Exhibit 99.1



tenet_logo.jpg
 
Tenet Reports Results for the Fourth Quarter Ended
December 31, 2017


l
Hospital segment same-hospital admissions increased 0.2%, adjusted admissions increased 1.3%, and revenue per adjusted admission increased 4.8%, resulting in same-hospital net patient revenue growth of 6.1%.
l
Ambulatory Care same-facility system-wide cases increased 4.6% and revenue per case increased 2.2%, resulting in revenue growth of 6.9%.
l
Conifer’s revenues decreased 2.0% with revenue from third parties flat year-over-year.
l
As a result of the Tax Cuts and Jobs Act, Tenet recorded a $252 million non-cash partial write-down of the Company’s deferred tax assets and a $22 million increase in noncontrolling interest expense, which lowered net income by $274 million in the fourth quarter. In addition, the Company recorded a $99 million after-tax charge, primarily related to the write-down of assets held for sale in Chicago and employee severance. As a result, Tenet reported a net loss from continuing operations attributable to Tenet shareholders of $230 million or $2.28 per diluted share in the fourth quarter. After adjusting for these items, which totaled $373 million or $3.68 per share, Tenet reported Adjusted diluted earnings per share from continuing operations of $1.40.
l
Adjusted EBITDA was $840 million in the fourth quarter, consisting of $538 million in the Hospital segment, $223 million in the Ambulatory segment and $79 million in the Conifer segment.
l
Net cash provided by operating activities in 2017 was $1.200 billion, a $642 million increase when compared to $558 million in 2016. Free Cash Flow was $493 million in 2017, an $810 million increase when compared to an outflow of $317 million in 2016. Adjusted Free Cash Flow was $623 million in 2017, a $243 million increase when compared to $380 million in 2016.
l
2018 Outlook has been increased to reflect net income from continuing operations attributable to Tenet common shareholders of $95 million to $105 million, Adjusted EBITDA of $2.500 billion to $2.600 billion, diluted earnings per share from continuing operations of $0.92 to $1.02 and Adjusted diluted earnings per share from continuing operations of $0.73 to $1.07.
DALLAS - February 26, 2018 - Tenet Healthcare Corporation (NYSE: THC) reported a net loss from continuing operations attributable to Tenet shareholders of $230 million in the fourth quarter of 2017 due to the items mentioned above, compared to a $79 million net loss from continuing operations in the fourth quarter of 2016. Adjusted EBITDA was $840 million in the fourth quarter of 2017 compared to $650 million in the fourth quarter of 2016.






“Our results for the fourth quarter were strong in each of our business segments,” said Ronald A. Rittenmeyer, executive chairman and CEO.  “Volume growth returned in our hospital and Ambulatory segments, cost controls were tight, and our financial results at USPI and Conifer were very strong.  Our cost control program is off to a great start and, when combined with improved financial performance in the fourth quarter, we are raising our Outlook for Adjusted EBITDA and Adjusted EPS for 2018.”

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment was $4.184 billion, up 3.4 percent from $4.046 billion in the fourth quarter of 2016; in order to improve comparability, these revenue figures exclude revenue generated by the Company’s health plans in both periods since the Company is exiting this business.

On a same-hospital basis, patient revenue was $4.126 billion, up 6.1 percent from $3.889 billion in the fourth quarter of 2016, with adjusted admissions up 1.3 percent and revenue per adjusted admission up 4.8 percent. The growth in revenue per adjusted admission was due to a $202 million increase in revenue from the California Provider Fee Program since the 2017 program was not approved until December 2017.

Adjusted EBITDA in Tenet’s hospital segment was $538 million, representing an increase of $143 million or 36.2 percent as compared to $395 million in the fourth quarter of 2016. The $143 million increase in Adjusted EBITDA in the hospital segment was primarily driven by: (i) $202 million increase in California Provider Fee revenue, with $267 million of revenue being under the program in the fourth quarter of 2017 compared to $65 million in the fourth quarter of 2016; (ii) $17 million unfavorable comparison due to the sale of the Company’s hospitals and related assets in Houston, effective August 1, 2017; (iii) $17 million of previously disclosed executive severance in the fourth quarter of 2017; and, (iv) an $8 million decline in electronic health record incentives.

Tenet’s health plan business was breakeven in the fourth quarter of 2017 versus a loss of $29 million on the EBITDA line in the fourth quarter of 2016. The revenue and expenses associated with the Company’s health plan operations are included in Tenet’s consolidated statements of operations; however, the results are excluded from Adjusted EBITDA in both periods.

Selected operating expenses in the segment, defined as the sum of salaries, wages and benefits, supplies and other operating expenses, increased 2.2 percent on a per adjusted admission basis in the fourth quarter of 2017.

Exchanges

Tenet’s same-hospital exchange admissions were 4,857 in the fourth quarter of 2017, up 0.2 percent from the fourth quarter of 2016. Same-hospital exchange outpatient visits were 51,451 in the fourth quarter of 2017, up 15.2 percent from the fourth quarter of 2016.


Page 2



Uncompensated Care

Tenet’s provision for doubtful accounts was $325 million in the fourth quarter of 2017, representing a ratio of 6.1 percent of revenues before bad debt, as compared to $354 million in the fourth quarter of 2016, or 6.9 percent of revenues before bad debt (excluding health plan revenues from both periods). The decrease in the bad debt ratio was primarily attributable to a $15 million decrease in same-hospital self-pay revenues, revenue growth in our Ambulatory segment, the sale of our Houston hospitals in 2017, and a full year of the California Provider Fee revenue being recorded in the fourth quarter of 2017.

