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Tenet Reports Fourth Quarter and FY 2022 Results; Provides 2023 Financial Outlook

  • Net income from continuing operations available to common shareholders in fourth quarter 2022 was $102 million, or $0.92 per diluted share
  • Adjusted diluted earnings per share from continuing operations1 of $1.96 in fourth quarter 2022
  • Consolidated Adjusted EBITDA1 in fourth quarter 2022 of $897 million, including $40 million of grant income
  • Fourth quarter 2022 Ambulatory Care Adjusted EBITDA excluding grant income grew 18.7% over fourth quarter 2021
  • Same-facility system-wide ambulatory surgical cases increased 0.7% versus fourth quarter 2021; Same-hospital adjusted admissions increased 2.9% versus fourth quarter 2021
  • Repurchased approximately 5.9 million shares of the Company's common stock for $250 million in the fourth quarter under a $1 billion share repurchase program
  • FY 2023 Adjusted EBITDA is expected to be in the range of $3.160 billion to $3.360 billion

Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended December 31, 2022.

"We closed the year with a strong fourth quarter and demonstrated operating discipline in a dynamic environment while providing patient-centered high quality care," said Saum Sutaria, M.D., Chief Executive Officer of Tenet. "Our momentum going into 2023 positions us for continued growth as we remain focused on expanding our industry-leading ambulatory business and investing in technology, innovation, and talent."

Tenet’s results for fourth quarter 2022 versus fourth quarter 2021 are as follows:

 

Three Months Ended

December 31,

Twelve Months

Ended December 31,

($ in millions, except per share results)

2022

2021

2022

2021

Net operating revenues

$4,990

$4,856

$19,174

$19,485

Net income available to Tenet common shareholders from continuing operations

$102

$250

$410

$915

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

$0.92

$2.30

$3.78

$8.43

Adjusted EBITDA1 excluding grant income

$857

$877

$3,275

$3,278

Adjusted EBITDA1

$897

$1,017

$3,469

$3,483

Adjusted diluted earnings per share from continuing operations1

$1.96

$2.70

$6.80

$7.58

  • Net income from continuing operations available to the Company’s common shareholders in the fourth quarter 2022 was $102 million, or $0.92 per diluted share, versus $250 million, or $2.30 per diluted share, in fourth quarter 2021.
  • Fourth quarter 2022 included COVID-related stimulus grant income of $40 million pre-tax ($30 million after-tax, or $0.28 per diluted share) versus $140 million pre-tax ($97 million after-tax, or $0.89 per diluted share) in fourth quarter 2021; also, fourth quarter 2022 included impairment and restructuring charges and acquisition-related costs of $129 million pre-tax ($101 million after-tax, or $0.95 per diluted share) versus $30 million pre-tax ($24 million after-tax, or $0.22 per diluted share) in the fourth quarter 2021.
  • Net income from continuing operations available to the Company’s common shareholders in 2022 was $410 million, or $3.78 per diluted share, versus $915 million, or $8.43 per diluted share, in 2021.
  • 2022 results included impairment and restructuring charges, and acquisition-related costs of $226 million pre-tax ($183 million after-tax, or $1.66 per diluted share) versus $85 million pre-tax ($66 million after-tax, or $0.61 per diluted share) in 2021. Additionally, 2021 results included a pre-tax gain of $406 million ($276 million after-tax, or $2.54 per diluted share) associated with the divestiture of the Company's Miami-area hospitals.
  • The Company recognized additional income tax expense for the three and twelve months ended December 31, 2022 of approximately $7 million, or $0.07 per diluted share, and $123 million, or $1.11 per diluted share, respectively, as a result of the interest expense limitation regulations. The Company did not have any interest expense limited during 2021.
  • Adjusted EBITDA excluding grant income in fourth quarter 2022 was $857 million compared to $877 million in fourth quarter 2021, reflecting lower COVID-related volume and acuity, elevated contract labor costs, partially offset by growth in our Ambulatory Care segment.
  • In January 2023, the Company entered into a definitive agreement for John Muir Health to purchase Tenet's interest in the San Ramon Regional Medical Center and First California Physician Partners OB/GYN for $142.5 million. The transaction is expected to be completed in 2023, subject to regulatory approvals and customary closing conditions.

Balance Sheet and Cash Flows

  • In the year ended December 31, 2020, the Company received approximately $1.5 billion of Medicare advance payments from CMS related to the pandemic. The Company completed the repayment of the advances as of December 31, 2022. $880 million and $616 million of the Medicare advances were repaid by the Company during the years ended December 31, 2022 and 2021, respectively.
  • Cash flows provided by operating activities for the year ended December 31, 2022 were $1.083 billion ($2.091 billion excluding $880 million of repayments associated with Medicare advances and $128 million of payroll tax deferrals from FY 2020) versus $1.568 billion for the year ended December 31, 2021 ($2.208 billion excluding $512 million of repayments associated with Medicare advances and $128 million of payroll tax deferrals).
  • The Company produced free cash flow1 of $321 million for the year ended December 31, 2022 ($1.329 billion excluding repayments of Medicare advances and deferred payroll tax payments) versus $910 million for the year ended December 31, 2021 ($1.550 billion excluding repayments of Medicare advances and deferred payroll tax payments).
  • In the fourth quarter of 2022, the Company repurchased approximately 5.9 million shares of common stock for $250 million.
  • In the fourth quarter of 2022, the Company purchased approximately $25 million aggregate principal amount of its 4.625% senior secured notes due in 2024 on the open market using available cash on hand.
  • The Company’s ratio of net debt plus the Medicare advances liability to Adjusted EBITDA1 was 4.10x at December 31, 2022 compared to 4.07x at December 31, 2021.
  • The Company had no outstanding borrowings on its $1.5 billion line of credit as of December 31, 2022.

