Tenet Reports Second Quarter 2011 Results

Adjusted EBITDA of $277 Million, an Increase of 3.4 Percent

Earnings per Diluted Share of $0.11 Per Share, as Compared to $0.05 Per Share in Q2’10

Net Operating Revenues of $2.374 Billion, an Increase of 3.1 Percent

Confirms Outlook Range for 2011 Adjusted EBITDA of $1.175 Billion to $1.275 Billion

Outlook for 2011 Diluted EPS Raised by 3 Cents

DALLAS--(BUSINESS WIRE)-- Tenet Healthcare Corporation (NYSE:THC):

Key Metrics (all percentage changes compare Q2’11 to Q2’10)

  • 3.1 percent growth in net operating revenues to $2.374 billion, an increase of $71 million
  • 1.0 percent growth in adjusted admissions, the 3rd consecutive quarter of positive growth
    • 0.1 percent decline in paying admissions
  • Earnings per diluted share from continuing operations of $0.09 per share, an increase of $0.02, or 29 percent, excluding $0.01 per share of litigation and impairment pre-tax expense of $10 million

Tenet Healthcare Corporation (NYSE:THC) today reported adjusted EBITDA of $277 million for the second quarter ended June 30, 2011, an increase of $9 million, or 3.4 percent, compared to $268 million for the second quarter of 2010. Income from continuing operations, before income taxes, was $66 million in the second quarter of 2011, an increase of $1 million, or 1.5 percent, as compared to $65 million in the second quarter of 2010. Net income attributable to common shareholders was $55 million, or $0.11 per diluted share, compared to $25 million, or $0.05 per diluted share, for the second quarter of 2010.

“Our results for the second quarter extended the positive momentum we reported in recent quarters,” said Trevor Fetter, president and chief executive officer. “Net revenues grew by 3.1 percent reflecting growth of 1.0 percent in adjusted admissions and 1.1 percent growth in surgeries. These increases provide additional evidence that our growth initiatives are gaining traction. Based on the solid performance for the first half of the year, we are reconfirming our Outlook for 2011 Adjusted EBITDA in the existing range of $1.175 billion to $1.275 billion.”

Discussion of Results (Percentage changes compare Q2’11 to Q2’10, unless otherwise noted.)

Adjusted EBITDA grew by 3.4 percent reflecting growth in adjusted admissions, improvements in commercial pricing, sustained cost control, and a decline in bad debt expense. These favorable items more than offset pressures from declines in government reimbursement rates. Adjusted EBITDA also reflected Healthcare Information Technology (“HIT”) incentive payments which offset incremental current period implementation and operating expense associated with Tenet’s HIT initiative. Adjusted EBITDA was adversely impacted by a retroactive Medicaid adjustment enacted by one state.

Adjusted admissions increased by 1.0 percent. Admissions and paying admissions declined by 0.2 and 0.1 percent, respectively.

Net operating revenues were $2.374 billion, an increase of $71 million, or 3.1 percent, compared to net operating revenues of $2.303 billion in the second quarter of 2010. Net operating revenues in the second quarter of 2011 included Medicaid HIT incentive payments recorded in other non-patient revenues. Net patient revenues per adjusted patient day increased by 2.0 percent.

Acuity was unchanged in the second quarter of 2011 as compared to the second quarter of 2010. The impact of continuing favorable pricing increases on commercial volumes was partially offset by changes in government reimbursement. Growth in imaging volumes made a positive contribution to operating margins although this volume growth moderated increases in the quarter’s pricing metrics.

Total controllable operating expenses were $1.926 billion, an increase of $64 million, or 3.4 percent. This increase reflects annual salary increases for our broad employee population and increases in HIT implementation and operating expenses. Controllable operating expenses is defined as the sum of salaries, wages and benefits, supplies, and other operating expenses.

The sum of uninsured and charity admissions declined by 1.9 percent. Bad debt expense was $171 million, a decline of $2 million. Last year’s second quarter bad debt expense included a favorable $28 million adjustment for Medicare bad debts. The current quarter benefited from lower uninsured revenues and favorable resolution of aged accounts.

