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Tenet Reports Results for the Fourth Quarter and Year Ended December 31, 2018 and Issues Outlook for 2019

DALLAS--(BUSINESS WIRE)--

  • Tenet reported net income from continuing operations attributable to Tenet common shareholders of $108 million or $1.04 per diluted share in 2018. In the fourth quarter of 2018, Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $5 million or $0.05 per diluted share.
  • Adjusted diluted earnings per share from continuing operations was $1.86 in 2018, above the Company’s Outlook range of $1.44 to $1.83 and an increase of 130 percent over 2017. In the fourth quarter, Adjusted diluted earnings per share from continuing operations was $0.51.
  • Adjusted EBITDA was $2.560 billion in 2018, above the midpoint of the Company’s Outlook and an increase of 4.7 percent over 2017. Adjusted EBITDA in 2018 consisted of $1.411 billion in the Hospital Operations and other segment, $792 million in the Ambulatory Care segment and $357 million in the Conifer segment. In the fourth quarter of 2018, Adjusted EBITDA was $684 million. After normalizing for divestitures and other items, Adjusted EBITDA grew 9.0 percent in 2018 and 7.4 percent in the fourth quarter of 2018.
  • Hospital segment same-hospital net patient revenue grew 3.6 percent in 2018: revenue per adjusted admission increased 3.6 percent; adjusted admissions were essentially unchanged; and admissions decreased 1.7 percent. In the fourth quarter of 2018, same-hospital net patient revenue declined 1.3 percent and increased 4.6 percent after adjusting for California Provider Fee revenues in both periods. Revenue per adjusted admission declined 0.6 percent in the fourth quarter of 2018 and increased 5.4 percent after adjusting for California Provider Fee revenues. Adjusted admissions declined 0.8 percent in the fourth quarter of 2018 and admissions declined 2.7 percent.
  • Ambulatory Care segment same-facility system-wide revenue grew 5.1 percent in 2018, with cases up 3.4 percent and revenue per case up 1.6 percent. In the fourth quarter of 2018, same-facility system-wide revenue grew 3.8 percent, with cases up 0.9 percent and revenue per case up 2.8 percent.
  • Conifer segment revenues decreased 4.0 percent in 2018 and 5.6 percent in the fourth quarter of 2018 following divestitures by Tenet and other customers.
  • Outlook for 2019 includes net operating revenues of $18.0 billion to $18.4 billion, net income from continuing operations available to Tenet common shareholders of $15 million to $115 million, Adjusted EBITDA of $2.650 billion to $2.750 billion (an increase of 4 percent to 7 percent over 2018), diluted earnings per share from continuing operations of $0.14 to $1.08 and Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59 (an increase of 12 percent to 39 percent over 2018).

Tenet Healthcare Corporation (THC) reported net income from continuing operations attributable to Tenet common shareholders of $108 million in 2018 compared to a $704 million net loss from continuing operations in 2017. In the fourth quarter of 2018, the Company reported a $5 million net loss from continuing operations attributable to Tenet common shareholders compared to a net loss of $230 million in the fourth quarter of 2017. Adjusted EBITDA was $2.560 billion in 2018, up 4.7 percent from $2.444 billion in 2017. In the fourth quarter, Adjusted EBITDA was $684 million compared to $840 million in the fourth quarter of 2017; timing differences associated with the California Provider Fee program impact year-over-year comparability in the fourth quarter but do not impact the comparability of full year results.

“We delivered strong results in the fourth quarter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS,” said Ronald A. Rittenmeyer, Executive Chairman and CEO. “2018 was a year of significant change for the company. We meaningfully improved our financial results, and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consistency in execution. We expect to make additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth.”

Results for the Quarter Ended December 31, 2018

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were $3.843 billion in the fourth quarter of 2018, down 8.4 percent from the fourth quarter of 2017. The decline in revenue was primarily due to hospital divestitures, partially offset by same-hospital revenue growth. The Company’s hospitals in California also faced a difficult comparison in the fourth quarter due to the California Provider Fee program: in the fourth quarter of 2018, the Company recognized $64 million of net revenues from the California Provider Fee program compared to $267 million recognized in the fourth quarter of 2017 due to CMS’ approval of program in December of 2017, which resulted in the full year 2017 revenues all being recognized in the fourth quarter of 2017.

