Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended September 30, 2020 (3Q20).
Ronald A. Rittenmeyer, Executive Chairman and Chief Executive Officer, stated, "The third quarter of 2020 was in many ways more challenging than the second, with COVID positive inpatient census surging by approximately 64 percent in our markets in late July and August. Our operators executed exceptionally throughout our entire system, ensuring they cared for the surge in COVID patients and continued the safe return of non-COVID patient volumes closer to normalized levels. Our operating discipline was further demonstrated as we exceeded expectations for both Adjusted EBITDA of $621 million, before adjusting for the changes in guidance issued by HHS in September, as well as cash flows, which increased by 26 percent on a year-over-year comparison before the additions of grants and advances. With the issuance of revised guidance on grant income from HHS late in the quarter, we, along with other providers, are facing new challenges in terms of federal support. We believe our hospitals' focus on additions of strategic service lines, coupled with continued positive growth and efficiency at USPI and Conifer, has positioned us well this quarter and provides the basis for continued solid performance going forward."
Tenet's results for 3Q20 versus the quarter ended September 30, 2019 (3Q19) as well as the nine months ended September 30, 2020 (YTD 3Q20) versus the nine months ended September 30, 2019 (YTD 3Q19) are as follows:
($ in millions, except per share results) |
3Q20 |
3Q19 |
YTD 3Q20 |
YTD 3Q19 |
Net loss from continuing operations attributable to Tenet common shareholders |
$(197) |
$(227) |
$(15) |
$(223) |
Net loss from continuing operations attributable to Tenet common shareholders per diluted share |
$(1.87) |
$(2.19) |
$(0.14) |
$(2.16) |
Adjusted EBITDA excluding grant income |
$621 |
$639 |
$1,415 |
$1,931 |
Adjusted EBITDA |
$551 |
$639 |
$1,868 |
$1,931 |
Adjusted diluted earnings per share from continuing operations |
$0.64 |
$0.64 |
$3.17 |
$1.89 |
The table above as well as tables and discussions throughout this earnings release include certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-3 included at the end of this earnings release. Management's reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release. |
COVID-19 Pandemic (COVID)
Results from Continuing Operations Attributable to Tenet Common Shareholders
Adjusted Results from Continuing Operations Available to Tenet Common Shareholders
Reconciliations of net loss attributable to Tenet common shareholders to Adjusted net income from continuing operations available to Tenet's common shareholders are contained in Table #1 at the end of this release.
Adjusted EBITDA
Reconciliations of net loss attributable to Tenet common shareholders to Adjusted EBITDA are contained in Table #2 at the end of this release.
Hospital Operations and Other (Hospital) Segment Results
Tenet's Hospital segment is comprised of acute care and specialty hospitals, ancillary outpatient facilities, freestanding urgent care centers (nearly all of which are managed by USPI and operated under the MedPost brand), micro-hospitals and physician practices.
Hospital segment results ($ in millions) |
3Q20 |
3Q19 |
YTD 3Q20 |
YTD 3Q19 |
Net operating revenues |
$3,803 |
$3,850 |
$10,725 |
$11,539 |
Grant income |
$(57) |
? |
$417 |
? |
Same-hospital net patient service revenues (a) |
$3,502 |
$3,562 |
$9,874 |
$10,666 |
Adjusted EBITDA excluding grant income |
$297 |
$342 |
$657 |
$1,048 |
Adjusted EBITDA |
$240 |
$342 |
$1,074 |
$1,048 |
Same-hospital admissions (decline) growth (a) |
(11.4)% |
3.6% |
(12.0)% |
2.2% |
Same-hospital adjusted admissions (decline) growth (a)(b) |
(15.9)% |
2.8% |
(16.0)% |
1.8% |
(a) |
Same-hospital revenues and statistical data include those for the 65 hospitals operated by the Company's Hospital segment continuously from January 1, 2019 through September 30, 2020. Revenues and volumes for any hospitals acquired or disposed of during that time frame are excluded. |
|
(b) |
Adjusted admissions represents actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues. |
Revenues and Volumes
Hospital Segment Volume
|
June 2020 |
July 2020 |
August 2020 |
Sept. 2020 |
3Q20 |
Admissions |
~90% |
~90% |
~87% |
~88% |
~89% |
Outpatient visits |
~77% |
~86% |
~82% |
~83% |
~84% |
Emergency Room visits |
~77% |
~80% |
~76% |
~74% |
~77% |
Hospital surgeries |
~90% |
~87% |
~88% |
~92% |
~89% |
Operating Expenses
Adjusted EBITDA
Ambulatory Care (Ambulatory) Segment Results
Tenet's Ambulatory business segment is comprised of the operations of United Surgical Partners International (USPI). As of September 30, 2020, USPI had interests in 263 ambulatory surgery centers, 40 urgent care centers (nearly all of which operate under the CareSpot brand), 24 imaging centers and 25 surgical hospitals in 28 states. The Company owns 95 percent of USPI.
