- Net income available to common shareholders in third quarter
2024 was $472 million, or $4.89 per diluted share, including an
after-tax gain of $209 million, or $2.16 per diluted share,
primarily associated with previously announced hospital
divestitures
- Adjusted diluted earnings per share1 was $2.93 in third
quarter 2024
- Consolidated Adjusted EBITDA1 in third quarter 2024 of $978
million increased 14.5% over third quarter 2023
- Third quarter 2024 Ambulatory Care Adjusted EBITDA of $439
million increased 18.6% over third quarter 2023
- FY 2024 Adjusted EBITDA Outlook now expected to be in the
range of $3.9 billion to $4.0 billion, a $50 million
increase
Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced
its results for the quarter ended September 30, 2024.
"Our businesses continue to produce strong results and generate
robust free cash flow with same store revenue growth and
profitability well above our expectations due to the focused
execution of our strategy and disciplined operations," said Saum
Sutaria, M.D., Chairman and Chief Executive Officer of Tenet. "We
have furthered our portfolio transformation and are well-positioned
to deliver enhanced value to our patients, physician partners, and
shareholders."
Tenet’s results for third quarter 2024 versus third quarter 2023
are as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in millions, except per share
results)
2024
2023
2024
2023
Net operating revenues
$5,122
$5,066
$15,593
$15,169
Net income available to Tenet common
shareholders
$472
$101
$2,882
$367
Net income available to Tenet common
shareholders per diluted share
$4.89
$0.94
$29.27
$3.41
Adjusted EBITDA1
$978
$854
$2,947
$2,529
Adjusted diluted earnings per share1
$2.93
$1.44
$8.47
$4.30
- Net income available to the Company’s common shareholders in
the third quarter 2024 was $472 million, or $4.89 per diluted
share, versus $101 million, or $0.94 per diluted share, in third
quarter 2023. Third quarter 2024 results included a pre-tax gain of
$348 million ($209 million after-tax or $2.16 per diluted share)
primarily associated with the sale of the Company's 70% majority
ownership interest in Brookwood Baptist Health in Alabama.
- Adjusted EBITDA1 in third quarter 2024 was $978 million
compared to $854 million in third quarter 2023, reflecting strong
same-hospital admissions growth, strong ambulatory net revenue per
case growth, favorable payer mix, and increased Medicaid
supplemental revenues in Michigan, partially offset by higher
medical fees as well as the impact of hospital divestitures.
Balance Sheet and Cash Flows
- Cash flows provided by operating activities for the nine months
ended September 30, 2024 were $2.378 billion versus $1.550 billion
for the nine months ended September 30, 2023.
- The Company produced free cash flow1 of $1.777 billion for the
nine months ended September 30, 2024 versus $1.007 billion for the
nine months ended September 30, 2023.
- In the three months ended September 30, 2024, the Company
repurchased 795,112 shares of common stock for $124 million. In the
nine months ended September 30, 2024, the Company repurchased
5,596,573 shares of common stock for $672 million.
- The Company’s ratio of net debt to Adjusted EBITDA1 was 2.22x
at September 30, 2024 compared to 2.61x at June 30, 2024 and 3.89x
at December 31, 2023.
Recent Transaction
- On October 1, 2024, the Company announced the completion of the
sale of its 70% majority ownership interest in Brookwood Baptist
Health in Birmingham, Alabama to Orlando Health in the third
quarter of 2024. The completed transaction included five hospitals
and other related operations. Our outlook for full year 2024 net
cash provided by operating activities and free cash flow1 now
reflects the anticipated payment of approximately $175 million of
income taxes, primarily in connection with the net gain on the sale
of these facilities.
Ambulatory Care (Ambulatory)
Segment
Tenet’s Ambulatory business segment is comprised of the
operations of United Surgical Partners International (USPI). As of
September 30, 2024, USPI had interests in 520 ambulatory surgery
centers (376 consolidated) and 24 surgical hospitals (seven
consolidated) in 37 states.