Ambulatory Care (Ambulatory) Segment

Tenet’s Ambulatory business segment is comprised of the operations of United Surgical Partners International (USPI). As of December 31, 2022, USPI had interests in 442 ambulatory surgery centers (300 consolidated) and 24 surgical hospitals (eight consolidated) in 35 states. Results for the year ended December 31, 2021 included USPI’s imaging centers (realigned under the Hospital segment as of April 1, 2021) and its urgent care centers (sold in April 2021). For all periods prior to June 30, 2022, the Company owned 95% of the voting stock of USPI.

 

Three Months Ended

December 31,

Twelve Months

Ended December 31,

Ambulatory segment results ($ in millions)

2022

2021

2022

2021

Revenues

 

 

 

 

Net operating revenues

$933

$742

$3,248

$2,718

Same-facility system-wide net patient service revenues2

$1,763

$1,712

$6,241

$5,968

Volume Changes versus the Prior-Year Period

 

 

 

 

Same-facility system-wide surgical cases2

0.7%

4.4%

2.0%

15.6%

Same-facility system-wide surgical cases on same-business day basis2

0.7%

6.1%

1.6%

16.6%

Adjusted EBITDA, Margins and Noncontrolling Interest (NCI)

 

 

 

 

Adjusted EBITDA excluding grant income

$407

$343

$1,323

$1,134

Adjusted EBITDA

$407

$371

$1,327

$1,197

Adjusted EBITDA margin excluding grant income

43.6%

46.2%

40.7%

41.7%

Adjusted EBITDA margin

43.6%

50.0%

40.9%

44.0%

Adjusted EBITDA less facility-level NCI excluding grant income

$262

$220

$865

$734

Adjusted EBITDA less facility-level NCI

$262

$236

$867

$770

Adjusted EBITDA less total NCI excluding grant income

$262

$214

$856

$715

Adjusted EBITDA less total NCI

$262

$229

$858

$749

  • Fourth quarter 2022 net operating revenues increased 25.7% compared to fourth quarter 2021 driven by additional revenues associated with the SurgCenter Development (SCD) acquisition completed in December 2021, service line growth and improved pricing yield.
  • Surgical business same-facility system-wide net patient service revenues increased 3.0% in fourth quarter 2022 compared to fourth quarter 2021, with cases up 0.7% and net revenue per case up 2.3%.
  • Adjusted EBITDA excluding grant income was $407 million in fourth quarter 2022 compared to $343 million in fourth quarter 2021, driven by the SCD acquisition, as well as new service line growth and improved pricing yield.
  • Adjusted EBITDA margin excluding grant income in fourth quarter 2022 declined relative to fourth quarter 2021 primarily due to higher supplies costs, higher other operating expenses associated with increased de novo development, partially offset by improved management of salaries, wages and benefits.

Hospital Operations and Other (Hospital) Segment

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

 

Three Months Ended

December 31,

Twelve Months

Ended December 31,

Hospital segment results ($ in millions)

2022

2021

2022

2021

Revenues

 

 

 

 

Net operating revenues (prior to inter-segment eliminations)

$3,840

$3,910

$15,061

$15,982

Grant income

$40

$112

$190

$142

Same-hospital net patient service revenues3

$3,486

$3,545

$13,703

$14,043

Same-Hospital Volume Changes versus the Prior-Year Period

 

 

 

 

Admissions

0.5%

(3.9)%

(4.5)%

(0.1)%

Adjusted admissions4

2.9%

—%

(1.2)%

2.4%

Outpatient visits (including outpatient ER visits)

(2.8)%

8.8%

(4.8)%

15.7%

Emergency Room visits (inpatient and outpatient)

7.7%

16.3%

4.8%

8.9%

Hospital surgeries

(2.5)%

(1.4)%

(3.7)%

6.1%

Adjusted EBITDA

 

 

 

 

Adjusted EBITDA excluding grant income

$360

$440

$1,587

$1,789

Adjusted EBITDA

$400

$552

$1,777

$1,931

Adjusted EBITDA margin excluding grant income

9.4%

11.3%

10.5%

11.2%

Adjusted EBITDA margin

10.4%

14.1%

11.8%

12.1%

  • Fourth quarter 2022 net operating revenues declined 1.8% from fourth quarter 2021 due to lower COVID-related volume and acuity, partially offset by higher adjusted admissions and improved pricing yield.
  • Same-hospital net patient service revenue per adjusted admission decreased 4.4% year-over-year for fourth quarter 2022 primarily due to lower COVID-related volumes and acuity, partially offset by improved pricing yield. COVID admissions were 4% of total admissions in the fourth quarter of 2022 versus 7% in the fourth quarter of 2021. Fourth quarter non-COVID inpatient admissions increased 4.3% over fourth quarter 2021.
  • Fourth quarter 2022 adjusted EBITDA and adjusted EBITDA margin decreased compared to fourth quarter 2021 primarily due to higher contract labor costs and premium pay due to the pandemic, decreased grant income, and lower COVID-related volumes and acuity, partially offset by continued strength in patient acuity due to the Company's focus on growing higher acuity services, improved pricing yield and cost efficiency actions.

