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☒
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2018
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☐
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
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Nevada
(State of Incorporation)
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95-2557091
(IRS Employer Identification No.)
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Page
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March 31,
|
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December 31,
|
||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
974
|
|
|
$
|
611
|
|
Accounts receivable (less allowance for doubtful accounts of $898 at December 31, 2017)
|
|
2,519
|
|
|
2,616
|
|
||
Inventories of supplies, at cost
|
|
294
|
|
|
289
|
|
||
Income tax receivable
|
|
20
|
|
|
5
|
|
||
Assets held for sale
|
|
599
|
|
|
1,017
|
|
||
Other current assets
|
|
1,228
|
|
|
1,035
|
|
||
Total current assets
|
|
5,634
|
|
|
5,573
|
|
||
Investments and other assets
|
|
1,433
|
|
|
1,543
|
|
||
Deferred income taxes
|
|
383
|
|
|
455
|
|
||
Property and equipment, at cost, less accumulated depreciation and amortization
($4,879 at March 31, 2018 and $4,739 at December 31, 2017) |
|
6,906
|
|
|
7,030
|
|
||
Goodwill
|
|
7,036
|
|
|
7,018
|
|
||
Other intangible assets, at cost, less accumulated amortization
($920 at March 31, 2018 and $883 at December 31, 2017) |
|
1,792
|
|
|
1,766
|
|
||
Total assets
|
|
$
|
23,184
|
|
|
$
|
23,385
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
666
|
|
|
$
|
146
|
|
Accounts payable
|
|
1,059
|
|
|
1,175
|
|
||
Accrued compensation and benefits
|
|
708
|
|
|
848
|
|
||
Professional and general liability reserves
|
|
222
|
|
|
200
|
|
||
Accrued interest payable
|
|
332
|
|
|
256
|
|
||
Liabilities held for sale
|
|
406
|
|
|
480
|
|
||
Other current liabilities
|
|
1,168
|
|
|
1,227
|
|
||
Total current liabilities
|
|
4,561
|
|
|
4,332
|
|
||
Long-term debt, net of current portion
|
|
14,223
|
|
|
14,791
|
|
||
Professional and general liability reserves
|
|
651
|
|
|
654
|
|
||
Defined benefit plan obligations
|
|
528
|
|
|
536
|
|
||
Deferred income taxes
|
|
36
|
|
|
36
|
|
||
Other long-term liabilities
|
|
627
|
|
|
631
|
|
||
Total liabilities
|
|
20,626
|
|
|
20,980
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Redeemable noncontrolling interests in equity of consolidated subsidiaries
|
|
1,942
|
|
|
1,866
|
|
||
Equity:
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Common stock, $0.05 par value; authorized 262,500,000 shares; 150,391,400 shares issued at March 31, 2018 and 149,384,952 shares issued at December 31, 2017
|
|
7
|
|
|
7
|
|
||
Additional paid-in capital
|
|
4,833
|
|
|
4,859
|
|
||
Accumulated other comprehensive loss
|
|
(239
|
)
|
|
(204
|
)
|
||
Accumulated deficit
|
|
(2,248
|
)
|
|
(2,390
|
)
|
||
Common stock in treasury, at cost, 48,402,616 shares at March 31, 2018
and 48,413,169 shares at December 31, 2017 |
|
(2,418
|
)