Ambulatory segment results ($ in millions) |
3Q20 |
3Q19 |
YTD 3Q20 |
YTD 3Q19 |
Net operating revenues |
$565 |
$522 |
$1,423 |
$1,526 |
Grant income excluding equity earnings impact |
$(9) |
? |
$28 |
? |
Grant income in equity earnings |
$(4) |
? |
$8 |
? |
Same-facility system-wide net patient service revenues (c) |
$1,220 |
$1,145 |
$3,038 |
$3,293 |
Adjusted EBITDA excluding grant income |
$228 |
$207 |
$502 |
$591 |
Adjusted EBITDA |
$215 |
$207 |
$538 |
$591 |
Adjusted EBITDA less facility-level NCI excluding grant income |
$146 |
$134 |
$324 |
$378 |
Adjusted EBITDA less facility-level NCI |
$138 |
$134 |
$344 |
$378 |
Same-facility system-wide surgical cases (decline) growth |
(5.9)% |
4.4% |
(18.8)% |
3.3% |
Same-facility system-wide total ambulatory cases (decline) growth |
(0.3)% |
5.1% |
(12.9)% |
3.1% |
(c) |
Same-facility system-wide revenues and statistical information include the results of the facilities in which the Ambulatory segment has an investment that are not consolidated by Tenet (of the 352 facilities at September 30, 2020, the results of 108 were accounted for under the equity method for unconsolidated affiliates). To help analyze the segment's results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities. |
Revenues and Volumes
Ambulatory Segment |
June 2020 |
July 2020 |
August 2020 |
Sept. 2020 |
3Q20 |
Surgical cases |
~90% |
~94% |
~93% |
~96% |
~94% |
Adjusted EBITDA
Conifer Segment Results
Tenet's Conifer business segment provides healthcare point-of-service and end-to-end business process services in the areas of hospital and physician revenue cycle management as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, healthcare plans and other entities.
Conifer segment results ($ in millions) |
3Q20 |
3Q19 |
YTD 3Q20 |
YTD 3Q19 |
Net operating revenues |
$325 |
$336 |
$962 |
$1,040 |
Adjusted EBITDA |
$96 |
$90 |
$256 |
$292 |
The Company continues to work on spinning off its Conifer segment. This transaction is expected to both enhance shareholder value and reduce the level of debt on Tenet through a tax-free debt-for-debt exchange.
Revenues
Adjusted EBITDA
Balance Sheet, Cash Flows and Liquidity
Balance Sheet Highlights
($ in millions) |
September 30,
|
December 31,
|
Cash and cash equivalents |
$3,300 |
$262 |
Accounts receivable days outstanding |
55.8 |
58.4 |
Line-of-credit borrowings outstanding |
? |
? |
Ratio of net debt plus Medicare advances liability to Adjusted EBITDA (d) |
5.21 |
5.31 |
(d) |
Net debt is total debt less cash and cash equivalents |
Cash flows and liquidity
Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.
($ in millions) |
3Q20 |
3Q19 |
Net cash provided by operating activities |
$593 |
$419 |
Capital expenditures |
$(86) |
$(156) |
Free cash flow |
$507 |
$263 |
Adjusted free cash flow |
$646 |
$318 |
Net cash used in investing activities |
$(117) |
$(123) |
Net cash used in financing activities |
$(690) |
$(231) |
Management's Webcast Discussion of Results
Tenet management will discuss the Company's 3Q20 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on October 21, 2020. 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 20, 2020.
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 the other factors disclosed under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended December 31, 2019, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.
About Tenet Healthcare
Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas with 110,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 520 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care and imaging centers and other care sites and clinics. We also operate Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve. For more information, please visit www.tenethealth.com.
Non-GAAP Financial Measures
The Company believes the foregoing non-GAAP measures are useful to investors and analysts because they present additional information on the Company's financial performance. Investors, analysts, Company management and the Company's Board of Directors utilize these non-GAAP measures, in addition to GAAP measures, to track the Company's financial and operating performance and compare the Company's performance to its peer companies, which use similar non-GAAP financial measures in their presentations and earnings releases. The Human Resources Committee of the Company's Board of Directors also uses certain of these measures to evaluate management's performance for the purpose of determining incentive compensation. Additional information regarding the purpose and utility of specific non-GAAP measures used in this release is set forth below.
The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the estimated fair value of shares of the Company's common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment. The Company does not use Adjusted EBITDA to measure liquidity, but instead to measure operating performance.
The Company uses, and believes investors use, Free Cash Flow and Adjusted Free Cash Flow as supplemental non-GAAP measures to analyze cash flows generated from the Company's operations. The Company believes these measures are useful to investors in evaluating its ability to fund distributions paid to noncontrolling interests or for acquisitions, purchasing equity interests in joint ventures or repaying debt.
These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in the Company's financial statements, they do not provide a complete measure of the Company's operating performance. For example, the Company's definitions of Free Cash Flow and Adjusted Free Cash Flow do not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, (ii) distributions paid to noncontrolling interests, or (iii) payments under the Put/Call Agreement for USPI redeemable noncontrolling interest, which are recorded on the Statement of Cash Flows as the purchase of noncontrolling interest. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company's financial performance.