Conifer Segment

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, health systems, physician practices, employers, and other clients.

 

Three Months Ended

December 31,

Twelve Months Ended

December 31,

Conifer segment results ($ in millions)

2022

2021

2022

2021

Net operating revenues

$326

$324

$1,316

$1,267

Adjusted EBITDA

$90

$94

$365

$355

Adjusted EBITDA margin

27.6%

29.0%

27.7%

28.0%

  • Fourth quarter 2022 net operating revenues increased 0.6%. Fourth quarter 2022 net operating revenues from external clients increased 6.4% over fourth quarter 2021 due to contractual rate increases and new business expansion.
  • Fourth quarter 2022 adjusted EBITDA and adjusted EBITDA margin declined compared to fourth quarter 2021 reflecting increased other operating expenses.

2023 Outlook1

Tenet’s Outlook for full year 2023 (consolidated and by segment) and first quarter 2023 follows:

CONSOLIDATED ($ in millions, except per share amounts)

FY 2023 Outlook

First Quarter

2023 Outlook

Net operating revenues

$19,700 to $20,100

$4,700 to $4,900

Income from continuing operations available to Tenet common stockholders

$420 to $585

$90 to $125

Adjusted EBITDA

$3,160 to $3,360

$750 to $800

Adjusted EBITDA margin

16.0% to 16.7%

16.0% to 16.3%

Diluted income per common share from continuing operations

$3.89 to $5.43

$0.82 to $1.14

Adjusted net income from continuing operations

$505 to $630

$110 to $135

Adjusted diluted earnings per share from continuing operations

$4.68 to $5.85

$1.00 to $1.23

Equity in earnings of unconsolidated affiliates

$200 to $220

$35 to $45

Depreciation and amortization

$850 to $875

$210 to $220

Interest expense

$870 to $880

$215 to $225

Income tax expense5

$270 to $300

$60 to $70

Net income available to NCI

$620 to $670

$135 to $155

Weighted average diluted common shares

~107 million

~107 million

NCI cash distributions

$540 to $580

 

Net cash provided by operating activities

$1,700 to $2,000

 

Adjusted net cash provided by operating activities

$1,825 to $2,075

 

Capital expenditures

$625 to $675

 

Free cash flow

$1,075 to $1,325

 

Adjusted free cash flow – continuing operations

$1,200 to $1,400

 

Ambulatory Segment ($ in millions)

FY 2023 Outlook

Net operating revenues

$3,550 to $3,650

Adjusted EBITDA

$1,415 to $1,475

Total NCI (Facility level)

$510 to $540

Adjusted EBITDA less total NCI

$905 to $935

Changes versus prior year6:

 

Surgical cases volumes

Up 2.0% to 3.0%

Net revenues per surgical case

Up 2.0% to 3.0%

Hospital Segment ($ in millions)

FY 2023 Outlook

Net operating revenues (prior to inter-segment eliminations)

$15,315 to $15,565

Adjusted EBITDA

$1,415 to $1,545

NCI

$20 to $35

Changes versus prior year6:

 

Inpatient admissions

Up 1.0% to 3.0%

Adjusted admissions

Up 2.0% to 4.0%

Conifer Segment ($ in millions)

FY 2023 Outlook

Net operating revenues

$1,285 to $1,335

Adjusted EBITDA

$330 to $340

NCI

$90 to $95

Management’s Webcast Discussion of Results

Tenet management will discuss the Company’s fourth quarter 2022 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 9, 2023. 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 February 9, 2023.

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, 2021, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

Footnotes

  1. Tables and discussions throughout this earnings release include certain financial measures, including those related to our first quarter and full year 2023 Outlook, 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 #1-6 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.
  2. 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. 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.
  3. 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 December 31, 2022. Amounts associated with physician practices are excluded.
  4. 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.
  5. 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: pretax income less GAAP facility level NCI expense plus permanent differences, and non-deductible interest expense.
  6. Change versus prior year is presented on a same-facility system-wide basis for USPI Ambulatory surgical cases and on a same-hospital basis for hospital statistics.

About Tenet Healthcare

Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas. Our care delivery network includes United Surgical Partners International, the largest ambulatory platform in the country, which operates or has ownership interests in more than 465 ambulatory surgery centers and surgical hospitals. We also operate 61 acute care and specialty hospitals, approximately 110 other outpatient facilities, a network of leading employed physicians and a global business center in Manila, Philippines. Our Conifer Health Solutions subsidiary 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

The Company believes the non-GAAP measures described below 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.

  • 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, net of tax, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation benefit (costs), net of insurance 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 (i.e., health plan 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, net of tax, (2) gain (loss) from early extinguishment of debt, (3) litigation and investigation benefit (costs), net of insurance 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 (i.e., health plan 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.
  • Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments, a non-GAAP measure, is defined by the Company as (1) Free Cash Flow plus (2) repayments of Medicare Advances and Deferred Payroll Tax Payments.
  • 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 Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments, a non-GAAP measure, is defined by the Company as (1) Adjusted Free Cash Flow plus (2) repayments of Medicare Advances and Deferred Payroll Tax Payments.
  • 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 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, and Free Cash Flow and Adjusted Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments 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, or (ii) distributions paid to noncontrolling interests. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

See corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures in Tables #1 - 6 below.