On a same-hospital basis, net patient revenues after implicit price concessions were $3.561 billion in the fourth quarter of 2018, down 1.3 percent from the fourth quarter of 2017. After excluding California Provider Fee revenues in both periods, net patient revenue after implicit price concessions increased 4.6 percent. Adjusted admissions declined 0.8 percent on a same-hospital basis in the fourth quarter of 2018. Revenue per adjusted admission decreased 0.6 percent on a same-hospital basis and increased 5.4 percent after excluding California Provider Fee revenues in both periods.

Adjusted EBITDA in Tenet’s hospital segment was $352 million in the fourth quarter of 2018, a decrease of $186 million or 34.6 percent compared to $538 million in the fourth quarter of 2017. The $186 million decline was primarily due to the $203 million decrease in California Provider Fee revenues discussed above, partially offset by other items. After normalizing for the California Provider Fee program as well as other items that are outlined in an accompanying slide presentation, Adjusted EBITDA in the hospital segment increased by $1 million, or 0.3 percent, in the fourth quarter of 2018; for additional details, please see the investor presentation dated February 25, 2019 that will be accessible through the Company’s website at www.tenethealth.com/investors.

Tenet’s health plan business recognized no revenue or Adjusted EBITDA in the fourth quarter of 2018 versus $10 million of revenue and no Adjusted EBITDA in the fourth quarter of 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the Hospital Operations and other segment increased 3.5 percent on a per adjusted admission basis in the fourth quarter of 2018 and increased 2.2 percent excluding a $44 million increase in malpractice expense in the hospital segment. Salaries, wages and benefits increased 2.3 percent and supply expense increased 1.0 percent per adjusted admission in the fourth quarter of 2018. Other operating expenses increased 7.9 percent per adjusted admission in the fourth quarter of 2018 and increased 2.7 percent per adjusted admission excluding the increase in malpractice expense.

Ambulatory Care Segment

The Ambulatory Care segment produced net operating revenues of $554 million in the fourth quarter of 2018, an increase of 1.7 percent compared to $545 million in the fourth quarter of 2017. In addition, the Ambulatory Care segment generated Adjusted EBITDA of $245 million in the fourth quarter of 2018, up 9.9 percent from $223 million in the fourth quarter of 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $151 million, up 4.1 percent from $145 million in the fourth quarter of 2017. After normalizing for the divestiture of Aspen, Adjusted EBITDA less facility-level noncontrolling interest expense increased 7.1 percent in the fourth quarter of 2018; Aspen was divested on August 17, 2018 and generated $4 million of EBITDA less facility-level noncontrolling interest in the fourth quarter of 2017.

The results of many of the facilities in which the Ambulatory Care segment has an investment are not consolidated by Tenet (of the 337 facilities at December 31, 2018, the results of 110 were accounted for under the equity method for unconsolidated affiliates). 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. On a same-facility system-wide basis, revenue in the Ambulatory Care segment increased 3.8 percent in the fourth quarter of 2018, with cases increasing 0.9 percent and revenue per case increasing 2.8 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory segment, same-facility system-wide revenue grew 3.7 percent in the fourth quarter of 2018, with cases up 1.1 percent and revenue per case up 2.6 percent.

Conifer Segment

During the fourth quarter of 2018, Conifer’s revenue declined 5.6 percent to $372 million, primarily due to client attrition following divestitures by Tenet and other customers, down from $394 million in the fourth quarter of 2017. Revenue from third party customers declined 7.1 percent to $222 million in the fourth quarter of 2018.

Conifer generated $87 million of Adjusted EBITDA in the fourth quarter of 2018, up 10.1 percent from $79 million in the fourth quarter of 2017, with Adjusted EBITDA margins increasing 330 basis points to 23.4 percent.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to Tenet common shareholders of $5 million, or $0.05 per diluted share, in the fourth quarter of 2018 compared to a net loss of $230 million, or $2.28 per diluted share, in the fourth quarter of 2017.

After adjusting for the items listed on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $53 million, or $0.51 per diluted share, in the fourth quarter of 2018, compared to Adjusted net income from continuing operations attributable to Tenet common shareholders of $143 million, or $1.40 per diluted share, in the fourth quarter of 2017.

A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations is contained in Table #2 at the end of this release.

Results for the Year Ended December 31, 2018

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were $15.285 billion in 2018, down 6.0 percent from 2017. The decline in revenue was primarily due to hospital divestitures, partially offset by same-hospital revenue growth. Revenue from the California Provider Fee program did not impact year-over-year comparability with $262 million of revenue recognized in 2018 compared to $267 million recognized in 2017.