Net cash provided by operating activities was $178 million in the second quarter of 2011 compared to $191 million in the second quarter of 2010, a decrease of $13 million. Capital expenditures were $82 million in the second quarter of 2011, as compared to $77 million in the second quarter of 2010. Cash and cash equivalents were $264 million at June 30, 2011, a decrease of $3 million, from $267 million at March 31, 2011. Cash usage in the second quarter of 2011 includes the use of $72 million to repurchase 11.5 million shares of the Company’s common stock and $22 million for the purchase of four outpatient centers. Through July 31, the Company has repurchased an aggregate total of 16.8 million shares of common stock, representing 3.4 percent of outstanding common shares, at an average price of $6.24 per share, for an expenditure of approximately $105 million.

The Company raised its Outlook for 2011 diluted earnings per share by three cents as a result of lower tax expense and a reduced share count related to the Company’s share buyback program.

Management’s Webcast Discussion of Second Quarter Results

Tenet management will discuss second quarter 2011 results on a webcast scheduled for 10:00 AM (ET) on August 2, 2011. This webcast may be accessed through Tenet’s website at www.tenethealth.com/investors.

Additional information regarding Tenet’s quarterly results of operations, including detailed tabular operational data, is contained in its Form 10-Q report, which will be filed with the Securities and Exchange Commission and posted on the Tenet investor relations website before today’s webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA. A reconciliation of Adjusted EBITDA to net income attributable to common shareholders is included in the financial tables at the end of this release.

Tenet Healthcare Corporation is a health care services company whose subsidiaries and affiliates own and operate acute care hospitals, ambulatory surgery centers and diagnostic imaging centers. Tenet’s hospitals and related healthcare facilities are committed to providing high quality care to patients in the communities they serve. For more information, please visit www.tenethealth.com.

Some of the statements in this release may constitute forward-looking statements. Such forward-looking statements are based on our current expectations and could be affected by numerous factors and are subject to various risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended Dec. 31, 2010, our quarterly reports on Form 10-Q, and periodic reports on Form 8-K. Do not rely on any forward-looking statement, as we cannot predict or control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.

Tenet uses its company web site 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 OPERATIONS DATA
(Unaudited)
 
(Dollars in millions except per share amounts)   Three Months Ended June 30,
2011   %   2010   %   Change
 
Net operating revenues $ 2,374 100.0 % $ 2,303 100.0 % 3.1 %
Operating expenses:
Salaries, wages and benefits 999 42.1 % 969 42.1 % 3.1 %
Supplies 399 16.8 % 395 17.2 % 1.0 %
Provision for doubtful accounts 171 7.2 % 173 7.5 % (1.2

)%

Other operating expenses, net 528 22.2 % 498 21.6 % 6.0 %
Depreciation and amortization 104 4.4 % 97 4.2 % 7.2 %
Impairment of long-lived assets and goodwill, and restructuring charges, net 2 0.1 % (2 ) (0.1 ) %
Litigation and investigation costs   8   0.3 %   2   0.1 %
Operating income 163 6.9 % 171 7.4 %
Interest expense (98 ) (107 )
Investment earnings   1     1  
Income from continuing operations, before income taxes 66 65
Income tax expense   (18 )   (20 )

Income from continuing operations, before discontinued operations

48 45
Discontinued operations:
Loss from operations (3 ) (5 )
Impairment of long-lived assets and goodwill, and restructuring charges, net (3 )
Income tax benefit (expense)   18     (2 )
Income (loss) from discontinued operations   15     (10 )
Net income 63 35
Less: Preferred stock dividends 6 6
Less: Net income attributable to noncontrolling interests   2     4  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 55   $ 25  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 40 $ 35
Income (loss) from discontinued operations, net of tax   15     (10 )
Net income attributable to Tenet Healthcare Corporation common shareholders $ 55   $ 25  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.08 $ 0.07
Discontinued operations   0.03     (0.02 )
$ 0.11   $ 0.05  
Diluted
Continuing operations $ 0.08 $ 0.07
Discontinued operations   0.03     (0.02 )
$ 0.11   $ 0.05  

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

Basic 486,794 484,610
Diluted 503,748 502,549
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
(Unaudited)
 
