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Tenet Reports Second Quarter 2021 Results; Raises 2021 Financial Guidance

·23 min read
  • Net income from continuing operations available to common shareholders in Q2’21 of $120 million versus net income from continuing operations of $88 million in Q2’20

  • Consolidated Adjusted EBITDA in Q2’21 of $834 million ($810 million excluding $24 million of COVID stimulus grant income) versus $732 million in Q2’20 ($209 million excluding $523 million of grant income)

  • Diluted earnings per share from continuing operations available to common shareholders in Q2’21 of $1.11 compared to $0.83 in Q2’20; Adjusted diluted earnings per share from continuing operations of $1.59 in Q2’21 compared to $1.26 in Q2’20

  • Same-hospital adjusted admissions increased 23.9% versus Q2’20; same-hospital net patient service revenue per adjusted admission up 7.4%

  • Same-facility system-wide ambulatory surgical cases up 68.2% versus Q2’20

  • Q2’21 achievements included:

    • Signed definitive agreement to sell certain Miami-area facilities for ~$1.1 billion

    • Refinanced ~$1.4 billion of 5.125% secured notes due 2025 with new 4.25% secured notes due 2029 lowering future annual cash interest payments by ~$13 million

    • Completed previously announced divestiture of urgent care platform for $80 million

  • FY 2021 Outlook again increased in light of continued growth and operational improvements as well as grant income:

    • Net income from continuing operations available to common shareholders Outlook range now $6.25 to $7.17 per diluted share (previously $2.98 to $4.69 per diluted share); Current Outlook includes anticipated pre-tax gain of $400 million ($269 million after-tax, or $2.47 per diluted share) associated with the anticipated divestiture of our Miami-area hospitals in Q3’21

    • Adjusted EBITDA Outlook range now $3.150 billion to $3.250 billion (previously $3.000 billion to $3.200 billion), which excludes the projected gain on the sale of the Miami-area hospitals

    • Adjusted diluted earnings per share Outlook range now $5.23 to $5.73 (previously $4.12 to $5.46 per diluted share)

DALLAS, July 21, 2021--(BUSINESS WIRE)--Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended June 30, 2021 (Q2’21). Tenet’s results for Q2’21 versus the quarter ended June 30, 2020 (Q2’20) and for the six months ended June 30, 2021 (YTD Q2’21) versus the six months ended June 30, 2020 (YTD Q2’20) are as follows:

($ in millions, except per share results)

Q2’21

Q2’20

YTD Q2’21

YTD Q2’20

Net income from continuing operations available to Tenet common shareholders

$120

$88

$217

$182

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

$1.11

$0.83

$2.00

$1.72

Adjusted EBITDA excluding grant income

$810

$209

$1,550

$794

Adjusted EBITDA

$834

$732

$1,611

$1,317

Adjusted diluted earnings per share from continuing operations

$1.59

$1.26

$2.89

$2.54

The table above as well as tables and discussions throughout this earnings release include certain financial measures that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-3 included at the end of this earnings release. Management’s reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release.

"Our second quarter results continue to reflect our long-term strategy and transformation progress, resulting in our ability to adapt and perform on a consistent and sustainable trajectory," said Ron Rittenmeyer, Executive Chairman and CEO. "We continued to focus our efforts on the expansion of healthcare access in alignment with community need, including investments in high-acuity service lines for patients with chronic conditions and the addition of lower cost ambulatory settings in key locations around the country. We also took steps to further evolve our portfolio and operating model by exiting our urgent care business and entering into an agreement to divest our Miami-area hospital operations, which we anticipate will be completed during the third quarter."

Rittenmeyer continued, "The cornerstone of our strategy remains our commitment to our four pillars of compliance, quality, service and safety. These have created a strong foundation which we have used to execute the transformational strategy resulting in this continued performance trajectory. And, as with prior quarters, we remain vigilant with COVID-safety protocols and continue to add highly qualified, skilled physicians to our medical staffs, both in our hospitals and ambulatory facilities, as we work to more closely support service line needs in each community we serve. The state of the enterprise today reflects our continuous effort to foster top-quality environments for our patients and the communities we serve, as well as our dedicated professionals, whose continued commitment and hard work is carried out at every corner of the organization."

COVID-19 Pandemic (COVID)

As previously disclosed, the Company has been experiencing operational and financial challenges associated with COVID. Tenet continues to manage COVID and its impact on operations. COVID cases have come down from peak levels in January 2021 with the roll-out of vaccinations.

Tenet remains committed to the highest standards of safety, with protocols focused on the protection of its patients and employees, including the distribution of COVID vaccines to its caregivers and the public at large. Operational teams monitor real-time data to ensure sufficient staffing, intensive care unit bed capacity and personal protective equipment (PPE). Outpatient facilities are also safely performing elective procedures, and the Company’s hospitals and ambulatory platform continue to follow all state and local guidelines concerning elective care.

The Company’s dedicated focus on strategic cost reduction measures and corporate efficiencies continue to partially mitigate the impact of COVID, including the impact of lost revenues and higher costs related to the pandemic.

Results from Continuing Operations Available to Tenet Common Shareholders

  • Net income from continuing operations available to the Company’s common shareholders in Q2’21 was $120 million, or $1.11 per diluted share, versus net income from continuing operations of $88 million, or $0.83 per diluted share, in Q2’20. Q2’21 included COVID-related stimulus grant income of $24 million pre-tax ($18 million after-tax, or $0.17 per diluted share) versus $523 million of pre-tax grant income in Q2’20 ($380 million after-tax or $3.60 per diluted share).