Tenet’s uncompensated care costs, defined as the sum of the provision for doubtful accounts, charity care write-offs and uninsured discounts, were $1.361 billion and $1.332 billion in the fourth quarters of 2017 and 2016, respectively, including $1.036 billion and $978 million, respectively, of charity care write-offs and uninsured discounts that were offered through Tenet’s Compact with Uninsured Patients. Uncompensated care in the fourth quarter of 2017 represented 21.5 percent of revenue before bad debts, uninsured discounts and charity care write-offs, flat versus the fourth quarter of 2016. Nearly all of Tenet’s uncompensated care is associated with the Hospital Operations and other segment.

Uninsured plus charity admissions increased by 317 admissions, or 3.3 percent on a same-hospital basis in the fourth quarter of 2017 compared to the fourth quarter of 2016. Uninsured plus charity outpatient visits increased by 6,237 visits, or 5.6 percent, on a same-hospital basis.

Ambulatory Care Segment

During the fourth quarter of 2017, the Ambulatory segment produced net operating revenues of $545 million, representing an increase of 14.0 percent as compared to $478 million in the fourth quarter of 2016. In addition, the Ambulatory segment generated Adjusted EBITDA of $223 million, up 21.9 percent from $183 million in the fourth quarter of 2016 and Adjusted EBITDA less facility-level noncontrolling interest was $145 million, up 26.1 percent from $115 million in the fourth quarter of 2016.

The results of many of the facilities in which the Ambulatory segment has an investment 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. On a same-facility system-wide basis, revenue in the Ambulatory segment increased 6.9 percent, with cases increasing 4.6 percent and revenue per case increasing 2.2 percent. The number of surgical days was the same in both periods and did not impact the year-over-year growth rates this quarter.

Conifer Segment

During the fourth quarter of 2017, Conifer’s revenue decreased 2.0 percent to $394 million, down from $402 million in the fourth quarter of 2016. Revenue from third party customers was flat at $239 million. Conifer generated $79 million of Adjusted EBITDA in the fourth quarter of 2017, up 9.7 percent from $72 million in the fourth quarter of 2016.

Page 3




Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to Tenet shareholders of $230 million, or a loss of $2.28 per diluted share, in the fourth quarter of 2017 compared to a net loss of $79 million, or a loss of $0.79 per diluted share, in the fourth quarter of 2016.

As shown on Table #2, the net loss from continuing operations attributable to Tenet shareholders of approximately $230 million included: (i) a $252 million non-cash partial write-down of the Company’s deferred tax assets due to the reduction in the corporate federal income tax rate from 35 percent to 21 percent; (ii) a $138 million pre-tax impairment and restructuring charge consisting of $73 million from the write-down of assets held for sale in the Chicago-area to their estimated fair value, $42 million of restructuring charges primarily related to employee severance associated with the Company’s cost reduction initiatives, and $23 million of other impairment and restructuring charges; and, (iii) $9 million of other items.  These items collectively lowered pre-tax income by approximately $147 million and lowered after-tax income by approximately $350 million. In addition, there was a noncontrolling interest impact of $23 million substantially due to a non-cash reduction in the deferred tax liabilities of the Company’s Ambulatory segment. Collectively, these items lowered diluted earnings per share by approximately $3.68.

After adjusting for the items listed on Table #2, Tenet recorded Adjusted net income from continuing operations attributable to Tenet shareholders of $143 million, or $1.40 per diluted share, during the fourth quarter of 2017, as compared to Adjusted net income from continuing operations attributable to Tenet shareholders of $23 million, or $0.23 per diluted share, in the fourth quarter of 2016.

A reconciliation of GAAP net income (loss) attributable to Tenet shareholders to Adjusted net income (loss) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations attributable to Tenet shareholders is contained in Table #2 at the end of this release.

Cash Flow and Liquidity

Cash and cash equivalents were $611 million at December 31, 2017 compared to $429 million at September 30, 2017. The Company had no outstanding borrowings on its $1 billion credit line as of December 31, 2017. Accounts receivable days outstanding from continuing operations were 55.2 at December 31, 2017 compared to 55.6 at September 30, 2017 and 56.5 at December 31, 2016. The calculation of accounts receivable days outstanding from continuing operations: (i) includes the accounts receivable of the Company’s two hospitals in Philadelphia, the Company’s four hospitals in the Chicago-area, Des Peres Hospital in St. Louis, and the Aspen facilities in the United Kingdom, which have been classified in assets held for sale on the Condensed Consolidated Balance Sheet at December 31, 2017; (ii) excludes revenue from our former hospitals and related assets in Houston, which were divested on August 1, 2017, from the 2016 and 2017 periods; (iii) excludes health plan revenues from the 2016 and 2017 periods; and (iv) excludes California Provider Fee revenues from both 2016 and 2017.


Page 4



Net cash provided by operating activities in 2017 was $1.200 billion, representing a $642 million increase compared to $558 million in 2016. After subtracting $707 million and $875 million of capital expenditures in 2017 and 2016, respectively, Free Cash Flow was $493 million in 2017, an $810 million improvement compared to an outflow of $317 million in 2016. Adjusted Free Cash Flow was $623 million in 2017, representing a $243 million increase from $380 million in 2016.

Net cash provided by investing activities was $21 million in 2017 compared to $430 million of net cash used in investing activities in 2016. The 2017 period included $827 million of proceeds from the sales of facilities and other assets, primarily from the sale of the Company’s Houston-area hospitals effective August 1, 2017 for net pre-tax proceeds of approximately $750 million; the 2016 period included $573 million of proceeds from the sale of the Company’s hospitals and related outpatient facilities in Georgia.