|
|
(2,419
|
)
|
||
Total shareholders’ equity (deficit)
|
|
(65
|
)
|
|
(147
|
)
|
||
Noncontrolling interests
|
|
681
|
|
|
686
|
|
||
Total equity
|
|
616
|
|
|
539
|
|
||
Total liabilities and equity
|
|
$
|
23,184
|
|
|
$
|
23,385
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net operating revenues:
|
|
|
|
|
||||
Net operating revenues before provision for doubtful accounts
|
|
|
|
|
$
|
5,196
|
|
|
Less: Provision for doubtful accounts
|
|
|
|
|
383
|
|
||
Net operating revenues
|
|
$
|
4,699
|
|
|
4,813
|
|
|
Equity in earnings of unconsolidated affiliates
|
|
25
|
|
|
29
|
|
||
Operating expenses:
|
|
|
|
|
||||
Salaries, wages and benefits
|
|
2,227
|
|
|
2,380
|
|
||
Supplies
|
|
774
|
|
|
765
|
|
||
Other operating expenses, net
|
|
1,060
|
|
|
1,187
|
|
||
Electronic health record incentives
|
|
(1
|
)
|
|
(1
|
)
|
||
Depreciation and amortization
|
|
204
|
|
|
221
|
|
||
Impairment and restructuring charges, and acquisition-related costs
|
|
47
|
|
|
33
|
|
||
Litigation and investigation costs
|
|
6
|
|
|
5
|
|
||
Gains on sales, consolidation and deconsolidation of facilities
|
|
(110
|
)
|
|
(15
|
)
|
||
Operating income
|
|
517
|
|
|
267
|
|
||
Interest expense
|
|
(255
|
)
|
|
(258
|
)
|
||
Other non-operating expense, net
|
|
(1
|
)
|
|
(5
|
)
|
||
Loss from early extinguishment of debt
|
|
(1
|
)
|
|
—
|
|
||
Income from continuing operations, before income taxes
|
|
260
|
|
|
4
|
|
||
Income tax benefit (expense)
|
|
(70
|
)
|
|
33
|
|
||
Income from continuing operations, before discontinued operations
|
|
190
|
|
|
37
|
|
||
Discontinued operations:
|
|
|
|
|
||||
Income (loss) from operations
|
|
1
|
|
|
(2
|
)
|
||
Income tax benefit (expense)
|
|
—
|
|
|
1
|
|
||
Income (loss) from discontinued operations
|
|
1
|
|
|
(1
|
)
|
||
Net income
|
|
191
|
|
|
36
|
|
||
Less: Net income attributable to noncontrolling interests
|
|
92
|
|
|
89
|
|
||
Net income available (loss attributable) to Tenet Healthcare Corporation common
shareholders |
|
$
|
99
|
|
|
$
|
(53
|
)
|
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders
|
|
|
|
|
||||
Income (loss) from continuing operations, net of tax
|
|
$
|
98
|
|
|
$
|
(52
|
)
|
Income (loss) from discontinued operations, net of tax
|
|
1
|
|
|
(1
|
)
|
||
Net income available (loss attributable) to Tenet Healthcare Corporation common
shareholders |
|
$
|
99
|
|
|
$
|
(53
|
)
|
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
|
|
|
|
|
||||
Basic
|
|
|
|
|
||||
Continuing operations
|
|
$
|
0.97
|
|
|
$
|
(0.52
|
)
|
Discontinued operations
|
|
0.01
|
|
|
(0.01
|
)
|
||
|
|
$
|
0.98
|
|
|
$
|
(0.53
|
)
|
Diluted
|
|
|
|
|
||||
Continuing operations
|
|
$
|
0.95
|
|
|
$
|
(0.52
|
)
|
Discontinued operations
|
|
0.01
|
|
|
(0.01
|
)
|
||
|
|
$
|
0.96
|
|
|
$
|
(0.53
|
)
|
Weighted average shares and dilutive securities outstanding (in thousands):
|
|
|
|
|
||||
Basic
|
|
101,392
|
|
|
100,000
|
|
||
Diluted
|
|
102,656
|
|
|
100,000
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net income
|
|
$
|
191
|
|
|
$
|