Tenet Healthcare Corporation

Financial Statements and Reconciliations

Fourth Quarter Earnings Release

 
 

Table of Contents

 
 

Description

Page

Consolidated Statements of Operations

13

Consolidated Balance Sheets

15

Consolidated Statements of Cash Flow

16

Segment Reporting

17

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

18

Table #2 - Reconciliations of Net Income to Adjusted EBITDA

19

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

20

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

22

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

23

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

24

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions, except per share amounts)

 

Three Months Ended December 31,

 

 

 

2022

 

 

%

 

 

2021

 

 

%

 

Change

Net operating revenues

 

$

4,990

 

 

100.0

%

 

$

4,856

 

 

100.0

%

 

2.8

%

Grant income

 

 

40

 

 

0.8

%

 

 

138

 

 

2.8

%

 

(71.0

)%

Equity in earnings of unconsolidated affiliates

 

 

65

 

 

1.3

%

 

 

77

 

 

1.6

%

 

(15.6

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

2,306

 

 

46.2

%

 

 

2,188

 

 

45.0

%

 

5.4

%

Supplies

 

 

860

 

 

17.2

%

 

 

838

 

 

17.3

%

 

2.6

%

Other operating expenses, net

 

 

1,032

 

 

20.7

%

 

 

1,029

 

 

21.2

%

 

0.3

%

Depreciation and amortization

 

 

213

 

 

4.3

%

 

 

201

 

 

4.1

%

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

129

 

 

2.6

%

 

 

30

 

 

0.6

%

 

 

Litigation and investigation costs

 

 

20

 

 

0.4

%

 

 

52

 

 

1.1

%

 

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(1

)

 

%

 

 

(18

)

 

(0.4

)%

 

 

Operating income

 

 

536

 

 

10.7

%

 

 

751

 

 

15.5

%

 

 

Interest expense

 

 

(219

)

 

 

 

 

(221

)

 

 

 

 

Other non-operating income (loss), net

 

 

4

 

 

 

 

 

(2

)

 

 

 

 

Income from continuing operations, before income taxes

 

 

321

 

 

 

 

 

528

 

 

 

 

 

Income tax expense

 

 

(47

)

 

 

 

 

(108

)

 

 

 

 

Income from continuing operations, before discontinued operations

 

 

274

 

 

 

 

 

420

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

 

 

 

 

 

(1

)

 

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

(1

)

 

 

 

 

Net income

 

 

274

 

 

 

 

 

419

 

 

 

 

 

Less: Net income available to noncontrolling interests

 

 

172

 

 

 

 

 

170

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

102

 

 

 

 

$

249

 

 

 

 

 

Amounts available to Tenet Healthcare Corporation common shareholders

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

102

 

 

 

 

$

250

 

 

 

 

 

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

(1

)

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

102

 

 

 

 

$

249

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.98

 

 

 

 

$

2.33

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

$

0.98

 

 

 

 

$

2.32

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.92

 

 

 

 

$

2.30

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

$

0.92

 

 

 

 

$

2.29

 

 

 

 

 

Weighted average shares and dilutive securities outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

 

 

104,519

 

 

 

 

 

107,150

 

 

 

 

 

Diluted

 

 

106,368

 

 

 

 

 

108,890

 

 

 

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions, except per share amounts)

 

Twelve Months Ended December 31,

 

 

 

2022

 

 

%

 

 

2021

 

 

%

 

Change

Net operating revenues

 

$

19,174

 

 

100.0

%

 

$

19,485

 

 

100.0

%

 

(1.6

)%

Grant income

 

 

194

 

 

1.0

%

 

 

191

 

 

1.0

%

 

1.6

%

Equity in earnings of unconsolidated affiliates

 

 

216

 

 

1.1

%

 

 

218

 

 

1.1

%

 

(0.9

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

8,844

 

 

46.1

%

 

 

8,878

 

 

45.6

%

 

(0.4

)%

Supplies

 

 

3,273

 

 

17.0

%

 

 

3,328

 

 

17.1

%

 

(1.7

)%

Other operating expenses, net

 

 

3,998

 

 

20.8

%

 

 

4,206

 

 

21.6

%

 

(4.9

)%

Depreciation and amortization

 

 

841

 

 

4.4

%

 

 

855

 

 

4.4

%

 

 

Impairment and restructuring charges, and acquisition-related costs

 

 

226

 

 

1.2

%

 

 

85

 

 

0.4

%

 

 

Litigation and investigation costs

 

 

70

 

 

0.4

%

 

 

116

 

 

0.6

%

 

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(1

)

 

%

 

 

(445

)

 

(2.3

)%

 

 

Operating income

 

 

2,333

 

 

12.2

%

 

 

2,871

 

 

14.7

%

 

 

Interest expense

 

 

(890

)

 

 

 

 

(923

)

 

 

 

 

Other non-operating income, net

 

 

10

 

 

 

 

 

14

 

 

 

 

 

Loss from early extinguishment of debt

 

 

(109

)

 

 

 

 

(74

)

 

 

 

 

Income from continuing operations, before income taxes

 

 

1,344

 

 

 

 

 

1,888

 

 

 

 

 

Income tax expense

 

 

(344

)

 

 

 

 

(411

)

 

 

 

 

Income from continuing operations, before discontinued operations

 

 

1,000

 

 

 

 

