- Net income available to common shareholders in second
quarter 2024 was $259 million, or $2.64 per diluted share
- Adjusted diluted earnings per share1 was $2.31 in second
quarter 2024
- Consolidated Adjusted EBITDA1 in second quarter 2024 of $945
million increased 12.1% over second quarter 2023
- Second quarter 2024 Ambulatory Care Adjusted EBITDA of $447
million increased 20.8% over second quarter 2023
- Board of Directors has authorized a new $1.5 billion share
repurchase program
- FY 2024 Adjusted EBITDA Outlook now expected to be in the
range of $3.825 billion to $3.975 billion, a $300 million increase;
FY 2024 Free Cash Flow outlook now expected to be in the range of
$1.100 billion to $1.350 billion, a $150 million increase
Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced
its results for the quarter ended June 30, 2024.
"Our results through the second quarter, which have
significantly exceeded our expectations, have been driven by volume
and revenue growth as well as sustained fundamentally strong
operating performance," said Saum Sutaria, M.D., Chairman and Chief
Executive Officer of Tenet. "Our portfolio transformation and
enhanced cash flow profile provide us with compelling opportunities
for growth as we execute on our strategy and continue to broaden
our service offerings for patient-centered care."
Tenet’s results for second quarter 2024 versus second quarter
2023 are as follows:
Three Months Ended June
30,
Six Months Ended June
30,
($ in millions, except per share
results)
2024
2023
2024
2023
Net operating revenues
$5,103
$5,082
$10,471
$10,103
Net income available to Tenet common
shareholders
$259
$123
$2,410
$266
Net income available to Tenet common
shareholders per diluted share
$2.64
$1.15
$24.22
$2.47
Adjusted EBITDA1
$945
$843
$1,969
$1,675
Adjusted diluted earnings per share1
$2.31
$1.44
$5.53
$2.87
- Net income available to the Company’s common shareholders in
the second quarter 2024 was $259 million, or $2.64 per diluted
share, versus $123 million, or $1.15 per diluted share, in second
quarter 2023.
- Adjusted EBITDA1 in second quarter 2024 was $945 million
compared to $843 million in second quarter 2023, reflecting strong
same-hospital admission growth, strong ambulatory net revenue per
case growth, favorable payer mix, and improved contract labor
costs, partially offset by higher medical fees as well as the
impact of hospital divestitures.
- In addition to the previously disclosed increased Medicaid
supplemental revenues in Michigan, in the second quarter of 2024,
the Company recognized a $30 million favorable pre-tax impact
associated with additional Medicaid supplemental revenues in Texas
related to prior years.
Balance Sheet and Cash Flows
- Cash flows provided by operating activities for the six months
ended June 30, 2024 were $1.333 billion versus $1.047 billion for
the six months ended June 30, 2023.
- The Company produced free cash flow1 of $948 million for the
six months ended June 30, 2024 versus $680 million for the six
months ended June 30, 2023.
- In the three months ended June 30, 2024, the Company
repurchased 1,990,227 shares of common stock for $270 million. In
the six months ended June 30, 2024, the Company repurchased
4,801,461 shares of common stock for $548 million, which completed
the Company's previous $1 billion share repurchase program.
- The Company's Board of Directors has authorized a $1.5 billion
share repurchase program. Repurchases will be made at management's
discretion from time to time in the open market or through
privately negotiated transactions, subject to market conditions and
other relevant factors.
- The Company’s ratio of net debt to Adjusted EBITDA1 was 2.61x
at June 30, 2024 compared to 2.79x at March 31, 2024 and 3.89x at
December 31, 2023.
Ambulatory Care (Ambulatory)
Segment
Tenet’s Ambulatory business segment is comprised of the
operations of United Surgical Partners International (USPI). As of
June 30, 2024, USPI had interests in 520 ambulatory surgery centers
(377 consolidated) and 24 surgical hospitals (seven consolidated)
in 38 states.