36
|
|
Other comprehensive income:
|
|
|
|
|
||||
Amortization of net actuarial loss included in other non-operating expense, net
|
|
4
|
|
|
4
|
|
||
Unrealized gains on securities held as available-for-sale
|
|
—
|
|
|
2
|
|
||
Foreign currency translation adjustments
|
|
6
|
|
|
3
|
|
||
Other comprehensive income before income taxes
|
|
10
|
|
|
9
|
|
||
Income tax expense related to items of other comprehensive income
|
|
(2
|
)
|
|
(6
|
)
|
||
Total other comprehensive income, net of tax
|
|
8
|
|
|
3
|
|
||
Comprehensive net income
|
|
199
|
|
|
39
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
|
92
|
|
|
89
|
|
||
Comprehensive income available (loss attributable) to Tenet Healthcare Corporation common shareholders
|
|
$
|
107
|
|
|
$
|
(50
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Net income
|
|
$
|
191
|
|
|
$
|
36
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
204
|
|
|
221
|
|
||
Provision for doubtful accounts
|
|
—
|
|
|
383
|
|
||
Deferred income tax expense (benefit)
|
|
70
|
|
|
—
|
|
||
Stock-based compensation expense
|
|
9
|
|
|
13
|
|
||
Impairment and restructuring charges, and acquisition-related costs
|
|
47
|
|
|
33
|
|
||
Litigation and investigation costs
|
|
6
|
|
|
5
|
|
||
Gains on sales, consolidation and deconsolidation of facilities
|
|
(110
|
)
|
|
(15
|
)
|
||
Loss from early extinguishment of debt
|
|
1
|
|
|
—
|
|
||
Equity in earnings of unconsolidated affiliates, net of distributions received
|
|
9
|
|
|
4
|
|
||
Amortization of debt discount and debt issuance costs
|
|
11
|
|
|
11
|
|
||
Pre-tax loss (income) from discontinued operations
|
|
(1
|
)
|
|
2
|
|
||
Other items, net
|
|
(1
|
)
|
|
(2
|
)
|
||
Changes in cash from operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(66
|
)
|
|
(446
|
)
|
||
Inventories and other current assets
|
|
(41
|
)
|
|
132
|
|
||
Income taxes
|
|
—
|
|
|
(34
|
)
|
||
Accounts payable, accrued expenses and other current liabilities
|
|
(183
|
)
|
|
(161
|
)
|
||
Other long-term liabilities
|
|
1
|
|
|
26
|
|
||
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements
|
|
(33
|
)
|
|
(24
|
)
|
||
Net cash provided by (used in) operating activities from discontinued operations, excluding income taxes
|
|
(1
|
)
|
|
2
|
|
||
Net cash provided by operating activities
|
|
113
|
|
|
186
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Purchases of property and equipment — continuing operations
|
|
(143
|
)
|
|
(198
|
)
|
||
Purchases of businesses or joint venture interests, net of cash acquired
|
|
(16
|
)
|
|
(6
|
)
|
||
Proceeds from sales of facilities and other assets
|
|
425
|
|
|
20
|
|
||
Proceeds from sales of marketable securities, long-term investments and other assets
|
|
134
|
|
|
9
|
|
||
Purchases of equity investments
|
|
(30
|
)
|
|
(1
|
)
|
||
Other long-term assets
|
|
7
|
|
|
(12
|
)
|
||
Other items, net
|
|
(4
|
)
|
|
(1
|
)
|
||
Net cash provided by (used in) investing activities
|
|
373
|
|
|
(189
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Repayments of borrowings under credit facility