 

1,477

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

Income (loss) from discontinued operations

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

Net income

 

 

1,001

 

 

 

 

 

1,476

 

 

 

 

 

Less: Net income available to noncontrolling interests

 

 

590

 

 

 

 

 

562

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

411

 

 

 

 

$

914

 

 

 

 

 

Amounts available to Tenet Healthcare Corporation common shareholders

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

410

 

 

 

 

$

915

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

411

 

 

 

 

$

914

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

3.83

 

 

 

 

$

8.56

 

 

 

 

 

Discontinued operations

 

 

0.01

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

$

3.84

 

 

 

 

$

8.55

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

3.78

 

 

 

 

$

8.43

 

 

 

 

 

Discontinued operations

 

 

0.01

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

$

3.79

 

 

 

 

$

8.42

 

 

 

 

 

Weighted average shares and dilutive securities outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

 

 

106,929

 

 

 

 

 

106,833

 

 

 

 

 

Diluted

 

 

110,516

 

 

 

 

 

108,571

 

 

 

 

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

December 31,

 

December 31,

(Dollars in millions)

 

 

2022

 

 

 

2021

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

858

 

 

$

2,364

 

Accounts receivable

 

 

2,943

 

 

 

2,770

 

Inventories of supplies, at cost

 

 

405

 

 

 

384

 

Other current assets

 

 

1,775

 

 

 

1,557

 

Total current assets

 

 

5,981

 

 

 

7,075

 

Investments and other assets

 

 

3,147

 

 

 

3,254

 

Deferred income taxes

 

 

19

 

 

 

65

 

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

 

 

6,462

 

 

 

6,427

 

Goodwill

 

 

10,123

 

 

 

9,261

 

Other intangible assets, at cost, less accumulated amortization

 

 

1,424

 

 

 

1,497

 

Total assets

 

$

27,156

 

 

$

27,579

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

145

 

 

$

135

 

Accounts payable

 

 

1,504

 

 

 

1,300

 

Accrued compensation and benefits

 

 

778

 

 

 

896

 

Professional and general liability reserves

 

 

255

 

 

 

254

 

Accrued interest payable

 

 

213

 

 

 

203

 

Contract liabilities

 

 

110

 

 

 

959

 

Other current liabilities

 

 

1,471

 

 

 

1,362

 

Total current liabilities

 

 

4,476

 

 

 

5,109

 

Long-term debt, net of current portion

 

 

14,934

 

 

 

15,511

 

Professional and general liability reserves

 

 

790

 

 

 

791

 

Defined benefit plan obligations

 

 

331

 

 

 

421

 

Deferred income taxes

 

 

217

 

 

 

36

 

Contract liabilities – long-term

 

 

13

 

 

 

15

 

Other long-term liabilities

 

 

1,787

 

 

 

1,439

 

Total liabilities

 

 

22,548

 

 

 

23,322

 

Commitments and contingencies

 

 

 

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

2,149

 

 

 

2,203

 

Equity:

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

4,778

 

 

 

4,877

 

Accumulated other comprehensive loss

 

 

(181

)

 

 

(233

)

Accumulated deficit

 

 

(803

)

 

 

(1,214

)

Common stock in treasury, at cost

 

 

(2,660

)

 

 

(2,410

)

Total shareholders’ equity

 

 

1,142

 

 

 

1,028

 

Noncontrolling interests

 

 

1,317

 

 

 

1,026

 

Total equity

 

 

2,459

 

 

 

2,054

 

Total liabilities and equity

 

$

27,156

 

 

$

27,579

 

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

 

 

Twelve Months Ended

(Dollars in millions)

 

December 31,

 

 

 

2022

 

 

 

2021

 

Net income

 

$

1,001

 

 

$

1,476

 

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

 

 

 

 

Depreciation and amortization

 

 

841

 

 

 

855

 

Deferred income tax expense

 

 

209

 

 

 

250

 

Stock-based compensation expense

 

 

56

 

 

 

56

 

Impairment and restructuring charges, and acquisition-related costs

 

 

226

 

 

 

85

 

Litigation and investigation costs

 

 

70

 

 

 

116

 

Net gains on sales, consolidation and deconsolidation of facilities

 

 

(1

)

 

 

(445

)

Loss from early extinguishment of debt

 

 

109

 

 

 

74

 

Equity in earnings of unconsolidated affiliates, net of distributions received

 

 

2

 

 

 

(10

)

Amortization of debt discount and debt issuance costs

 

 

33

 

 

 

33

 

Pre-tax (income) loss from discontinued operations

 

 

(1

)

 

 

1

 

Net gains from the sale of investments and long-lived assets

 

 

(117

)

 

 

(23

)

Other items, net

 

 

13

 

 

 

(10

)

Changes in cash from operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(140

)

 

 

(197

)

Inventories and other current assets

 

 

(64

)

 

 

(52

)

Income taxes

 

 

(26

)

 

 

68

 

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

 

 

(898

)

 

 

(584

)

Other long-term liabilities

 

 

(15

)

 

 

28

 

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

 

 

(214

)

 

 

(153

)

Net cash used in operating activities from discontinued operations, excluding income taxes

 

 

(1

)

 

 

 

Net cash provided by operating activities

 

 

1,083

 

 

 

1,568

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(762

)

 

 

(658

)

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

 

 

(234

)

 

 

(1,220

)

Proceeds from sales of facilities and other assets

 