Net cash used in financing activities was $1.326 billion in 2017 compared to $232 million of net cash provided by financing activities in 2016. The 2017 period included: (i) $729 million related to purchases of noncontrolling interests, primarily the Company’s purchase of an additional 23.7 percent of USPI, which increased Tenet’s ownership interest in the USPI joint venture to 80.0 percent; (ii) the refinancing activities that were completed in the second and third quarters of 2017; and (iii) the redemption of $250 million aggregate principal amount of Tenet’s 8.0 percent senior unsecured notes due 2020 on September 11, 2017.

Reconciliations of net cash provided by operating activities to both Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at the end of this release.

Outlook

The Company’s revised Outlook for 2018 includes:

l
Revenue of $17.9 billion to $18.3 billion,
l
Net income from continuing operations attributable to Tenet common shareholders of $95 million to $105 million,
l
Adjusted EBITDA of $2.500 billion to $2.600 billion,
l
Net cash provided by operating activities of $1.245 billion to $1.450 billion,
l
Adjusted Free Cash Flow of $675 million to $875 million,
l
Diluted earnings per share from continuing operations attributable to Tenet shareholders ranging from $0.92 to $1.02, and
l
Adjusted diluted earnings per share from continuing operations attributable to Tenet shareholders of $0.73 to $1.07.
The Company raised the midpoint of its previous 2018 Adjusted EBITDA Outlook range $25 million to reflect: (i) higher expectations for Conifer; (ii) additional Medicaid DSH reimbursement since Medicaid DSH reimbursement cuts have been delayed in both federal fiscal years 2018 and 2019; (iii) greater than previously expected revenue from the California Provider Fee program in 2018; and (iv) a net reduction in estimated EBITDA from to-be-divested facilities in 2018.

Page 5




The Outlook for 2018 assumes equity in earnings of unconsolidated affiliates of $160 million to $170 million, net income attributable to noncontrolling interests of $415 million to $435 million and an average diluted share count of 103 million.

The Company’s Outlook for the first quarter of 2018 includes:

l
Revenue of $4.45 billion to $4.65 billion,
l
Net income from continuing operations attributable to Tenet shareholders of $50 million to $70 million,
l
Adjusted EBITDA of $580 million to $630 million,
l
Earnings per diluted share from continuing operations attributable to Tenet shareholders of $0.49 to $0.69, and
l
Adjusted earnings per diluted share from continuing operations attributable to Tenet shareholders ranging from a loss of $0.10 to earnings of $0.05.
 
The Outlook for the first quarter assumes equity in earnings of unconsolidated affiliates of approximately $30 million to $35 million, net income attributable to noncontrolling interests of $90 million to $100 million, and an average diluted share count of 102 million.

Additional details on Tenet’s Outlook for both the first quarter and calendar year 2018 are available in Tables #4 and #5 at the end of this press release and in an accompanying slide presentation that is accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of Fourth Quarter Results

Tenet management will discuss the Company’s fourth quarter 2017 results on a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 27, 2018. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors. A set of slides, which will be referred to on the conference call, is available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations is contained in its Form 10K report for the twelve months ended December 31, 2017, which will be filed with the Securities and Exchange Commission and posted on the Company’s website before the webcast.

This press release includes certain non-GAAP measures, such as Adjusted EBITDA, Adjusted net income (loss) from continuing operations attributable to Tenet shareholders, Adjusted diluted earnings (loss) per share from continuing operations attributable to Tenet shareholders, Free Cash Flow and Adjusted Free Cash Flow. Reconciliations of these measures to the most comparable GAAP measure are contained in the tables at the end of this release.

Tenet Healthcare Corporation is a diversified healthcare services company with 120,000 employees united around a common mission: to help people live happier, healthier lives.  Through its subsidiaries, partnerships and joint ventures, including United Surgical Partners International, the

Page 6



Company operates general acute care and specialty hospitals, ambulatory surgery centers, urgent care centers and other outpatient facilities in the United States and the United Kingdom. Tenet’s Conifer Health Solutions subsidiary provides technology-enabled performance improvement and health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans. For more information, please visit www.tenethealth.com.

The terms "THC", "Tenet Healthcare Corporation", "the Company", "we", "us" or "our" refer to Tenet Healthcare Corporation or one or more of its subsidiaries or affiliates as applicable.

###
 
Investor Relations
Brendan Strong
469-893-6992
investorrelations@tenethealth.com
Corporate Communications
Lesley Bogdanow
469-893-2640 
mediarelations@tenethealth.com
 
This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “assume,” “anticipate,” “estimate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our 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, 2017, and subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

 
Tenet uses its Company website to provide important information to investors about the Company including the posting of important announcements regarding financial performance and corporate developments.

Page 7





TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions except per share amounts)
 
Three Months Ended December 31,
 
 
2017
 
%
 
2016
 
%
 
Change
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
Net operating revenues before provision for doubtful accounts
 
$
5,303

 
 
 
$
5,214

 
 
 
1.7
 %
Less: Provision for doubtful accounts
 
325

 
 
 
354

 
 
 
(8.2
)%
Net operating revenues
 
4,978

 
100.0
 %
 
4,860

 
100.0
 %
 
2.4
 %
Equity in earnings of unconsolidated affiliates
 
49

 
1.0
 %
 
46

 
0.9
 %
 
6.5
 %
Operating expenses:
 
 
 
 

 
 
 
 
 
 
Salaries, wages and benefits
 
2,284

 
45.9
 %
 
2,316

 
47.7
 %
 
(1.4
)%
Supplies
 
800

 
16.0
 %
 
773

 
15.9
 %
 
3.5
 %
Other operating expenses, net
 
1,104

 
22.2
 %
 
1,205

 
24.7
 %
 
(8.4
)%
Electronic health record incentives
 
(1
)
 