  • For YTD Q2’21, the income from continuing operations available to the Company’s common shareholders was $217 million, or $2.00 per diluted share, compared to $182 million, or $1.72 per diluted share, for YTD Q2’20. YTD Q2’21 included COVID-related stimulus grant income of $61 million pre-tax ($46 million after-tax, or $0.43 per diluted share) compared to pre-tax grant income of $523 million in YTD Q2’20 ($380 million after-tax, or $3.60 per diluted share). YTD Q2’20 included a favorable income tax benefit of $88 million ($0.83 per diluted share), substantially all recorded in the first quarter of 2020, related to an increase in the deductibility of interest expense for income tax purposes as a result of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Adjusted Net Income from Continuing Operations Available to Tenet Common Shareholders

Reconciliations of net income available to Tenet common shareholders to Adjusted net income from continuing operations available to Tenet’s common shareholders are contained in Table #1 at the end of this release.

  • Tenet’s Q2’21 Adjusted net income from continuing operations available to its common shareholders was $173 million, or $1.59 per diluted share, compared to $133 million, or $1.26 per diluted share, in Q2’20.

  • Tenet’s YTD Q2’21 Adjusted net income from continuing operations available to its common shareholders was $313 million, or $2.89 per diluted share, compared to $268 million, or $2.54 per diluted share, in YTD Q2’20.

Adjusted EBITDA

Reconciliations of net income available to Tenet common shareholders to Adjusted EBITDA are contained in Table #2 at the end of this release.

  • Adjusted EBITDA in Q2’21 was $834 million ($810 million excluding $24 million of grant income) compared to $732 million in Q2’20 ($209 million excluding $523 million of grant income).

  • For YTD Q2’21, Adjusted EBITDA was $1.611 billion ($1.550 billion excluding $61 million of grant income) compared to $1.317 billion in YTD Q2’20 ($794 million excluding $523 million of grant income).

Q2’21 Events

  • On June 16, 2021, the Company announced it had signed a definitive agreement to sell five hospitals and related hospital operations in the Miami-Dade and Southern Broward counties of Florida to Steward Health Care, LLC (Steward). The company’s ambulatory facilities operated by United Surgical Partners International (USPI) in these counties will remain with Tenet. The Company’s Conifer Health Solutions subsidiary will continue to provide revenue cycle management services to the five hospitals following completion of the transaction, which is anticipated to close in the third quarter of 2021.

  • On May 18, 2021, the Company announced a private placement of $1.400 billion in aggregate principal amount of newly issued 4.250% senior secured first lien notes maturing in 2029. The Company used the net proceeds from the sale of the notes, after payment of fees and expenses, to finance, together with cash on hand, the redemption of all of its outstanding 5.125% $1.410 billion senior secured second lien notes due 2025, which will lower future annual cash interest payments by approximately $13 million.

  • On April 30, 2021, the Company completed the previously announced sale of its urgent care platform to FastMed for $80 million. The transaction included the sale of 87 CareSpot and MedPost centers, which were previously managed by Tenet’s USPI subsidiary.

Hospital Operations and Other (Hospital) Segment Results

Tenet’s Hospital business segment is primarily comprised of acute care and specialty hospitals, ancillary outpatient facilities, micro-hospitals, imaging centers and physician practices. Effective April 1, 2021, the Company’s imaging centers that were previously operated under USPI were realigned under the Hospital segment.

Hospital segment results ($ in millions)

Q2’21

Q2’20

YTD Q2’21

YTD Q2’20

Revenues

Net operating revenues

$4,095

$3,088

$8,042

$6,922

Grant income

$4

$474

$28

$474

Same-hospital net patient service revenues (a)

$3,749

$2,816

$7,381

$6,334

Same-Hospital Volume Changes versus the Prior-Year Period (a)

Admissions

13.7%

(20.3)%

0.1 %

(12.3)%

Adjusted admissions (b)

23.9%

(27.3)%

2.6 %

(16.0)%

Outpatient visits (including outpatient ER visits)

70.6%

(41.9)%

19.1 %

(23.1)%

Emergency Room visits (inpatient and outpatient)

35.0%

(35.9)%

(2.4)%

(18.6)%

Hospital surgeries

37.0%

(30.2)%

13.0 %

(18.7)%

Adjusted EBITDA

Adjusted EBITDA excluding grant income

$445

$18

$855

$360

Adjusted EBITDA

$449

$492

$883

$834

(a)

Same-hospital revenues and statistical data include those for hospitals and hospital-affiliated outpatient centers operated by the Company’s Hospital segment continuously from January 1, 2020 through June 30, 2021. Amounts associated with physician practices are excluded. With the exception of the historical percentage changes presented for Q2’20 and YTD Q2’20, prior period revenues and statistics have been recast to reflect only the continuously operated facilities.

(b)

Adjusted admissions represent actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.

Revenues and Volumes

  • Net operating revenues (which exclude grant income) in the Hospital segment were $4.095 billion in Q2’21, growth of 32.6 percent from $3.088 billion in Q2’20. The increase in revenues was primarily due to significantly higher volumes given the impact of the pandemic in Q2’20, as well as high patient acuity and pricing yield.

  • Same-hospital net patient service revenues were $3.749 billion in Q2’21, growth of 33.1 percent from $2.816 billion in Q2’20.

  • Same-hospital net patient service revenue per adjusted admission increased 7.4 percent year-over-year for Q2’21 primarily reflecting continued high patient acuity.

Operating Expenses

Total selected operating expenses in the segment in Q2’21 increased 19.6 percent, or $578 million, from Q2’20 as volume levels rebounded from the onset of the pandemic in the prior year. Selected operating expenses include salaries, wages and benefits, supplies and other operating expenses.