Three Months Ended September
30,
Nine Months Ended September
30,
Ambulatory segment results ($ in
millions)
2024
2023
2024
2023
Revenues
Net operating revenues
$1,139
$941
$3,275
$2,788
Same-facility system-wide net patient
service revenues2
$1,895
$1,744
$5,516
$5,133
Volume Changes versus the Prior-Year
Period
Same-facility system-wide surgical
cases2
1.0 %
4.1 %
0.4 %
6.2 %
Same-facility system-wide surgical cases
on same-business day basis2
(0.6) %
5.8 %
(0.1) %
6.8 %
Adjusted EBITDA, Margins and
NCI
Adjusted EBITDA
$439
$370
$1,280
$1,080
Adjusted EBITDA margin
38.5%
39.3%
39.1%
38.7%
Adjusted EBITDA less NCI
$265
$233
$779
$678
- Third quarter 2024 net operating revenues increased 21.0%
compared to third quarter 2023 driven by strong net revenue per
case growth, acquisitions of facilities, and increased service
lines.
- Surgical business same-facility system-wide net patient service
revenues increased 8.7% in third quarter 2024 compared to third
quarter 2023, with cases up 1.0% and net revenue per case up 7.6%.
Net revenue per case growth was driven by higher acuity associated
with favorable case mix as well as favorable payer mix.
- Third quarter 2024 Adjusted EBITDA increased 18.6% compared to
third quarter 2023, due to strong net revenue per case growth,
disciplined expense management, and contributions from acquisitions
and de novo facilities.
Hospital Operations and Services
(Hospital) Segment
Tenet’s Hospital business segment is primarily comprised of
acute care and specialty hospitals, imaging centers, ancillary
outpatient facilities, micro-hospitals and physician practices. It
also provides comprehensive end-to-end and focused point services,
including hospital and physician revenue cycle management, patient
communications and engagement support and value-based care
solutions.
Three Months Ended September
30,
Nine Months Ended September
30,
Hospital segment results ($ in
millions)
2024
2023
2024
2023
Revenues
Net operating revenues
$3,983
$4,125
$12,318
$12,381
Same-hospital net patient service
revenues3
$3,383
$3,190
$10,298
$9,507
Same-Hospital Volume Changes versus the
Prior-Year Period
Admissions
5.2%
0.6%
4.9%
2.6%
Adjusted admissions4
2.7%
0.4%
2.3%
3.3%
Outpatient visits (including outpatient ER
visits)
0.5%
(2.0)%
0.1%
(1.0)%
Emergency Room visits (inpatient and
outpatient)
(0.2)%
(0.9)%
1.8%
1.3%
Hospital surgeries
0.6%
(0.7)%
—%
0.5%
Adjusted EBITDA
Adjusted EBITDA
$539
$484
$1,667
$1,449
Adjusted EBITDA margin
13.5%
11.7%
13.5%
11.7%
- Third quarter 2024 net operating revenues declined 3.4% from
third quarter 2023 primarily due to the impact of hospital
divestitures in first quarter 2024, partially offset by strong same
hospital admissions growth, favorable payer mix, and improved
pricing yield.
- Same-hospital net patient service revenue per adjusted
admission increased 3.3% year-over-year for third quarter 2024
primarily due to improved pricing yield, favorable payer mix, and
our focus on growing higher acuity services.
- Adjusted EBITDA in third quarter 2024 was $539 million compared
to $484 million in third quarter 2023, reflecting strong
same-hospital admissions growth and revenue per adjusted admission,
favorable payer mix, and increased supplemental revenues in
Michigan, partially offset by higher medical fees as well as the
impact of hospital divestitures.
2024 Outlook1
Tenet’s Outlook for full year 2024 (consolidated and by segment)
and fourth quarter 2024 follows. This outlook reflects the sale of
three Coastal South Carolina hospitals on January 31, 2024, the
sale of six California hospitals on March 31, 2024, and the sale of
five Alabama hospitals on September 30, 2024.