 %
 
(9
)
 
(0.2
)%
 
(88.9
)%
Depreciation and amortization
 
208

 
4.2
 %
 
218

 
4.5
 %
 
 
Impairment and restructuring charges, and acquisition-related costs
 
138

 
2.8
 %
 
121

 
2.5
 %
 
 
Litigation and investigation costs
 
11

 
0.2
 %
 
2

 
 %
 
 
Gains on sales, consolidation and deconsolidation of facilities
 
(2
)
 
 %
 
0

 
 %
 
 
Operating income
 
485

 
9.7
 %
 
280

 
5.8
 %
 
 
Interest expense
 
(253
)
 
 
 
(249
)
 
 
 
 
Other non-operating expense, net
 
(8
)
 
 
 
(2
)
 
 
 
 
Loss from early extinguishment of debt
 

 
 
 

 
 
 
 
Income from continuing operations, before income taxes
 
224

 
 
 
29

 
 
 
 
Income tax expense
 
(324
)
 
 
 
(6
)
 
 
 
 
Income (loss) from continuing operations, before discontinued operations
 
(100
)
 
 
 
23

 
 
 
 
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
1

 
 
 
(1
)
 
 
 
 
Income tax benefit
 

 
 
 
1

 
 
 
 
Income (loss) from discontinued operations
 
1

 
 
 

 
 
 
 
Net income (loss)
 
(99
)
 
 
 
23

 
 
 
 
Less: Net income attributable to noncontrolling interests
 
130

 
 
 
102

 
 
 
 
Net loss attributable to Tenet Healthcare Corporation common shareholders
 
$
(229
)
 
 
 
$
(79
)
 
 
 
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations, net of tax
 
$
(230
)
 
 
 
$
(79
)
 
 
 
 
Income (loss) from discontinued operations, net of tax
 
1

 
 
 

 
 
 
 
Net loss attributable to Tenet Healthcare Corporation common shareholders
 
$
(229
)
 
 
 
$
(79
)
 
 
 
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(2.28
)
 
 
 
$
(0.79
)
 
 
 
 
Discontinued operations
 
0.01

 
 
 
0.00

 
 
 
 
 
 
$
(2.27
)
 
 
 
$
(0.79
)
 
 
 
 
Diluted
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(2.28
)
 
 
 
$
(0.79
)
 
 
 
 
Discontinued operations
 
0.01

 
 
 
0.00

 
 
 
 
 
 
$
(2.27
)
 
 
 
$
(0.79
)
 
 
 
 
Weighted average shares and dilutive securities outstanding (in thousands):
 
 
 
 
 
 
 
 
 
 
Basic
 
100,945

 
 
 
99,651

 
 
 
 
Diluted*
 
100,945

 
 
 
99,651

 
 
 
 


*Had we generated income from continuing operations in the three months ended December 31, 2017 and 2016 the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 908 thousand and 1,277 thousand shares, respectively.

Page 8



TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions except per share amounts)
 
Years Ended December 31,
 
 
2017
 
%
 
2016
 
%
 
Change
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
Net operating revenues before provision for doubtful accounts
 
$
20,613

 
 
 
$
21,070

 
 
 
(2.2
)%
Less: Provision for doubtful accounts
 
1,434

 
 
 
1,449

 
 
 
(1.0
)%
Net operating revenues
 
19,179

 
100.0
 %
 
19,621

 
100.0
 %
 
(2.3
)%
Equity in earnings of unconsolidated affiliates
 
144

 
0.8
 %
 
131

 
0.7
 %
 
9.9
 %
Operating expenses:
 
 
 
 
 
 
 
 
 


Salaries, wages and benefits
 
9,274

 
48.4
 %
 
9,328

 
47.5
 %
 
(0.6
)%
Supplies
 
3,085

 
16.1
 %
 
3,124

 
15.9
 %
 
(1.2
)%
Other operating expenses, net
 
4,570

 
23.8
 %
 
4,891

 
25.0
 %
 
(6.6
)%
Electronic health record incentives
 
(9
)
 
0.0
 %
 
(32
)
 
(0.2
)%
 
(71.9
)%
Depreciation and amortization
 
870

 
4.5
 %
 
850

 
4.3
 %
 
 
Impairment and restructuring charges, and acquisition related costs
 
541

 
2.8
 %
 
202

 
1.1
 %
 
 
Litigation and investigation costs
 
23

 
0.1
 %
 
293

 
1.5
 %
 
 
Gains on sales, consolidation and deconsolidation of facilities
 
(144
)
 
(0.7
)%
 
(151
)
 
(0.8
)%
 
 
Operating income
 
1,113

 
5.8
 %
 
1,247

 
6.4
 %
 
 
Interest expense
 
(1,028
)
 
 
 
(979
)
 
 
 
 
Other non-operating expense, net
 
(22
)
 
 
 
(20
)
 
 
 
 
Loss from early extinguishment of debt
 
(164
)
 
 
 

 
 
 
 
Income (loss) from continuing operations, before income taxes
 
(101
)
 
 
 
248

 
 
 
 
Income tax expense
 
(219
)
 
 
 
(67
)
 
 
 
 
Income (loss) from continuing operations, before discontinued operations
 
(320
)
 
 
 
181

 
 
 
 
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
Loss from operations
 

 
 
 
(6
)
 
 
 
 
Income tax benefit
 

 
 
 
1

 
 
 
 
Loss from discontinued operations
 

 
 
 
(5
)
 
 
 
 
Net income (loss)
 
(320
)
 