Adjusted EBITDA

Adjusted EBITDA in the segment was $449 million in Q2’21 ($445 million excluding $4 million of grant income) compared to $492 million in Q2’20 ($18 million excluding $474 million of grant income). The Adjusted EBITDA margin excluding grant income was 10.9 percent in Q2’21 compared to 0.6 percent in Q2’20.

Ambulatory Care (Ambulatory) Segment Results

Tenet’s Ambulatory business segment is comprised of the operations of USPI. As of June 30, 2021, USPI had interests in 317 ambulatory surgery centers and 24 surgical hospitals in 31 states. Results for Q2’20, YTD Q2’20 and YTD Q2’21 included USPI’s imaging centers (realigned under the Hospital segment as of April 1, 2021) and its urgent care centers (sold in April 2021). The Company owns 95 percent of USPI.

Ambulatory segment results ($ in millions)

Q2’21

Q2’20

YTD Q2’21

YTD Q2’20

Revenues

Net operating revenues

$664

$368

$1,310

$858

Grant income excluding equity earnings impact

$15

$37

$22

$37

Grant income in equity earnings

$5

$12

$11

$12

Same-facility system-wide net patient service revenues (c)

$1,333

$888

$2,527

$2,008

Volume Changes versus the Prior-Year Period

Same-facility system-wide surgical cases (c)(d)

68.2%

(41.6)%

29.1%

(25.7)%

Same-facility system-wide surgical cases on same-business day basis (c)(d)

68.2%

(41.6)%

30.1%

(26.3)%

Adjusted EBITDA and NCI

Adjusted EBITDA excluding grant income

$275

$118

$519

$274

Adjusted EBITDA

$295

$167

$552

$323

Adjusted EBITDA less facility-level NCI excluding grant income

$176

$78

$336

$178

Adjusted EBITDA less facility-level NCI

$187

$106

$356

$206

Adjusted EBITDA less total NCI excluding grant income

$172

$77

$328

$176

Adjusted EBITDA less total NCI

$182

$104

$347

$203

(c)

Same-facility system-wide revenues and statistical information include the results of the facilities in which the Ambulatory segment has an investment that are not consolidated by Tenet (of the 341 facilities at June 30, 2021, the results of 109 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. Prior-period amounts for acquired facilities are included in analyses of same-facility system-wide growth rates.

(d)

Includes volume changes for SurgCenter Development (SCD) facilities acquired in December 2020.

Revenues and Volumes

  • The Ambulatory segment produced net operating revenues of $664 million in Q2’21, an increase of 80.4 percent compared to $368 million in Q2’20 primarily reflecting significantly higher volumes given the impact of the pandemic in Q2’20, higher patient acuity, new service line growth and additional revenues associated with the SCD portfolio acquisition completed in December 2020, partially offset by the sale of the urgent care centers and the realignment of the imaging centers under the Company’s Hospital segment in Q2’21.

  • Surgical business same-facility system-wide net operating revenues increased 50.1 percent in Q2’21 compared to Q2’20, with cases up 68.2 percent and revenue per case down 10.7 percent. The decline in revenue per case reflects lower acuity cases being deferred in Q2’20 in light of the pandemic.

Adjusted EBITDA

  • Segment Adjusted EBITDA of $295 million in Q2’21 ($275 million excluding $20 million of grant income) compared to $167 million in Q2’20 ($118 million excluding $49 million of grant income).

  • Adjusted EBITDA less facility-level noncontrolling interest (NCI) in Q2’21 was $187 million ($176 million excluding grant income) compared to $106 million in Q2’20 ($78 million excluding grant income).

Conifer Segment Results

Tenet’s Conifer business segment provides comprehensive end-to-end and focused-point business process services, including hospital and physician revenue cycle management, patient communications and engagement support and value-based care solutions to hospitals, healthcare systems, physician practices, employers and other clients.

The Company continues to work on spinning off its Conifer segment. This transaction is expected to both enhance shareholder value and reduce the level of Tenet’s debt through a tax-free debt-for-debt exchange.

Conifer segment results ($ in millions)

Q2’21

Q2’20

YTD Q2’21

YTD Q2’20

Net operating revenues

$319

$305

$629

$637

Adjusted EBITDA

$90

$73

$176

$160

Revenues

During Q2’21, Conifer segment revenues increased 4.6 percent to $319 million, from $305 million in Q2’20, primarily due to client volume improvement versus the prior year and business expansions, partially offset by the previously disclosed revised terms associated with its contract with Tenet hospitals.

Adjusted EBITDA

Conifer generated $90 million of Adjusted EBITDA in Q2’21, up 23.3 percent compared to $73 million in Q2’20. Conifer’s Adjusted EBITDA margin increased to 28.2 percent in Q2’21 compared to 23.9 percent in Q2’20 primarily due to revenue growth and continuing expense discipline.

Balance Sheet, Cash Flows and Liquidity

Balance Sheet Highlights

($ in millions)

June 30, 2021

March 31, 2021

December 31, 2020

Cash and cash equivalents

$2,194

$2,141

$2,446

Accounts receivable days outstanding

55.2

55.8

55.6

Line-of-credit borrowings outstanding

Ratio of net debt plus Medicare advances liability to Adjusted EBITDA (e)

4.17

4.37

4.70

(e) Net debt is total debt less cash and cash equivalents

  • Cash and cash equivalents at June 30, 2021 were $252 million lower than December 31, 2020 reflecting the Company’s early retirement of $478 million of 7 percent debt in the first quarter of 2021.

  • In 2020, the Company received approximately $1.5 billion of Medicare advance payments from the Centers for Medicare and Medicaid Services (CMS). Repayment terms for the Medicare advance payments begin 12 months from the provider’s receipt of the advance payments. An interest rate of 4.0 percent will be assessed on any outstanding balances 29 months from the initial advance. The Company began repaying these advance payments in Q2’21 (with approximately $164 million repaid in the quarter) and expects to fully repay the advances before interest starts to accrue in September 2022.