Tenet Healthcare Corporation Financial Statements and Reconciliations 3Q20 Earnings Release |
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Table of Contents |
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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 Loss to Adjusted Net Income |
18 |
Table #2 - Reconciliations of Net Loss to Adjusted EBITDA |
20 |
Table #3 - Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow |
22 |
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
(Dollars in millions except per share amounts) |
|
Three Months Ended September 30, |
|||||||||||||||
|
|
2020 |
|
% |
|
2019 |
|
% |
|
Change |
|||||||
Net operating revenues |
|
$ |
4,557 |
|
|
100.0 |
% |
|
$ |
4,568 |
|
|
100.0 |
% |
|
(0.2) |
% |
Grant income |
|
(66) |
|
|
(1.4) |
% |
|
? |
|
|
? |
% |
|
n/a |
|||
Equity in earnings of unconsolidated affiliates |
|
44 |
|
|
1.0 |
% |
|
38 |
|
|
0.8 |
% |
|
15.8 |
% |
||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||||
Salaries, wages and benefits |
|
2,142 |
|
|
47.1 |
% |
|
2,172 |
|
|
47.6 |
% |
|
(1.4) |
% |
||
Supplies |
|
784 |
|
|
17.2 |
% |
|
760 |
|
|
16.6 |
% |
|
3.2 |
% |
||
Other operating expenses, net |
|
1,058 |
|
|
23.2 |
% |
|
1,036 |
|
|
22.7 |
% |
|
2.1 |
% |
||
Depreciation and amortization |
|
215 |
|
|
4.7 |
% |
|
205 |
|
|
4.5 |
% |
|
|
|||
Impairment and restructuring charges, and acquisition-related costs |
|
57 |
|
|
1.3 |
% |
|
46 |
|
|
1.0 |
% |
|
|
|||
Litigation and investigation costs |
|
9 |
|
|
0.2 |
% |
|
84 |
|
|
1.8 |
% |
|
|
|||
Net (gains) losses on sales, consolidation and deconsolidation of facilities |
|
(1) |
|
|
? |
% |
|
1 |
|
|
? |
% |
|
|
|||
Operating income |
|
271 |
|
|
5.9 |
% |
|
302 |
|
|
6.6 |
% |
|
|
|||
Interest expense |
|
(263) |
|
|
|
|
(244) |
|
|
|
|
|
|||||
Other non-operating expense, net |
|
? |
|
|
|
|
(3) |
|
|
|
|
|
|||||
Loss from early extinguishment of debt |
|
(312) |
|
|
|
|
(180) |
|
|
|
|
|
|||||
Loss from continuing operations, before income taxes |
|
(304) |
|
|
|
|
(125) |
|
|
|
|
|
|||||
Income tax benefit (expense) |
|
197 |
|
|
|
|
(22) |
|
|
|
|
|
|||||
Loss from continuing operations, before discontinued operations |
|
(107) |
|
|
|
|
(147) |
|
|
|
|
|
|||||
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|||||||
Income from operations |
|
1 |
|
|
|
|
1 |
|
|
|
|
|
|||||
Income tax expense |
|
? |
|
|
|
|
? |
|
|
|
|
|
|||||
Income from discontinued operations |
|
1 |
|
|
|
|
1 |
|
|
|
|
|
|||||
Net loss |
|
(106) |
|
|
|
|
(146) |
|
|
|
|
|
|||||
Less: Net income available to noncontrolling interests |
|
90 |
|
|
|
|
80 |
|
|
|
|
|
|||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(196) |
|
|
|
|
$ |
(226) |
|
|
|
|
|
|||
Amounts (attributable) available to Tenet Healthcare Corporation common shareholders |
|
|
|
|
|
|
|
|
|
|
|||||||
Loss from continuing operations, net of tax |
|
$ |
(197) |
|
|
|
|
$ |
(227) |
|
|
|
|
|
|||
Income from discontinued operations, net of tax |
|
1 |
|
|
|
|
1 |
|
|
|
|
|
|||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(196) |
|
|
|
|
$ |
(226) |
|
|
|
|
|
|||
(Loss) earnings per share (attributable) available to Tenet Healthcare Corporation common shareholders: |
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations |
|
$ |
(1.87) |
|
|
|
|
$ |
(2.19) |
|
|
|
|
|
|||
Discontinued operations |
|
0.01 |
|
|
|
|
0.01 |
|
|
|
|
|
|||||
|
|
$ |
(1.86) |
|
|
|
|
$ |
(2.18) |
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations |
|
$ |
(1.87) |
|
|
|
|
$ |
(2.19) |
|
|
|
|
|
|||
Discontinued operations |
|
0.01 |
|
|
|
|
0.01 |
|
|
|
|
|
|||||
|
|
$ |
(1.86) |
|
|
|
|
$ |
(2.18) |
|
|
|
|
|
|||
Weighted average shares and dilutive securities outstanding
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
105,263 |
|
|
|
|
103,558 |
|
|
|
|
||||||
Diluted |
|
105,263 |
|
|
|
|
103,558 |
|
|
|
|
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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|
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|