Three Months Ended June
30,
Six Months Ended June
30,
Ambulatory segment results ($ in
millions)
2024
2023
2024
2023
Revenues
Net operating revenues
$1,141
$942
$2,136
$1,847
Same-facility system-wide net patient
service revenues2
$1,889
$1,764
$3,626
$3,395
Volume Changes versus the Prior-Year
Period
Same-facility system-wide surgical
cases2
0.2%
6.6%
—%
7.2%
Same-facility system-wide surgical cases
on same-business day basis2
0.2%
6.6%
—%
7.2%
Adjusted EBITDA, Margins and
NCI
Adjusted EBITDA
$447
$370
$841
$710
Adjusted EBITDA margin
39.2%
39.3%
39.4%
38.4%
Adjusted EBITDA less NCI
$273
$231
$514
$445
- Second quarter 2024 net operating revenues increased 21.1%
compared to second quarter 2023 driven by strong net revenue per
case growth, acquisitions of facilities, and increased service
lines.
- Surgical business same-facility system-wide net patient service
revenues increased 7.1% in second quarter 2024 compared to second
quarter 2023, with cases up 0.2% and net revenue per case up 6.8%.
Net revenue per case growth was driven by higher acuity associated
with favorable case mix as well as favorable payer mix.
- Second quarter 2024 Adjusted EBITDA increased 20.8% compared to
second quarter 2023, due to strong net revenue per case growth,
disciplined expense management, and contributions from acquisitions
and de novo facilities.
Hospital Operations and Services
(Hospital) Segment
Tenet’s Hospital business segment is primarily comprised of
acute care and specialty hospitals, imaging centers, ancillary
outpatient facilities, micro-hospitals and physician practices. It
also provides comprehensive end-to-end and focused point services,
including hospital and physician revenue cycle management, patient
communications and engagement support and value-based care
solutions.
Three Months Ended June
30,
Six Months Ended June
30,
Hospital segment results ($ in
millions)
2024
2023
2024
2023
Revenues
Net operating revenues
$3,962
$4,140
$8,335
$8,256
Same-hospital net patient service
revenues3
$3,444
$3,184
$6,915
$6,317
Same-Hospital Volume Changes versus the
Prior-Year Period
Admissions
5.2%
3.0%
4.7%
3.6%
Adjusted admissions4
2.4%
3.2%
2.1%
4.9%
Outpatient visits (including outpatient ER
visits)
0.6%
(1.3)%
(0.1)%
(0.6)%
Emergency Room visits (inpatient and
outpatient)
1.7%
0.4%
2.8%
2.5%
Hospital surgeries
1.5%
(0.1)%
(0.3)%
1.1%
Adjusted EBITDA
Adjusted EBITDA
$498
$473
$1,128
$965
Adjusted EBITDA margin
12.6%
11.4%
13.5%
11.7%
- Second quarter 2024 net operating revenues declined 4.3% from
second 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 5.7% year-over-year for second quarter 2024
primarily due to improved pricing yield, favorable payer mix, and
our focus on growing higher acuity services.
- Adjusted EBITDA in second quarter 2024 was $498 million
compared to $473 million in second quarter 2023, reflecting strong
same-hospital admission growth and revenue per adjusted admission,
improved contract labor costs, partially offset by higher medical
fees as well as the impact of hospital divestitures.
- In addition to the previously disclosed increased Medicaid
supplemental revenues in Michigan, in the second quarter of 2024,
the Company recognized a $30 million favorable pre-tax impact
associated with additional Medicaid supplemental revenues in Texas
related to prior years.
2024 Outlook1
Tenet’s Outlook for full year 2024 (consolidated and by segment)
and third quarter 2024 follows. This outlook reflects the
completion of the sale of three Coastal South Carolina hospitals on
January 31, 2024 and the completion of the sale of six California
hospitals on March 31, 2024.