CONSOLIDATED ($ in millions, except
per share amounts)
FY 2024 Outlook
Fourth Quarter 2024
Outlook
Net operating revenues
$20,600 to $20,800
$5,007 to $5,207
Net income available to Tenet common
stockholders
$3,093 to $3,193
$211 to $311
Adjusted EBITDA
$3,900 to $4,000
$953 to $1,053
Adjusted EBITDA margin
18.9% to 19.2%
19.0% to 20.2%
Diluted income per common share
$31.56 to $32.58
$2.20 to $3.24
Adjusted net income
$1,090 to $1,150
$258 to $318
Adjusted diluted earnings per share
$11.12 to $11.73
$2.69 to $3.31
Equity in earnings of unconsolidated
affiliates
$260 to $270
$78 to $88
Depreciation and amortization
$820 to $840
$195 to $215
Interest expense
$820 to $830
$197 to $207
Income tax expense5
$1,185 to $1,215
$84 to $114
Net income available to NCI
$835 to $855
$225 to $245
Weighted average diluted common shares
~98 million
~96 million
NCI cash distributions
$725 to $775
Net cash provided by operating
activities6
$1,775 to $2,125
Adjusted net cash provided by operating
activities6
$1,950 to $2,250
Capital expenditures
$800 to $900
Free cash flow6
$975 to $1,225
Adjusted free cash flow6
$1,150 to $1,350
Ambulatory Segment ($ in
millions)
FY 2024 Outlook
Net operating revenues
$4,375 to $4,425
Adjusted EBITDA
$1,760 to $1,800
NCI
$690 to $710
Adjusted EBITDA less NCI
$1,070 to $1,090
Changes versus prior year7:
Surgical cases volumes
Up 0.0% to 1.0%
Net revenues per surgical case
Up 6.0% to 7.0%
Hospital Segment ($ in
millions)
FY 2024 Outlook
Net operating revenues
$16,225 to $16,375
Adjusted EBITDA
$2,140 to $2,200
NCI
$145 to $145
Changes versus prior year7:
Inpatient admissions
Up 4.0% to 5.0%
Adjusted admissions
Up 1.5% to 2.5%
Management’s Webcast Discussion of
Results
Tenet management will discuss the Company’s third quarter 2024
results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00
a.m. Central Time) on October 29, 2024. 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 29, 2024.
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. 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 factors disclosed under
“Forward-Looking Statements” and “Risk Factors” in our Form 10-K
for the year ended December 31, 2023 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 2024 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 2024, 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, 2023 through September 30, 2024. 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.
- For 2024, Outlook for net cash provided by operating
activities, Adjusted net cash provided by operating activities,
Free cash flow and Adjusted free cash flow include an estimate of
approximately $875 million of net income tax payments associated
with the gains on sale of the three hospitals and related
operations in South Carolina, the six hospitals and related
operations in California, and the five hospitals and related
operations in Alabama, approximately $175 million of which have
already been paid as of September 30, 2024.
- 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
ambulatory surgery centers and surgical hospitals. We also operate
a national portfolio of acute care and specialty hospitals, 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 is defined by the
Company as Adjusted net income available (loss attributable) to
Tenet common shareholders, divided by the weighted average diluted
shares outstanding in the reporting period.
- Adjusted net income available (loss attributable) 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.
- Adjusted Free Cash Flow is defined by the Company as (1)
Adjusted net cash provided by (used in) operating activities, less
(2) purchases of property and equipment.