 
 
176

 
 
 
 
Less: Net income attributable to noncontrolling interests
 
384

 
 
 
368

 
 
 
 
Net loss attributable to Tenet Healthcare Corporation common shareholders
 
$
(704
)
 
 
 
$
(192
)
 
 
 
 
Amounts attributable to Tenet Healthcare Corporation common shareholders
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations, net of tax
 
$
(704
)
 
 
 
$
(187
)
 
 
 
 
Loss from discontinued operations, net of tax
 

 
 
 
(5
)
 
 
 
 
Net loss attributable to Tenet Healthcare Corporation common shareholders
 
$
(704
)
 
 
 
$
(192
)
 
 
 
 
Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(7.00
)
 
 
 
$
(1.88
)
 
 
 
 
Discontinued operations
 

 
 
 
(0.05
)
 
 
 
 
 
 
$
(7.00
)
 
 
 
$
(1.93
)
 
 
 
 
Diluted
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(7.00
)
 
 
 
$
(1.88
)
 
 
 
 
Discontinued operations
 

 
 
 
(0.05
)
 
 
 
 
 
 
$
(7.00
)
 
 
 
$
(1.93
)
 
 
 
 
Weighted average shares and dilutive securities outstanding (in thousands):
 
 
 
 
 
 
 
 
 
 
Basic
 
100,592

 
 
 
99,321

 
 
 
 
Diluted*
 
100,592

 
 
 
99,321

 
 
 
 


*Had we generated income from continuing operations in the twelve months ended December 31, 2017 and 2016, the effect of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 788 thousand and 1,421 thousand shares, respectively.



Page 9



TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
 
 
 
 
 
 
December 31,
 
December 31,
(Dollars in millions)
 
2017
 
2016
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
611

 
$
716

Accounts receivable, less allowance for doubtful accounts
 
2,616

 
2,897

Inventories of supplies, at cost
 
289

 
326

Income tax receivable
 
5

 
4

Assets held for sale
 
1,017

 
29

Other current assets
 
1,035

 
1,285

Total current assets 
 
5,573

 
5,257

Investments and other assets
 
1,543

 
1,250

Deferred income taxes
 
455

 
871

Property and equipment, at cost, less accumulated depreciation and amortization
 
7,030

 
8,053

Goodwill
 
7,018

 
7,425

Other intangible assets, at cost, less accumulated amortization
 
1,766

 
1,845

Total assets 
 
$
23,385

 
$
24,701

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Current portion of long-term debt
 
$
146

 
$
191

Accounts payable
 
1,175

 
1,329

Accrued compensation and benefits
 
848

 
872

Professional and general liability reserves
 
200

 
181

Accrued interest payable
 
256

 
210

Liabilities held for sale
 
480

 
9

Other current liabilities
 
1,227

 
1,242

Total current liabilities 
 
4,332

 
4,034

Long-term debt, net of current portion
 
14,791

 
15,064

Professional and general liability reserves
 
654

 
613

Defined benefit plan obligations
 
536

 
626

Deferred income taxes
 
36

 
279

Other long-term liabilities
 
631

 
610

Total liabilities 
 
20,980

 
21,226

Commitments and contingencies
 
 
 
 
Redeemable noncontrolling interests in equity of consolidated subsidiaries
 
1,866

 
2,393

Equity:
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common stock
 
7

 
7

Additional paid-in capital
 
4,859

 
4,827

Accumulated other comprehensive loss
 
(204
)
 
(258
)
Accumulated deficit
 
(2,390
)
 
(1,742
)
Common stock in treasury, at cost
 
(2,419
)
 
(2,417
)
Total shareholders’ equity (deficit)
 
(147
)
 
417

Noncontrolling interests 
 
686

 
665

Total equity
 
539

 
1,082

Total liabilities and equity 
 
$
23,385

 
$
24,701








Page 10



TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 
 
Years Ended
(Dollars in millions)
 
December 31,
 
 
2017
 
2016
Net income (loss)
 
$
(320
)
 
$
176

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 

 
 
Depreciation and amortization
 
870

 
850

Provision for doubtful accounts
 
1,434

 
1,449

Deferred income tax expense
 
200

 
41

Stock-based compensation expense
 
59

 
68

Impairment and restructuring charges, and acquisition-related costs
 
541

 
202

Litigation and investigation costs
 
23

 
293

Gains on sales, consolidation and deconsolidation of facilities
 
(144
)
 
(151
)
Loss from early extinguishment of debt
 
164

 

Equity in earnings of unconsolidated affiliates, net of distributions received
 
(18
)
 
(13
)
Amortization of debt discount and debt issuance costs
 
44

 
41

Pre-tax loss from discontinued operations
 

 
6

Other items, net
 
(18
)
 
(1
)
Changes in cash from operating assets and liabilities:
 
 

 
 
Accounts receivable
 
(1,448
)
 
(1,604
)
Inventories and other current assets
 
(35
)
 
(83
)
Income taxes
 
(38
)
 
(8
)
Accounts payable, accrued expenses and other current liabilities
 
(10
)
 
(51
)
Other long-term liabilities
 
26

 
40

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements
 
(125
)
 
(691
)
Net cash used in operating activities from discontinued operations, excluding income taxes
 
(5
)
 
(6
)
Net cash provided by operating activities
 
1,200

 
558

Cash flows from investing activities:
 
 

 
 
Purchases of property and equipment — continuing operations
 
(707
)
 
(875
)
Purchases of businesses or joint venture interests, net of cash acquired
 
(50
)
 
(117
)
Proceeds from sales of facilities and other assets
 
827

 
573

Proceeds from sales of marketable securities, long-term investments and other assets
 
