- Net income from continuing operations available to common
shareholders in third quarter 2023 was $101 million, or $0.94 per
diluted share
- Adjusted diluted earnings per share from continuing
operations1 was $1.44 in third quarter 2023
- Consolidated Adjusted EBITDA1 in third quarter 2023 was $854
million, including $3 million of grant income
- Third quarter 2023 Ambulatory Care Adjusted EBITDA of $370
million increased 16.0% over third quarter 2022
- Same-facility system-wide ambulatory surgical cases
increased 4.1% versus third quarter 2022; Same-hospital admissions
increased 0.6% versus third quarter 2022, with non-Covid admissions
up 4.5%
- Net cash provided by operating activities was $503 million
in third quarter 2023 and free cash flow was $327 million
- FY 2023 Adjusted EBITDA Outlook increased, now expected to
be in the range of $3.365 billion to $3.465 billion
Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced
its results for the quarter ended September 30, 2023.
"Sustained same facility revenue growth and effective cost
controls drove strong performance in both our ambulatory care and
hospital segments in the third quarter," said Saum Sutaria, M.D.,
Chairman and Chief Executive Officer of Tenet. "Our steadfast
commitment to operating discipline and strategic focus fortify our
care capabilities and position us for future growth."
Tenet’s results for third quarter 2023 versus third quarter 2022
are as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in millions, except per share
results)
2023
2022
2023
2022
Net operating revenues
$5,066
$4,801
$15,169
$14,184
Net income available to Tenet common
shareholders from continuing operations
$101
$131
$367
$308
Net income available to Tenet common
shareholders from continuing operations per diluted share
$0.94
$1.16
$3.41
$2.81
Adjusted EBITDA1 excluding grant
income
$851
$787
$2,515
$2,418
Adjusted EBITDA1
$854
$841
$2,529
$2,572
Adjusted diluted earnings per share from
continuing operations1
$1.44
$1.42
$4.30
$4.80
- Net income from continuing operations available to the
Company’s common shareholders in the third quarter 2023 was $101
million, or $0.94 per diluted share, versus $131 million, or $1.16
per diluted share, in third quarter 2022.
- Third quarter 2023 included COVID-related stimulus grant income
of $3 million pre-tax ($2 million after-tax, or $0.02 per diluted
share) versus $54 million pre-tax ($41 million after-tax, or $0.37
per diluted share) in third quarter 2022.
- The Company recognized additional income tax expense for the
three months ended September 30, 2023 of approximately $16 million,
or $0.15 per diluted share, and $40 million, or $0.36 per diluted
share for the three months ended September 30, 2022, as a result of
interest expense limitation tax regulations.
- Adjusted EBITDA1 excluding grant income in third quarter 2023
was $851 million compared to $787 million in third quarter 2022,
reflecting strong volume growth in our Ambulatory Care and Hospital
Operations segments, improved contract labor costs, and the
recognition of $7 million of income from cybersecurity insurance
proceeds. The Company believes this strong volume growth is due in
part to patient care deferred as a result of the pandemic. Third
quarter 2022 results included a $45 million gain on the sale of a
substantial portion of the Company's interest in assets of a group
purchasing organization.
Balance Sheet and Cash Flows
- Cash flows provided by operating activities for the nine months
ended September 30, 2023 were $1.550 billion versus $662 million
for the nine months ended September 30, 2022 (or $1.542 billion
excluding $880 million of repayments associated with Medicare
advances).
- The Company produced free cash flow1 of $1.007 billion for the
nine months ended September 30, 2023 versus $190 million for the
nine months ended September 30, 2022 (or $1.070 billion excluding
the repayment of Medicare advances).
- In the nine months ended September 30, 2023, the Company
repurchased 1,485,983 shares of common stock for $90 million.
- The Company’s ratio of net debt to Adjusted EBITDA1 was 4.08x
at September 30, 2023 compared to 4.14x at June 30, 2023 and 4.10x
at December 31, 2022.