On a same-hospital basis, net patient revenues after implicit price concessions were $13.995 billion in 2018, up 3.6 percent from 2017. Adjusted admissions were essentially unchanged in 2018 on a same-hospital basis. Revenue per adjusted admission increased 3.6 percent on a same-hospital basis in 2018.

Adjusted EBITDA in Tenet’s hospital segment was $1.411 billion in 2018, a decrease of $51 million or 3.5 percent compared to $1.462 billion in 2017. The $51 million decline was primarily due to an $88 million decline related to divestitures, partially offset by other items. As a group, divested facilities generated Adjusted EBITDA of negative $37 million in 2018 compared to positive $51 million in 2017. After normalizing for divestitures as well as other items that are outlined in an accompanying slide presentation, Adjusted EBITDA in the hospital segment increased by $34 million, or 2.4 percent, in 2018; for additional details, please see the investor presentation dated February 25, 2019 that will be accessible through the Company’s website at www.tenethealth.com/investors.

Tenet’s health plan business recognized $14 million of revenue and $9 million of Adjusted EBITDA in 2018 versus $110 million of revenue and negative $41 million of Adjusted EBITDA in 2017. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the Hospital Operations and other segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 3.1 percent on a per adjusted admission basis in 2018 and increased 2.4 percent excluding an $85 million increase in malpractice expense in the hospital segment. Salaries, wages and benefits increased 1.3 percent and supply expense increased 4.5 percent per adjusted admission in 2018. Other operating expenses increased 5.6 percent per adjusted admission and increased 3.1 percent excluding the increase in malpractice expense.

Ambulatory Care Segment

The Ambulatory Care segment produced net operating revenues of $2.085 billion in 2018, an increase of 7.5 percent compared to $1.940 billion in 2017. In addition, the Ambulatory Care segment generated Adjusted EBITDA of $792 million, up 13.3 percent from $699 million in 2017 and Adjusted EBITDA less facility-level noncontrolling interest expense was $504 million, up 10.8 percent from $455 million in 2017. After normalizing for the divestiture of Aspen, Adjusted EBITDA less facility-level noncontrolling interest expense increased 12.7 percent in 2018; Aspen was divested on August 17, 2018 and generated $16 million and $22 million of EBITDA less facility-level noncontrolling interest in 2018 and 2017, respectively.

On a same-facility system-wide basis, revenue in the Ambulatory Care segment increased 5.1 percent in 2018, with cases increasing 3.4 percent and revenue per case increasing 1.6 percent. In the surgical business, which represents the majority of the revenue in the Ambulatory Care segment, same-facility system-wide revenue grew 4.9 percent in 2018, with cases up 2.1 percent and revenue per case up 2.7 percent.

Conifer Segment

During 2018, Conifer’s revenue decreased 4.0 percent to $1.533 billion, primarily due to client attrition following divestitures by Tenet and other customers, down from $1.597 billion in 2017. Revenue from third party customers declined 3.7 percent to $943 million in 2018.

Conifer generated $357 million of Adjusted EBITDA in 2018, up 26.1 percent from $283 million in 2017, with Adjusted EBITDA margins increasing 560 basis points to 23.3 percent.

Net Income and Earnings Per Share

Tenet reported net income from continuing operations attributable to Tenet common shareholders of $108 million, or $1.04 per diluted share, in 2018 compared to a net loss of $704 million, or $7.00 per diluted share, in 2017.

After adjusting for the items listed on Table #2, Tenet produced Adjusted net income from continuing operations available to Tenet common shareholders of $193 million, or $1.86 per diluted share, in 2018, compared to Adjusted net income from continuing operations attributable to Tenet common shareholders of $82 million, or $0.81 per diluted share, in 2017.

A reconciliation of GAAP net income available (loss attributable) to Tenet common shareholders to Adjusted net income available (loss attributable) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations is contained in Table #2 at the end of this release.

Cash Flow and Liquidity

Cash and cash equivalents were $411 million at December 31, 2018 compared to $500 million at September 30, 2018. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2018. Accounts receivable days outstanding from continuing operations were 56.8 at December 31, 2018 compared to 56.3 at September 30, 2018 and 55.8 at December 31, 2017.