36

 
62

Purchases of equity investments
 
(68
)
 
(39
)
Other long-term assets
 
(10
)
 
(31
)
Other items, net
 
(7
)
 
(3
)
Net cash provided by (used in) investing activities
 
21

 
(430
)
Cash flows from financing activities:
 
 

 
 
Repayments of borrowings under credit facility
 
(970
)
 
(1,895
)
Proceeds from borrowings under credit facility
 
970

 
1,895

Repayments of other borrowings
 
(4,139
)
 
(154
)
Proceeds from other borrowings
 
3,795

 
760

Debt issuance costs
 
(62
)
 
(12
)
Distributions paid to noncontrolling interests
 
(258
)
 
(218
)
Proceeds from sale of noncontrolling interests
 
31

 
22

Purchases of noncontrolling interests
 
(729
)
 
(186
)
Proceeds from exercise of stock options and employee stock purchase plan
 
7

 
4

Other items, net
 
29

 
16

Net cash provided by (used in) financing activities
 
(1,326
)
 
232

Net increase (decrease) in cash and cash equivalents
 
(105
)
 
360

Cash and cash equivalents at beginning of period
 
716

 
356

Cash and cash equivalents at end of period
 
$
611

 
$
716

Supplemental disclosures:
 
 

 
 
Interest paid, net of capitalized interest
 
$
(939
)
 
$
(932
)
Income tax payments, net
 
$
(56
)
 
$
(33
)

Page 11



TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING TOTAL HOSPITALS(1) 
(Unaudited)
(Dollars in millions except per patient day,
per admission, per adjusted admission and per visit amounts)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Admissions, Patient Days and Surgeries
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of hospitals (at end of period)
 
72

 
75

 
(3
)
*
72

 
75

 
(3
)
*
Total admissions
 
186,185

 
192,104

 
(3.1
)%
 
758,875

 
792,143

 
(4.2
)%
 
Adjusted patient admissions
 
332,642

 
338,929

 
(1.9
)%
 
1,354,266

 
1,389,768

 
(2.6
)%
 
Paying admissions (excludes charity and uninsured)
 
176,158

 
181,617

 
(3.0
)%
 
717,498

 
749,634

 
(4.3
)%
 
Charity and uninsured admissions
 
10,027

 
10,487

 
(4.4
)%
 
41,377

 
42,509

 
(2.7
)%
 
Admissions through emergency department
 
123,887

 
120,549

 
2.8
 %
 
492,660

 
499,335

 
(1.3
)%
 
Paying admissions as a percentage of total admissions
 
94.6
%
 
94.5
%
 
0.1
 %
*
94.5
%
 
94.6
%
 
(0.1
)%
*
Charity and uninsured admissions as a percentage of total admissions
 
5.4
%
 
5.5
%
 
(0.1
)%
*
5.5
%
 
5.4
%
 
0.1
 %
*
Emergency department admissions as a percentage of total admissions
 
66.5
%
 
62.8
%
 
3.7
 %
*
64.9
%
 
63.0
%
 
1.9
 %
*
Surgeries — inpatient
 
50,292

 
53,071

 
(5.2
)%
 
205,114

 
217,906

 
(5.9
)%
 
Surgeries — outpatient
 
68,604

 
73,678

 
(6.9
)%
 
276,895

 
298,974

 
(7.4
)%
 
Total surgeries
 
118,896

 
126,749

 
(6.2
)%
 
482,009

 
516,880

 
(6.7
)%
 
Patient days — total
 
857,728

 
888,185

 
(3.4
)%
 
3,509,056

 
3,690,335

 
(4.9
)%
 
Adjusted patient days
 
1,505,130

 
1,543,490

 
(2.5
)%
 
6,163,961

 
6,395,025

 
(3.6
)%
 
Average length of stay (days)
 
4.61

 
4.62

 
(0.2
)%
 
4.62

 
4.66

 
(0.9
)%
 
Licensed beds (at end of period)
 
19,141

 
20,354

 
(6.0
)%
 
19,141

 
20,354

 
(6.0
)%
 
Average licensed beds
 
19,320

 
20,326

 
(4.9
)%
 
19,995

 
20,651

 
(3.2
)%
 
Utilization of licensed beds
 
48.3
%
 
47.5
%
 
0.8
 %
*
48.1
%
 
48.8
%
 
(0.7
)%
*
Outpatient Visits
 
 
 
 
 
 
 
 
 
 
 
 
 
Total visits
 
1,901,864

 
1,950,549

 
(2.5
)%
 
7,791,125

 
8,144,473

 
(4.3
)%
 
Paying visits (excludes charity and uninsured)
 
1,777,790

 
1,834,844

 
(3.1
)%
 
7,277,514

 
7,577,799

 
(4.0
)%
 
Charity and uninsured visits
 
124,074

 
115,705

 
7.2
 %
 
513,611

 
566,674

 
(9.4
)%
 
Emergency department visits
 
711,268

 
701,100

 
1.5
 %
 
2,854,200

 
2,914,421

 
(2.1
)%
 
Paying visits as a percentage of total visits
 
93.5
%
 
94.1
%
 
(0.6
)%
*
93.4
%
 
93.0
%
 
0.4
 %
*
Charity and uninsured visits as a percentage of total visits
 
6.5
%
 
5.9
%
 
0.6
 %
*
6.6
%
 
7.0
%
 
(0.4
)%
*
Total emergency department admissions and visits
 
835,155

 
821,649

 
1.6
 %
 
3,346,860

 
3,413,756

 
(2.0
)%
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inpatient revenues
 
$
2,721

 
$
2,606

 
4.4
 %
 
$
10,319

 
$
10,619

 
(2.8
)%
 
Net outpatient revenues
 
$
1,450

 
$
1,457

 
(0.5
)%
 
$
5,869

 
$
5,848

 
0.4
 %
 
Total patient revenues
 
$
4,171

 
$
4,063

 
2.7
 %
 
$
16,188

 
$
16,467

 
(1.7
)%
 
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inpatient revenue per admission
 