  • The Company had no outstanding borrowings on its $1.9 billion line of credit as of June 30, 2021. In April 2021, the Company renewed an additional one-year commitment to continue to increase the borrowing capacity from $1.5 billion to $1.9 billion.

  • The Company’s ratio of net debt plus the Medicare advances liability to Adjusted EBITDA was 4.17x at June 30, 2021 compared to 4.37x at March 31, 2021 and 4.70x at December 31, 2020.

Cash flows and liquidity

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.

($ in millions)

Q2’21

Q2’20

YTD Q2’21

YTD Q2’20

Net cash provided by operating activities

$245

$2,239

$779

$2,368

Capital expenditures

$(122)

$(106)

$(243)

$(288)

Free cash flow

$123

$2,133

$536

$2,080

Adjusted free cash flow

$157

$2,179

$621

$2,194

Net cash used in investing activities

$(50)

$(85)

$(195)

$(289)

Net cash provided by (used in) financing activities

$(142)

$747

$(836)

$1,173

  • The Company produced positive free cash flow of $123 million in Q2’21 and $536 million YTD Q2’21. Free cash flow in the 2020 periods included approximately $2.052 billion of Medicare advance payments and grant funds associated with pandemic stimulus legislation.

Company Outlook

  • Reconciliations of Outlook net income available to Tenet common shareholders to Outlook Adjusted EBITDA for the year ending December 31, 2021 (FY 2021) and the quarter ending September 30, 2021 (Q3’21) are contained in Table #4 at the end of this release.

  • Reconciliations of Outlook net income available to Tenet common shareholders to Outlook Adjusted net income from continuing operations to common shareholders for FY 2021 and Q3’21 are contained in Table #5 at the end of this release.

  • Reconciliations of Outlook net cash provided by operating activities to Outlook free cash flow and Outlook Adjusted free cash flow from continuing operations for FY 2021 are contained in Table #6 at the end of this release.

Tenet’s Outlook for FY 2021 and Q3’21 on a consolidated basis and by segment follows:

CONSOLIDATED ($ in millions except per share amounts)

FY 2021 Outlook (g)

Q3’21 Outlook (g)

Net operating revenues

$19,250 to $19,650

$4,600 to $4,800

Net income from continuing operations available to Tenet common stockholders

$681 to $781

$335 to $375

Adjusted EBITDA

$3,150 to $3,250

$700 to $750

Adjusted EBITDA margin

16.4% to 16.5%

15.2% to 15.6%

Diluted income per common share from continuing operations

$6.25 to $7.17

$3.07 to $3.44

Adjusted net income from continuing operations

$570 to $625

$80 to $115

Adjusted diluted earnings per share from continuing operations

$5.23 to $5.73

$0.73 to $1.06

Equity in earnings of unconsolidated affiliates

$210 to $230

$45 to $55

Depreciation and amortization

$850 to $870

$205 to $215

Interest expense

$935 to $945

$225 to $235

Net income available to NCI

$565 to $585

$135 to $145

Weighted average diluted common shares

~109 million

~109 million

NCI cash distributions

$460 to $480

Effective tax rate (f)

~17%

Net cash provided by operating activities

$1,150 to $1,450

Adjusted net cash provided by operating activities

$1,300 to $1,550

Capital expenditures

$700 to $750

Adjusted free cash flow

$600 to $800

(f)

The effective tax rate is calculated as income tax expense divided by the adjusted pretax income. Income tax expense is calculated by multiplying 24% (the federal corporate tax rate of 21% plus an estimate of state taxes) by the sum of: adjusted pretax income less GAAP NCI expense plus permanent differences, non-deductible interest expense and non-cash NCI expense related to the portion of USPI the Company does not own.

(g)

Guidance assumes completion of the pending sale of Miami-area facilities to Steward during Q3’21.

Hospital Segment ($ in millions)

FY 2021 Outlook (g)

Net operating revenues

$15,805 to $16,075

Adjusted EBITDA

$1,575 to $1,645

NCI

$35 to $40

Changes versus FY 2020 (h):

Inpatient admissions

Flat to up 3%

Outpatient visits

Up 13% to 17%

Adjusted admissions

Up 2% to 5%

Ambulatory Segment ($ in millions)

FY 2021 Outlook

Net operating revenues

$2,700 to $2,800

Adjusted EBITDA

$1,225 to $1,245

Total NCI (Facility level and Baylor University Medical Center)

$470 to $480

Adjusted EBITDA less total NCI

$755 to $765

Changes versus FY 2020 (h):

Surgical cases volumes

Up 15% to 20%

Net revenues per surgical case

(2.5%) to 2.5%

Conifer Segment ($ in millions)

FY 2021 Outlook

Net operating revenues

$1,270 to $1,300

Adjusted EBITDA

$350 to $360

NCI

$60 to $65

(h) Same-hospital basis for hospital statistics; USPI surgical cases on a same-facility system-wide basis

Management’s Webcast Discussion of Results

Tenet management will discuss the Company’s Q2’21 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on July 22, 2021. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors.

The slide presentation associated with the webcast referenced above, a copy of this earnings press release and a related supplemental financial disclosures document will be available on the Company’s Investor Relations website on July 21, 2021.