Net cash provided by operating activities was $1.049 billion in 2018, representing a $151 million decrease compared to $1.200 billion in 2017. After subtracting $617 million and $707 million of capital expenditures in 2018 and 2017, respectively, Free Cash Flow was $432 million in 2018, a decrease of $61 million compared to $493 million in 2017. Adjusted Free Cash Flow was $600 million in 2018, representing a $23 million decrease from $623 million in 2017.

Net cash used in investing activities was $115 million in 2018 compared to $21 million of net cash provided by investing activities in 2017. The 2018 period included $742 million of proceeds from the sales of facilities, long-term investments and other assets (note that Company received an additional $42 million in the first quarter of 2019 from the sale of three Chicago-area hospitals, which represents the completion of the previously announced divestiture program). The 2018 period also included $240 million of purchases of businesses, joint ventures and equity investments, primarily related to USPI’s acquisition program.

Net cash used in financing activities was $1.134 billion in 2018 compared to $1.326 billion in 2017. The 2018 period included $647 million in purchases of noncontrolling interests (including approximately $630 million in the second quarter of 2018 to increase Tenet’s ownership in USPI to 95 percent, up from 80 percent), $288 million of distributions paid to noncontrolling interests and $145 million of cash to retire $150 million of debt through open market purchases.

Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.

Outlook

The Company’s Outlook for 2019 includes:

  • Revenue of $18.0 billion to $18.4 billion,
  • Net income from continuing operations available to Tenet common shareholders of $15 million to $115 million,
  • Adjusted EBITDA of $2.650 billion to $2.750 billion,
  • Net cash provided by operating activities of $1.070 billion to $1.375 billion,
  • Adjusted Free Cash Flow of $600 million to $800 million,
  • Diluted earnings per share from continuing operations of $0.14 to $1.08, and
  • Adjusted diluted earnings per share from continuing operations of $2.08 to $2.59.

The Outlook for 2019 assumes equity in earnings of unconsolidated affiliates of $180 million to $190 million, depreciation and amortization expense of $805 million to $825 million, interest expense of $985 million to $995 million, net income available to noncontrolling interests of $425 million to $445 million and an average diluted share count of 106 million.

The Company’s Outlook for the first quarter of 2019 includes:

  • Revenue of $4.300 billion to $4.600 billion,
  • Net income available (loss attributable) from continuing operations to Tenet common shareholders ranging from a loss of $70 million to a loss of $25 million,
  • Adjusted EBITDA of $575 million to $625 million,
  • Diluted earnings (loss) per share from continuing operations ranging from a loss of $0.68 to a loss of $0.24, and
  • Adjusted diluted earnings per share from continuing operations ranging from $0.10 to $0.43.

The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of $30 million to $35 million, depreciation and amortization expense of $200 million to $205 million, interest expense of $250 million to $260 million, net income available to noncontrolling interests of $80 million to $90 million, and an average diluted share count of 104 million.

Additional details on Tenet’s Outlook for both the first quarter and calendar year 2019 are available in Tables #4, #5 and #6 at the end of this press release and in an accompanying slide presentation that will be accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company’s fourth quarter 2018 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 26, 2019. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, will be available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10-K report for the period ended December 31, 2018, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.

This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, Adjusted diluted earnings (loss) per share from continuing operations, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measures are contained in the tables at the end of this release.

Tenet Healthcare Corporation (THC) is a national diversified healthcare services company headquartered in Dallas, TX, with 110,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 500 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care and imaging centers and other outpatient facilities. We also operate Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other customers. At the center of everything we do is a commitment to deliver the right care, in the right place, at the right time, and to continually improve and advance the healthcare delivery system in the markets we serve. For more information, please visit www.tenethealth.com.

The terms “THC”, “Tenet Healthcare Corporation”, “the company”, “we”, “us” or “our” refer to Tenet Healthcare Corporation or one or more of its subsidiaries or affiliates as applicable.

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “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 our actual results to be materially different than those expressed in our forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2018, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to investors about the Company including the posting of important announcements regarding financial performance and corporate developments.