$
14,614

 
$
13,566

 
7.7
 %
 
$
13,598

 
$
13,405

 
1.4
 %
 
Net inpatient revenue per patient day
 
$
3,172

 
$
2,934

 
8.1
 %
 
$
2,941

 
$
2,878

 
2.2
 %
 
Net outpatient revenue per visit
 
$
762

 
$
747

 
2.0
 %
 
$
753

 
$
718

 
4.9
 %
 
Net patient revenue per adjusted patient admission
 
$
12,539

 
$
11,988

 
4.6
 %
 
$
11,953

 
$
11,849

 
0.9
 %
 
Net patient revenue per adjusted patient day
 
$
2,771

 
$
2,632

 
5.3
 %
 
$
2,626

 
$
2,575

 
2.0
 %
 
Total selected operating expenses (salaries, wages and benefits, supplies and other operating expenses) per adjusted patient admission(2)
 
$
10,492

 
$
10,264

 
2.2
 %
 
$
10,384

 
$
10,176

 
2.0
 %
 
Net Patient Revenues from:
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
 
18.9
%
 
20.4
%
 
(1.5
)%
*
20.0
%
 
20.5
%
 
(0.5
)%
*
Medicaid
 
11.9
%
 
8.2
%
 
3.7
 %
*
8.1
%
 
8.2
%
 
(0.1
)%
*
Managed care
 
59.6
%
 
61.4
%
 
(1.8
)%
*
61.7
%
 
61.5
%
 
0.2
 %
*
Indemnity, self-pay and other
 
9.6
%
 
10.0
%
 
(0.4
)%
*
10.2
%
 
9.8
%
 
0.4
 %
*



(1) Represents the consolidated results of Tenet’s acute care hospitals and related outpatient facilities included in the Hospital Operations and other segment.
(2) Excludes operating expenses from Tenet's health plans.
* This change is the difference between the 2017 and 2016 amounts shown.

Page 12



TENET HEALTHCARE CORPORATION
SELECTED STATISTICS – CONTINUING SAME HOSPITALS(1) 
(Unaudited)
(Dollars in millions except per patient day,
per admission, per adjusted admission and per visit amounts)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Admissions, Patient Days and Surgeries
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of hospitals (at end of period)
 
72

 
72

 

*
72

 
72

 

*
Total admissions
 
184,877

 
184,561

 
0.2
 %
 
738,528

 
753,673

 
(2.0
)%
 
Adjusted patient admissions
 
324,495

 
320,445

 
1.3
 %
 
1,294,913

 
1,310,962

 
(1.2
)%
 
Paying admissions (excludes charity and uninsured)
 
175,025

 
175,026

 
 %
 
699,613

 
715,198

 
(2.2
)%
 
Charity and uninsured admissions
 
9,852

 
9,535

 
3.3
 %
 
38,915

 
38,475

 
1.1
 %
 
Admissions through emergency department
 
123,102

 
116,374

 
5.8
 %
 
480,180

 
476,068

 
0.9
 %
 
Paying admissions as a percentage of total admissions
 
94.7
%
 
94.8
%
 
(0.1
)%
*
94.7
%
 
94.9
%
 
(0.2
)%
*
Charity and uninsured admissions as a percentage of total admissions
 
5.3
%
 
5.2
%
 
0.1
 %
*
5.3
%
 
5.1
%
 
0.2
 %
*
Emergency department admissions as a percentage of total admissions
 
66.6
%
 
63.1
%
 
3.5
 %
*
65.0
%
 
63.2
%
 
1.8
 %
*
Surgeries — inpatient
 
50,070

 
50,971

 
(1.8
)%
 
199,871

 
207,609

 
(3.7
)%
 
Surgeries — outpatient
 
68,432

 
71,129

 
(3.8
)%
 
271,228

 
286,761

 
(5.4
)%
 
Total surgeries
 
118,502

 
122,100

 
(2.9
)%
 
471,099

 
494,370

 
(4.7
)%
 
Patient days — total
 
853,217

 
857,118

 
(0.5
)%
 
3,423,934

 
3,515,087

 
(2.6
)%
 
Adjusted patient days
 
1,485,209

 
1,481,787

 
0.2
 %
 
5,964,002

 
6,080,456

 
(1.9
)%
 
Average length of stay (days)
 
4.62

 
4.64

 
(0.4
)%
 
4.64

 
4.66

 
(0.4
)%
 
Licensed beds (at end of period)
 
19,035

 
19,306

 
(1.4
)%
 
19,035

 
19,306

 
(1.4
)%
 
Average licensed beds
 
19,214

 
19,278

 
(0.3
)%
 
19,277

 
19,315

 
(0.2
)%
 
Utilization of licensed beds
 
48.3
%
 
48.3
%
 
 %
*
48.7
%
 
49.9
%
 
(1.2
)%
*
Outpatient Visits
 
 
 
 
 
 
 
 
 
 
 
 
 
Total visits
 
1,865,781

 
1,869,272

 
(0.2
)%
 
7,495,754

 
7,697,302

 
(2.6
)%
 
Paying visits (excludes charity and uninsured)
 