Cautionary Statement

This release contains "forward-looking statements" - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company’s expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "assume," "believe," "budget," "estimate," "forecast," "intend," "plan," "predict," "project," "seek," "see," "target," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, especially with regards to developments related to COVID-19. Particular uncertainties that could cause the Company’s actual results to be materially different than those expressed in the Company’s forward-looking statements include, but are not limited to, the impact of the COVID-19 pandemic and other factors disclosed under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended December 31, 2020, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

About Tenet Healthcare

Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas with 107,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 460 other healthcare facilities, including surgical hospitals, ambulatory surgery centers and imaging centers and other care sites and clinics. 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 clients. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve. For more information, please visit www.tenethealth.com.

Non-GAAP Financial Measures

  • Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) the cumulative effect of changes in accounting principles, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, (4) income tax (expense) benefit, (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation (costs) benefits, net of reinsurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested and closed businesses. Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.

  • Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP measure, is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, divided by the weighted average diluted shares outstanding in the reporting period.

  • Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) income (loss) from discontinued operations, (2) gain (loss) from early extinguishment of debt, (3) litigation and investigation (costs) benefits, net of reinsurance recoveries, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) impairment and restructuring charges and acquisition-related costs, (6) income (loss) from divested and closed businesses and (7) the associated impact of these items on taxes and noncontrolling interests. Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.

  • Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment for continuing operations.

  • Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations.

  • Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.

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

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

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

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

Tenet Healthcare Corporation

Financial Statements and Reconciliations

Q2’21 Earnings Release

Table of Contents

Description

Page

Consolidated Statements of Operations

15

Consolidated Balance Sheets

17

Consolidated Statements of Cash Flow

18

Segment Reporting

19

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

20

Table #2 - Reconciliations of Net Income to Adjusted EBITDA

22

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

24

Table #4 - Reconciliations of Outlook Net Income to Outlook Adjusted EBITDA

25

Table #5 - Reconciliations of Outlook Net Income to Outlook Adjusted Net Income

26

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

27

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions except per share amounts)

Three Months Ended June 30,

2021

%

2020

%

Change

Net operating revenues

$

4,954

100.0

%

$

3,648

100.0

%

35.8

%

Grant income

19

0.4

%

511

14.0

%

(96.3

)%

Equity in earnings of unconsolidated affiliates

54

1.1

%

31

0.8

%

74.2

%

Operating expenses:

Salaries, wages and benefits

2,280

46.0

%

1,864

51.1

%

22.3

%

Supplies

859

17.4

%

611

16.7

%

40.6

%

Other operating expenses, net

1,054

21.3

%

983

26.9

%

7.2

%

Depreciation and amortization

221

4.5

%

206

5.6

%

Impairment and restructuring charges, and acquisition-related costs

20

0.4

%

54

1.5

%

Litigation and investigation costs

22

0.4

%

2

0.1

%

Net gains on sales, consolidation and deconsolidation of facilities

(15

)

(0.3

)%

(1

)

%

Operating income

586

11.8

%

471

12.9

%

Interest expense

(235

)

(255

)

Other non-operating income (expense), net

(1

)

2

Loss from early extinguishment of debt

(31

)

(4

)

Income from continuing operations, before income taxes

319

214

Income tax expense

(61

)

(45

)

Income from continuing operations, before discontinued operations

258

169

Discontinued operations:

Loss from operations

(1

)

Loss from discontinued operations

(1

)

Net income

257

169

Less: Net income available to noncontrolling interests

138

81

Net income available to Tenet Healthcare Corporation common shareholders

$

119

$

88

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Income from continuing operations, net of tax

$

120

$

88

Loss from discontinued operations, net of tax

(1

)

Net income available to Tenet Healthcare Corporation common shareholders

$

119

$

88

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:

Basic

Continuing operations

$

1.12

$

0.84

Discontinued operations

(0.01

)

$

1.11

$

0.84

Diluted

Continuing operations

$

1.11

$

...

0.83

Discontinued operations

(0.01

)

$

1.10

$

0.83

Weighted average shares and dilutive securities outstanding

(in thousands):

Basic

106,822

104,794

Diluted

108,569

105,578

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions except per share amounts)

Six Months Ended June 30,

2021

%

2020

%

Change

Net operating revenues

$

9,735

100.0

%

$

8,168

100.0

%

19.2

%

Grant income

50

0.5

%

511

6.2

%

(90.2

)%

Equity in earnings of unconsolidated affiliates

96

1.0

%

59

0.7

%

62.7

%

Operating expenses:

Salaries, wages and benefits

4,481

46.0

%

4,051

49.6

%

10.6

%

Supplies

1,663

17.1

%

1,374

16.8

%

21.0

%

Other operating expenses, net

2,126

21.8

%

1,996

24.4

%

6.5

%

Depreciation and amortization

445

4.6

%

409

5.0

%

Impairment and restructuring charges, and acquisition-related costs

40

0.4

%

109

1.3

%

Litigation and investigation costs

35

0.4

%

4

%

Net gains on sales, consolidation and deconsolidation of facilities

(15

)

(0.2

)%

(3

)

%

Operating income

1,106

11.4

%

798

9.8

%

Interest expense

(475

)

(498

)

Other non-operating income, net

9

3

Loss from early extinguishment of debt

(54

)

(4

)

Income from continuing operations, before income taxes

586

299

Income tax benefit (expense)

(106

)

30

Income from continuing operations, before discontinued operations

480

329

Discontinued operations:

Loss from operations

(1

)

(1

)

Loss from discontinued operations

(1

)

(1

)

Net income

479

328

Less: Net income available to noncontrolling interests

263

147

Net income available to Tenet Healthcare Corporation common shareholders

$

216

$

181

Amounts available (attributable) to Tenet Healthcare Corporation common shareholders

Income from continuing operations, net of tax

$

217

$

182

Loss from discontinued operations, net of tax

(1

)

(1

)