- The Company had no outstanding borrowings on its $1.5 billion
line of credit as of September 30, 2023.
Ambulatory Care (Ambulatory)
Segment
Tenet’s Ambulatory business segment is comprised of the
operations of United Surgical Partners International (USPI). As of
September 30, 2023, USPI had interests in 457 ambulatory surgery
centers (316 consolidated) and 24 surgical hospitals (eight
consolidated) in 35 states. For all periods prior to June 30, 2022,
the Company owned 95% of the voting stock of USPI and now owns
100%.
Three Months Ended September
30,
Nine Months Ended September
30,
Ambulatory segment results ($ in
millions)
2023
2022
2023
2022
Revenues
Net operating revenues
$941
$806
$2,788
$2,315
Same-facility system-wide net patient
service revenues2
$1,703
$1,578
$5,055
$4,637
Volume Changes versus the Prior-Year
Period
Same-facility system-wide surgical
cases2
4.1%
—%
6.2%
2.4%
Same-facility system-wide surgical cases
on same-business day basis2
5.8%
—%
6.8%
1.9%
Adjusted EBITDA, Margins and
Noncontrolling Interest (NCI)
Adjusted EBITDA excluding grant income
$370
$319
$1,079
$916
Adjusted EBITDA
$370
$319
$1,080
$920
Adjusted EBITDA margin excluding grant
income
39.3%
39.6%
38.7%
39.6%
Adjusted EBITDA margin
39.3%
39.6%
38.7%
39.7%
Adjusted EBITDA less facility-level NCI
excluding grant income
$233
$208
$678
$603
Adjusted EBITDA less facility-level
NCI
$233
$208
$678
$605
Adjusted EBITDA less total NCI excluding
grant income
$233
$208
$678
$594
Adjusted EBITDA less total NCI
$233
$208
$678
$596
- Third quarter 2023 net operating revenues increased 16.7%
compared to third quarter 2022 driven by strong same-facility net
surgical case growth, acquisitions and opening of de novo
facilities, service line growth and improved pricing yield.
- Surgical business same-facility system-wide net patient service
revenues increased 7.9% in third quarter 2023 compared to third
quarter 2022, with cases up 4.1% and net revenue per case up
3.7%.
- Third quarter 2023 Adjusted EBITDA increased 16.0% relative to
third quarter 2022, due to strong same-facility system-wide
surgical case growth, contributions from acquisitions and de novo
facilities, and improved pricing yield.
Hospital Operations and Other
(Hospital) Segment
Tenet’s Hospital business segment is primarily comprised of
acute care and specialty hospitals, imaging centers, ancillary
outpatient facilities, micro-hospitals and physician practices.
Three Months Ended September
30,
Nine Months Ended September
30,
Hospital segment results ($ in
millions)
2023
2022
2023
2022
Revenues
Net operating revenues (prior to
inter-segment eliminations)
$3,919
$3,778
$11,740
$11,221
Grant income
$3
$54
$13
$150
Same-hospital net patient service
revenues3
$3,575
$3,453
$10,711
$10,302
Same-Hospital Volume Changes versus the
Prior-Year Period
Admissions
0.6%
(5.3)%
2.6%
(6.1)%
Adjusted admissions4
0.4%
(0.7)%
3.3%
(2.5)%
Outpatient visits (including outpatient ER
visits)
(2.0)%
(6.9)%
(1.0)%
(5.5)%
Emergency Room visits (inpatient and
outpatient)
(0.9)%
(4.1)%
1.3%
3.8%
Hospital surgeries
(0.7)%
(3.6)%
0.5%
(4.1)%
Adjusted EBITDA
Adjusted EBITDA excluding grant income
$398
$378
$1,181
$1,227
Adjusted EBITDA
$401
$432
$1,194
$1,377
Adjusted EBITDA margin excluding grant
income
10.2%
10.0%
10.1%
10.9%
Adjusted EBITDA margin
10.2%
11.4%
10.2%
12.3%
- Third quarter 2023 net operating revenues increased 3.7% from
third quarter 2022 primarily due to increased adjusted admissions
and improved pricing yield.