 

210

 

 

 

1,248

 

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

 

 

76

 

 

 

31

 

Purchases of marketable securities and equity investments

 

 

(92

)

 

 

(108

)

Other items, net

 

 

(6

)

 

 

(7

)

Net cash used in investing activities

 

 

(808

)

 

 

(714

)

Cash flows from financing activities:

 

 

 

 

Repayments of borrowings

 

 

(2,851

)

 

 

(3,221

)

Proceeds from borrowings

 

 

2,023

 

 

 

2,872

 

Repurchases of common stock

 

 

(250

)

 

 

 

Debt issuance costs

 

 

(24

)

 

 

(31

)

Distributions paid to noncontrolling interests

 

 

(560

)

 

 

(423

)

Proceeds from the sale of noncontrolling interests

 

 

27

 

 

 

25

 

Purchases of noncontrolling interests

 

 

(100

)

 

 

(27

)

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

 

 

 

 

 

(67

)

Other items, net

 

 

(46

)

 

 

(64

)

Net cash used in financing activities

 

 

(1,781

)

 

 

(936

)

Net decrease in cash and cash equivalents

 

 

(1,506

)

 

 

(82

)

Cash and cash equivalents at beginning of period

 

 

2,364

 

 

 

2,446

 

Cash and cash equivalents at end of period

 

$

858

 

 

$

2,364

 

Supplemental disclosures:

 

 

 

 

Interest paid, net of capitalized interest

 

$

(848

)

 

$

(937

)

Income tax payments, net

 

$

(161

)

 

$

(92

)

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

(Dollars in millions)

 

December 31,

 

December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net operating revenues (1) :

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

933

 

 

$

742

 

 

$

3,248

 

 

$

2,718

 

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

 

 

3,840

 

 

 

3,910

 

 

 

15,061

 

 

 

15,982

 

Conifer

 

 

 

 

 

 

 

 

Tenet

 

 

109

 

 

 

120

 

 

 

451

 

 

 

482

 

Other clients

 

 

217

 

 

 

204

 

 

 

865

 

 

 

785

 

Total Conifer revenues

 

 

326

 

 

 

324

 

 

 

1,316

 

 

 

1,267

 

Inter-segment eliminations

 

 

(109

)

 

 

(120

)

 

 

(451

)

 

 

(482

)

Total

 

$

4,990

 

 

$

4,856

 

 

$

19,174

 

 

$

19,485

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates:

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

63

 

 

$

63

 

 

$

206

 

 

$

193

 

Hospital Operations and other

 

 

2

 

 

 

14

 

 

 

10

 

 

 

25

 

Total

 

$

65

 

 

$

77

 

 

$

216

 

 

$

218

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (including grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

407

 

 

$

371

 

 

$

1,327

 

 

$

1,197

 

Hospital Operations and other

 

 

400

 

 

 

552

 

 

 

1,777

 

 

 

1,931

 

Conifer

 

 

90

 

 

 

94

 

 

 

365

 

 

 

355

 

Total

 

$

897

 

 

$

1,017

 

 

$

3,469

 

 

$

3,483

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margins (including grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

 

43.6

%

 

 

50.0

%

 

 

40.9

%

 

 

44.0

%

Hospital Operations and other

 

 

10.4

%

 

 

14.1

%

 

 

11.8

%

 

 

12.1

%

Conifer

 

 

27.6

%

 

 

29.0

%

 

 

27.7

%

 

 

28.0

%

Total

 

 

18.0

%

 

 

20.9

%

 

 

18.1

%

 

 

17.9

%

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margins (excluding grant income):

 

 

 

 

 

 

 

 

Ambulatory Care

 

 

43.6

%

 

 

46.2

%

 

 

40.7

%

 

 

41.7

%

Hospital Operations and other

 

 

9.4

%

 

 

11.3

%

 

 

10.5

%

 

 

11.2

%

Conifer

 

 

27.6

%

 

 

29.0

%

 

 

27.7

%

 

 

28.0

%

Total

 

 

17.2

%

 

 

18.1

%

 

 

17.1

%

 

 

16.8

%

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

Ambulatory Care

 

$

17

 

 

$

17

 

 

$

75

 

 

$

66

 

Hospital Operations and other

 

 

263

 

 

 

283

 

 

 

668

 

 

 

578

 

Conifer

 

 

10

 

 

 

4

 

 

 

19

 

 

 

14

 

Total

 

$

290

 

 

$

304

 

 

$

762

 

 

$

658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

(Unaudited)

 

(Dollars in millions, except per share amounts)

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

102

 

 

$

249

 

 

$

411

 

 

$

914

 

Net (loss) income from discontinued operations

 

 

 

 

 

(1

)

 

 

1

 

 

 

(1

)

Net income from continuing operations

 

 

102

 

 

 

250

 

 

 

410

 

 

 

915

 

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

 

 

(129

)

 

 

(30

)

 

 

(226

)

 

 

(85

)

Litigation and investigation costs

 

 

(20

)

 

 

(52

)

 

 

(70

)

 

 

(116

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

1

 

 

 

18

 

 

 

1

 

 

 

445

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(109

)

 

 

(74

)

Loss from divested and closed businesses

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Tax and noncontrolling interests impact of above items

 

 

37

 

 

 

21

 

 

 

70

 

 

 

(77

)

Adjusted net income available from continuing operations to common shareholders

 