|
|
—
|
|
|
—
|
|
||
Proceeds from borrowings under credit facility
|
|
—
|
|
|
—
|
|
||
Repayments of other borrowings
|
|
(91
|
)
|
|
(89
|
)
|
||
Proceeds from other borrowings
|
|
7
|
|
|
6
|
|
||
Debt issuance costs
|
|
—
|
|
|
(2
|
)
|
||
Distributions paid to noncontrolling interests
|
|
(64
|
)
|
|
(63
|
)
|
||
Proceeds from sales of noncontrolling interests
|
|
5
|
|
|
10
|
|
||
Purchases of noncontrolling interests
|
|
(9
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options and employee stock purchase plan
|
|
9
|
|
|
2
|
|
||
Other items, net
|
|
20
|
|
|
(5
|
)
|
||
Net cash used in financing activities
|
|
(123
|
)
|
|
(141
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
363
|
|
|
(144
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
611
|
|
|
716
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
974
|
|
|
$
|
572
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
||
Interest paid, net of capitalized interest
|
|
$
|
(169
|
)
|
|
$
|
(130
|
)
|
Income tax refunds (payments), net
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net Book
Value |
||||||
At March 31, 2018:
|
|
|
|
|
|
|
||||||
Capitalized software costs
|
|
$
|
1,644
|
|
|
$
|
(784
|
)
|
|
$
|
860
|
|
Trade names
|
|
102
|
|
|
—
|
|
|
102
|
|
|||
Contracts
|
|
860
|
|
|
(64
|
)
|
|
796
|
|
|||
Other
|
|
106
|
|
|
(72
|
)
|
|
34
|
|
|||
Total
|
|
$
|
2,712
|
|
|
$
|
(920
|
)
|
|
$
|
1,792
|
|
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net Book
Value |
||||||
At December 31, 2017:
|
|
|
|
|
|
|
||||||
Capitalized software costs
|
|
$
|
1,582
|
|
|
$
|
(754
|
)
|
|
$
|
828
|
|
Trade names
|
|
102
|
|
|
—
|
|
|
102
|
|
|||
Contracts
|
|
859
|
|
|
(60
|
)
|
|
799
|
|
|||
Other
|
|
106
|
|
|
(69
|
)
|
|
37
|
|
|||
Total
|
|
$
|
2,649
|
|
|
$
|
(883
|
)
|
|
$
|
1,766
|
|
|
|
|
|
Nine Months
Ending |
|
Years Ending
|
|
Later Years
|
||||||||||||||||||||
|
|
|
|
December 31,
|
|
|||||||||||||||||||||||
|
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
|||||||||||||||
Amortization of intangible assets
|
|
$
|
1,125
|
|
|
$
|
113
|
|
|
$
|
148
|
|
|
$
|
122
|
|
|
$
|
103
|
|
|
$
|
92
|
|
|
$
|
547
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net operating revenues
|
|
$
|
574
|
|
|
$
|
584
|
|
Net income
|
|
$
|
116
|
|
|
$
|
115
|
|
Net income attributable to the investees
|
|
$
|
71
|
|
|
$
|
76
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Continuing operations:
|
|
|
|
|
|
|
||
Patient accounts receivable
|
|
$
|
2,400
|
|
|
$
|
3,376
|
|
Allowance for doubtful accounts
|
|
—
|
|
|
(898
|
)
|
||
Estimated future recoveries
|
|
127
|
|
|
132
|
|
||
Net cost reports and settlements payable and valuation allowances
|
|
(10
|
)
|
|
4
|
|
||
|
|
2,517
|
|
|
2,614
|
|
||
Discontinued operations
|
|
2
|
|
|
2
|
|
||
Accounts receivable
|
|
$
|
2,519
|
|
|
$
|
2,616
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
|
2018
|
|
2017
|
|
||||
Estimated costs for:
|
|
|
|
|
|
|
|
||
Self-pay patients
|
|
$
|
146
|
|
|
$
|
160
|
|
|