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|
|||||||
(Dollars in millions except per share amounts) |
|
Nine Months Ended September 30, |
|||||||||||||||
|
|
2020 |
|
% |
|
2019 |
|
% |
|
Change |
|||||||
Net operating revenues |
|
$ |
12,725 |
|
|
100.0 |
% |
|
$ |
13,673 |
|
|
100.0 |
% |
|
(6.9) |
% |
Grant income |
|
445 |
|
|
3.5 |
% |
|
? |
|
|
? |
% |
|
n/a |
|||
Equity in earnings of unconsolidated affiliates |
|
103 |
|
|
0.8 |
% |
|
114 |
|
|
0.8 |
% |
|
(9.6) |
% |
||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||||
Salaries, wages and benefits |
|
6,193 |
|
|
48.6 |
% |
|
6,468 |
|
|
47.3 |
% |
|
(4.3) |
% |
||
Supplies |
|
2,158 |
|
|
17.0 |
% |
|
2,254 |
|
|
16.5 |
% |
|
(4.3) |
% |
||
Other operating expenses, net |
|
3,054 |
|
|
24.0 |
% |
|
3,136 |
|
|
22.9 |
% |
|
(2.6) |
% |
||
Depreciation and amortization |
|
624 |
|
|
4.9 |
% |
|
627 |
|
|
4.6 |
% |
|
|
|||
Impairment and restructuring charges, and acquisition-related costs |
|
166 |
|
|
1.3 |
% |
|
101 |
|
|
0.7 |
% |
|
|
|||
Litigation and investigation costs |
|
13 |
|
|
0.1 |
% |
|
115 |
|
|
0.9 |
% |
|
|
|||
Net (gains) losses on sales, consolidation and deconsolidation of facilities |
|
(4) |
|
|
? |
% |
|
3 |
|
|
? |
% |
|
|
|||
Operating income |
|
1,069 |
|
|
8.4 |
% |
|
1,083 |
|
|
7.9 |
% |
|
|
|||
Interest expense |
|
(761) |
|
|
|
|
(742) |
|
|
|
|
|
|||||
Other non-operating income (expense), net |
|
3 |
|
|
|
|
(3) |
|
|
|
|
|
|||||
Loss from early extinguishment of debt |
|
(316) |
|
|
|
|
(227) |
|
|
|
|
|
|||||
(Loss) income from continuing operations, before income taxes |
|
(5) |
|
|
|
|
111 |
|
|
|
|
|
|||||
Income tax benefit (expense) |
|
227 |
|
|
|
|
(75) |
|
|
|
|
|
|||||
Income from continuing operations, before discontinued operations |
|
222 |
|
|
|
|
36 |
|
|
|
|
|
|||||
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|||||||
Income from operations |
|
? |
|
|
|
|
13 |
|
|
|
|
|
|||||
Income tax expense |
|
? |
|
|
|
|
(2) |
|
|
|
|
|
|||||
Income from discontinued operations |
|
? |
|
|
|
|
11 |
|
|
|
|
|
|||||
Net income |
|
222 |
|
|
|
|
47 |
|
|
|
|
|
|||||
Less: Net income available to noncontrolling interests |
|
237 |
|
|
|
|
259 |
|
|
|
|
|
|||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(15) |
|
|
|
|
$ |
(212) |
|
|
|
|
|
|||
Amounts (attributable) available to Tenet Healthcare Corporation common shareholders |
|
|
|
|
|
|
|
|
|
|
|||||||
Loss from continuing operations, net of tax |
|
$ |
(15) |
|
|
|
|
$ |
(223) |
|
|
|
|
|
|||
Income from discontinued operations, net of tax |
|
? |
|
|
|
|
11 |
|
|
|
|
|
|||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(15) |
|
|
|
|
$ |
(212) |
|
|
|
|
|
|||
(Loss) earnings per share (attributable) available to Tenet Healthcare Corporation common shareholders: |
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations |
|
$ |
(0.14) |
|
|
|
|
$ |
(2.16) |
|
|
|
|
|
|||
Discontinued operations |
|
? |
|
|
|
|
0.11 |
|
|
|
|
|
|||||
|
|
$ |
(0.14) |
|
|
|
|
$ |
(2.05) |
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations |
|
$ |
(0.14) |
|
|
|
|
$ |
(2.16) |
|
|
|
|
|
|||
Discontinued operations |
|
? |
|
|
|
|
0.11 |
|
|
|
|
|
|||||
|
|
$ |
(0.14) |
|
|
|
|
$ |
(2.05) |
|
|
|
|
|
|||
Weighted average shares and dilutive securities outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|||||||
Basic |
|
104,803 |
|
|
|
|
103,181 |
|
|
|
|
||||||
Diluted |
|
104,803 |
|
|
|
|
103,181 |
|
|
|
|
TENET HEALTHCARE CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
September 30, |
|
December 31, |
||||
(Dollars in millions) |
|
2020 |
|
2019 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
3,300 |
|
|
$ |
262 |
|
Accounts receivable |
|
2,479 |
|
|
2,743 |
|
||
Inventories of supplies, at cost |
|
349 |
|
|
310 |
|
||
Income tax receivable |
|
2 |
|
|
10 |
|
||
Assets held for sale |
|
386 |
|
|
387 |
|
||
Other current assets |
|
1,292 |
|
|
1,369 |
|
||
Total current assets |
|
7,808 |
|
|
5,081 |
|
||
Investments and other assets |
|
2,445 |
|
|
2,369 |
|
||