CONSOLIDATED ($ in millions, except
per share amounts)
FY 2024 Outlook
Third Quarter 2024
Outlook
Net operating revenues
$20,600 to $21,000
$5,000 to $5,100
Net income available to Tenet common
stockholders
$2,825 to $2,930
$195 to $240
Adjusted EBITDA
$3,825 to $3,975
$900 to $950
Adjusted EBITDA margin
18.6% to 18.9%
18.0% to 18.6%
Diluted income per common share
$28.83 to $29.90
$2.01 to $2.47
Adjusted net income
$1,020 to $1,090
$210 to $250
Adjusted diluted earnings per share
$10.41 to $11.12
$2.16 to $2.58
Equity in earnings of unconsolidated
affiliates
$260 to $270
$60 to $70
Depreciation and amortization
$830 to $860
$210 to $220
Interest expense
$815 to $825
$195 to $205
Income tax expense5
$1,040 to $1,075
$90 to $105
Net income available to NCI
$820 to $870
$195 to $205
Weighted average diluted common shares
~98 million
~97 million
NCI cash distributions
$725 to $775
Net cash provided by operating
activities6
$1,900 to $2,250
Adjusted net cash provided by operating
activities6
$2,025 to $2,325
Capital expenditures
$800 to $900
Free cash flow6
$1,100 to $1,350
Adjusted free cash flow6
$1,225 to $1,425
Ambulatory Segment ($ in
millions)
FY 2024 Outlook
Net operating revenues
$4,325 to $4,475
Adjusted EBITDA
$1,750 to $1,810
NCI
$685 to $715
Adjusted EBITDA less NCI
$1,065 to $1,095
Changes versus prior year7:
Surgical cases volumes
Up 1.0% to 2.0%
Net revenues per surgical case
Up 4.5% to 5.5%
Hospital Segment ($ in
millions)
FY 2024 Outlook
Net operating revenues
$16,275 to $16,525
Adjusted EBITDA
$2,075 to $2,165
NCI
$135 to $155
Changes versus prior year7:
Inpatient admissions
Up 3.0% to 4.0%
Adjusted admissions
Up 1.0% to 3.0%
Management’s Webcast Discussion of
Results
Tenet management will discuss the Company’s second quarter 2024
results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00
a.m. Central Time) on July 24, 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 July 24, 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 third
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 June 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 $700 million of net income tax payments associated
with the gains on sale of the three hospitals and related
operations in South Carolina and the six hospitals and related
operations in California.
- 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
Second 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
16
Table #1 – Reconciliations of Net Income
to Adjusted Net Income
17
Table #2 – Reconciliations of Net Income
to Adjusted EBITDA
18
Table #3 – Reconciliations of Net Cash
Provided by Operating Activities to Free Cash Flow and Adjusted
Free Cash Flow
19
Table #4 – Reconciliations of Outlook Net
Income to Outlook Adjusted Net Income
20
Table #5 – Reconciliations of Outlook Net
Income to Outlook Adjusted EBITDA
21
Table #6 – Reconciliations of Outlook Net
Cash Provided by Operating Activities to Outlook Free Cash Flow and
Outlook Adjusted Free Cash Flow
22
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in millions, except per share
amounts)
Three Months Ended June
30,
2024
%
2023
%
Change
Net operating revenues
$
5,103
100.0
%
$
5,082
100.0
%
0.4
%
Grant income
5
0.1
%
8
0.2
%
(37.5
)%
Equity in earnings of unconsolidated
affiliates
61
1.2
%
54
1.1
%
13.0
%
Operating expenses:
Salaries, wages and benefits
2,168
42.5
%
2,285
45.0
%
(5.1
)%
Supplies
908
17.8
%
891
17.5
%
1.9
%
Other operating expenses, net
1,148
22.4
%
1,125
22.1
%
2.0
%
Depreciation and amortization
208
4.1
%
213
4.3
%
Impairment and restructuring charges, and