(Dollars in millions except per share amounts)   Six Months Ended June 30,
2011   %   2010   %   Change
 
Net operating revenues $ 4,880 100.0 % $ 4,642 100.0 % 5.1 %
Operating expenses:
Salaries, wages and benefits 2,034 41.7 % 1,956 42.1 % 4.0 %
Supplies 803 16.5 % 793 17.1 % 1.3 %
Provision for doubtful accounts 353 7.2 % 362 7.8 % (2.5 ) %
Other operating expenses, net 1,034 21.2 % 965 20.8 % 7.2 %
Depreciation and amortization 205 4.2 % 192 4.1 % 6.8 %
Impairment of long-lived assets and goodwill, and restructuring charges, net 10 0.2 % (2 ) %
Litigation and investigation costs   19   0.4 %   4   0.1 %
Operating income 422 8.6 % 372 8.0 %
Interest expense (216 ) (216 )
Investment earnings   2     2  

Income from continuing operations, before income taxes

208 158
Income tax expense   (69 )   (23 )

Income from continuing operations, before discontinued operations

139 135
Discontinued operations:
Loss from operations (18 )
Impairment of long-lived assets and goodwill, and restructuring charges, net (2 )
Income tax benefit (expense)   24     (3 )
Income (loss) from discontinued operations   6     (5 )
Net income 145 130
Less: Preferred stock dividends 12 12
Less: Net income attributable to noncontrolling interests   5     5  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 128   $ 113  
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax $ 122 $ 118
Income (loss) from discontinued operations, net of tax   6     (5 )
Net income attributable to Tenet Healthcare Corporation common shareholders $ 128   $ 113  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.25 $ 0.24
Discontinued operations   0.01     (0.01 )
$ 0.26   $ 0.23  
Diluted
Continuing operations $ 0.24 $ 0.23
Discontinued operations   0.01     (0.01 )
$ 0.25   $ 0.22  

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

Basic 486,848 483,263
Diluted 563,951 560,376
 
TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
 
  June 30,   December 31,
(Dollars in millions) 2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 264 $ 405
Accounts receivable, less allowance for doubtful accounts 1,258 1,143
Inventories of supplies, at cost 156 156
Income tax receivable 1 22
Current portion of deferred income taxes 249 282
Assets held for sale 11 14
Other current assets   375     289  
Total current assets 2,314 2,311
Investments and other assets 171 164
Deferred income taxes, net of current portion 543 627
Property and equipment, at cost, less accumulated depreciation and amortization 4,238 4,304
Goodwill 715 652
Other intangible assets, at cost, less accumulated amortization   454     442  
Total assets $ 8,435   $ 8,500  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 128 $ 67
Accounts payable 614 720
Accrued compensation and benefits 357 363
Professional and general liability reserves 96 84
Accrued interest payable 117 115
Accrued legal settlement costs 10 8
Other current liabilities   340     368  
Total current liabilities 1,662 1,725
Long-term debt, net of current portion 3,989 3,997
Professional and general liability reserves 369 383
Accrued legal settlement costs 22 22
Other long-term liabilities   503     554  
Total liabilities 6,545 6,681
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 16
Equity:
Shareholders’ equity:
Preferred stock 334 334
Common stock 27 27
Additional paid-in capital 4,425 4,449
Accumulated other comprehensive loss (43 ) (43 )
Accumulated deficit (1,382 ) (1,522 )
Common stock in treasury, at cost   (1,551 )   (1,479 )
Total shareholders’ equity 1,810 1,766
Noncontrolling interests   64     53  
Total equity   1,874     1,819  
Total liabilities and equity $ 8,435   $ 8,500  
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED CASH FLOW DATA