Net income available to Tenet Healthcare Corporation common shareholders

$

216

$

181

Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:

Basic

Continuing operations

$

2.04

$

1.74

Discontinued operations

(0.01

)

(0.01

)

$

2.03

$

1.73

Diluted

Continuing operations

$

2.00

$

1.72

Discontinued operations

(0.01

)

(0.01

)

$

1.99

$

1.71

Weighted average shares and dilutive securities outstanding

(in thousands):

Basic

106,566

104,574

Diluted

108,317

105,656

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

December 31,

(Dollars in millions)

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

2,194

$

2,446

Accounts receivable

2,643

2,690

Inventories of supplies, at cost

364

368

Assets held for sale

828

140

Other current assets

1,388

1,503

Total current assets

7,417

7,147

Investments and other assets

2,525

2,534

Deferred income taxes

276

325

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

6,166

6,692

Goodwill

8,659

8,808

Other intangible assets, at cost, less accumulated amortization

1,522

1,600

Total assets

$

26,565

$

27,106

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt

$

127

$

145

Accounts payable

1,084

1,207

Accrued compensation and benefits

954

942

Professional and general liability reserves

234

243

Accrued interest payable

220

248

Liabilities held for sale

145

70

Contract liabilities

1,055

659

Other current liabilities

1,252

1,333

Total current liabilities

5,071

4,847

Long-term debt, net of current portion

15,091

15,574

Professional and general liability reserves

782

735

Defined benefit plan obligations

459

497

Deferred income taxes

29

29

Contract liabilities - long-term

351

918

Other long-term liabilities

1,579

1,617

Total liabilities

23,362

24,217

Commitments and contingencies

Redeemable noncontrolling interests in equity of consolidated subsidiaries

2,034

1,952

Equity:

Shareholders’ equity:

Common stock

8

7

Additional paid-in capital

4,854

4,844

Accumulated other comprehensive loss

(277

)

(281

)

Accumulated deficit

(1,912

)

(2,128

)

Common stock in treasury, at cost

(2,412

)

(2,414

)

Total shareholders’ equity

261

28

Noncontrolling interests

908

909

Total equity

1,169

937

Total liabilities and equity

$

26,565

$

27,106

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

Six Months Ended

(Dollars in millions)

June 30,

2021

2020

Net income

$

479

$

328

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

Depreciation and amortization

445

409

Deferred income tax expense (benefit)

48

(49

)

Stock-based compensation expense

30

27

Impairment and restructuring charges, and acquisition-related costs

40

109

Litigation and investigation costs

35

4

Net gains on sales, consolidation and deconsolidation of facilities

(15

)

(3

)

Loss from early extinguishment of debt

54

4

Equity in earnings of unconsolidated affiliates, net of distributions received

10

(39

)

Amortization of debt discount and debt issuance costs

17

20

Pre-tax loss from discontinued operations

1

1

Other items, net

(22

)

(3

)

Changes in cash from operating assets and liabilities:

Accounts receivable

(101

)

317

Inventories and other current assets

56

44

Income taxes

25

14

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

(232

)

1,209

Other long-term liabilities

(6

)

90

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

(85

)

(114

)

Net cash provided by operating activities

779

2,368

Cash flows from investing activities:

Purchases of property and equipment

(243

)

(288

)

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

(64

)

(56

)

Proceeds from sales of facilities and other assets

124

12

Proceeds from sales of marketable securities, long-term investments and other assets

18

35

Purchases of marketable securities and equity investments

(19

)

(10

)

Other items, net

(11

)

18

Net cash used in investing activities

(195

)

(289

)

Cash flows from financing activities:

Repayments of borrowings under credit facility

(740

)

Proceeds from borrowings under credit facility

740

Repayments of other borrowings

(2,012

)

(229

)

Proceeds from other borrowings

1,409

1,312

Debt issuance costs

(15

)

(22

)

Distributions paid to noncontrolling interests

(212

)

(100

)

Proceeds from sale of noncontrolling interests

12

5

Purchases of noncontrolling interests

(5

)

Proceeds from exercise of stock options and employee stock purchase plan

9

5

Medicare advances and grants received by unconsolidated affiliates, net of recoupment

6

142

Other items, net

(28

)

60

Net cash provided by (used in) financing activities

(836

)

1,173

Net increase (decrease) in cash and cash equivalents

(252

)

3,252

Cash and cash equivalents at beginning of period

2,446

262

Cash and cash equivalents at end of period

$

2,194

$

3,514

Supplemental disclosures:

Interest paid, net of capitalized interest

$

(486

)

$

(465

)

Income tax payments, net

$

(34

)

$

(5

)

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

Three Months Ended

Six Months Ended

(Dollars in millions)

June 30,

June 30,

2021

2020

2021

2020

Net operating revenues (1) :

Hospital Operations and other (prior to inter-segment eliminations)

$

4,095

$

3,088

$

8,042

$

6,922

Ambulatory Care

664

368

1,310

858

Conifer

Tenet

124

113

246

249

Other clients

195

192

383

388

Total Conifer revenues

319

305

629

637

Inter-segment eliminations

(124

)

(113

)

(246

)

(249

)

Total

$

4,954

$

3,648

$

9,735

$

8,168

Equity in earnings of unconsolidated affiliates:

Hospital Operations and other

$

5

$

(4

)

$

9

$

(2

)

Ambulatory Care

49

35

87

61

Total

$

54

$

31

$

96

$

59

Adjusted EBITDA (including grant income):

Hospital Operations and other

$

449

$

492

$

883

$

834

Ambulatory Care

295

167

552

323

Conifer

90

73

176

160

Total

$

834

$

732

$

1,611

$

1,317

Adjusted EBITDA margins (including grant income):

