Tenet Reports Second Quarter 2010 Results

Diluted Earnings of $0.05 Per Share, Up from Loss of $0.03 Per Share Over Prior Year Period

Net Income Attributable to Common Shareholders of $25 Million, Compared to a Net Loss of $15 Million in Prior Year Period

Net Operating Revenues Increase 3.3 Percent to $2.30 Billion

Key Metrics (All percentage changes compare Q2’10 to Q2’09 unless otherwise noted)

• Adjusted EBITDA of $268 million, an 8.9% increase
• Adjusted EBITDA margin of 11.6%, a 60 basis point increase
• Outlook for 2010 adjusted EBITDA confirmed at $1.035 billion to $1.100 billion

DALLAS--(BUSINESS WIRE)-- Tenet Healthcare Corporation (NYSE:THC) today reported adjusted EBITDA of $268 million for the quarter ended June 30, 2010, an increase of $22 million, or 8.9 percent, as compared to $246 million for the second quarter of 2009. Net income attributable to common shareholders for the second quarter of 2010 was $25 million, or $0.05 per diluted share, compared to a net loss of $15 million, or $0.03 per diluted share, for the second quarter of 2009. Continuing operations earned $0.07 per diluted share in the second quarter of 2010 as compared to $0.01 per diluted share in the second quarter of 2009.

“Our earnings power continued to grow as we successfully converted an admissions decline of 2.0 percent into revenue growth of 3.3 percent and adjusted EBITDA growth of 8.9 percent,” said Trevor Fetter, president and chief executive officer. “This progression demonstrates our ability to address the challenges presented by the continuing soft macroeconomic environment to produce meaningful growth in value.”

Discussion of Results (All percentage changes compare Q2’10 to Q2’09. Same hospital and total company statistics are identical.)

Second quarter 2010 performance was driven by solid revenue growth and incremental cost efficiencies which more than offset the impact from soft volumes. Admissions and outpatient visits declined by 2.0 percent and 0.8 percent, respectively. Adjusted admissions declined by 0.6 percent. Commercial managed care admissions and outpatient visits declined by 7.2 percent and 5.4 percent, respectively. Higher commercial acuity, increased unit revenues, and improved commercial payer mix produced growth in commercial managed care revenues of 2.0 percent. This growth in commercial revenues contributed to an aggregate increase in net operating revenues of $74 million, or 3.3 percent. This increase in revenues was net of unfavorable adjustments of $28 million for the estimated impact on our Medicare disproportionate share hospital payments ($20 million) as a result of estimated lower Supplemental Security Income (SSI) percentages at certain of our hospitals and the portion of bad debt that will not be reimbursed by Medicare ($8 million).

Total controllable operating expense increased by $46 million, or 2.5 percent. This increase included a 2.1 percent increase in salaries, wages and benefits, primarily the result of salary and wage increases awarded to our broad employee population on October 1, 2009. Supplies expense was unchanged and other operating expense increased by 5.5 percent.

Bad debt expense increased by $6 million, or 3.6 percent. There was no change in the ratio of bad debt expense to net operating revenues which remained at 7.5 percent. Items that contributed to the increase in bad debt expense included increases of 1.5 percent and 2.4 percent in uninsured admissions and outpatient visits, respectively, and a 130 basis point decline in the self-pay collection rate to 29.5 percent. These adverse factors were partially offset by a $28 million favorable adjustment for Medicare bad debts that will be claimed on the Company’s cost reports. The impact of providing uncompensated care, which includes charity as well as uninsured patients, was mitigated by a decline in charity volumes. This mitigating effect is evident in our estimated costs of providing care to charity and self-pay patients for the second quarters of 2010 and 2009, which were $126 million and $121 million, respectively.

Adjusted net cash provided by operating activities from continuing operations was $198 million and adjusted free cash flow from continuing operations was $121 million, reflecting capital expenditures of $77 million. Cash and cash equivalents were $711 million at June 30, 2010, an increase of $122 million from March 31, 2010. In 2009’s second quarter, adjusted net cash provided by operating activities was $202 million. Net cash provided by operating activities was $191 million in the second quarter of 2010 compared to $170 million in the second quarter of 2009.

Management’s Webcast Discussion of Second Quarter Results

Tenet management will discuss second quarter 2010 results on a webcast scheduled for 10:00 AM (ET) on August 3, 2010. This webcast may be accessed through Tenet’s website at www.tenethealth.com/investors. A set of slides, to which management intends to refer on the call, will be posted to the Company’s website at approximately 8:30 AM (ET).