acquisition-related costs
29
0.6
%
16
0.3
%
Litigation and investigation costs
5
0.1
%
10
0.2
%
Net gains on sales, consolidation and
deconsolidation of facilities
(58
)
(1.1
)%
—
—
%
Operating income
761
14.9
%
604
11.9
%
Interest expense
(203
)
(226
)
Other non-operating income, net
29
6
Loss from early extinguishment of debt
—
(11
)
Income before income taxes
587
373
Income tax expense
(110
)
(80
)
Net income
477
293
Less: Net income available to
noncontrolling interests
218
170
Net income available to Tenet
Healthcare Corporation common shareholders
$
259
$
123
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
$
2.66
$
1.21
Diluted
$
2.64
$
1.15
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic
97,267
101,766
Diluted
98,444
104,778
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in millions, except per share
amounts)
Six Months Ended June
30,
2024
%
2023
%
Change
Net operating revenues
$
10,471
100.0
%
$
10,103
100.0
%
3.6
%
Grant income
5
—
%
11
0.1
%
(54.5
)%
Equity in earnings of unconsolidated
affiliates
120
1.1
%
104
1.0
%
15.4
%
Operating expenses:
Salaries, wages and benefits
4,489
42.9
%
4,543
45.0
%
(1.2
)%
Supplies
1,836
17.5
%
1,782
17.6
%
3.0
%
Other operating expenses, net
2,302
21.9
%
2,218
22.0
%
3.8
%
Depreciation and amortization
416
4.0
%
430
4.2
%
Impairment and restructuring charges, and
acquisition-related costs
56
0.5
%
37
0.4
%
Litigation and investigation costs
9
0.1
%
14
0.1
%
Net gains on sales, consolidation and
deconsolidation of facilities
(2,558
)
(24.4
)%
(13
)
(0.1
)%
Operating income
4,046
38.6
%
1,207
11.9
%
Interest expense
(421
)
(447
)
Other non-operating income, net
54
4
Loss from early extinguishment of debt
(8
)
(11
)
Income before income taxes
3,671
753
Income tax expense
(860
)
(164
)
Net income
2,811
589
Less: Net income available to
noncontrolling interests
401
323
Net income available to Tenet
Healthcare Corporation common shareholders
$
2,410
$
266
Earnings per share available to Tenet
Healthcare Corporation common shareholders:
Basic
$
24.49
$
2.61
Diluted
$
24.22
$
2.47
Weighted average shares and dilutive
securities outstanding (in thousands):
Basic
98,424
102,028
Diluted
99,557
105,354
TENET HEALTHCARE
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in millions)
June 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
2,880
$
1,228
Accounts receivable
2,817
2,914
Inventories of supplies, at cost
382
411
Assets held for sale
21
775
Other current assets
1,855
1,839
Total current assets
7,955
7,167
Investments and other assets
3,156
3,157
Deferred income taxes
85
77
Property and equipment, at cost, less
accumulated depreciation and amortization
5,857
6,236
Goodwill
10,799
10,307
Other intangible assets, at cost, less
accumulated amortization
1,413
1,368
Total assets
$
29,265
$
28,312
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
102
$
120
Accounts payable
1,270
1,408
Accrued compensation and benefits
788
930
Professional and general liability
reserves
283
254
Accrued interest payable
149
200
Liabilities held for sale
11
69
Income tax payable
715
23
Other current liabilities
2,175
1,756
Total current liabilities
5,493
4,760
Long-term debt, net of current portion
12,769
14,882
Professional and general liability
reserves
844
792
Defined benefit plan obligations
334
335
Deferred income taxes
245
326
Other long-term liabilities
1,711
1,709
Total liabilities
21,396
22,804
Commitments and contingencies
Redeemable noncontrolling interests in
equity of consolidated subsidiaries
2,813
2,391
Equity:
Shareholders’ equity:
Common stock
8
8
Additional paid-in capital
4,840
4,834
Accumulated other comprehensive loss
(177
)
(181
)
Retained earnings (accumulated
deficit)
2,218
(192
)
Common stock in treasury, at cost
(3,414
)
(2,861
)
Total shareholders’ equity
3,475
1,608
Noncontrolling interests
1,581
1,509
Total equity
5,056
3,117
Total liabilities and equity
$
29,265
$
28,312
TENET HEALTHCARE
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Dollars in millions)
Six Months Ended
June 30,
2024
2023
Net income
$
2,811
$
589
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
416
430
Deferred income tax expense (benefit)
(93
)
37
Stock-based compensation expense
36
33
Impairment and restructuring charges, and
acquisition-related costs
56
37
Litigation and investigation costs
9
14
Net gains on sales, consolidation and
deconsolidation of facilities
(2,558
)
(13
)
Loss from early extinguishment of debt
8
11
Equity in earnings of unconsolidated
affiliates, net of distributions received
(3
)
7
Amortization of debt discount and debt
issuance costs
14
18
Net gains from the sale of investments and
long-lived assets
(1
)
(15
)
Other items, net
(3
)
(3
)
Changes in cash from operating assets
and liabilities:
Accounts receivable
77
7
Inventories and other current assets
16
160
Income taxes
713
(31
)
Accounts payable, accrued expenses and
other current liabilities
(124
)
(168
)
Other long-term liabilities
23
12
Payments for restructuring charges,
acquisition-related costs, and litigation costs and
settlements
(64
)
(78
)
Net cash provided by operating
activities
1,333
1,047
Cash flows from investing
activities:
Purchases of property and equipment
(385
)
(367
)
Purchases of businesses or joint venture
interests, net of cash acquired
(510
)
(96
)
Proceeds from sales of facilities and
other assets
4,048
16
Proceeds from sales of marketable
securities and long-term investments
17
26
Purchases of marketable securities and
long-term investments
(26
)
(37
)
Other items, net
(10
)
(9
)
Net cash provided by (used in)
investing activities
3,134
(467
)
Cash flows from financing
activities:
Repayments of borrowings
(2,179
)
(1,437
)
Proceeds from borrowings
8
1,362
Repurchases of common stock
(548
)
(90
)
Debt issuance costs
—
(15
)
Distributions paid to noncontrolling
interests
(323
)
(270
)
Proceeds from the sale of noncontrolling
interests
10
30
Purchases of noncontrolling interests
(88
)
(79
)
Advances from managed care payers
342
—
Other items, net
(37
)
(5
)
Net cash used in financing
activities
(2,815
)
(504
)
Net increase in cash and cash
equivalents
1,652
76
Cash and cash equivalents at beginning of
period
1,228
858
Cash and cash equivalents at end of
period
$
2,880
$
934
Supplemental disclosures:
Interest paid, net of capitalized
interest
$
(459
)
$
(445
)
Income tax payments, net
$
(240
)
$
(158
)
TENET HEALTHCARE
CORPORATION
SEGMENT REPORTING
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
(Dollars in millions)
2024
2023
2024
2023
Net operating revenues:
Ambulatory Care
$
1,141
$
942
$
2,136
$
1,847
Hospital Operations and Services
3,962
4,140
8,335
8,256
Total
$
5,103
$
5,082
$
10,471
$
10,103
Equity in earnings of unconsolidated
affiliates:
Ambulatory Care
$
58
$
52
$
114
$
99
Hospital Operations and Services
3
2
6
5
Total
$
61
$
54
$
120
$
104
Adjusted EBITDA:
Ambulatory Care
$
447
$
370
$
841
$
710
Hospital Operations and Services
498
473
1,128
965
Total
$
945
$
843
$
1,969
$
1,675
Adjusted EBITDA margins:
Ambulatory Care
39.2
%
39.3
%
39.4
%
38.4
%
Hospital Operations and Services
12.6
%
11.4
%
13.5
%
11.7
%
Total
18.5
%