(Unaudited)
(Dollars in millions)   Six Months Ended
June 30,
2011   2010
Net income $ 145 $ 130
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 205 192
Provision for doubtful accounts 353 362
Deferred income tax expense 91 12
Stock-based compensation expense 12 13
Impairment of long-lived assets and goodwill, and restructuring charges, net 10 (2 )
Fair market value adjustments related to interest rate swap and LIBOR cap agreements 17 3
Amortization of debt discount and debt issuance costs 15 15
Litigation and investigation costs 19 4
Pre-tax loss from discontinued operations 18 2
Other items, net (5 ) 1
Changes in cash from operating assets and liabilities:
Accounts receivable (470 ) (377 )
Inventories and other current assets (58 ) (8 )
Income taxes (26 ) 50
Accounts payable, accrued expenses and other current liabilities (118 ) (164 )
Other long-term liabilities 8 (18 )
Payments against reserves for restructuring charges and litigation costs (21 ) (51 )
Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes   (19 )   5  
Net cash provided by operating activities 176 169
Cash flows from investing activities:
Purchases of property and equipment—continuing operations (198 ) (148 )
Construction of new and replacement hospitals (12 )
Purchases of businesses or joint venture interest (42 ) (2 )
Proceeds from sales of facilities and other assets — discontinued operations 18
Proceeds from sales of marketable securities, long-term investments and other assets 10 16
Other items, net   (1 )   2  
Net cash used in investing activities (231 ) (126 )
Cash flows from financing activities:
Repayments of borrowings (2 ) (12 )
Proceeds from borrowings 1
Repurchases of common stock (72 )
Cash dividends on preferred stock (12 ) (12 )
Distributions paid to noncontrolling interests (4 ) (3 )
Other items, net   4     4  
Net cash used in financing activities   (86 )   (22 )
Net increase (decrease) in cash and cash equivalents (141 ) 21
Cash and cash equivalents at beginning of period   405     690  
Cash and cash equivalents at end of period $ 264   $ 711  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (182 ) $ (201 )
Income tax refunds, net $ 20 $ 34
 

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING HOSPITALS
(Unaudited)
 

(Dollars in millions except per patient day, per admission and per visit amounts)

  Three Months Ended June 30,   Six Months Ended June 30,
2011   2010   Change 2011   2010   Change
 
Net inpatient revenues $ 1,497 $ 1,478 1.3 % $ 3,150 $ 3,022 4.2 %
Net outpatient revenues $ 751 $ 733 2.5 % $ 1,484 $ 1,439 3.1 %
 
Number of acute care hospitals (at end of period) 49 49 49 49 *
Licensed beds (at end of period) 13,420 13,420 % 13,420 13,420 %
Average licensed beds 13,445 13,435 0.1 % 13,451 13,433 0.1 %
Utilization of licensed beds 49.5 % 50.3 % (0.8 ) 51.4 % 52.1 % (0.7 ) *
Patient days 605,216 614,365 (1.5 ) % 1,250,382 1,267,317 (1.3 ) %
Adjusted patient days 926,328 929,186 (0.3 ) % 1,889,367 1,887,434 0.1 %
Net inpatient revenue per patient day $ 2,473 $ 2,406 2.8 % $ 2,519 $ 2,385 5.6 %
Admissions 127,503 127,751 (0.2 ) % 260,852 260,350 0.2 %
Adjusted patient admissions 196,862 194,828 1.0 % 397,215 390,737 1.7 %
Net inpatient revenue per admission $ 11,741 $ 11,569 1.5 % $ 12,076 $ 11,607 4.0 %
Average length of stay (days) 4.7 4.8 (0.1 ) 4.8 4.9 (0.1 ) *
Surgeries 92,250 91,285 1.1 % 181,004 179,283 1.0 %
Net outpatient revenue per visit $ 739 $ 741 (0.3 ) % $ 732 $ 741 (1.2 ) %
Outpatient visits 1,015,830 988,706 2.7 % 2,026,678 1,941,621 4.4 %
 
Sources of net patient revenue
Medicare 23.6 % 23.2 % 0.4 23.4 % 24.2 % (0.8 ) *
Medicaid 7.5 % 9.3 % (1.8 ) 9.6 % 9.0 % 0.6 *
Managed care 58.0 % 56.5 % 1.5 56.2 % 56.0 % 0.2 *
Indemnity, self-pay and other 10.9 % 11.0 % (0.1 ) 10.8 % 10.8 % *
 
