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 |
|||||||||||
| 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 | ||||||||||||||||
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Table #1 - Reconciliation of Adjusted EBITDA to Net Income Attributable to Tenet Healthcare Corporation Common Shareholders |
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| (Unaudited) | ||||||||||||||||
| (Dollars in millions) | Three Months Ended June 30, |
Six Months Ended June 30, |
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| 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 |
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| (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) |
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| (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) |
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| Normalized earnings per share – continuing operations (a) | $ | 0.41 | $ |
0.54 |
(b) |
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(a) Uses tax rate of 39 percent excluding unusual adjustments. |
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(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. |
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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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