- 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
12
Consolidated Balance Sheets
14
Consolidated Statements of Cash Flows
15
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,
2024
%
2023
%
Change
Net operating revenues
$
5,122
100.0
%
$
5,066
100.0
%
1.1
%
Grant income
4
0.1
%
3
0.1
%
33.3
%
Equity in earnings of unconsolidated
affiliates
62
1.2
%
51
1.0
%
21.6
%
Operating expenses:
Salaries, wages and benefits
2,218
43.3
%
2,288
45.2
%
(3.1
)%
Supplies
881
17.2
%
877
17.3
%
0.5
%
Other operating expenses, net
1,111
21.6
%
1,101
21.7
%
0.9
%
Depreciation and amortization
209
4.1
%
224
4.5
%
Impairment and restructuring charges, and
acquisition-related costs
19
0.4
%
47
0.9
%
Litigation and investigation costs
9
0.2
%
14
0.3
%
Net losses (gains) on sales, consolidation
and deconsolidation of facilities
(348
)
(6.8
)%
1
—
%
Operating income
1,089
21.3
%
568
11.2
%
Interest expense
(202
)
(227
)
Other non-operating income, net
35
4
Income before income taxes
922
345
Income tax expense
(241
)
(79
)
Net income
681
266
Less: Net income available to
noncontrolling interests
209
165
Net income available to Tenet
Healthcare Corporation common shareholders
$
472
$
101
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
$
4.93
$
0.99
Diluted
$
4.89
$
0.94
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic
95,665
101,544
Diluted
96,652
104,425
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in millions, except per share
amounts)
Nine Months Ended September
30,
2024
%
2023
%
Change
Net operating revenues
$
15,593
100.0
%
$
15,169
100.0
%
2.8
%
Grant income
9
0.1
%
14
0.1
%
(35.7
)%
Equity in earnings of unconsolidated
affiliates
182
1.2
%
155
1.0
%
17.4
%
Operating expenses:
Salaries, wages and benefits
6,707
43.0
%
6,831
45.0
%
(1.8
)%
Supplies
2,717
17.4
%
2,659
17.5
%
2.2
%
Other operating expenses, net
3,413
22.0
%
3,319
21.9
%
2.8
%
Depreciation and amortization
625
4.0
%
654
4.3
%
Impairment and restructuring charges, and
acquisition-related costs
75
0.5
%
84
0.6
%
Litigation and investigation costs
18
0.1
%
28
0.2
%
Net gains on sales, consolidation and
deconsolidation of facilities
(2,906
)
(18.6
)%
(12
)
(0.1
)%
Operating income
5,135
32.9
%
1,775
11.7
%
Interest expense
(623
)
(674
)
Other non-operating income, net
89
8
Loss from early extinguishment of debt
(8
)
(11
)
Income before income taxes
4,593
1,098
Income tax expense
(1,101
)
(243
)
Net income
3,492
855
Less: Net income available to
noncontrolling interests
610
488
Net income available to Tenet
Healthcare Corporation common shareholders
$
2,882
$
367
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
$
29.56
$
3.60
Diluted
$
29.27
$
3.41
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic
97,505
101,869
Diluted
98,518
105,021
TENET HEALTHCARE
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in millions)
September 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
4,094
$
1,228
Accounts receivable
2,598
2,914
Inventories of supplies, at cost
356
411
Assets held for sale
20
775
Other current assets
1,691
1,839
Total current assets
8,759
7,167
Investments and other assets
3,064
3,157
Deferred income taxes
36
77
Property and equipment, at cost, less
accumulated depreciation and amortization
5,552
6,236
Goodwill
10,588
10,307
Other intangible assets, at cost, less
accumulated amortization
1,373
1,368
Total assets
$
29,372
$
28,312
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
95
$
120
Accounts payable
1,265
1,408
Accrued compensation and benefits
879
930
Professional and general liability
reserves
286
254
Accrued interest payable
248
200
Liabilities held for sale
12
69
Income tax payable
826
23
Other current liabilities
1,927
1,756
Total current liabilities
5,538
4,760
Long-term debt, net of current portion
12,776
14,882
Professional and general liability
