Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Tenet Reports Strong Second Quarter 2024 Results; Raises 2024 Financial Outlook By: Tenet Healthcare Corporation via Business Wire July 24, 2024 at 06:45 AM EDT 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/Contacts Investor Contact Will McDowell 469-893-2387 william.mcdowell@tenethealth.com Media Contact Robert Dyer 469-893-2640 mediarelations@tenethealth.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Tenet Reports Strong Second Quarter 2024 Results; Raises 2024 Financial Outlook By: Tenet Healthcare Corporation via Business Wire July 24, 2024 at 06:45 AM EDT 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/Contacts Investor Contact Will McDowell 469-893-2387 william.mcdowell@tenethealth.com Media Contact Robert Dyer 469-893-2640 mediarelations@tenethealth.com
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