                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 
(Dollars in millions except per share amounts) Three Months Ended December 31,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 5,303
Less: Provision for doubtful accounts   325  
Net operating revenues $ 4,619 100.0 % 4,978 100.0 % (7.2 )%
Equity in earnings of unconsolidated affiliates 53 1.1 % 49 1.0 % 8.2 %
Operating expenses:
Salaries, wages and benefits 2,156 46.7 % 2,284 45.9 % (5.6 )%
Supplies 756 16.4 % 800 16.1 % (5.5 )%
Other operating expenses, net 1,078 23.3 % 1,104 22.1 % (2.4 )%
Electronic health record incentives (2 ) % (1 ) % 100.0 %
Depreciation and amortization 200 4.3 % 208 4.2 %
Impairment and restructuring charges, and acquisition-related costs 86 1.9 % 138 2.8 %
Litigation and investigation costs 10 0.2 % 11 0.2 %
Net gains on sales, consolidation and deconsolidation of facilities   (16 ) (0.4 )%   (2 ) %
Operating income 404 8.7 % 485 9.7 %
Interest expense (246 ) (253 )
Other non-operating expense, net (3 ) (8 )
Gain (loss) from early extinguishment of debt   3      
Income from continuing operations, before income taxes 158 224
Income tax expense   (56 )   (324 )
Income (loss) from continuing operations, before discontinued operations 102 (100 )
Discontinued operations:
Income from operations 1 1
Income tax benefit (expense)   (1 )    
Income (loss) from discontinued operations       1  
Net income (loss) 102 (99 )
Less: Net income available to noncontrolling interests   107     130  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (5 ) $ (229 )
Amounts attributable to Tenet Healthcare Corporation common shareholders
Loss from continuing operations, net of tax $ (5 ) $ (230 )
Income (loss) from discontinued operations, net of tax       1  
Net loss attributable to Tenet Healthcare Corporation common shareholders $ (5 ) $ (229 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ (0.05 ) $ (2.28 )
Discontinued operations       0.01  
$ (0.05 ) $ (2.27 )
Diluted
Continuing operations $ (0.05 ) $ (2.28 )
Discontinued operations       0.01  
$ (0.05 ) $ (2.27 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,501 100,945
Diluted* 102,501 100,945
 
*   Had we generated income from continuing operations in the three months ended December 31, 2018 and 2017 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,617 thousand and 908 thousand shares, respectively.
 
                   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 
(Dollars in millions except per share amounts) Years Ended December 31,
2018 % 2017 % Change
Net operating revenues:
Net operating revenues before provision for doubtful accounts $ 20,613
Less: Provision for doubtful accounts   1,434  
Net operating revenues $ 18,313 100.0 % 19,179 100.0 % (4.5 )%
Equity in earnings of unconsolidated affiliates 150 0.8 % 144 0.8 % 4.2 %
Operating expenses:
Salaries, wages and benefits 8,634 47.1 % 9,274 48.4 % (6.9 )%
Supplies 3,004 16.4 % 3,085 16.1 % (2.6 )%
Other operating expenses, net 4,259 23.3 % 4,570 23.8 % (6.8 )%
Electronic health record incentives (3 ) % (9 ) % (66.7 )%
Depreciation and amortization 802 4.4 % 870 4.5 %
Impairment and restructuring charges, and acquisition-related costs 209 1.1 % 541 2.8 %
Litigation and investigation costs 38 0.2 % 23 0.1 %
Net gains on sales, consolidation and deconsolidation of facilities   (127 ) (0.7 )%   (144 ) (0.7 )%
Operating income 1,647 9.0 % 1,113 5.8 %
Interest expense (1,004 ) (1,028 )
Other non-operating expense, net (5 ) (22 )
Gain (loss) from early extinguishment of debt   1     (164 )
Income (loss) from continuing operations, before income taxes 639 (101 )
Income tax expense   (176 )   (219 )
Income (loss) from continuing operations, before discontinued operations 463 (320 )
Discontinued operations:
Income (loss) from operations 4
Income tax benefit (expense)   (1 )    
Income (loss) from discontinued operations   3      
Net income (loss) 466 (320 )
Less: Net income available to noncontrolling interests   355     384  
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 111   $ (704 )
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
Income (loss) from continuing operations, net of tax $ 108 $ (704 )
Income (loss) from discontinued operations, net of tax   3      
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ 111   $ (704 )
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations $ 1.06 $ (7.00 )
Discontinued operations   0.03      
$ 1.09   $ (7.00 )
Diluted
Continuing operations $ 1.04 $ (7.00 )
Discontinued operations   0.03      
$ 1.07   $ (7.00 )
Weighted average shares and dilutive securities outstanding (in thousands):
Basic 102,110 100,592
Diluted* 103,881 100,592
 
*   Had we generated income from continuing operations in the twelve months ended December 31, 2017, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 788 thousand shares.
 