reserves
855
792
Defined benefit plan obligations
308
335
Deferred income taxes
260
326
Other long-term liabilities
1,560
1,709
Total liabilities
21,297
22,804
Commitments and contingencies
Redeemable noncontrolling interests in
equity of consolidated subsidiaries
2,649
2,391
Equity:
Shareholders’ equity:
Common stock
8
8
Additional paid-in capital
4,849
4,834
Accumulated other comprehensive loss
(175
)
(181
)
Retained earnings (accumulated
deficit)
2,690
(192
)
Common stock in treasury, at cost
(3,538
)
(2,861
)
Total shareholders’ equity
3,834
1,608
Noncontrolling interests
1,592
1,509
Total equity
5,426
3,117
Total liabilities and equity
$
29,372
$
28,312
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Dollars in millions)
Nine Months Ended
September 30,
2024
2023
Net income
$
3,492
$
855
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
625
654
Deferred income tax expense (benefit)
(29
)
75
Stock-based compensation expense
52
48
Impairment and restructuring charges, and
acquisition-related costs
75
84
Litigation and investigation costs
18
28
Net gains on sales, consolidation and
deconsolidation of facilities
(2,906
)
(12
)
Loss from early extinguishment of debt
8
11
Equity in earnings of unconsolidated
affiliates, net of distributions received
(9
)
5
Amortization of debt discount and debt
issuance costs
21
25
Net gains from the sale of investments and
long-lived assets
(2
)
(25
)
Other items, net
(3
)
(1
)
Changes in cash from operating assets
and liabilities:
Accounts receivable
183
31
Inventories and other current assets
10
(49
)
Income taxes
821
(46
)
Accounts payable, accrued expenses and
other current liabilities
123
(38
)
Other long-term liabilities
18
10
Payments for restructuring charges,
acquisition-related costs, and litigation costs and
settlements
(119
)
(105
)
Net cash provided by operating
activities
2,378
1,550
Cash flows from investing
activities:
Purchases of property and equipment
(601
)
(543
)
Purchases of businesses or joint venture
interests, net of cash acquired
(524
)
(110
)
Proceeds from sales of facilities and
other assets
4,965
38
Proceeds from sales of marketable
securities and long-term investments
25
40
Purchases of marketable securities and
long-term investments
(46
)
(54
)
Other items, net
(18
)
(7
)
Net cash provided by (used in)
investing activities
3,801
(636
)
Cash flows from financing
activities:
Repayments of borrowings
(2,212
)
(1,478
)
Proceeds from borrowings
16
1,368
Repurchases of common stock
(672
)
(90
)
Debt issuance costs
—
(16
)
Distributions paid to noncontrolling
interests
(496
)
(425
)
Proceeds from the sale of noncontrolling
interests
13
37
Purchases of noncontrolling interests
(127
)
(127
)
Advances from managed care payers
342
—
Repayments of advances from managed care
payers
(160
)
—
Other items, net
(17
)
13
Net cash used in financing
activities
(3,313
)
(718
)
Net increase in cash and cash
equivalents
2,866
196
Cash and cash equivalents at beginning of
period
1,228
858
Cash and cash equivalents at end of
period
$
4,094
$
1,054
Supplemental disclosures:
Interest paid, net of capitalized
interest
$
(555
)
$
(589
)
Income tax payments, net
$
(308
)
$
(212
)
TENET HEALTHCARE
CORPORATION
SEGMENT REPORTING
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2024
2023
2024
2023
Net operating revenues:
Ambulatory Care
$
1,139
$
941
$
3,275
$
2,788
Hospital Operations and Services
3,983
4,125
12,318
12,381
Total
$
5,122
$
5,066
$
15,593
$
15,169
Equity in earnings of unconsolidated
affiliates:
Ambulatory Care
$
61
$
50
$
175
$
149
Hospital Operations and Services
1
1
7
6
Total
$
62
$
51
$
182
$
155
Adjusted EBITDA:
Ambulatory Care
$
439
$
370
$
1,280
$
1,080
Hospital Operations and Services
539
484
1,667
1,449
Total
$
978
$
854
$
2,947
$
2,529
Adjusted EBITDA margins:
Ambulatory Care