Additional information regarding Tenet’s quarterly results of operations, including detailed tabular operational data, is contained in our 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 and adjusted free cash flow. A reconciliation of these financial measures and the most directly comparable GAAP measure 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, 2009, 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,
		2010				%			2009				%			Change
Net operating revenues		$	2,303			100.0	%		$	2,229			100.0	%		3.3	%
Operating expenses:
Salaries, wages and benefits			969			42.1	%			949			42.6	%		2.1	%
Supplies			395			17.2	%			395			17.7	%		—	%
Provision for doubtful accounts			173			7.5	%			167			7.5	%		3.6	%
Other operating expenses, net			498			21.6	%			472			21.2	%		5.5	%
Depreciation and amortization			97			4.2	%			98			4.4	%		(1.0	)%
Impairment of long-lived assets and goodwill, and restructuring charges			(2	)		(0.1	)%			1			—	%
Litigation and investigation costs			2			0.1	%			9			0.4	%
Operating income			171			7.4	%			138			6.2	%
Interest expense			(107	)						(120	)
Loss from early extinguishment of debt			—							(21	)
Investment earnings (loss)			1							(5	)
Net gain on sales of investments			—							15
Income from continuing operations, before income taxes			65							7
Income tax expense			(20	)						(4	)
Income from continuing operations, before discontinued operations			45							3
Discontinued operations:
Loss from operations			(5	)						(11	)
Impairment of long-lived assets and goodwill, and restructuring charges, net			(3	)						(6	)
Income tax expense			(2	)						—
Loss from discontinued operations			(10	)						(17	)
Net income (loss)			35							(14	)
Less: Preferred stock dividends			6							—
Less: Net income attributable to noncontrolling interests			4							1
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders		$	25						$	(15	)
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax		$	35						$	2
Loss from discontinued operations, net of tax			(10	)						(17	)
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders		$	25						$	(15	)
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations		$	0.07						$	0.01
Discontinued operations			(0.02	)						(0.04	)
		$	0.05						$	(0.03	)
Diluted
Continuing operations		$	0.07						$	0.01
Discontinued operations			(0.02	)						(0.04	)
		$	0.05						$	(0.03	)
Weighted average shares and dilutive securities outstanding (in thousands):
Basic			484,610							480,447
Diluted			502,549							488,244

TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
(Unaudited)
(Dollars in millions except per share amounts)		Six Months Ended June 30,
		2010				%			2009				%			Change
Net operating revenues		$	4,642			100.0	%		$	4,491			100.0	%		3.4	%
Operating expenses:
Salaries, wages and benefits			1,956			42.1	%			1,914			42.6	%		2.2	%
Supplies			793			17.1	%			786			17.5	%		0.9	%
Provision for doubtful accounts			362			7.8	%			323			7.2	%		12.1	%
Other operating expenses, net			965			20.8	%			944			21.1	%		2.2	%
Depreciation and amortization			192			4.1	%			194			4.3	%		(1.0	)%
Impairment of long-lived assets and goodwill, and restructuring charges			(2	)		—	%			6			0.1	%
Litigation and investigation costs			4			0.1	%			10			0.2	%
Operating income			372			8.0	%			314			7.0	%
Interest expense			(216	)						(230	)
Gain from early extinguishment of debt			—							113
Investment earnings (loss)			2							(3	)
Net gain on sales of investments			—							15
Income from continuing operations, before income taxes			158							209
Income tax expense			(23	)						(9	)
Income from continuing operations, before discontinued operations			135							200
Discontinued operations:
Loss from operations			—							(12	)
Impairment of long-lived assets and goodwill, and restructuring charges, net			(2	)						(15	)
Net losses on sales of facilities			—							(2	)
Income tax expense			(3	)						(2	)
Loss from discontinued operations			(5	)						(31	)
Net income			130							169
Less: Preferred stock dividends			12							—
Less: Net income attributable to noncontrolling interests			5							6
Net income attributable to Tenet Healthcare Corporation common shareholders		$	113						$	163
Amounts attributable to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax		$	118						$	195
Loss from discontinued operations, net of tax			(5	)						(32	)
Net income attributable to Tenet Healthcare Corporation common shareholders		$	113						$	163
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations		$	0.24						$	0.41
Discontinued operations			(0.01	)						(0.07	)
		$	0.23						$	0.34
Diluted
Continuing operations		$	0.23						$	0.41
Discontinued operations			(0.01	)						(0.07	)
		$	0.22						$	0.34
Weighted average shares and dilutive securities outstanding (in thousands):
Basic			483,263							479,410
Diluted			560,376							483,878

TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
		June 30,				December 31,
(Dollars in millions)		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	711			$	690
Investments in Reserve Yield Plus Fund			1				2
Investments in marketable securities			1				11
Accounts receivable, less allowance for doubtful accounts			1,160				1,158
Inventories of supplies, at cost			152				153
Income tax receivable			13				35
Deferred income taxes			107				108
Assets held for sale			19				29
Other current assets			271				286
Total current assets			2,435				2,472
Investments and other assets			180				182
Property and equipment, at cost, less accumulated depreciation and amortization			4,211				4,313
Goodwill			609				607
Other intangible assets, at cost, less accumulated amortization			399				379
Total assets		$	7,834			$	7,953
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		$	2			$	2
Accounts payable			615				739
Accrued compensation and benefits			343				370
Professional and general liability reserves			104				106
Accrued interest payable			123				127
Accrued legal settlement costs			31				76
Other current liabilities			340				363
Total current liabilities			1,558				1,783
Long-term debt, net of current portion			4,272				4,272
Professional and general liability reserves			427				466
Accrued legal settlement costs			19				19
Other long-term liabilities			572				568
Deferred income taxes			160				148
Total liabilities			7,008				7,256
Commitments and contingencies
Equity:
Shareholders’ equity:
Preferred stock			334				334
Common stock			27				27
Additional paid-in capital			4,461				4,461
Accumulated other comprehensive loss			(31	)			(32	)
Accumulated deficit			(2,540	)			(2,665	)
Less common stock in treasury, at cost			(1,479	)			(1,479	)
Total shareholders’ equity			772				646
Noncontrolling interests			54				51
Total equity			826				697
Total liabilities and equity		$	7,834			$	7,953

TENET HEALTHCARE CORPORATION
CONSOLIDATED CASH FLOW DATA
(Unaudited)
(Dollars in millions)		Six Months Ended June 30,
		2010				2009
Net income		$	130			$	169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			192				194
Provision for doubtful accounts			362				323
Net gain on sales of investments			—				(15	)
Deferred income tax expense			12				11
Stock-based compensation expense			13				13
Impairment of long-lived assets and goodwill, and restructuring charges			(2	)			6
Fair market value adjustments related to interest rate swap and LIBOR cap agreements			3				3
Litigation and investigation costs			4				10
Gain from early extinguishment of debt			—				(113	)
Pretax loss from discontinued operations			2				29
Other items, net			16				6
Changes in cash from changes in operating assets and liabilities:
Accounts receivable			(377	)			(319	)
Inventories and other current assets			(8	)			(16	)
Income taxes			50				21
Accounts payable, accrued expenses and other current liabilities			(164	)			(119	)
Other long-term liabilities			(18	)			(11	)
Payments against reserves for restructuring charges and litigation costs			(51	)			(56	)
Net cash provided by operating activities from discontinued operations, excluding income taxes			5				28
Net cash provided by operating activities			169				164
Cash flows from investing activities:
Purchases of property and equipment—continuing operations			(148	)			(138	)
Purchases of property and equipment—discontinued operations			—				(1	)
Construction of new and replacement hospitals			(12	)			(34	)
Purchase of business or joint venture interest			(2	)			—
Proceeds from sales of facilities and other assets – discontinued operations			18				221
Proceeds from sales of marketable securities, long-term investments and other assets			16				49
Proceeds from hospital authority bonds			—				49
Purchase of marketable securities			—				(6	)
Distributions received from investments in Reserve Yield Plus Fund			1				8
Other items, net			1				2
Net cash provided by (used in) investing activities			(126	)			150
Cash flows from financing activities:
Repayments of borrowings			(12	)			(901	)
Proceeds from borrowings			1				885
Deferred debt issuance costs			—				(46	)
Cash dividends on preferred stock			(12	)			—
Contributions from noncontrolling interests			1				—
Distributions paid to noncontrolling interests			(3	)			(3	)
Other items, net			3				2
Net cash used in financing activities			(22	)			(63	)
Net increase in cash and cash equivalents			21				251
Cash and cash equivalents at beginning of period			690				507
Cash and cash equivalents at end of period		$	711			$	758
Supplemental disclosures:
Interest paid, net of capitalized interest		$	(201	)		$	(240	)
Income tax refunds, net		$	34			$	22