- Same-hospital net patient service revenue per adjusted
admission increased 3.2% year-over-year for third quarter 2023
primarily due to improved pricing yield and our focus on growing
higher acuity services. COVID admissions were 2% of total
admissions in the third quarter 2023 versus 6% in the third quarter
2022. Third quarter non-COVID inpatient admissions increased 4.5%
over third quarter 2022.
- Adjusted EBITDA excluding grant income in third quarter 2023
was $398 million compared to $378 million in third quarter 2022,
reflecting strong non-COVID adjusted admissions growth and improved
contract labor costs, and the recognition of $7 million of income
from cybersecurity insurance proceeds, partially offset by higher
other operating expenses. Third quarter 2022 results included a $45
million gain on the sale of a substantial portion of the Company's
interest in assets of a group purchasing organization and $6
million of income from cybersecurity insurance proceeds.
Conifer Segment
Tenet’s Conifer business segment provides comprehensive
end-to-end and focused-point business process services, including
hospital and physician revenue cycle management, patient
communications and engagement support and value-based care
solutions to hospitals, health systems, physician practices,
employers, and other clients.
Three Months Ended September
30,
Nine Months Ended September
30,
Conifer segment results ($ in
millions)
2023
2022
2023
2022
Net operating revenues
$315
$333
$962
$990
Adjusted EBITDA
$83
$90
$255
$275
Adjusted EBITDA margin
26.3%
27.0%
26.5%
27.8%
- Third quarter 2023 net operating revenues and Adjusted EBITDA
declined compared to third quarter 2022 primarily reflecting
previously announced contract changes with Tenet hospitals and
client divestitures.
2023 Outlook1
Tenet’s Outlook for full year 2023 (consolidated and by segment)
and fourth quarter 2023 follows:
CONSOLIDATED ($ in millions, except
per share amounts)
FY 2023 Outlook
Fourth Quarter
2023 Outlook
Net operating revenues
$20,300 to $20,500
$5,131 to $5,331
Net income from continuing operations
available to Tenet common stockholders
$456 to $541
$89 to $174
Adjusted EBITDA
$3,365 to $3,465
$836 to $936
Adjusted EBITDA margin
16.6% to 16.9%
16.3% to 17.6%
Diluted income per common share from
continuing operations
$4.25 to $5.06
$0.83 to $1.64
Adjusted net income from continuing
operations
$580 to $645
$119 to $184
Adjusted diluted earnings per share from
continuing operations
$5.43 to $6.05
$1.12 to $1.74
Equity in earnings of unconsolidated
affiliates
$205 to $225
$50 to $70
Depreciation and amortization
$870 to $890
$216 to $236
Interest expense
$895 to $905
$221 to $231
Income tax expense5
$320 to $335
$77 to $92
Net income available to NCI
$675 to $695
$187 to $207
Weighted average diluted common shares
~105 million
~105 million
NCI cash distributions
$565 to $605
Net cash provided by operating
activities
$1,800 to $2,075
Adjusted net cash provided by operating
activities
$1,950 to $2,200
Capital expenditures
$675 to $725
Free cash flow
$1,125 to $1,350
Adjusted free cash flow – continuing
operations
$1,275 to $1,475
Ambulatory Segment ($ in
millions)
FY 2023 Outlook
Net operating revenues
$3,790 to $3,840
Adjusted EBITDA
$1,505 to $1,535
Total NCI (Facility level)
$560 to $570
Adjusted EBITDA less total NCI
$945 to $965
Changes versus prior year6:
Surgical cases volumes
Up 5.0% to 6.0%
Net revenues per surgical case
Up 2.0% to 3.0%
Hospital Segment ($ in
millions)
FY 2023 Outlook
Net operating revenues (prior to
inter-segment eliminations)
$15,675 to $15,795
Adjusted EBITDA
$1,530 to $1,590
NCI
$25 to $30
Changes versus prior year6:
Inpatient admissions
Up 2.0% to 3.0%
Adjusted admissions
Up 2.5% to 3.5%
Conifer Segment ($ in millions)
FY 2023 Outlook
Net operating revenues
$1,270 to $1,300
Adjusted EBITDA
$330 to $340
NCI
$90 to $95
Management’s Webcast Discussion of
Results
Tenet management will discuss the Company’s third quarter 2023
results in a webcast scheduled for 5:00 p.m. Eastern Time (4:00
p.m. Central Time) on October 30, 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 October 30, 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, 2022 and other filings with the Securities and
Exchange Commission.