       

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
 
December 31, December 31,
(Dollars in millions) 2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 411 $ 611
Accounts receivable, less allowance for doubtful accounts 2,595 2,616
Inventories of supplies, at cost 305 289
Income tax receivable 21 5
Assets held for sale 107 1,017
Other current assets 1,197   1,035  
Total current assets 4,636 5,573
Investments and other assets 1,456 1,543
Deferred income taxes 312 455
Property and equipment, at cost, less accumulated depreciation and amortization 6,993 7,030
Goodwill 7,281 7,018
Other intangible assets, at cost, less accumulated amortization 1,731   1,766  
Total assets $ 22,409   $ 23,385  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 182 $ 146
Accounts payable 1,207 1,175
Accrued compensation and benefits 838 848
Professional and general liability reserves 216 200
Accrued interest payable 240 256
Liabilities held for sale 43 480
Other current liabilities 1,131   1,227  
Total current liabilities 3,857 4,332
Long-term debt, net of current portion 14,644 14,791
Professional and general liability reserves 666 654
Defined benefit plan obligations 521 536
Deferred income taxes 36 36
Other long-term liabilities 578   631  
Total liabilities 20,302 20,980
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries 1,420 1,866
Equity:
Shareholders’ equity:
Common stock 7 7
Additional paid-in capital 4,747 4,859
Accumulated other comprehensive loss (223 ) (204 )
Accumulated deficit (2,236 ) (2,390 )
Common stock in treasury, at cost (2,414 ) (2,419 )
Total shareholders’ deficit (119 ) (147 )
Noncontrolling interests 806   686  
Total equity 687   539  
Total liabilities and equity $ 22,409   $ 23,385  
 
   

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 
 
Years Ended
(Dollars in millions) December 31,
2018     2017
Net income (loss) $ 466 $ (320 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 802 870
Provision for doubtful accounts 1,434
Deferred income tax expense 150 200
Stock-based compensation expense 46 59
Impairment and restructuring charges, and acquisition-related costs 209 541
Litigation and investigation costs 38 23
Net gains on sales, consolidation and deconsolidation of facilities (127 ) (144 )
Loss (gain) from early extinguishment of debt (1 ) 164
Equity in earnings of unconsolidated affiliates, net of distributions received (12 ) (18 )
Amortization of debt discount and debt issuance costs 45 44
Pre-tax loss (income) from discontinued operations (4 )
Other items, net (21 ) (18 )
Changes in cash from operating assets and liabilities:
Accounts receivable (134 ) (1,448 )
Inventories and other current assets 17 (35 )
Income taxes (3 ) (38 )
Accounts payable, accrued expenses and other current liabilities (152 ) (10 )
Other long-term liabilities (102 ) 26
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (163 ) (125 )
Net cash used in operating activities from discontinued operations, excluding income taxes (5 ) (5 )
Net cash provided by operating activities 1,049 1,200
Cash flows from investing activities:
Purchases of property and equipment — continuing operations (617 ) (707 )
Purchases of businesses or joint venture interests, net of cash acquired (113 ) (50 )
Proceeds from sales of facilities and other assets 543 827
Proceeds from sales of marketable securities, long-term investments and other assets 199 36
Purchases of equity investments (127 ) (68 )
Other long-term assets 15 (10 )
Other items, net (15 ) (7 )
Net cash provided by (used in) investing activities (115 ) 21
Cash flows from financing activities:
Repayments of borrowings under credit facility (950 ) (970 )
Proceeds from borrowings under credit facility 950 970
Repayments of other borrowings (312 ) (4,139 )
Proceeds from other borrowings 23 3,795
Debt issuance costs (62 )
Distributions paid to noncontrolling interests (288 ) (258 )
Proceeds from sale of noncontrolling interests 20 31
Purchases of noncontrolling interests (647 ) (729 )
Proceeds from exercise of stock options and employee stock purchase plan 16 7
Other items, net 54   29  
Net cash used in financing activities (1,134 ) (1,326 )
Net decrease in cash and cash equivalents (200 ) (105 )
Cash and cash equivalents at beginning of period 611   716  
Cash and cash equivalents at end of period $ 411   $ 611  
Supplemental disclosures:
Interest paid, net of capitalized interest $ (976 ) $ (939 )
Income tax payments, net $ (25 ) $ (56 )
 
...
       