Hospital Operations and other

11.0

%

15.9

%

11.0

%

12.0

%

Ambulatory Care

44.4

%

45.4

%

42.1

%

37.6

%

Conifer

28.2

%

23.9

%

28.0

%

25.1

%

Total

16.8

%

20.1

%

16.5

%

16.1

%

Adjusted EBITDA margins (excluding grant income):

Hospital Operations and other

10.9

%

0.6

%

10.6

%

5.2

%

Ambulatory Care

41.4

%

32.1

%

39.6

%

31.9

%

Conifer

28.2

%

23.9

%

28.0

%

25.1

%

Total

16.4

%

5.7

%

15.9

%

9.7

%

Capital expenditures:

Hospital Operations and other

$

90

$

90

$

200

$

257

Ambulatory Care

27

10

35

21

Conifer

5

6

8

10

Total

$

122

$

106

$

243

$

288

(1) Net operating revenues include the impact of implicit price concessions and bad debts

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 – Reconciliations of Net Income Available to Tenet Healthcare Corporation

Common Shareholders to Adjusted Net Income Available from Continuing Operations

to Common Shareholders for 2021

(Unaudited)

(Dollars in millions except per share amounts)

2021

Q2

YTD

Net income available to Tenet Healthcare Corporation common shareholders

$

119

$

216

Net loss from discontinued operations

(1

)

(1

)

Net income from continuing operations

120

217

Less: Impairment and restructuring charges, and acquisition-related costs

(20

)

(40

)

Litigation and investigation costs

(22

)

(35

)

Net gains on sales, consolidation and deconsolidation of facilities

15

15

Loss from early extinguishment of debt

(31

)

(54

)

Tax impact of above items

5

18

Adjusted net income available from continuing operations to common shareholders

$

173

$

313

Diluted earnings per share from continuing operations

$

1.11

$

2.00

Less: Impairment and restructuring charges, and acquisition-related costs

(0.18

)

(0.37

)

Litigation and investigation costs

(0.20

)

(0.32

)

Net gains on sales, consolidation and deconsolidation of facilities

0.14

0.14

Loss from early extinguishment of debt

(0.29

)

(0.50

)

Tax impact of above items

0.05

0.16

Adjusted diluted earnings per share from continuing operations

$

1.59

$

2.89

Weighted average basic shares outstanding (in thousands)

106,822

106,566

Weighted average dilutive shares outstanding (in thousands)

108,569

108,317

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

to Common Shareholders for 2020

(Unaudited)

(Dollars in millions except per share amounts)

2020

Q2

YTD

Net income available to Tenet Healthcare Corporation common shareholders

$

88

$

181

Net loss from discontinued operations

(1

)

Net income from continuing operations

88

182

Less: Impairment and restructuring charges, and acquisition-related costs

(54

)

(109

)

Litigation and investigation costs

(2

)

(4

)

Net gains on sales, consolidation and deconsolidation of facilities

1

3

Loss from early extinguishment of debt

(4

)

(4

)

Tax impact of above items

14

28

Adjusted net income available from continuing operations to common shareholders

$

133

$

268

Diluted earnings per share from continuing operations

$

0.83

$

1.72

Less: Impairment and restructuring charges, and acquisition-related costs

(0.51

)

(1.03

)

Litigation and investigation costs

(0.02

)

(0.04

)

Net gains on sales, consolidation and deconsolidation of facilities

0.01

0.03

Loss from early extinguishment of debt

(0.04

)

(0.04

)

Tax impact of above items

0.13

0.26

Adjusted diluted earnings per share from continuing operations

$

1.26

$

2.54

Weighted average basic shares outstanding (in thousands)

104,794

104,574

Weighted average dilutive shares outstanding (in thousands)

105,578

105,656

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation

Common Shareholders to Adjusted EBITDA for 2021

(Unaudited)

(Dollars in millions)

2021

Q2

YTD

Net income available to Tenet Healthcare Corporation common shareholders

$

119

$

216

Less: Net income available to noncontrolling interests

(138

)

(263

)

Loss from discontinued operations, net of tax

(1

)

(1

)

Income from continuing operations

258

480

Income tax expense

(61

)

(106

)

Loss from early extinguishment of debt

(31

)

(54

)

Other non-operating income (expense), net

(1

)

9

Interest expense

(235

)

(475

)

Operating income

586

1,106

Litigation and investigation costs

(22

)

(35

)

Net gain on sales, consolidation and deconsolidation of facilities

15

15

Impairment and restructuring charges, and acquisition-related costs

(20

)

(40

)

Depreciation and amortization

(221

)

(445

)

Adjusted EBITDA

$

834

$

1,611

Net operating revenues

$

4,954

$

9,735

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

2.4

%

2.2

%

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

16.8

%

16.5

%

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation

Common Shareholders to Adjusted EBITDA for 2020

(Unaudited)

(Dollars in millions)

2020

Q2

YTD

Net income available to Tenet Healthcare Corporation common shareholders

$

88

$

181

Less: Net income available to noncontrolling interests

(81

)

(147

)

Loss from discontinued operations, net of tax

(1

)

Income from continuing operations

169

329

Income tax (expense) benefit

(45

)

30

Loss from early extinguishment of debt

(4

)

(4

)

Other non-operating income, net

2

3

Interest expense

(255

)

(498

)

Operating income

471

798

Litigation and investigation costs

(2

)

(4

)

Net gains on sales, consolidation and deconsolidation of facilities

1

3

Impairment and restructuring charges, and acquisition-related costs

(54

)

(109

)

Depreciation and amortization

(206

)

(409

)

Adjusted EBITDA

$

732

$

1,317

Net operating revenues

$

3,648

$

8,168

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

2.4

%

2.2

%

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

20.1

%

16.1

%

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

(Dollars in millions)