Footnotes
- Tables and discussions throughout this earnings release include
certain financial measures, including those related to our fourth
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.
- 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.
- For 2023, 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, 2022 through September 30, 2023. Amounts associated with
physician practices are excluded.
- 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.
- 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.
- 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 480 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 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 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 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 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 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 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 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
Third Quarter Earnings
Release
Table of Contents
Description
Page
Consolidated Statements of Operations
13
Consolidated Balance Sheets
15
Consolidated Statements of Cash Flows
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
21
Table #5 – Reconciliations of Outlook Net
Income to Outlook Adjusted EBITDA
22
Table #6 – Reconciliations of Outlook Net
Cash Provided by Operating Activities to Outlook Free Cash Flow and
Outlook Adjusted Free Cash Flow
23
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in millions, except per share
amounts)
Three Months Ended September
30,
2023
%
2022
%
Change
Net operating revenues
$
5,066
100.0
%
$
4,801
100.0
%
5.5
%
Grant income
3
0.1
%
54
1.1
%
(94.4
)%
Equity in earnings of unconsolidated
affiliates
51
1.0
%
51
1.1
%
—
%
Operating expenses:
Salaries, wages and benefits
2,288
45.2
%
2,230
46.4
%
2.6
%
Supplies
877
17.3
%
817
17.0
%
7.3
%
Other operating expenses, net
1,101
21.7
%
1,018
21.3
%
8.2
%
Depreciation and amortization
224
4.5
%
209
4.4
%
Impairment and restructuring charges, and
acquisition-related costs
47
0.9
%
24
0.5
%
Litigation and investigation costs
14
0.3
%
12
0.2
%
Net losses on sales, consolidation and
deconsolidation of facilities
1
—
%
—
—
%
Operating income
568
11.2
%
596
12.4
%
Interest expense
(227
)
(222
)
Other non-operating income, net
4
6
Income from continuing operations,
before income taxes
345
380
Income tax expense
(79
)
(112
)
Net income
266
268
Less: Net income available to
noncontrolling interests
165
137
Net income available to Tenet
Healthcare Corporation common shareholders
$
101
$
131
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
Continuing operations
$
0.99
$
1.21
Diluted
Continuing operations
$
0.94
$
1.16
Weighted average shares and dilutive
securities outstanding
(in thousands):
Basic
101,544
107,923
Diluted
104,425
109,888
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in millions, except per share
amounts)
Nine Months Ended September
30,
2023
%
2022
%
Change
Net operating revenues
$
15,169
100.0
%
$
14,184
100.0
%
6.9
%
Grant income
14
0.1
%
154
1.1
%
(90.9
)%
Equity in earnings of unconsolidated
affiliates
155
1.0
%
151
1.1
%
2.6
%
Operating expenses:
Salaries, wages and benefits
6,831
45.0
%
6,538
46.1
%
4.5
%
Supplies
2,659
17.5
%
2,413
17.0
%
10.2
%
Other operating expenses, net
3,319
21.9
%
2,966
20.9
%
11.9
%
Depreciation and amortization
654
4.3
%
628
4.4
%
Impairment and restructuring charges, and
acquisition-related costs
84
0.6
%
97
0.7
%
Litigation and investigation costs
28
0.2
%
50
0.4
%
Net gains on sales, consolidation and
deconsolidation of facilities
(12
)
(0.1
)%
—
—
%
Operating income
1,775
11.7
%
1,797
12.7
%