38.5
%
39.3
%
39.1
%
38.7
%
Hospital Operations and Services
13.5
%
11.7
%
13.5
%
11.7
%
Total
19.1
%
16.9
%
18.9
%
16.7
%
Capital expenditures:
Ambulatory Care
$
28
$
20
$
65
$
58
Hospital Operations and Services
188
156
536
485
Total
$
216
$
176
$
601
$
543
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 to Common Shareholders
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions, except per share
amounts)
2024
2023
2024
2023
Net income available to Tenet
Healthcare Corporation common shareholders
$
472
$
101
$
2,882
$
367
Less:
Impairment and restructuring charges, and
acquisition-related costs
(19
)
(47
)
(75
)
(84
)
Litigation and investigation costs
(9
)
(14
)
(18
)
(28
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
348
(1
)
2,906
12
Loss from early extinguishment of debt
—
—
(8
)
(11
)
Tax and noncontrolling interests impact of
above items
(130
)
10
(755
)
17
Adjusted net income available to common
shareholders
$
282
$
153
$
832
$
461
Diluted earnings per share
$
4.89
$
0.94
$
29.27
$
3.41
Less:
Impairment and restructuring charges, and
acquisition-related costs
(0.20
)
(0.45
)
(0.76
)
(0.80
)
Litigation and investigation costs
(0.09
)
(0.13
)
(0.19
)
(0.27
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
3.60
(0.01
)
29.50
0.12
Loss from early extinguishment of debt
—
—
(0.08
)
(0.10
)
Tax and noncontrolling interests impact of
above items
(1.35
)
0.09
(7.67
)
0.16
Adjusted diluted earnings per
share
$
2.93
$
1.44
$
8.47
$
4.30
Weighted average basic shares
outstanding (in thousands)
95,665
101,544
97,505
101,869
Weighted average dilutive shares
outstanding (in thousands)
96,652
104,425
98,518
105,021
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)
2024
2023
2024
2023
Net income available to Tenet
Healthcare Corporation common shareholders
$
472
$
101
$
2,882
$
367
Less:
Net income available to noncontrolling
interests
(209
)
(165
)
(610
)
(488
)
Net income
681
266
3,492
855
Income tax expense
(241
)
(79
)
(1,101
)
(243
)
Loss from early extinguishment of debt
—
—
(8
)
(11
)
Other non-operating income, net
35
4
89
8
Interest expense
(202
)
(227
)
(623
)
(674
)
Operating income
1,089
568
5,135
1,775
Litigation and investigation costs
(9
)
(14
)
(18
)
(28
)
Net gains (losses) on sales, consolidation
and deconsolidation of facilities
348
(1
)
2,906
12
Impairment and restructuring charges, and
acquisition-related costs
(19
)
(47
)
(75
)
(84
)
Depreciation and amortization
(209
)
(224
)
(625
)
(654
)
Adjusted EBITDA
$
978
$
854
$
2,947
$
2,529
Net operating revenues
$
5,122
$
5,066
$
15,593
$
15,169
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
9.2
%
2.0
%
18.5
%
2.4
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
19.1
%
16.9
%
18.9
%
16.7
%
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
(Unaudited)
2024
(Dollars in millions)
Q3
YTD
Net cash provided by operating
activities
$
1,045
$
2,378
Purchases of property and equipment
(216
)
(601
)
Free cash flow
$
829
$
1,777
Net cash provided by investing
activities
$
667
$
3,801
Net cash used in financing
activities
$
(498
)
$
(3,313
)
Net cash provided by operating
activities
$
1,045
$
2,378
Less:
Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements
(55
)
(119
)
Adjusted net cash provided by operating
activities
1,100
2,497
Purchases of property and equipment
(216
)
(601
)
Adjusted free cash flow
$
884
$
1,896
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
$
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
530
1,655
Purchases of property and equipment
(176
)
(543
)
Adjusted free cash flow
$
354
$
1,112
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 to Common Shareholders
(Unaudited)
Fourth Quarter 2024
FY 2024
(Dollars in millions, except per share
amounts)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
211
$
311