2021

Q2

YTD

Net cash provided by operating activities

$

245

$

779

Purchases of property and equipment

(122

)

(243

)

Free cash flow

$

123

$

536

Net cash used in investing activities

$

(50

)

$

(195

)

Net cash used in financing activities

$

(142

)

$

(836

)

Net cash provided by operating activities

$

245

$

779

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

(34

)

(85

)

Adjusted net cash provided by operating activities from continuing operations

279

864

Purchases of property and equipment

(122

)

(243

)

Adjusted free cash flow – continuing operations

$

157

$

621

(Dollars in millions)

2020

Q2

YTD

Net cash provided by operating activities

$

2,239

$

2,368

Purchases of property and equipment

(106

)

(288

)

Free cash flow

$

2,133

$

2,080

Net cash used in investing activities

$

(85

)

$

(289

)

Net cash provided by financing activities

$

747

$

1,173

Net cash provided by operating activities

$

2,239

$

2,368

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

(46

)

(114

)

Adjusted net cash provided by operating activities from continuing operations

2,285

2,482

Purchases of property and equipment

(106

)

(288

)

Adjusted free cash flow – continuing operations

$

2,179

$

2,194

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

(Dollars in millions)

Q3’21

FY 2021

Low

High

Low

High

Net income available to Tenet Healthcare Corporation common shareholders

$

335

$

375

$

681

$

781

Less: Net income available to noncontrolling interests

(135

)

(145

)

(565

)

(585

)

Income tax expense

(160

)

(175

)

(325

)

(360

)

Interest expense

(235

)

(225

)

(945

)

(935

)

Loss from early extinguishment of debt(1)

(54

)

(54

)

Other non-operating income, net

5

10

20

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

400

400

415

415

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(3)

(30

)

(20

)

(150

)

(100

)

Depreciation and amortization

(205

)

(215

)

(850

)

(870

)

Loss from divested and closed businesses

(5

)

Adjusted EBITDA

$

700

$

750

$

3,150

$

3,250

Net operating revenues

$

4,600

$

4,800

$

19,250

$

19,650

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

7.3

%

7.8

%

3.5

%

4.0

%

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

15.2

%

15.6

%

16.4

%

16.5

%

(1)

The Company does not generally forecast losses from the early extinguishment of debt because the Company does not believe that it can forecast this item with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown represent the Company’s actual year-to-date results for this item.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook. However, the Company has provided an estimate for the anticipated gain on the sale of its Miami-area hospitals in Q3’21 and the actual year-to-date results for this item.

(3)

The Company has provided an estimate of restructuring charges and related payments it anticipates in 2021. The figures shown represent the Company’s estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

(Unaudited)

(Dollars in millions except per share amounts)

Q3’21

FY 2021

Low

High

Low

High

Net income available to Tenet Healthcare Corporation common shareholders

$

335

$

375

$

681

$

781

Net income from discontinued operations, net of tax

Net income from continuing operations

335

375

681

781

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

(30

)

(20

)

(150

)

(100

)

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

400

400

415

415

Loss from early extinguishment of debt(3)

(54

)

(54

)

Loss from divested and closed businesses

(5

)

Tax impact of above items

(115

)

(120

)

(95

)

(105

)

Noncontrolling interests impact of above items

Adjusted net income available from continuing operations to common shareholders

$

80

$

115

$

570

$

625

Diluted earnings per share from continuing operations

$

3.07

$

3.44

$

6.25

$

7.17

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

(0.28

)

(0.19

)

(1.37

)

(0.91

)

Net gains on sales, consolidation and deconsolidation of facilities

3.67

3.67

3.81

3.81

Loss from early extinguishment of debt

(0.50

)

(0.50

)

Loss from divested and closed businesses

(0.05

)

Tax impact of above items

(1.05

)

(1.10

)

(0.87

)

(0.96

)

Noncontrolling interests impact of above items

Adjusted diluted earnings per share from continuing operations

$

0.73

$

1.06

$

5.23

$

5.73

Weighted average basic shares outstanding (in thousands)

107,000

107,000

107,000

107,000

Weighted average dilutive shares outstanding (in thousands)

109,000

109,000

109,000

109,000

(1)

The Company has provided an estimate of restructuring charges it anticipates in 2021. The figures shown represent the Company’s estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook. However, the Company has provided an estimate for the anticipated gain on the sale of its Miami-area hospitals in Q3’21 and the actual year-to-date results for this item.

(3)

The Company does not generally forecast losses from the early extinguishment of debt because the Company does not believe that it can forecast this item with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown represent the Company’s actual year-to-date results for this item.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

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

Flow Continuing Operations

(Unaudited)

(Dollars in millions)

FY 2021

Low

High

Net cash provided by operating activities

$

1,150

$

1,450

Purchases of property and equipment – continuing operations

(700

)

(750

)

Free cash flow – continuing operations

$

450

$

700

Net cash provided by operating activities

$

1,150

$

1,450

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

(150

)

(100

)

Adjusted net cash provided by operating activities – continuing operations

1,300

1,550

Purchases of property and equipment – continuing operations

(700

)

(750

)

Adjusted free cash flow – continuing operations(2)

$

600

$

800

(1)

The Company has provided an estimate of restructuring related payments it anticipates in 2021. The figures shown represent the Company’s estimate for restructuring payments plus the actual year-to-date payments for acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast payments for acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210721005900/en/

Contacts

Investor Contact
Regina Nethery
469-893-2387
regina.nethery@tenethealth.com

Media Contact
Lesley Bogdanow
469-893-2640
mediarelations@tenethealth.com