Deferred income taxes |
|
436 |
|
|
183 |
|
||
Property and equipment, at cost, less accumulated depreciation and amortization |
|
6,618 |
|
|
6,878 |
|
||
Goodwill |
|
7,302 |
|
|
7,252 |
|
||
Other intangible assets, at cost, less accumulated amortization |
|
1,578 |
|
|
1,602 |
|
||
Total assets |
|
$ |
26,187 |
|
|
$ |
23,365 |
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
155 |
|
|
$ |
171 |
|
Accounts payable |
|
1,025 |
|
|
1,204 |
|
||
Accrued compensation and benefits |
|
834 |
|
|
877 |
|
||
Professional and general liability reserves |
|
285 |
|
|
330 |
|
||
Accrued interest payable |
|
218 |
|
|
245 |
|
||
Liabilities held for sale |
|
91 |
|
|
44 |
|
||
Contract liabilities |
|
1,500 |
|
|
61 |
|
||
Other current liabilities |
|
1,735 |
|
|
1,273 |
|
||
Total current liabilities |
|
5,843 |
|
|
4,205 |
|
||
Long-term debt, net of current portion |
|
15,561 |
|
|
14,580 |
|
||
Professional and general liability reserves |
|
666 |
|
|
635 |
|
||
Defined benefit plan obligations |
|
525 |
|
|
560 |
|
||
Deferred income taxes |
|
27 |
|
|
27 |
|
||
Other long-term liabilities |
|
1,564 |
|
|
1,415 |
|
||
Total liabilities |
|
24,186 |
|
|
21,422 |
|
||
Commitments and contingencies |
|
|
|
|
||||
Redeemable noncontrolling interests in equity of consolidated subsidiaries |
|
1,479 |
|
|
1,506 |
|
||
Equity: |
|
|
|
|
||||
Shareholders' equity: |
|
|
|
|
||||
Common stock |
|
7 |
|
|
7 |
|
||
Additional paid-in capital |
|
4,826 |
|
|
4,760 |
|
||
Accumulated other comprehensive loss |
|
(251) |
|
|
(257) |
|
||
Accumulated deficit |
|
(2,542) |
|
|
(2,513) |
|
||
Common stock in treasury, at cost |
|
(2,414) |
|
|
(2,414) |
|
||
Total shareholders' deficit |
|
(374) |
|
|
(417) |
|
||
Noncontrolling interests |
|
896 |
|
|
854 |
|
||
Total equity |
|
522 |
|
|
437 |
|
||
Total liabilities and equity |
|
$ |
26,187 |
|
|
$ |
23,365 |
|
TENET HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) |
||||||||
|
|
Nine Months Ended |
||||||
(Dollars in millions) |
|
September 30, |
||||||
|
|
2020 |
|
2019 |
||||
Net income |
|
$ |
222 |
|
|
$ |
47 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
624 |
|
|
627 |
|
||
Deferred income tax (benefit) expense |
|
(246) |
|
|
65 |
|
||
Stock-based compensation expense |
|
38 |
|
|
34 |
|
||
Impairment and restructuring charges, and acquisition-related costs |
|
166 |
|
|
101 |
|
||
Litigation and investigation costs |
|
13 |
|
|
115 |
|
||
Net losses (gains) on sales, consolidation and deconsolidation of facilities |
|
(4) |
|
|
3 |
|
||
Loss from early extinguishment of debt |
|
316 |
|
|
227 |
|
||
Equity in earnings of unconsolidated affiliates, net of distributions received |
|
(11) |
|
|
(6) |
|
||
Amortization of debt discount and debt issuance costs |
|
30 |
|
|
25 |
|
||
Pre-tax income from discontinued operations |
|
? |
|
|
(13) |
|
||
Other items, net |
|
(4) |
|
|
(14) |
|
||
Changes in cash from operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
280 |
|
|
(174) |
|
||
Inventories and other current assets |
|
30 |
|
|
(98) |
|
||
Income taxes |
|
9 |
|
|
(4) |
|
||
Accounts payable, accrued expenses and other current liabilities |
|
1,546 |
|
|
(67) |
|
||
Other long-term liabilities |
|
205 |
|
|
(15) |
|
||
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements |
|
(252) |
|
|
(136) |
|
||
Net cash used in operating activities from discontinued operations, excluding income taxes |
|
(1) |
|
|
(4) |
|
||
Net cash provided by operating activities |
|
2,961 |
|
|
713 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment ? continuing operations |
|
(374) |
|
|
(492) |
|
||
Purchases of businesses or joint venture interests, net of cash acquired |
|
(61) |
|
|
(23) |
|
||
Proceeds from sales of facilities and other assets ? continuing operations |
|
13 |
|
|
44 |
|
||
Proceeds from sales of facilities and other assets ? discontinued operations |
|
? |
|
|
17 |
|
||
Proceeds from sales of marketable securities, long-term investments and other assets |
|
44 |
|
|
52 |
|
||