16.6
%
18.8
%
16.6
%
Capital expenditures:
Ambulatory Care
$
19
$
20
$
37
$
38
Hospital Operations and Services
126
112
348
329
Total
$
145
$
132
$
385
$
367
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
Six Months Ended
June 30,
June 30,
(Dollars in millions, except per share
amounts)
2024
2023
2024
2023
Net income available to Tenet
Healthcare Corporation common shareholders
$
259
$
123
$
2,410
$
266
Less:
Impairment and restructuring charges, and
acquisition-related costs
(29
)
(16
)
(56
)
(37
)
Litigation and investigation costs
(5
)
(10
)
(9
)
(14
)
Net gains on sales, consolidation and
deconsolidation of facilities
58
—
2,558
13
Loss from early extinguishment of debt
—
(11
)
(8
)
(11
)
Tax and noncontrolling interests impact of
above items
9
6
(625
)
7
Adjusted net income available to common
shareholders
$
226
$
154
$
550
$
308
Diluted earnings per share
$
2.64
$
1.15
$
24.22
$
2.47
Less:
Impairment and restructuring charges, and
acquisition-related costs
(0.30
)
(0.15
)
(0.56
)
(0.35
)
Litigation and investigation costs
(0.05
)
(0.10
)
(0.09
)
(0.13
)
Net gains on sales, consolidation and
deconsolidation of facilities
0.59
—
25.70
0.12
Loss from early extinguishment of debt
—
(0.10
)
(0.08
)
(0.10
)
Tax and noncontrolling interests impact of
above items
0.09
0.06
(6.28
)
0.06
Adjusted diluted earnings per
share
$
2.31
$
1.44
$
5.53
$
2.87
Weighted average basic shares
outstanding (in thousands)
97,267
101,766
98,424
102,028
Weighted average dilutive shares
outstanding (in thousands)
98,444
104,778
99,557
105,354
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
Six Months Ended
June 30,
June 30,
(Dollars in millions)
2024
2023
2024
2023
Net income available to Tenet
Healthcare Corporation common shareholders
$
259
$
123
$
2,410
$
266
Less:
Net income available to noncontrolling
interests
(218
)
(170
)
(401
)
(323
)
Net income
477
293
2,811
589
Income tax expense
(110
)
(80
)
(860
)
(164
)
Loss from early extinguishment of debt
—
(11
)
(8
)
(11
)
Other non-operating income, net
29
6
54
4
Interest expense
(203
)
(226
)
(421
)
(447
)
Operating income
761
604
4,046
1,207
Litigation and investigation costs
(5
)
(10
)
(9
)
(14
)
Net gains on sales, consolidation and
deconsolidation of facilities
58
—
2,558
13
Impairment and restructuring charges, and
acquisition-related costs
(29
)
(16
)
(56
)
(37
)
Depreciation and amortization
(208
)
(213
)
(416
)
(430
)
Adjusted EBITDA
$
945
$
843
$
1,969
$
1,675
Net operating revenues
$
5,103
$
5,082
$
10,471
$
10,103
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
5.1
%
2.4
%
23.0
%
2.6
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
18.5
%
16.6
%
18.8
%
16.6
%
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)
Q2
YTD
Net cash provided by operating
activities
$
747
$
1,333
Purchases of property and equipment
(145
)
(385
)
Free cash flow
$
602
$
948
Net cash provided by (used in)
investing activities
$
(194
)
$
3,134
Net cash used in financing
activities
$
(154
)
$
(2,815
)
Net cash provided by operating
activities
$
747
$
1,333
Less:
Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements
(39
)
(64
)
Adjusted net cash provided by operating
activities
786
1,397
Purchases of property and equipment
(145
)
(385
)
Adjusted free cash flow
$
641
$
1,012
2023
(Dollars in millions)
Q2
YTD
Net cash provided by operating
activities
$
598
$
1,047
Purchases of property and equipment
(132
)
(367
)
Free cash flow
$
466
$
680
Net cash used in investing
activities
$
(181
)
$
(467
)
Net cash used in financing
activities
$
(249
)
$
(504
)