$

213

 

 

$

294

 

 

$

744

 

 

$

823

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

0.92

 

 

$

2.30

 

 

$

3.78

 

 

$

8.43

 

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

 

 

(1.21

)

 

 

(0.27

)

 

 

(2.04

)

 

 

(0.78

)

Litigation and investigation costs

 

 

(0.19

)

 

 

(0.48

)

 

 

(0.63

)

 

 

(1.07

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

0.01

 

 

 

0.17

 

 

 

0.01

 

 

 

4.10

 

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(0.99

)

 

 

(0.68

)

Loss from divested and closed businesses

 

 

 

 

 

(0.01

)

 

 

 

 

 

(0.01

)

Tax and noncontrolling interests impact of above items

 

 

0.35

 

 

 

0.19

 

 

 

0.63

 

 

 

(0.71

)

Adjusted diluted earnings per share from continuing operations

 

$

1.96

 

 

$

2.70

 

 

$

6.80

 

 

$

7.58

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

104,519

 

 

 

107,150

 

 

 

106,929

 

 

 

106,833

 

Weighted average dilutive shares outstanding (in thousands)

 

 

106,368

 

 

 

108,890

 

 

 

110,516

 

 

 

108,571

 

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

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

Common Shareholders to Adjusted EBITDA

(Unaudited)

 

(Dollars in millions)

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income available to Tenet Healthcare Corporation common shareholders

 

$

102

 

 

$

249

 

 

$

411

 

 

$

914

 

Less: Net income available to noncontrolling interests

 

 

(172

)

 

 

(170

)

 

 

(590

)

 

 

(562

)

(Loss) income from discontinued operations, net of tax

 

 

 

 

 

(1

)

 

 

1

 

 

 

(1

)

Income from continuing operations

 

 

274

 

 

 

420

 

 

 

1,000

 

 

 

1,477

 

Income tax expense

 

 

(47

)

 

 

(108

)

 

 

(344

)

 

 

(411

)

Loss from early extinguishment of debt

 

 

 

 

 

 

 

 

(109

)

 

 

(74

)

Other non-operating income (loss), net

 

 

4

 

 

 

(2

)

 

 

10

 

 

 

14

 

Interest expense

 

 

(219

)

 

 

(221

)

 

 

(890

)

 

 

(923

)

Operating income

 

 

536

 

 

 

751

 

 

 

2,333

 

 

 

2,871

 

Litigation and investigation costs

 

 

(20

)

 

 

(52

)

 

 

(70

)

 

 

(116

)

Net gains on sales, consolidation and deconsolidation of facilities

 

 

1

 

 

 

18

 

 

 

1

 

 

 

445

 

Impairment and restructuring charges, and acquisition-related costs

 

 

(129

)

 

 

(30

)

 

 

(226

)

 

 

(85

)

Depreciation and amortization

 

 

(213

)

 

 

(201

)

 

 

(841

)

 

 

(855

)

Loss from divested and closed businesses

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Adjusted EBITDA

 

$

897

 

 

$

1,017

 

 

$

3,469

 

 

$

3,483

 

 

 

 

 

 

 

 

 

 

Net operating revenues

 

$

4,990

 

 

$

4,856

 

 

$

19,174

 

 

$

19,485

 

 

 

 

 

 

 

 

 

 

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

 

 

2.0

%

 

 

5.1

%

 

 

2.1

%

 

 

4.7

%

 

 

 

 

 

 

 

 

 

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

 

 

18.0

%

 

 

20.9

%

 

 

18.1

%

 

 

17.9

%

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)

 

2022

 

 

Q4

 

Full Year

Net cash provided by operating activities

 

$

421

 

 

$

1,083

 

Purchases of property and equipment

 

 

(290

)

 

 

(762

)

Free cash flow

 

 

131

 

 

 

321

 

Add back: Medicare Advance Repayments

 

 

 

 

 

880

 

Payroll Tax Deferral Payments

 

 

128

 

 

 

128

 

Free cash flow, excluding repayment of Medicare Advances and Deferred Payroll Tax Payments

 

$

259

 

 

$

1,329

 

 

 

 

 

 

Net cash used in investing activities

 

$

(306

)

 

$

(808

)

Net cash used in financing activities

 

$

(465

)

 

$

(1,781

)

 

 

 

 

 

Net cash provided by operating activities

 

$

421

 

 

$

1,083

 

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

 

 

(57

)

 

 

(214

)

Net cash used in operating activities from discontinued operations

 

 

 

 

 

(1

)

Adjusted net cash provided by operating activities from continuing operations

 

 

478

 

 

 

1,298

 

Purchases of property and equipment

 

 

(290

)

 

 

(762

)

Adjusted free cash flow – continuing operations

 

 

188

 

 

 

536

 

Add back: Medicare Advance Repayments

 

 

 

 

 

880

 

Payroll Tax Deferral Payments

 

 

128

 

 

 

128

 

Adjusted free cash flow – continuing operations, excluding repayments of Medicare Advances and Deferred Payroll Tax Payments

 

$

316

 

 

$

1,544

 

(Dollars in millions)

 

2021

 

 

Q4

 

Full Year

Net cash provided by operating activities

 

$

357

 

 

$

1,568

 

Purchases of property and equipment

 

 

(304

)

 

 

(658

)

Free cash flow

 

 

53

 

 

 

910

 

Add back: Medicare Advance Repayments

 

