

 

 

11

 

 

 

69

 

Income tax payable

 

 

805

 

 

 

23

 

Other current liabilities

 

 

1,868

 

 

 

1,756

 

Total current liabilities

 

 

5,416

 

 

 

4,760

 

Long-term debt, net of current portion

 

 

12,772

 

 

 

14,882

 

Professional and general liability reserves

 

 

794

 

 

 

792

 

Defined benefit plan obligations

 

 

334

 

 

 

335

 

Deferred income taxes

 

 

231

 

 

 

326

 

Other long-term liabilities

 

 

1,689

 

 

 

1,709

 

Total liabilities

 

 

21,236

 

 

 

22,804

 

Commitments and contingencies

 

 

 

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

2,728

 

 

 

2,391

 

Equity:

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

4,806

 

 

 

4,834

 

Accumulated other comprehensive loss

 

 

(179

)

 

 

(181

)

Retained earnings (accumulated deficit)

 

 

1,959

 

 

 

(192

)

Common stock in treasury, at cost

 

 

(3,141

)

 

 

(2,861

)

Total shareholders’ equity

 

 

3,453

 

 

 

1,608

 

Noncontrolling interests

 

 

1,490

 

 

 

1,509

 

Total equity

 

 

4,943

 

 

 

3,117

 

Total liabilities and equity

 

$

28,907

 

 

$

28,312

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

(Dollars in millions)

 

Three Months Ended

 

March 31,

 

2024

 

2023

Net income

 

$

2,334

 

 

$

296

 

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

 

 

 

 

Depreciation and amortization

 

 

208

 

 

 

217

 

Deferred income tax expense (benefit)

 

 

(38

)

 

 

8

 

Stock-based compensation expense

 

 

17

 

 

 

14

 

Impairment and restructuring charges, and acquisition-related costs

 

 

27

 

 

 

21

 

Litigation and investigation costs

 

 

4

 

 

 

4

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(2,500

)

 

 

(13

)

Loss from early extinguishment of debt

 

 

8

 

 

 

 

Equity in earnings of unconsolidated affiliates, net of distributions received

 

 

3

 

 

 

11

 

Amortization of debt discount and debt issuance costs

 

 

8

 

 

 

9

 

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

 

 

 

 

 

(14

)

Other items, net

 

 

(5

)

 

 

(2

)

Changes in cash from operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(263

)

 

 

35

 

Inventories and other current assets

 

 

(18

)

 

 

50

 

Income taxes

 

 

783

 

 

 

76

 

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

 

 

19

 

 

 

(230

)

Other long-term liabilities

 

 

24

 

 

 

(9

)

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

 

 

(25

)

 

 

(24

)

Net cash provided by operating activities

 

 

586

 

 

 

449

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(240

)

 

 

(235

)

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

 

 

(449

)

 

 

(48

)

Proceeds from sales of facilities and other assets

 

 

4,030

 

 

 

13

 

Proceeds from sales of marketable securities and long-term investments

 

 

7

 

 

 

9

 

Purchases of marketable securities and long-term investments

 

 

(10

)

 

 

(18

)

Other items, net

 

 

(10

)

 

 

(7

)

Net cash provided by (used in) investing activities

 

 

3,328

 

 

 

(286

)

Cash flows from financing activities:

 

 

 

 

Repayments of borrowings

 

 

(2,141

)

 

 

(45

)

Proceeds from borrowings

 

 

2

 

 

 

12

 

Repurchases of common stock

 

 

(278

)

 

 

(50

)

Distributions paid to noncontrolling interests

 

 

(162

)

 

 

(134

)

Proceeds from the sale of noncontrolling interests

 

 

5

 

 

 

25

 

Purchases of noncontrolling interests

 

 

(52

)

 

 

(41

)

Other items, net

 

 

(35

)

 

 

(22

)

Net cash used in financing activities

 

 

(2,661

)

 

 

(255

)

Net increase (decrease) in cash and cash equivalents

 

 

1,253

 

 

 

(92

)

Cash and cash equivalents at beginning of period

 

 

1,228

 

 

 

858

 

Cash and cash equivalents at end of period

 

$

2,481

 

 

$

766

 

Supplemental disclosures:

 

 

 

 

Interest paid, net of capitalized interest

 

$

(162

)

 

$

(177

)

Income tax payments, net

 

$

(5

)

 

$

 

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31,

(Dollars in millions)

 

2024

 

2023

Net operating revenues:

 

 

 

 

Ambulatory Care

 

$

995

 

 

$

905

 

Hospital Operations and Services

 

 

4,373

 

 

 

4,116

 

Total

 

$

5,368

 