TENET HEALTHCARE CORPORATION

SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1)

(Unaudited)

 
 

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

Three Months Ended December 31, Years Ended December 31,
2018     2017     Change 2018     2017     Change
 
Admissions, Patient Days and Surgeries
Number of hospitals (at end of period) 68 72 (4 ) * 68 72 (4 ) *
Total admissions 170,407 186,185 (8.5 )% 689,367 758,875 (9.2 )%
Adjusted patient admissions 308,113 332,642 (7.4 )% 1,241,241 1,354,266 (8.3 )%
Paying admissions (excludes charity and uninsured) 160,172 176,158 (9.1 )% 648,071 717,498 (9.7 )%
Charity and uninsured admissions 10,235 10,027 2.1 % 41,296 41,377 (0.2 )%
Admissions through emergency department 120,012 123,887 (3.1 )% 476,851 492,660 (3.2 )%
Paying admissions as a percentage of total admissions 94.0 % 94.6 % (0.6 )% * 94.0 % 94.5 % (0.5 )% *
Charity and uninsured admissions as a percentage of total admissions 6.0 % 5.4 % 0.6 % * 6.0 % 5.5 % 0.5 % *
Emergency department admissions as a percentage of total admissions 70.4 % 66.5 % 3.9 % * 69.2 % 64.9 % 4.3 % *
Surgeries — inpatient 45,897 50,292 (8.7 )% 185,020 205,114 (9.8 )%
Surgeries — outpatient 62,638 68,604 (8.7 )% 250,919 276,895 (9.4 )%
Total surgeries 108,535 118,896 (8.7 )% 435,939 482,009 (9.6 )%
Patient days — total 779,728 857,728 (9.1 )% 3,166,815 3,509,056 (9.8 )%
Adjusted patient days 1,383,372 1,505,130 (8.1 )% 5,608,653 6,163,961 (9.0 )%
Average length of stay (days) 4.58 4.61 (0.7 )% 4.59 4.62 (0.7 )%
Licensed beds (at end of period) 17,937 19,141 (6.3 )% 17,937 19,141 (6.3 )%
Average licensed beds 17,935 19,320 (7.2 )% 18,321 19,995 (8.4 )%
Utilization of licensed beds 47.3 % 48.3 % (1.0 )% * 47.4 % 48.1 % (0.7 )% *
Outpatient Visits
Total visits 1,734,523 1,901,864 (8.8 )% 7,049,201 7,791,125 (9.5 )%
Paying visits (excludes charity and uninsured) 1,617,970 1,777,790 (9.0 )% 6,584,502 7,277,514 (9.5 )%
Charity and uninsured visits 116,553 124,074 (6.1 )% 464,699 513,611 (9.5 )%
Emergency department visits 649,544 711,268 (8.7 )% 2,627,829 2,854,200 (7.9 )%
Paying visits as a percentage of total visits 93.3 % 93.5 % (0.2 )% * 93.4 % 93.4 % 0.0 % *
Charity and uninsured visits as a percentage of total visits 6.7 % 6.5 % 0.2 % * 6.6 % 6.6 % 0.0 % *
Total emergency department admissions and visits 769,556 835,155 (7.9 )% 3,104,680 3,346,860 (7.2 )%
Revenues
Net patient revenues(3) $ 3,561 $ 3,860 (7.7 )% $ 14,081 $ 14,829 (5.0 )%
Revenues on a Per Adjusted Patient Admission and Per Adjusted Patient Day
Net patient revenue(3) per adjusted patient

admission

$ 11,557 $ 11,604 (0.4 )% $ 11,344 $ 10,950 3.6 %
Net patient revenue(3) per adjusted patient day $ 2,574 $ 2,565 0.4 % $ 2,511 $ 2,406 4.4 %
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2) $ 10,861 $ 10,492 3.5 % $ 10,701 $ 10,384 3.1 %
Net Patient Revenues(3) from:
Medicare 20.1 % 20.4 % (0.3 )% * 20.5 % 21.9 % (1.4 )% *
Medicaid 9.1 % 12.9 % (3.8 )% * 9.2 % 8.8 % 0.4 % *
Managed care 65.8 % 61.5 % 4.3 % * 65.4 % 64.6 % 0.8 % *
Self-pay 0.5 % 1.3 % (0.8 )% * 0.7