Interest expense
(674
)
(671
)
Other non-operating income, net
8
6
Loss from early extinguishment of debt
(11
)
(109
)
Income from continuing operations,
before income taxes
1,098
1,023
Income tax expense
(243
)
(297
)
Income from continuing operations,
before discontinued operations
855
726
Income from discontinued
operations
—
1
Net income
855
727
Less: Net income available to
noncontrolling interests
488
418
Net income available to Tenet
Healthcare Corporation common shareholders
$
367
$
309
Amounts available to Tenet Healthcare
Corporation common shareholders
Income from continuing operations, net of
tax
$
367
$
308
Income from discontinued operations, net
of tax
—
1
Net income available to Tenet
Healthcare Corporation common shareholders
$
367
$
309
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
Continuing operations
$
3.60
$
2.86
Discontinued operations
—
0.01
$
3.60
$
2.87
Diluted
Continuing operations
$
3.41
$
2.81
Discontinued operations
—
0.01
$
3.41
$
2.82
Weighted average shares and dilutive
securities outstanding
(in thousands):
Basic
101,869
107,732
Diluted
105,021
112,288
TENET HEALTHCARE
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in millions)
September 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,054
$
858
Accounts receivable
2,897
2,943
Inventories of supplies, at cost
413
405
Assets held for sale
140
—
Other current assets
1,855
1,775
Total current assets
6,359
5,981
Investments and other assets
3,152
3,147
Deferred income taxes
4
19
Property and equipment, at cost, less
accumulated depreciation and amortization
6,260
6,462
Goodwill
10,415
10,123
Other intangible assets, at cost, less
accumulated amortization
1,400
1,424
Total assets
$
27,590
$
27,156
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
141
$
145
Accounts payable
1,202
1,504
Accrued compensation and benefits
787
778
Professional and general liability
reserves
264
255
Accrued interest payable
273
213
Liabilities held for sale
17
—
Contract liabilities
86
110
Other current liabilities
1,662
1,471
Total current liabilities
4,432
4,476
Long-term debt, net of current portion
14,901
14,934
Professional and general liability
reserves
787
790
Defined benefit plan obligations
327
331
Deferred income taxes
278
217
Other long-term liabilities
1,684
1,800
Total liabilities
22,409
22,548
Commitments and contingencies
Redeemable noncontrolling interests in
equity of consolidated subsidiaries
2,303
2,149
Equity:
Shareholders’ equity:
Common stock
8
8
Additional paid-in capital
4,818
4,778
Accumulated other comprehensive loss
(176
)
(181
)
Accumulated deficit
(436
)
(803
)
Common stock in treasury, at cost
(2,750
)
(2,660
)
Total shareholders’ equity
1,464
1,142
Noncontrolling interests
1,414
1,317
Total equity
2,878
2,459
Total liabilities and equity
$
27,590
$
27,156
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Dollars in millions)
Nine Months Ended
September 30,
2023
2022
Net income
$
855
$
727
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
654
628
Deferred income tax expense
75
208
Stock-based compensation expense
48
47
Impairment and restructuring charges, and
acquisition-related costs
84
97
Litigation and investigation costs
28
50
Net gains on sales, consolidation and
deconsolidation of facilities
(12
)
—
Loss from early extinguishment of debt
11
109
Equity in earnings of unconsolidated
affiliates, net of distributions received
5
14
Amortization of debt discount and debt
issuance costs
25
23
Pre-tax income from discontinued
operations
—
(1
)
Net gains from the sale of investments and
long-lived assets
(25
)
(115
)
Other items, net
(1
)
12
Changes in cash from operating assets
and liabilities:
Accounts receivable
31