 

$

5,021

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates:

 

 

 

 

Ambulatory Care

 

$

56

 

 

$

47

 

Hospital Operations and Services

 

 

3

 

 

 

3

 

Total

 

$

59

 

 

$

50

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

Ambulatory Care

 

$

394

 

 

$

340

 

Hospital Operations and Services

 

 

630

 

 

 

492

 

Total

 

$

1,024

 

 

$

832

 

 

 

 

 

 

Adjusted EBITDA margins:

 

 

 

 

Ambulatory Care

 

 

39.6

%

 

 

37.6

%

Hospital Operations and Services

 

 

14.4

%

 

 

12.0

%

Total

 

 

19.1

%

 

 

16.6

%

 

 

 

 

 

Capital expenditures:

 

 

 

 

Ambulatory Care

 

$

18

 

 

$

18

 

Hospital Operations and Services

 

 

222

 

 

 

217

 

Total

 

$

240

 

 

$

235

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31,

(Dollars in millions, except per share amounts)

 

2024

 

2023

Net income available to Tenet Healthcare Corporation common shareholders

 

$

2,151

 

 

$

143

 

Less:

 

 

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(27

)

 

 

(21

)

Litigation and investigation costs

 

 

(4

)

 

 

(4

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

2,500

 

 

 

13

 

Loss from early extinguishment of debt

 

 

(8

)

 

 

 

Tax and noncontrolling interests impact of above items

 

 

(634

)

 

 

1

 

Adjusted net income available from continuing operations to common shareholders

 

$

324

 

 

$

154

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

21.38

 

 

$

1.32

 

Less:

 

 

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(0.27

)

 

 

(0.20

)

Litigation and investigation costs

 

 

(0.04

)

 

 

(0.04

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

24.85

 

 

 

0.13

 

Loss from early extinguishment of debt

 

 

(0.08

)

 

 

 

Tax and noncontrolling interests impact of above items

 

 

(6.30

)

 

 

0.01

 

Adjusted diluted earnings per share from continuing operations

 

$

3.22

 

 

$

1.42

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

99,581

 

 

 

102,289

 

Weighted average dilutive shares outstanding (in thousands)

 

 

100,598

 

 

 

106,006

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31,

(Dollars in millions)

 

2024

 

2023

Net income available to Tenet Healthcare Corporation common shareholders

 

$

2,151

 

 

$

143

 

Less:

 

 

 

 

Net income available to noncontrolling interests

 

 

(183

)

 

 

(153

)

Income from continuing operations

 

 

2,334

 

 

 

296

 

Income tax expense

 

 

(750

)

 

 

(84

)

Loss from early extinguishment of debt

 

 

(8

)

 

 

 

Other non-operating income (expense), net

 

 

25

 

 

 

(2

)

Interest expense

 

 

(218

)

 

 

(221

)

Operating income

 

 

3,285

 

 

 

603

 

Litigation and investigation costs

 

 

(4

)

 

 

(4

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

2,500

 

 

 

13

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(27

)

 

 

(21

)

Depreciation and amortization

 

 

(208

)

 

 

(217

)

Adjusted EBITDA

 

$

1,024

 

 

$

832

 

 

 

 

 

 

Net operating revenues

 

$

5,368

 

 

$

5,021

 

 

 

 

 

 

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

 

 

40.1

%

 

 

2.8

%

 

 

 

 

 

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

 

 

19.1

%

 

 

16.6

%

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)

 

Three Months Ended

 

 

March 31,

 

 

2024

 

2023

Net cash provided by operating activities

 

$

586

 

 

$

449

 

Purchases of property and equipment

 

 

(240

)

 

 

(235

)

Free cash flow – continuing operations

 

$

346

 

 

$

214

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

$

3,328

 

 

$

(286

)

Net cash used in financing activities

 

$

(2,661

)

 

$

(255

)

 

 

 

 

 

Net cash provided by operating activities

 

$

586

 

 

$

449

 

Less:

 

 

 

 

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

 

 

(25

)

 

 

(24

)

Adjusted net cash provided by operating activities from continuing operations

 

 

611

 

 

 

473

 

Purchases of property and equipment

 

 

(240

)

 

 

(235

)

Adjusted free cash flow – continuing operations

 

$

371

 

 

$

238

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 

 

 

Second Quarter 2024

 

FY 2024

(Dollars in millions, except per share amounts)

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

150

 

 

$

195

 

 

$

2,622

 

 

$

2,762

 

Less:

 

 

 

 

 

 

 

 

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

 

 

(20

)

 

 

(10

)

 

 

(100

)

 

 

(50

)