 
* This change is the difference between the 2011 and 2010 amounts shown
 

TENET HEALTHCARE CORPORATION

CONSOLIDATED OPERATIONS DATA
Fiscal 2011 by Calendar Quarter
(Unaudited)
    Six Months
Ended
(Dollars in millions except per share amounts) Three Months Ended
3/31/11   6/30/11 06/30/11
 
Net operating revenues $ 2,506 $ 2,374 $ 4,880
Operating expenses:
Salaries, wages and benefits 1,035 999 2,034
Supplies 404 399 803
Provision for doubtful accounts 182 171 353
Other operating expenses, net 506 528 1,034
Depreciation and amortization 101 104 205
Impairment of long-lived assets and goodwill, and restructuring charges 8 2 10
Litigation and investigation costs   11     8     19  
Operating income 259 163 422
Interest expense (118 ) (98 ) (216 )
Investment earnings   1     1     2  
Income from continuing operations, before income taxes 142 66 208
Income tax expense   (51 )   (18 )   (69 )
Income from continuing operations, before discontinued operations 91 48 139
Discontinued operations:
Loss from operations (15 ) (3 ) (18 )
Income tax benefit   6     18     24  
Income (loss) from discontinued operations   (9 )   15     6  
Net income 82 63 145
Less: Preferred stock dividends 6 6 12
Less: Net income attributable to noncontrolling interests   3     2     5  
Net income attributable to Tenet Healthcare Corporation common shareholders $ 73   $ 55   $ 128  
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations $ 0.17 $ 0.08 $ 0.25
Discontinued operations   (0.02 )   0.03     0.01  
$ 0.15   $ 0.11   $ 0.26  
Diluted
Continuing operations $ 0.16 $ 0.08 $ 0.24
Discontinued operations   (0.02 )   0.03     0.01  
$ 0.14   $ 0.11   $ 0.25  

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

Basic 486,902 486,794 486,848
Diluted 565,181 503,748 563,951
 
TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING HOSPITALS
Fiscal 2011 by Calendar Quarter
(Unaudited)
   
(Dollars in millions except per patient day, per

Six Months
Ended

admission and per visit amounts) Three Months Ended
03/31/11   06/30/11 06/30/11
 
Net inpatient revenues $ 1,653 $ 1,497 $ 3,150
Net outpatient revenues $ 733 $ 751 $ 1,484
 
Number of acute care hospitals (at end of period) 49 49 49
Licensed beds (at end of period) 13,457 13,420 13,420
Average licensed beds 13,457 13,445 13,451
Utilization of licensed beds 53.3 % 49.5 % 51.4 %
Patient days 645,166 605,216 1,250,382
Adjusted patient days 963,039 926,328 1,889,367
Net inpatient revenue per patient day $ 2,562 $ 2,473 $ 2,519
Admissions 133,349 127,503 260,852
Adjusted patient admissions 200,353 196,862 397,215
Net inpatient revenue per admission $ 12,396 $ 11,741 $ 12,076
Average length of stay (days) 4.8 4.7 4.8
Surgeries 88,754 92,250 181,004
Net outpatient revenue per visit $ 725 $ 739 $ 732
Outpatient visits 1,010,848 1,015,830 2,026,678
 
Sources of net patient revenue
Medicare 23.2 % 23.6 % 23.4 %
Medicaid 11.6 % 7.5 % 9.6 %
Managed care 54.4 % 58.0 % 56.2 %
Indemnity, self-pay and other 10.8 % 10.9 % 10.8 %

Reconciliation of Adjusted EBITDA

Adjusted EBITDA, a non-GAAP term, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) cumulative effect of changes in accounting principle, net of tax, (2) net income attributable to noncontrolling interests, (3) preferred stock dividends, (4) income (loss) from discontinued operations, net of tax, (5) income tax (expense) benefit, (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) impairment of long-lived assets and goodwill and restructuring charges, net of insurance recoveries, and (13) depreciation and amortization. The Company’s Adjusted EBITDA may not be comparable to EBITDA 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 hospitals in continuing operations. In addition, from time to time we use this measure to define certain performance targets under our compensation programs. Adjusted EBITDA is not a measure of liquidity, but is a measure 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 excludes many items that are included in our financial statements, it does 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 first table below for the three and six months ended June 30, 2011 and 2010.