Net cash provided by operating
activities
$
598
$
1,047
Less:
Payments for restructuring charges,
acquisition-related costs, and litigation costs and settlements
(54
)
(78
)
Adjusted net cash provided by operating
activities
652
1,125
Purchases of property and equipment
(132
)
(367
)
Adjusted free cash flow
$
520
$
758
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)
Third Quarter 2024
FY 2024
(Dollars in millions, except per share
amounts)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
195
$
240
$
2,825
$
2,930
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(20
)
(10
)
(125
)
(75
)
Net gains on sales, consolidation and
deconsolidation of facilities(2)
—
—
2,558
2,558
Loss from early extinguishment of
debt(2)
—
—
(8
)
(8
)
Tax and noncontrolling interests impact of
above items
5
—
(620
)
(635
)
Adjusted net income available to common
shareholders
$
210
$
250
$
1,020
$
1,090
Diluted earnings per share
$
2.01
$
2.47
$
28.83
$
29.90
Less:
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and settlements
(0.20
)
(0.11
)
(1.27
)
(0.76
)
Net gains on sales, consolidation and
deconsolidation of facilities
—
—
26.10
26.10
Loss from early extinguishment of debt
—
—
(0.08
)
(0.08
)
Tax and noncontrolling interests impact of
above items
0.05
—
(6.33
)
(6.48
)
Adjusted diluted earnings per
share
$
2.16
$
2.58
$
10.41
$
11.12
Weighted average basic shares
outstanding (in thousands)
96,000
96,000
97,000
97,000
Weighted average dilutive shares
outstanding (in thousands)
97,000
97,000
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)
Third Quarter 2024
FY 2024
(Dollars in millions)
Low
High
Low
High
Net income available to Tenet
Healthcare Corporation common shareholders
$
195
$
240
$
2,825
$
2,930
Less:
Net income available to noncontrolling
interests
(195
)
(205
)
(820
)
(870
)
Income tax expense
(90
)
(105
)
(1,040
)
(1,075
)
Interest expense
(205
)
(195
)
(825
)
(815
)
Loss from early extinguishment of
debt(2)
—
—
(8
)
(8
)
Other non-operating income, net
15
25
90
100
Net gains on sales, consolidation and
deconsolidation of facilities(2)
—
—
2,558
2,558
Impairment and restructuring charges,
acquisition-related costs, and litigation costs and
settlements(1)
(20
)
(10
)
(125
)
(75
)
Depreciation and amortization
(210
)
(220
)
(830
)
(860
)
Adjusted EBITDA
$
900
$
950
$
3,825
$
3,975
Net income available to Tenet
Healthcare Corporation common shareholders
$
195
$
240
$
2,825
$
2,930
Net operating revenues
$
5,000
$
5,100
$
20,600
$
21,000
Net income available to Tenet
Healthcare Corporation common shareholders as a % of net operating
revenues
3.9
%
4.7
%
13.7
%
14.0
%
Adjusted EBITDA as a % of net operating
revenues (Adjusted EBITDA margin)
18.0
%
18.6
%
18.6
%
18.9
%
(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
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
$
1,900
$
2,250
Purchases of property and equipment
(800
)
(900
)
Free cash flow
$
1,100
$
1,350
Net cash provided by operating
activities
$
1,900
$
2,250
Less:
Payments for restructuring charges,
acquisition-related costs and litigation costs and
settlements(1)
(125
)
(75
)
Adjusted net cash provided by operating
activities
2,025
2,325
Purchases of property and equipment
(800
)
(900
)
Adjusted free cash flow(2)
$
1,225
$
1,425
(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/20240723399752/en/
Investor Contact Will McDowell 469-893-2387
william.mcdowell@tenethealth.com
Media Contact Robert Dyer 469-893-2640
mediarelations@tenethealth.com
Tenet Healthcare (NYSE:THC)
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