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,
		2010				2009				Change			2010				2009				Change
Net inpatient revenues		$	1,478			$	1,441			2.6	%		$	3,022			$	2,955			2.3	%
Net outpatient revenues		$	733			$	702			4.4	%		$	1,439			$	1,370			5.0	%
Number of general hospitals (at end of period)			49				49			—				49				49			—		*
Licensed beds (at end of period)			13,420				13,419			—	%			13,420				13,419			—	%
Average licensed beds			13,435				13,411			0.2	%			13,433				13,411			0.2	%
Utilization of licensed beds			50.3	%			51.6	%		(1.3	)%			52.1	%			53.7	%		(1.6	)%	*
Patient days			614,365				629,714			(2.4	)%			1,267,317				1,302,350			(2.7	)%
Adjusted patient days			929,186				940,472			(1.2	)%			1,887,434				1,919,313			(1.7	)%
Net inpatient revenue per patient day		$	2,406			$	2,288			5.2	%		$	2,385			$	2,269			5.1	%
Admissions			127,751				130,308			(2.0	)%			260,350				265,643			(2.0	)%
Adjusted patient admissions			194,828				195,962			(0.6	)%			390,737				394,059			(0.8	)%
Net inpatient revenue per admission		$	11,569			$	11,058			4.6	%		$	11,607			$	11,124			4.3	%
Average length of stay (days)			4.8				4.8			—				4.9				4.9			—		*
Surgeries			91,285				92,166			(1.0	)%			179,283				181,806			(1.4	)%
Net outpatient revenue per visit		$	741			$	704			5.3	%		$	741			$	697			6.3	%
Outpatient visits			988,706				996,468			(0.8	)%			1,941,621				1,966,787			(1.3	)%
Sources of net patient revenue
Medicare			23.2	%			24.0	%		(0.8	)%			24.2	%			25.4	%		(1.2	)%	*
Medicaid			9.3	%			8.3	%		1.0	%			9.0	%			8.1	%		0.9	%	*
Managed care governmental			15.1	%			14.9	%		0.2	%			15.0	%			14.8	%		0.2	%	*
Managed care commercial			41.4	%			41.9	%		(0.5	)%			41.0	%			41.2	%		(0.2	)%	*
Indemnity, self-pay and other			11.0	%			10.9	%		0.1	%			10.8	%			10.5	%		0.3	%	*
* This change is the difference between the 2010 and 2009 amounts shown

TENET HEALTHCARE CORPORATION
CONSOLIDATED OPERATIONS DATA
Fiscal 2010 by Calendar Quarter
(Unaudited)
(Dollars in millions except per share amounts)		Three Months Ended									Six Months Ended
		3/31/10				6/30/10					06/30/10
Net operating revenues		$	2,339			$	2,303				$	4,642
Operating expenses:
Salaries, wages and benefits			987				969					1,956
Supplies			398				395					793
Provision for doubtful accounts			189				173					362
Other operating expenses, net			467				498					965
Depreciation and amortization			95				97					192
Impairment of long-lived assets and goodwill, and restructuring charges			—				(2	)				(2	)
Litigation and investigation costs			2				2					4
Operating income			201				171					372
Interest expense			(109	)			(107	)				(216	)
Investment earnings			1				1					2
Income from continuing operations, before income taxes			93				65					158
Income tax expense			(3	)			(20	)				(23	)
Income from continuing operations, before discontinued operations			90				45					135
Discontinued operations:
Income (loss) from operations			5				(5	)				—
Impairment of long-lived assets and goodwill, and restructuring charges, net			1				(3	)				(2	)
Income tax expense			(1	)			(2	)				(3	)
Income (loss) from discontinued operations			5				(10	)				(5	)
Net income			95				35					130
Less: Preferred stock dividends			6				6					12
Less: Net income attributable to noncontrolling interests			1				4					5
Net income attributable to Tenet Healthcare Corporation common shareholders		$	88			$	25				$	113
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders
Basic
Continuing operations		$	0.17			$	0.07				$	0.24
Discontinued operations			0.01				(0.02	)				(0.01	)
		$	0.18			$	0.05				$	0.23
Diluted
Continuing operations		$	0.16			$	0.07				$	0.23
Discontinued operations			0.01				(0.02	)				(0.01	)
		$	0.17			$	0.05				$	0.22
Weighted average shares and dilutive securities outstanding (in thousands):
Basic			481,917				484,610					483,263
Diluted			559,228				502,549					560,376

TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING HOSPITALS
Fiscal 2010 by Calendar Quarter
(Unaudited)
(Dollars in millions except per patient day, per admission and per visit amounts)
		Three Months Ended									Six Months Ended
		03/31/10				06/30/10					06/30/10
Net inpatient revenues		$	1,544			$	1,478				$	3,022
Net outpatient revenues		$	706			$	733				$	1,439
Number of general hospitals (at end of period)			49				49					49
Licensed beds (at end of period)			13,430				13,420					13,420
Average licensed beds			13,431				13,435					13,433
Utilization of licensed beds			54.0	%			50.3	%				52.1	%
Patient days			652,952				614,365					1,267,317
Adjusted patient days			958,248				929,186					1,887,434
Net inpatient revenue per patient day		$	2,365			$	2,406				$	2,385
Admissions			132,599				127,751					260,350
Adjusted patient admissions			195,909				194,828					390,737
Net inpatient revenue per admission		$	11,644			$	11,569				$	11,607
Average length of stay (days)			4.9				4.8					4.9
Surgeries			87,998				91,285					179,283
Net outpatient revenue per visit		$	741			$	741				$	741
Outpatient visits			952,915				988,706					1,941,621
Sources of net patient revenue
Medicare			25.1	%			23.2	%				24.2	%
Medicaid			8.7	%			9.3	%				9.0	%
Managed care governmental			14.8	%			15.1	%				15.0	%
Managed care commercial			40.5	%			41.4	%				41.0	%
Indemnity, self-pay and other			10.9	%			11.0	%				10.8	%

(1) 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) the 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) net gain (loss) on sales of investments, (7) investment earnings (loss), (8) gain (loss) from early extinguishment of debt, (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. 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, 2010 and 2009.

(2) Adjusted Free Cash Flow

Adjusted Free Cash Flow, a non-GAAP term, is defined by the Company as cash provided by (used in) operating activities less income tax refunds (payments), payments against reserves for restructuring charges and litigation costs, operating cash flows from discontinued operations, excluding income taxes, capital expenditures in continuing operations, and new hospital construction expenditures. The Company believes the use of Adjusted Free Cash Flow is meaningful as the use of this financial measure provides the Company and the users of its financial statements with supplemental information about the impact on the Company’s cash flows from the items specified above. 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 cash flows, some of which are recurring. The Company uses this information in its analysis of its cash flows excluding items that it does not consider relevant to the liquidity of its hospitals in continuing operations. Adjusted Free Cash Flow is a measure of liquidity that management uses in its business as an alternative to net cash provided by (used in) operating activities. Because Adjusted Free Cash Flow excludes many items that are included in our financial statements, it does not provide a complete measure of our liquidity. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance or liquidity. The reconciliation of net cash provided by operating activities, the most comparable GAAP term, to Adjusted Free Cash Flow is set forth in the second table below for the three and six months ended June 30, 2010 and 2009.

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,
		2010				2009				2010				2009
Net income (loss) attributable to Tenet Healthcare Corporation common shareholders		$	25			$	(15	)		$	113			$	163
Less: Net income attributable to noncontrolling interests			(4	)			(1	)			(5	)			(6	)
Preferred stock dividends			(6	)			—				(12	)			—
Loss from discontinued operations, net of tax			(10	)			(17	)			(5	)			(31	)
Income from continuing operations			45				3				135				200
Income tax expense			(20	)			(4	)			(23	)			(9	)
Investment earnings (loss)			1				(5	)			2				(3	)
Gain (loss) from early extinguishment of debt			—				(21	)			—				113
Net gain on sales of investments			—				15				—				15
Interest expense			(107	)			(120	)			(216	)			(230	)
Operating income			171				138				372				314
Litigation and investigation costs			(2	)			(9	)			(4	)			(10	)
Impairment of long-lived assets and goodwill, and restructuring charges			2				(1	)			2				(6	)
Depreciation and amortization			(97	)			(98	)			(192	)		(194}
Adjusted EBITDA		$	268			$	246			$	566			$	524
Net operating revenues		$	2,303			$	2,229			$	4,642			$	4,491
Adjusted EBITDA as % of net operating revenues (Adjusted EBITDA margin)			11.6	%			11.0	%			12.2	%			11.7	%

Additional Supplemental Non-GAAP Disclosures
Table #2 Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities
(Unaudited)
(Dollars in millions)		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Net cash provided by operating activities		$	191			$	170			$	169			$	164
Less:
Income tax refunds, net			17				22				34				22
Payments against reserves for restructuring charges and litigation costs			(27	)			(28	)			(51	)			(56	)
Net cash provided by (used in ) operating activities from discontinued operations, excluding income taxes			3				(26	)			5				28
Adjusted net cash provided by operating activities – continuing operations			198				202				181				170
Purchases of property and equipment – continuing operations			(70	)			(53	)			(148	)			(138	)
Construction of new and replacement hospitals			(7	)			(18	)			(12	)			(34	)
Adjusted Free Cash Flow – continuing operations		$	121			$	131			$	21			$	(2	)

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

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