 
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures

 

Table #1 - Reconciliation of Adjusted EBITDA to Net Income Attributable to Tenet Healthcare Corporation Common Shareholders

(Unaudited)
 
(Dollars in millions)   Three Months Ended
June 30,
  Six Months Ended
June 30,
2011   2010 2011   2010
Net income attributable to Tenet Healthcare Corporation common shareholders $ 55 $ 25 $ 128 $ 113
Less: Net income attributable to noncontrolling interests (2 ) (4 ) (5 ) (5 )
Preferred stock dividends (6 ) (6 ) (12 ) (12 )
Income (loss) from discontinued operations, net of tax   15     (10 )   6     (5 )
Income from continuing operations 48 45 139 135
Income tax expense (18 ) (20 ) (69 ) (23 )
Investment earnings 1 1 2 2
Interest expense   (98 )   (107 )   (216 )   (216 )
Operating income 163 171 422 372
Litigation and investigation costs (8 ) (2 ) (19 ) (4 )
Impairment of long-lived assets and goodwill, and restructuring charges, net (2 ) 2 (10 ) 2
Depreciation and amortization   (104 )   (97 )   (205 )   (192 )
Adjusted EBITDA $ 277   $ 268   $ 656   $ 566  
 
Net operating revenues $ 2,374   $ 2,303   $ 4,880   $ 4,642  
 
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 11.7 % 11.6 % 13.4 % 12.2 %
 
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Table #2 - Reconciliation of Outlook Adjusted EBITDA to
Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders

for Year Ending December 31, 2011

(Unaudited)
 
(Dollars in millions)   Low   High
 
Net income attributable to Tenet Healthcare Corporation common shareholders $ 162 $ 252
Less:
Net income attributable to noncontrolling interests (15 ) (10 )
Preferred stock dividends (24 ) (24 )
Loss from discontinued operations, net of tax   (15 )   (10 )
Income from continuing operations 216 296
Income tax expense   (122 )   (173 )
Income from continuing operations, before income taxes 338 469
Interest expense, net   (405 )   (385 )
Operating income 743 854
Litigation and investigation costs (22 ) (11 )
Impairment of long-lived assets and goodwill, and restructuring charges (20 ) (10 )
Depreciation and amortization   (390 )   (400 )
Adjusted EBITDA $ 1,175   $ 1,275  
 
Net operating revenues $ 9,700 $ 9,900
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin) 12.1 % 12.9 %
   

Table #3 - Reconciliation of Outlook Adjusted EBITDA to

Outlook Normalized Net Income Attributable to Tenet Healthcare Corporation

Common Shareholders for Year Ending December 31, 2011

(Unaudited)

 
(Dollars in millions except per share amounts) Low High
 
Adjusted EBITDA (from Table # 2, above) $ 1,175 $ 1,275
 
Depreciation and amortization (390 ) (400 )
Interest expense, net   (405 )   (385 )
Normalized income from continuing operations before income taxes 380 490
Income tax expense (a)   (138 )   (181 )
Normalized income from continuing operations (a) 242 309
Preferred stock dividends (24 ) (24 )
Net income attributable to noncontrolling interests   (15 )   (10 )
Normalized net income attributable to Tenet Healthcare Corporation common shareholders (a) $ 203   $ 275  
 
Weighted average shares outstanding (in millions) 499

558

(b)

 
Normalized earnings per share – continuing operations (a) $ 0.41 $

0.54

(b)

 

(a) Uses tax rate of 39 percent excluding unusual adjustments.

(b) An additional 59 million shares are included as our mandatory convertible preferred stock is dilutive at this level of earnings and the $24 million of preferred stock dividends are excluded for earnings per share computation purposes.



CONTACT:

Tenet Healthcare Corporation
Media:
Rick Black, 469-893-2647
[email protected]
or
Investors:
Thomas Rice, 469-893-2522
[email protected]

KEYWORDS:   United States  North America  Texas

INDUSTRY KEYWORDS:   Practice Management  Health  Hospitals  Nursing  Managed Care

MEDIA:

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