(39
)
Inventories and other current assets
(49
)
89
Income taxes
(46
)
(59
)
Accounts payable, accrued expenses,
contract liabilities and other current liabilities
(38
)
(942
)
Other long-term liabilities
10
(28
)
Payments for restructuring charges,
acquisition-related costs, and litigation costs and
settlements
(105
)
(157
)
Net cash used in operating activities
from discontinued operations, excluding income taxes
—
(1
)
Net cash provided by operating
activities
1,550
662
Cash flows from investing
activities:
Purchases of property and equipment
(543
)
(472
)
Purchases of businesses or joint venture
interests, net of cash acquired
(110
)
(224
)
Proceeds from sales of facilities and
other assets
38
209
Proceeds from sales of marketable
securities, long-term investments and other assets
40
61
Purchases of marketable securities and
equity investments
(54
)
(68
)
Other items, net
(7
)
(8
)
Net cash used in investing
activities
(636
)
(502
)
Cash flows from financing
activities:
Repayments of borrowings
(1,478
)
(2,786
)
Proceeds from borrowings
1,368
2,020
Repurchases of common stock
(90
)
—
Debt issuance costs
(16
)
(24
)
Distributions paid to noncontrolling
interests
(425
)
(432
)
Proceeds from the sale of noncontrolling
interests
37
16
Purchases of noncontrolling interests
(127
)
(61
)
Other items, net
13
(49
)
Net cash used in financing
activities
(718
)
(1,316
)
Net increase (decrease) in cash and cash
equivalents
196
(1,156
)
Cash and cash equivalents at beginning of
period
858
2,364
Cash and cash equivalents at end of
period
$
1,054
$
1,208
Supplemental disclosures:
Interest paid, net of capitalized
interest
$
(589
)
$
(601
)
Income tax payments, net
$
(212
)
$
(148
)
TENET HEALTHCARE
CORPORATION
SEGMENT REPORTING
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2023
2022
2023
2022
Net operating revenues:
Ambulatory Care
$
941
$
806
$
2,788
$
2,315
Hospital Operations and other (prior to
inter-segment eliminations)
3,919
3,778
11,740
11,221
Conifer
Tenet
109
116
321
342
Other clients
206
217
641
648
Total Conifer revenues
315
333
962
990
Inter-segment eliminations
(109
)
(116
)
(321
)
(342
)
Total
$
5,066
$
4,801
$
15,169
$
14,184
Equity in earnings of unconsolidated
affiliates:
Ambulatory Care
$
50
$
49
$
149
$
143
Hospital Operations and other
1
2
6
8
Total
$
51
$
51
$
155
$
151
Adjusted EBITDA (including grant
income):
Ambulatory Care
$
370
$
319
$
1,080
$
920
Hospital Operations and other
401
432
1,194
1,377
Conifer
83
90
255
275
Total
$
854
$
841
$
2,529
$
2,572
Adjusted EBITDA margins (including
grant income):
Ambulatory Care
39.3
%
39.6
%
38.7
%
39.7
%
Hospital Operations and other
10.2
%
11.4
%
10.2
%
12.3
%
Conifer
26.3
%
27.0
%
26.5
%
27.8
%
Total
16.9
%
17.5
%
16.7
%
18.1
%
Adjusted EBITDA margins (excluding
grant income):
Ambulatory Care
39.3
%
39.6
%
38.7
%
39.6
%
Hospital Operations and other
10.2
%
10.0
%
10.1
%
10.9
%
Conifer
26.3
%
27.0
%
26.5
%
27.8
%
Total
16.8
%
16.4
%
16.6
%
17.0
%
Capital expenditures:
Ambulatory Care
$
20
$
18
$
58
$
58
Hospital Operations and other
153
143
477
405
Conifer
3
4
8
9
Total
$
176
$
165
$
543
$
472
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)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions, except per share
amounts)
2023
2022
2023
2022
Net income available to Tenet
Healthcare Corporation common shareholders
$
101
$
131
$
367
$
309
Less:
Net income from discontinued
operations
—
—
—
1
Net income from continuing
operations
101
131
367
308
Impairment and restructuring charges, and
acquisition-related costs
(47
)
(24
)
(84
)
(97
)
Litigation and investigation costs
(14
)
(12
)
(28
)
(50
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
(1
)
—
12
—