Purchases of marketable securities and equity investments |
|
(41) |
|
|
(25) |
|
||
Other long-term assets |
|
(4) |
|
|
1 |
|
||
Other items, net |
|
17 |
|
|
0 |
|
||
Net cash used in investing activities |
|
(406) |
|
|
(426) |
|
||
Cash flows from financing activities: |
|
|
|
|
||||
Repayments of borrowings under credit facility |
|
(740) |
|
|
(1,880) |
|
||
Proceeds from borrowings under credit facility |
|
740 |
|
|
2,155 |
|
||
Repayments of other borrowings |
|
(3,244) |
|
|
(6,084) |
|
||
Proceeds from other borrowings |
|
3,815 |
|
|
5,718 |
|
||
Debt issuance costs |
|
(48) |
|
|
(63) |
|
||
Distributions paid to noncontrolling interests |
|
(184) |
|
|
(223) |
|
||
Proceeds from sale of noncontrolling interests |
|
7 |
|
|
15 |
|
||
Purchases of noncontrolling interests |
|
(34) |
|
|
(8) |
|
||
Proceeds from exercise of stock options and employee stock purchase plan |
|
13 |
|
|
4 |
|
||
Other items, net |
|
158 |
|
|
(18) |
|
||
Net cash provided by (used in) financing activities |
|
483 |
|
|
(384) |
|
||
Net increase (decrease) in cash and cash equivalents |
|
3,038 |
|
|
(97) |
|
||
Cash and cash equivalents at beginning of period |
|
262 |
|
|
411 |
|
||
Cash and cash equivalents at end of period |
|
$ |
3,300 |
|
|
$ |
314 |
|
Supplemental disclosures: |
|
|
|
|
||||
Interest paid, net of capitalized interest |
|
$ |
(757) |
|
|
$ |
(705) |
|
Income tax payments, net |
|
$ |
(10) |
|
|
$ |
(18) |
|
TENET HEALTHCARE CORPORATION SEGMENT REPORTING (Unaudited) |
||||||||||||||||
(Dollars in millions) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net operating revenues: |
|
|
|
|
|
|
|
|
||||||||
Hospital Operations and other total prior to inter-segment eliminations |
|
$ |
3,803 |
|
|
$ |
3,850 |
|
|
$ |
10,725 |
|
|
$ |
11,539 |
|
Ambulatory Care |
|
565 |
|
|
522 |
|
|
1,423 |
|
|
1,526 |
|
||||
Conifer |
|
|
|
|
|
|
|
|
||||||||
Tenet |
|
136 |
|
|
140 |
|
|
385 |
|
|
432 |
|
||||
Other clients |
|
189 |
|
|
196 |
|
|
577 |
|
|
608 |
|
||||
Total Conifer revenues |
|
325 |
|
|
336 |
|
|
962 |
|
|
1,040 |
|
||||
Inter-segment eliminations |
|
(136) |
|
|
(140) |
|
|
(385) |
|
|
(432) |
|
||||
Total |
|
$ |
4,557 |
|
|
$ |
4,568 |
|
|
$ |
12,725 |
|
|
$ |
13,673 |
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated affiliates: |
|
|
|
|
|
|
|
|
||||||||
Hospital Operations and other |
|
$ |
3 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
12 |
|
Ambulatory Care |
|
41 |
|
|
37 |
|
|
102 |
|
|
102 |
|
||||
Total |
|
$ |
44 |
|
|
$ |
38 |
|
|
$ |
103 |
|
|
$ |
114 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Hospital Operations and other |
|
$ |
240 |
|
|
$ |
342 |
|
|
$ |
1,074 |
|
|
$ |
1,048 |
|
Ambulatory Care |
|
215 |
|
|
207 |
|
|
538 |
|
|
591 |
|
||||
Conifer |
|
96 |
|
|
90 |
|
|
256 |
|
|
292 |
|
||||
Total |
|
$ |
551 |
|
|
$ |
639 |
|
|
$ |
1,868 |
|
|
$ |
1,931 |
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures: |
|
|
|
|
|
|
|
|
||||||||
Hospital Operations and other |
|
$ |
71 |
|
|
$ |
135 |
|
|
$ |
328 |
|
|
$ |
423 |
|
Ambulatory Care |
|
11 |
|
|
16 |
|
|
32 |
|
|
57 |
|
||||
Conifer |
|
4 |
|
|
5 |
|
|
14 |
|
|
12 |
|
||||
Total |
|
$ |
86 |
|
|
$ |
156 |
|
|
$ |
374 |
|
|
$ |
492 |
|
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #1 ? Reconciliations of Net Loss Attributable to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2020 (Unaudited) |
||||||||
(Dollars in millions except per share amounts) |
|
2020 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(196) |
|
|
$ |
(15) |
|
Net income from discontinued operations |
|
1 |
|
|
? |
|
||
Net loss from continuing operations |
|
(197) |
|
|
(15) |
|
||
Less: Impairment and restructuring charges, and acquisition-related costs |
|
(57) |
|
|
(166) |
|
||
Litigation and investigation costs |
|
(9) |
|
|
(13) |
|
||
Net gains on sales, consolidation and deconsolidation of facilities |
|
1 |
|
|
4 |
|
||
Loss from early extinguishment of debt |
|
(312) |
|
|
(316) |
|
||
Tax impact of above items |
|
112 |
|
|
140 |
|
||