 

186

 

 

 

512

 

Payroll Tax Deferral Payments

 

 

128

 

 

 

128

 

Free cash flow, excluding repayment of Medicare Advances and Deferred Payroll Tax Payments

 

$

367

 

 

$

1,550

 

 

 

 

 

 

Net cash used in investing activities

 

$

(1,516

)

 

$

(714

)

Net cash provided by (used in) financing activities

 

$

1,231

 

 

$

(936

)

 

 

 

 

 

Net cash provided by operating activities

 

$

357

 

 

$

1,568

 

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

 

 

(37

)

 

 

(153

)

Net cash provided by operating activities from discontinued operations

 

 

1

 

 

 

 

Adjusted net cash provided by operating activities from continuing operations

 

 

393

 

 

 

1,721

 

Purchases of property and equipment

 

 

(304

)

 

 

(658

)

Adjusted free cash flow – continuing operations

 

 

89

 

 

 

1,063

 

Add back: Medicare Advance Repayments

 

 

186

 

 

 

512

 

Payroll Tax Deferral Payments

 

 

128

 

 

 

128

 

Adjusted free cash flow – continuing operations, excluding repayments of Medicare Advances and Deferred Payroll Tax Payments

 

$

403

 

 

$

1,703

 

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 Net Income Available from Continuing Operations to Common Shareholders

(Unaudited)

 

(Dollars in millions, except per share amounts)

 

First Quarter 2023

 

FY 2023

 

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

90

 

 

$

125

 

 

$

420

 

 

$

585

 

Net income from continuing operations

 

 

90

 

 

 

125

 

 

 

420

 

 

 

585

 

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

 

 

(25

)

 

 

(15

)

 

 

(100

)

 

 

(50

)

Tax impact of above items

 

 

5

 

 

 

5

 

 

 

15

 

 

 

5

 

Adjusted net income available from continuing operations to common shareholders

 

$

110

 

 

$

135

 

 

$

505

 

 

$

630

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

0.82

 

 

$

1.14

 

 

$

3.89

 

 

$

5.43

 

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

 

 

(0.23

)

 

 

(0.14

)

 

 

(0.93

)

 

 

(0.47

)

Tax impact of above items

 

 

0.05

 

 

 

0.05

 

 

 

0.14

 

 

 

0.05

 

Adjusted diluted earnings per share from continuing operations

 

$

1.00

 

 

$

1.23

 

 

$

4.68

 

 

$

5.85

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding (in thousands)

 

 

103,000

 

 

 

103,000

 

 

 

103,000

 

 

 

103,000

 

Weighted average dilutive shares outstanding (in thousands)

 

 

107,000

 

 

 

107,000

 

 

 

107,000

 

 

 

107,000

 

(1)

 

The figures shown represent the Company's estimate for restructuring charges. 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 EBITDA

(Unaudited)

 

(Dollars in millions)

 

First Quarter 2023

 

FY 2023

 

 

Low

 

High

 

Low

 

High

Net income available to Tenet Healthcare Corporation common shareholders

 

$

90

 

 

$

125

 

 

$

420

 

 

$

585

 

Less: Net income available to noncontrolling interests

 

 

(135

)

 

 

(155

)

 

 

(620

)

 

 

(670

)

Income tax expense

 

 

(60

)

 

 

(70

)

 

 

(270

)

 

 

(300

)

Interest expense

 

 

(225

)

 

 

(215

)

 

 

(880

)

 

 

(870

)

Other non-operating expense, net

 

 

(5

)

 

 

 

 

 

(20

)

 

 

(10

)

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

 

 

(25

)

 

 

(15

)

 

 

(100

)

 

 

(50

)

Depreciation and amortization

 

 

(210

)

 

 

(220

)

 

 

(850

)

 

 

(875

)

Adjusted EBITDA

 

$

750

 

 

$

800

 

 

$

3,160

 

 

$

3,360

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

90

 

 

$

125

 

 

$

420

 

 

$

585

 

Net operating revenues

 

$

4,700

 

 

$

4,900

 

 

$

19,700

 

 

$

20,100

 

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

 

 

1.9

%

 

 

2.6

%

 

 

2.1

%

 

 

2.9

%

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

 

 

16.0

%

 

 

16.3

%

 

 

16.0

%

 

 

16.7

%

(1)

 

The figures shown represent the Company's estimate for restructuring charges. 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 #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 2023

 

 

 

 

 

 

 

 

Low

 

High

Net cash provided by operating activities

 

 

 

 

 

 

 

$

1,700

 

 

$

2,000

 

Purchases of property and equipment – continuing operations

 

 

 

 

 

 

 

 

(625

)

 

 

(675

)

Free cash flow – continuing operations

 

 

 

 

 

 

 

$

1,075

 

 

$

1,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

 

 

 

 

 

$

1,700

 

 

$

2,000

 

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

 

 

 

 

 

 

 

 

(125

)

 

 

(75

)

Adjusted net cash provided by operating activities – continuing operations

 

 

 

 

 

 

 

 

1,825

 

 

 

2,075

 

Purchases of property and equipment – continuing operations

 

 

 

 

 

 

 

 

(625

)

 

 

(675

)

Adjusted free cash flow – continuing operations(2)

 

 

 

 

 

 

 

$

1,200

 

 

$

1,400

 

(1)

 

The figures shown represent the Company's estimate for restructuring payments. 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.

 

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