Loss from early extinguishment of debt
—
—
(11
)
(109
)
Tax and noncontrolling interests impact of
above items
10
7
17
33
Adjusted net income available from
continuing operations to common shareholders
$
153
$
160
$
461
$
531
Diluted earnings per share from
continuing operations
$
0.94
$
1.16
$
3.41
$
2.81
Less:
Impairment and restructuring charges, and
acquisition-related costs
(0.45
)
(0.22
)
(0.80
)
(0.86
)
Litigation and investigation costs
(0.13
)
(0.11
)
(0.27
)
(0.45
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
(0.01
)
—
0.12
—
Loss from early extinguishment of debt
—
—
(0.10
)
(0.97
)
Tax and noncontrolling interests impact of
above items
0.09
0.07
0.16
0.29
Adjusted diluted earnings per share
from continuing operations
$
1.44
$
1.42
$
4.30
$
4.80
Weighted average basic shares
outstanding (in thousands)
101,544
107,923
101,869
107,732
Weighted average dilutive shares
outstanding (in thousands)
104,425
109,888
105,021
112,288
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)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2023
2022
2023
2022
Net income available to Tenet
Healthcare Corporation common shareholders
$
101
$
131
$
367
$
309
Less:
Net income available to noncontrolling
interests
(165
)
(137
)
(488
)
(418
)
Income from discontinued operations, net
of tax
—
—
—
1
Income from continuing operations
266
268
855
726
Income tax expense
(79
)
(112
)
(243
)
(297
)
Loss from early extinguishment of debt
—
—
(11
)
(109
)
Other non-operating income, net
4
6
8
6
Interest expense
(227
)
(222
)
(674
)
(671
)
Operating income
568
596
1,775
1,797
Litigation and investigation costs
(14
)
(12
)
(28
)
(50
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
(1
)
—
12
—
Impairment and restructuring charges, and
acquisition-related costs
(47
)
(24
)
(84
)
(97
)
Depreciation and amortization
(224
)
(209
)
(654
)
(628
)
Adjusted EBITDA
$
854
$
841
$
2,529
$
2,572
Net operating revenues
$
5,066
$
4,801
$
15,169
$
14,184
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
2.0
%
2.7
%
2.4
%
2.2
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
16.9
%
17.5
%
16.7
%
18.1
%
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)
2023
(Dollars in millions)
Q3
YTD
Net cash provided by operating
activities
$
503
$
1,550
Purchases of property and equipment
(176
)
(543
)
Free cash flow – continuing
operations
$
327
$
1,007
Net cash used in investing
activities
$
(169
)
$
(636
)
Net cash used in financing
activities
$
(214
)
$
(718
)
Net cash provided by operating
activities
$
503
$
1,550
Less:
Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements
(27
)
(105
)
Adjusted net cash provided by operating
activities from continuing operations
530
1,655
Purchases of property and equipment
(176
)
(543
)
Adjusted free cash flow – continuing
operations
$
354
$
1,112
2022
(Dollars in millions)
Q3
YTD
Net cash provided by operating
activities
$
315
$
662
Purchases of property and equipment
(165
)
(472
)
Free cash flow - continuing
operations
150
190
Add back:
Medicare Advance Repayments
405
880
Free cash flow – continuing operations,
excluding repayments of Medicare Advances
$
555
$
1,070
Net cash used in investing
activities
$
(302
)
$
(502
)
Net cash used in financing
activities
$
(156
)
$
(1,316
)
Net cash provided by operating
activities
$
315
$
662
Less:
Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements
(59
)
(157
)
Net cash used in operating activities from
discontinued operations
(1
)
(1
)
Adjusted net cash provided by operating
activities from continuing operations
375
820
Purchases of property and equipment
(165
)
(472
)
Adjusted free cash flow – continuing
operations
210
348
Add back:
Medicare Advance Repayments