Adjusted net income available from continuing operations to common shareholders |
|
$ |
68 |
|
|
$ |
336 |
|
|
|
|
|
|
||||
Diluted loss per share from continuing operations |
|
$ |
(1.87) |
|
|
$ |
(0.14) |
|
Less: Impairment and restructuring charges, and acquisition-related costs |
|
(0.54) |
|
|
(1.57) |
|
||
Litigation and investigation costs |
|
(0.08) |
|
|
(0.12) |
|
||
Net gains on sales, consolidation and deconsolidation of facilities |
|
0.01 |
|
|
0.04 |
|
||
Loss from early extinguishment of debt |
|
(2.93) |
|
|
(2.98) |
|
||
Tax impact of above items |
|
1.05 |
|
|
1.32 |
|
||
Adjusted diluted earnings per share from continuing operations |
|
$ |
0.64 |
|
|
$ |
3.17 |
|
|
|
|
|
|
||||
Weighted average basic shares outstanding (in thousands) |
|
105,263 |
|
|
104,803 |
|
||
Weighted average dilutive shares outstanding (in thousands) |
|
106,503 |
|
|
105,938 |
|
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #1 ? Reconciliations of Net Loss Attributable to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2019 (Unaudited) |
||||||||
(Dollars in millions except per share amounts) |
|
2019 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(226) |
|
|
$ |
(212) |
|
Net income from discontinued operations |
|
1 |
|
|
11 |
|
||
Net loss from continuing operations |
|
(227) |
|
|
(223) |
|
||
Less: Impairment and restructuring charges, and acquisition-related costs |
|
(46) |
|
|
(101) |
|
||
Litigation and investigation costs |
|
(84) |
|
|
(115) |
|
||
Net losses on sales, consolidation and deconsolidation of facilities |
|
(1) |
|
|
(3) |
|
||
Loss from early extinguishment of debt |
|
(180) |
|
|
(227) |
|
||
Loss from divested and closed businesses |
|
(1) |
|
|
(2) |
|
||
Noncontrolling interest impact |
|
4 |
|
|
4 |
|
||
Tax impact of above items |
|
14 |
|
|
23 |
|
||
Adjusted net income available from continuing operations to common shareholders |
|
$ |
67 |
|
|
$ |
198 |
|
|
|
|
|
|
||||
Diluted loss per share from continuing operations |
|
$ |
(2.19) |
|
|
$ |
(2.16) |
|
Less: Impairment and restructuring charges, and acquisition-related costs |
|
(0.44) |
|
|
(0.97) |
|
||
Litigation and investigation costs |
|
(0.80) |
|
|
(1.10) |
|
||
Net losses on sales, consolidation and deconsolidation of facilities |
|
(0.01) |
|
|
(0.03) |
|
||
Loss from early extinguishment of debt |
|
(1.72) |
|
|
(2.17) |
|
||
Loss from divested and closed businesses |
|
(0.01) |
|
|
(0.02) |
|
||
Noncontrolling interest impact |
|
0.04 |
|
|
0.04 |
|
||
Tax impact of above items |
|
0.13 |
|
|
0.22 |
|
||
Adjusted diluted earnings per share from continuing operations |
|
$ |
0.64 |
|
|
$ |
1.89 |
|
|
|
|
|
|
||||
Weighted average basic shares outstanding (in thousands) |
|
103,558 |
|
|
103,181 |
|
||
Weighted average dilutive shares outstanding (in thousands) |
|
104,582 |
|
|
104,584 |
|
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #2 ? Reconciliations of Net Loss Attributable to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2020 (Unaudited) |
||||||||
(Dollars in millions) |
|
2020 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(196) |
|
|
$ |
(15) |
|
Less: Net income available to noncontrolling interests |
|
(90) |
|
|
(237) |
|
||
Income from discontinued operations, net of tax |
|
1 |
|
|
? |
|
||
(Loss) income from continuing operations |
|
(107) |
|
|
222 |
|
||
Income tax benefit |
|
197 |
|
|
227 |
|
||
Loss from early extinguishment of debt |
|
(312) |
|
|
(316) |
|
||
Other non-operating income, net |
|
? |
|
|
3 |
|
||
Interest expense |
|
(263) |
|
|
(761) |
|
||
Operating income |
|
271 |
|
|
1,069 |
|
||
Litigation and investigation costs |
|
(9) |
|
|
(13) |
|
||
Net gains on sales, consolidation and deconsolidation of facilities |
|
1 |
|
|
4 |
|
||
Impairment and restructuring charges, and acquisition-related costs |
|
(57) |
|
|
(166) |
|
||
Depreciation and amortization |
|
(215) |
|
|
(624) |
|
||
Adjusted EBITDA |
|
$ |
551 |
|
|
$ |
1,868 |
|
|
|
|
|
|
||||
Net operating revenues |
|
$ |
4,557 |
|
|