Net gains on sales, consolidation and deconsolidation of facilities(2)

 

 

 

 

 

 

 

 

2,500

 

 

 

2,500

 

Loss from early extinguishment of debt(2)

 

 

 

 

 

 

 

 

(8

)

 

 

(8

)

Tax and noncontrolling interests impact of above items

 

 

10

 

 

 

5

 

 

 

(615

)

 

 

(630

)

Adjusted net income available from continuing operations to common shareholders

 

$

160

 

 

$

200

 

 

$

845

 

 

$

950

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

1.49

 

 

$

1.93

 

 

$

25.96

 

 

$

27.35

 

Less:

 

 

 

 

 

 

 

 

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

 

 

(0.19

)

 

 

(0.10

)

 

 

(0.99

)

 

 

(0.49

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

 

 

 

 

 

 

24.75

 

 

 

24.75

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(0.08

)

 

 

(0.08

)

Tax and noncontrolling interests impact of above items

 

 

0.10

 

 

 

0.05

 

 

 

(6.09

)

 

 

(6.24

)

Adjusted diluted earnings per share from continuing operations

 

$

1.58

 

 

$

1.98

 

 

$

8.37

 

 

$

9.41

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

100,000

 

 

 

100,000

 

 

 

100,000

 

 

 

100,000

 

Weighted average dilutive shares outstanding (in thousands)

 

 

101,000

 

 

 

101,000

 

 

 

101,000

 

 

 

101,000

 

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities or losses from the early extinguishment of debt because the Company does not believe that it can forecast these items with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to transactions that have already occurred in 2024.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

 

 

 

Second Quarter 2024

 

FY 2024

(Dollars in millions)

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

150

 

 

$

195

 

 

$

2,622

 

 

$

2,762

 

Less:

 

 

 

 

 

 

 

 

Net income available to noncontrolling interests

 

 

(160

)

 

 

(170

)

 

 

(750

)

 

 

(800

)

Income tax expense

 

 

(80

)

 

 

(95

)

 

 

(945

)

 

 

(995

)

Interest expense

 

 

(230

)

 

 

(220

)

 

 

(835

)

 

 

(825

)

Loss from early extinguishment of debt(2)

 

 

 

 

 

 

 

 

(8

)

 

 

(8

)

Other non-operating income, net

 

 

15

 

 

 

25

 

 

 

90

 

 

 

100

 

Net gains on sales, consolidation and deconsolidation of facilities(2)

 

 

 

 

 

 

 

 

2,500

 

 

 

2,500

 

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

 

 

(20

)

 

 

(10

)

 

 

(100

)

 

 

(50

)

Depreciation and amortization

 

 

(210

)

 

 

(220

)

 

 

(830

)

 

 

(860

)

Adjusted EBITDA

 

$

835

 

 

$

885

 

 

$

3,500

 

 

$

3,700

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

150

 

 

$

195

 

 

$

2,622

 

 

$

2,762

 

Net operating revenues

 

$

4,900

 

 

$

5,100

 

 

$

20,000

 

 

$

20,400

 

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

 

 

3.1

%

 

 

3.8

%

 

 

13.1

%

 

 

13.5

%

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

 

 

17.0

%

 

 

17.4

%

 

 

17.5

%

 

 

18.1

%

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities or losses from the early extinguishment of debt because the Company does not believe that it can forecast these items with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to transactions that have already occurred in 2024.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

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

Flow Continuing Operations

(Unaudited)

 

(Dollars in millions)

 

FY 2024

 

 

Low

 

High

Net cash provided by operating activities

 

$

1,725

 

 

$

2,075

 

Purchases of property and equipment

 

 

(775

)

 

 

(875

)

Free cash flow – continuing operations

 

$

950

 

 

$

1,200

 

 

 

 

 

 

Net cash provided by operating activities

 

$

1,725

 

 

$

2,075

 

Less:

 

 

 

 

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

 

 

(100

)

 

 

(50

)

Adjusted net cash provided by operating activities – continuing operations

 

 

1,825

 

 

 

2,125

 

Purchases of property and equipment

 

 

(775

)

 

 

(875

)

Adjusted free cash flow – continuing operations(2)

 

$

1,050

 

 

$

1,250

 

(1)

The figures shown represent the Company's estimate for restructuring payments plus the actual year-to-date payments for restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast payments for acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company’s definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, and (ii) distributions paid to noncontrolling interests.

 

Investor Contact

Will McDowell

469-893-2387

william.mcdowell@tenethealth.com

Media Contact

Robert Dyer

469-893-2640

mediarelations@tenethealth.com

Source: Tenet Healthcare Corporation