405
880
Adjusted free cash flow – continuing
operations, excluding repayments of Medicare Advances
$
615
$
1,228
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)
Fourth Quarter 2023
FY 2023
(Dollars in millions, except per share
amounts)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
89
$
174
$
456
$
541
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(38
)
(13
)
(150
)
(125
)
Net gains on sales, consolidation and
deconsolidation of facilities
—
—
12
12
Loss from early extinguishment of
debt(2)
—
—
(11
)
(11
)
Tax and noncontrolling interests impact of
above items
8
3
25
20
Adjusted net income available from
continuing operations to common shareholders
$
119
$
184
$
580
$
645
Diluted earnings per share from
continuing operations
$
0.83
$
1.64
$
4.25
$
5.06
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and settlements
(0.37
)
(0.13
)
(1.43
)
(1.19
)
Net gains on sales, consolidation and
deconsolidation of facilities
—
—
0.11
0.11
Loss from early extinguishment of debt
—
—
(0.10
)
(0.10
)
Tax and noncontrolling interests impact of
above items
0.08
0.03
0.24
0.19
Adjusted diluted earnings per share
from continuing operations
$
1.12
$
1.74
$
5.43
$
6.05
Weighted average basic shares
outstanding (in thousands)
102,000
102,000
102,000
102,000
Weighted average dilutive shares
outstanding (in thousands)
105,000
105,000
105,000
105,000
(1)
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
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 relate to the
debt repurchased or refinanced by the Company in 2023.
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)
Fourth Quarter 2023
FY 2023
(Dollars in millions)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
89
$
174
$
456
$
541
Less:
Net income available to noncontrolling
interests
(187
)
(207
)
(675
)
(695
)
Income tax expense
(77
)
(92
)
(320
)
(335
)
Interest expense
(231
)
(221
)
(905
)
(895
)
Loss from early extinguishment of
debt(2)
—
—
(11
)
(11
)
Other non-operating income, net
2
7
10
15
Net gains on sales, consolidation and
deconsolidation of facilities
—
—
12
12
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(38
)
(13
)
(150
)
(125
)
Depreciation and amortization
(216
)
(236
)
(870
)
(890
)
Adjusted EBITDA
$
836
$
936
$
3,365
$
3,465
Income from continuing
operations
$
89
$
174
$
456
$
541
Net operating revenues
$
5,131
$
5,331
$
20,300
$
20,500
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
1.7
%
3.3
%
2.2
%
2.6
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
16.3
%
17.6
%
16.6
%
16.9
%
(1)
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
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 relate to the
debt repurchased or refinanced by the Company in 2023.
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
$
1,800
$
2,075
Purchases of property and equipment
(675
)
(725
)
Free cash flow – continuing
operations
$
1,125
$
1,350
Net cash provided by operating
activities
$
1,800
$
2,075
Less:
Payments for restructuring charges,
acquisition-related costs and litigation costs and
settlements(1)
(150
)
(125
)
Adjusted net cash provided by operating
activities – continuing operations
1,950
2,200
Purchases of property and equipment
(675
)
(725
)
Adjusted free cash flow – continuing
operations(2)
$
1,275
$
1,475
(1)
The figures shown represent the Company's
estimate for restructuring payments plus the actual year-to-date
payments for restructuring charges, 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/20231029186169/en/
Investor Contact Will McDowell 469-893-2387
william.mcdowell@tenethealth.com
Media Contact Robert Dyer 469-893-2640
mediarelations@tenethealth.com
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