$ |
12,725 |
|
|
|
|
|
|
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues |
|
(4.3) |
% |
|
(0.1) |
% |
||
|
|
|
|
|
||||
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin) |
|
12.1 |
% |
|
14.7 |
% |
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #2 ? Reconciliations of Net Loss Attributable to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2019 (Unaudited) |
||||||||
(Dollars in millions) |
|
2019 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders |
|
$ |
(226) |
|
|
$ |
(212) |
|
Less: Net income available to noncontrolling interests |
|
(80) |
|
|
(259) |
|
||
Income from discontinued operations, net of tax |
|
1 |
|
|
11 |
|
||
(Loss) income from continuing operations |
|
(147) |
|
|
36 |
|
||
Income tax expense |
|
(22) |
|
|
(75) |
|
||
Loss from early extinguishment of debt |
|
(180) |
|
|
(227) |
|
||
Other non-operating expense, net |
|
(3) |
|
|
(3) |
|
||
Interest expense |
|
(244) |
|
|
(742) |
|
||
Operating income |
|
302 |
|
|
1,083 |
|
||
Litigation and investigation costs |
|
(84) |
|
|
(115) |
|
||
Net losses on sales, consolidation and deconsolidation of facilities |
|
(1) |
|
|
(3) |
|
||
Impairment and restructuring charges, and acquisition-related costs |
|
(46) |
|
|
(101) |
|
||
Depreciation and amortization |
|
(205) |
|
|
(627) |
|
||
Loss from divested and closed businesses |
|
(1) |
|
|
(2) |
|
||
Adjusted EBITDA |
|
$ |
639 |
|
|
$ |
1,931 |
|
|
|
|
|
|
||||
Net operating revenues |
|
$ |
4,568 |
|
|
$ |
13,673 |
|
Less: Net operating revenues from health plans |
|
? |
|
|
1 |
|
||
Adjusted net operating revenues |
|
$ |
4,568 |
|
|
$ |
13,672 |
|
|
|
|
|
|
||||
Net loss attributable to Tenet Healthcare Corporation common shareholders as a % of net operating revenues |
|
(4.9) |
% |
|
(1.6) |
% |
||
|
|
|
|
|
||||
Adjusted EBITDA as a % of adjusted net operating revenues (Adjusted EBITDA margin) |
|
14.0 |
% |
|
14.1 |
% |
TENET HEALTHCARE CORPORATION Additional Supplemental Non-GAAP disclosures Table #3 ? Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations (Unaudited) |
||||||||
(Dollars in millions) |
|
2020 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net cash provided by operating activities |
|
$ |
593 |
|
|
$ |
2,961 |
|
Purchases of property and equipment |
|
(86) |
|
|
(374) |
|
||
Free cash flow |
|
$ |
507 |
|
|
$ |
2,587 |
|
|
|
|
|
|
||||
Net cash used in investing activities |
|
$ |
(117) |
|
|
$ |
(406) |
|
Net cash (used in) provided by financing activities |
|
$ |
(690) |
|
|
$ |
483 |
|
|
|
|
|
|
||||
Net cash provided by operating activities |
|
$ |
593 |
|
|
$ |
2,961 |
|
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements |
|
(138) |
|
|
(252) |
|
||
Net cash used in operating activities from discontinued operations |
|
(1) |
|
|
(1) |
|
||
Adjusted net cash provided by operating activities from continuing operations |
|
732 |
|
|
3,214 |
|
||
Purchases of property and equipment |
|
(86) |
|
|
(374) |
|
||
Adjusted free cash flow ? continuing operations |
|
$ |
646 |
|
|
$ |
2,840 |
|
(Dollars in millions) |
|
2019 |
||||||
|
|
3rd Qtr |
|
YTD |
||||
Net cash provided by operating activities |
|
$ |
419 |
|
|
$ |
713 |
|
Purchases of property and equipment |
|
(156) |
|
|
(492) |
|
||
Free cash flow |
|
$ |
263 |
|
|
$ |
221 |
|
|
|
|
|
|
||||
Net cash used in investing activities |
|
$ |
(123) |
|
|
$ |
(426) |
|
Net cash used in financing activities |
|
$ |
(231) |
|
|
$ |
(384) |
|
|
|
|
|
|
||||
Net cash provided by operating activities |
|
$ |
419 |
|
|
$ |
713 |
|
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements |
|
(56) |
|
|
(136) |
|
||
Net cash provided by (used in) operating activities from discontinued operations |
|
1 |
|
|
(4) |
|
||
Adjusted net cash provided by operating activities from continuing operations |
|
474 |
|
|
853 |
|
||
Purchases of property and equipment |
|
(156) |
|
|
(492) |
|
||
Adjusted free cash flow ? continuing operations |
|
$ |
318 |
|
|
$ |
361 |
|
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