1,747,285

 
1,757,013

 
(0.6
)%
 
7,028,688

 
7,200,453

 
(2.4
)%
 
Charity and uninsured visits
 
118,496

 
112,259

 
5.6
 %
 
467,066

 
496,849

 
(6.0
)%
 
Emergency department visits
 
676,705

 
650,573

 
4.0
 %
 
2,664,448

 
2,689,519

 
(0.9
)%
 
Paying visits as a percentage of total visits
 
93.6
%
 
94.0
%
 
(0.4
)%
*
93.8
%
 
93.5
%
 
0.3
 %
*
Charity and uninsured visits as a percentage of total visits
 
6.4
%
 
6.0
%
 
0.4
 %
*
6.2
%
 
6.5
%
 
(0.3
)%
*
Total emergency department admissions and visits
 
799,807

 
766,947

 
4.3
 %
 
3,144,628

 
3,165,587

 
(0.7
)%
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inpatient revenues
 
$
2,695

 
$
2,518

 
7.0
 %
 
$
10,037

 
$
10,089

 
(0.5
)%
 
Net outpatient revenues
 
$
1,431

 
$
1,371

 
4.4
 %
 
$
5,626

 
$
5,452

 
3.2
 %
 
Total patient revenues
 
$
4,126

 
$
3,889

 
6.1
 %
 
$
15,663

 
$
15,541

 
0.8
 %
 
Revenues on a Per Admission, Per Patient Day and Per Visit Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inpatient revenue per admission
 
$
14,577

 
$
13,643

 
6.8
 %
 
$
13,591

 
$
13,386

 
1.5
 %
 
Net inpatient revenue per patient day
 
$
3,159

 
$
2,938

 
7.5
 %
 
$
2,931

 
$
2,870

 
2.1
 %
 
Net outpatient revenue per visit
 
$
767

 
$
733

 
4.6
 %
 
$
751

 
$
708

 
6.1
 %
 
Net patient revenue per adjusted patient admission
 
$
12,715

 
$
12,136

 
4.8
 %
 
$
12,096

 
$
11,855

 
2.0
 %
 
Net patient revenue per adjusted patient day
 
$
2,778

 
$
2,625

 
5.8
 %
 
$
2,626

 
$
2,556

 
2.7
 %
 
Net Patient Revenues from:
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare
 
18.9
%
 
20.8
%
 
(1.9
)%
*
20.3
%
 
21.0
%
 
(0.7
)%
*
Medicaid
 
12.1
%
 
8.2
%
 
3.9
 %
*
8.1
%
 
8.2
%
 
(0.1
)%
*
Managed care
 
59.3
%
 
61.2
%
 
(1.9
)%
*
61.6
%
 
61.6
%
 
 %
*
Indemnity, self-pay and other
 
9.7
%
 
9.8
%
 
(0.1
)%
*
10.0
%
 
9.2
%
 
0.8
 %
*

(1) Information for our Hospital Operations and other segment is presented on a same-hospital basis, which includes the results of our same 72 hospitals operated throughout the twelve months ended December 31, 2017 and 2016, and associated outpatient facilities but excludes the results of hospitals that Tenet began operating, as well as hospitals Tenet divested, since January 1, 2016.
* This change is the difference between the 2017 and 2016 amounts shown.

Page 13



TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions except per share amounts)
 
Three Months Ended
 
Year Ended
 
 
3/31/2017
 
6/30/2017
 
9/30/2017
 
12/31/2017
 
12/31/2017
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
Net operating revenues before provision for doubtful accounts
 
$
5,196

 
$
5,173

 
$
4,941

 
$
5,303

 
$
20,613

Less: Provision for doubtful accounts
 
383

 
371

 
355

 
325

 
1,434

Net operating revenues
 
4,813

 
4,802

 
4,586

 
4,978

 
19,179

Equity in earnings of unconsolidated affiliates
 
29

 
28

 
38

 
49

 
144

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Salaries, wages and benefits
 
2,380

 
2,346

 
2,264

 
2,284

 
9,274

Supplies
 
765

 
780

 
740

 
800

 
3,085

Other operating expenses, net
 
1,187

 
1,159

 
1,120

 
1,104

 
4,570

Electronic health record incentives
 
(1
)
 
(6
)
 
(1
)
 
(1
)
 
(9
)
Depreciation and amortization
 
221

 
222

 
219

 
208

 
870

Impairment and restructuring charges, and acquisition-related costs
 
33

 
41

 
329

 
138

 
541

Litigation and investigation costs
 
5

 
1

 
6

 
11

 
23

Gains on sales, consolidation and deconsolidation of facilities
 
(15
)
 
(23
)
 
(104
)
 
(2
)
 
(144
)
Operating income
 
267

 
310

 
51

 
485

 
1,113

Interest expense
 
(258
)
 
(260
)
 
(257
)
 
(253
)
 
(1,028
)
Other non-operating expense, net
 
(5
)
 
(5
)
 
(4
)
 
(8
)
 
(22
)
Loss from early extinguishment of debt
 

 
(26
)
 
(138
)
 

 
(164
)
Income (loss) from continuing operations, before income taxes
 
4

 
19

 
(348
)
 
224

 
(101
)
Income tax benefit (expense)
 
33

 
12

 
60

 
(324
)
 
(219
)
Income (loss) from continuing operations, before discontinued operations
 
37

 
31

 
(288
)
 
(100
)
 
(320
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
(2
)
 
2

 
(1
)
 
1

 

Income tax benefit (expense)
 
1

 
(1
)
 

 

 

Income (loss) from discontinued operations
 
(1
)
 
1

 
(1
)
 
1

 

Net income (loss)
 
36

 
32

 
(289
)
 
(99
)
 
(320
)
Less: Net income attributable to noncontrolling interests