$
3,093
$
3,193
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(57
)
(7
)
(150
)
(100
)
Net gains on sales, consolidation and
deconsolidation of facilities(2)
—
—
2,906
2,906
Loss from early extinguishment of
debt(2)
—
—
(8
)
(8
)
Tax and noncontrolling interests impact of
above items
10
—
(745
)
(755
)
Adjusted net income available to common
shareholders
$
258
$
318
$
1,090
$
1,150
Diluted earnings per share
$
2.20
$
3.24
$
31.56
$
32.58
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and settlements
(0.59
)
(0.07
)
(1.53
)
(1.02
)
Net gains on sales, consolidation and
deconsolidation of facilities
—
—
29.65
29.65
Loss from early extinguishment of debt
—
—
(0.08
)
(0.08
)
Tax and noncontrolling interests impact of
above items
0.10
—
(7.60
)
(7.70
)
Adjusted diluted earnings per
share
$
2.69
$
3.31
$
11.12
$
11.73
Weighted average basic shares
outstanding (in thousands)
95,000
95,000
97,000
97,000
Weighted average dilutive shares
outstanding (in thousands)
96,000
96,000
98,000
98,000
(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
net gains on sales, consolidation and deconsolidation of facilities
or losses from the early extinguishment of debt because the Company
does not believe that it can forecast these items with sufficient
accuracy since it is indeterminable at the time the Company
provides its financial Outlook. The figures shown relate to
transactions that have already occurred in 2024.
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 2024
FY 2024
(Dollars in millions)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
211
$
311
$
3,093
$
3,193
Less:
Net income available to noncontrolling
interests
(225
)
(245
)
(835
)
(855
)
Income tax expense
(84
)
(114
)
(1,185
)
(1,215
)
Interest expense
(207
)
(197
)
(830
)
(820
)
Loss from early extinguishment of
debt(2)
—
—
(8
)
(8
)
Other non-operating income, net
26
36
115
125
Net gains on sales, consolidation and
deconsolidation of facilities(2)
—
—
2,906
2,906
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(57
)
(7
)
(150
)
(100
)
Depreciation and amortization
(195
)
(215
)
(820
)
(840
)
Adjusted EBITDA
$
953
$
1,053
$
3,900
$
4,000
Net income available to Tenet
Healthcare Corporation common shareholders
$
211
$
311
$
3,093
$
3,193
Net operating revenues
$
5,007
$
5,207
$
20,600
$
20,800
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
4.2
%
6.0
%
15.0
%
15.4
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
19.0
%
20.2
%
18.9
%
19.2
%
(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
net gains on sales, consolidation and deconsolidation of facilities
or losses from the early extinguishment of debt because the Company
does not believe that it can forecast these items with sufficient
accuracy since it is indeterminable at the time the Company
provides its financial Outlook. The figures shown relate to
transactions that have already occurred in 2024.
TENET HEALTHCARE
CORPORATION
Additional Supplemental
Non-GAAP disclosures
Table #6 – Reconciliations of
Outlook Net Cash Provided by Operating Activities
to Outlook Free Cash Flow and
Outlook Adjusted Free Cash Flow
(Unaudited)
FY 2024
(Dollars in millions)
Low
High
Net cash provided by operating
activities
$
1,775
$
2,125
Purchases of property and equipment
(800
)
(900
)
Free cash flow
$
975
$
1,225
Net cash provided by operating
activities
$
1,775
$
2,125
Less:
Payments for restructuring charges,
acquisition-related costs and litigation costs and
settlements(1)
(175
)
(125
)
Adjusted net cash provided by operating
activities
1,950
2,250
Purchases of property and equipment
(800
)
(900
)
Adjusted free cash flow(2)
$
1,150
$
1,350
(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/20241029442085/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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