Charity care patients
|
|
35
|
|
|
30
|
|
|
||
Total
|
|
$
|
181
|
|
|
$
|
190
|
|
|
Medicaid DSH and other supplemental revenues
|
|
$
|
220
|
|
|
$
|
158
|
|
|
|
|
Contract Assets
|
||
January 1, 2018
|
|
$
|
171
|
|
March 31, 2018
|
|
158
|
|
|
Increase/(decrease)
|
|
$
|
(13
|
)
|
|
|
|
||
January 1, 2017
|
|
$
|
—
|
|
March 31, 2017
|
|
—
|
|
|
Increase/(decrease)
|
|
$
|
—
|
|
|
|
|
|
|
|
Contract Liability-
|
|
Contract Liability-
|
||||||||
|
|
|
|
Contract Asset-
|
|
Current
|
|
Long-Term
|
||||||||
|
|
Receivables
|
|
Unbilled Revenue
|
|
Deferred Revenue
|
|
Deferred Revenue
|
||||||||
January 1, 2018
|
|
$
|
89
|
|
|
$
|
10
|
|
|
$
|
80
|
|
|
$
|
21
|
|
March 31, 2018
|
|
99
|
|
|
10
|
|
|
78
|
|
|
29
|
|
||||
Increase/(decrease)
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
||||||||
January 1, 2017
|
|
$
|
67
|
|
|
$
|
8
|
|
|
$
|
76
|
|
|
$
|
26
|
|
March 31, 2017
|
|
112
|
|
|
6
|
|
|
79
|
|
|
25
|
|
||||
Increase/(decrease)
|
|
$
|
45
|
|
|
$
|
(2
|
)
|
|
$
|
3
|
|
|
$
|
(1
|
)
|
Accounts receivable
|
|
$
|
74
|
|
Other current assets
|
|
50
|
|
|
Investments and other long-term assets
|
|
2
|
|
|
Property and equipment
|
|
398
|
|
|
Other intangible assets
|
|
8
|
|
|
Goodwill
|
|
67
|
|
|
Current liabilities
|
|
(93
|
)
|
|
Long-term liabilities
|
|
(313
|
)
|
|
Net assets held for sale
|
|
$
|
193
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Significant disposals:
|
|
|
|
|
||||
Income (loss) from continuing operations, before income taxes
|
|
|
|
|
||||
Houston
|
|
$
|
—
|
|
|
$
|
15
|
|
Philadelphia
|
|
(9
|
)
|
|
(14
|
)
|
||
MacNeal (includes a $98 million gain on sale in the 2018 period)
|
|
101
|
|
|
3
|
|
||
Total
|
|
$
|
92
|
|
|
$
|
4
|
|
|
|
|
|
|
||||
Significant planned divestitures classified as held for sale:
|
|
|
|
|
||||
Income (loss) from continuing operations, before income taxes
|
|
|
|
|
||||
Chicago-area (includes $17 million of impairment charges in the 2018 period)
|
|
$
|
(16
|
)
|
|
$
|
(4
|
)
|
Aspen
|
|
3
|
|
|
(2
|
)
|
||
Total
|
|
$
|
(13
|
)
|
|
$
|
(6
|
)
|
|
|
March 31,
2018
|
|
December 31, 2017
|
||||
Senior unsecured notes:
|
|
|
|
|
|
|
||
5.500% due 2019
|
|
$
|
500
|
|
|
$
|
500
|
|
6.750% due 2020
|
|
300
|
|
|
300
|
|
||
8.125% due 2022
|
|
2,800
|
|
|
2,800
|
|
||
6.750% due 2023
|
|
1,872
|
|
|
1,900
|
|
||
7.000% due 2025
|
|
478
|
|
|
500
|
|
||
6.875% due 2031
|
|
430
|
|
|
430
|
|
||
Senior secured first lien notes:
|
|
|
|
|
|
|
||
4.750% due 2020
|
|
500
|
|
|
500
|
|
||
6.000% due 2020
|
|
1,800
|
|
|
1,800
|
|
||
4.500% due 2021
|
|
850
|
|
|
850
|
|
||
4.375% due 2021
|
|
1,050
|
|
|
1,050
|
|
||
4.625% due 2024
|
|
1,870
|
|
|
1,870
|
|
||
Senior secured second lien notes:
|
|
|
|
|
||||
7.500% due 2022
|
|
750
|
|
|
750
|
|
||
5.125% due 2025
|
|
1,410
|
|
|
1,410
|
|
||
Capital leases
|
|
417
|
|
|
431
|
|
||
Mortgage notes
|
|
80
|
|
|
77
|
|
||
Unamortized issue costs, note discounts and premiums
|
|
(218
|
)
|
|
(231
|
)
|
||
Total long-term debt
|
|
14,889
|
|
|
14,937
|
|
||
Less current portion
|
|
666
|
|
|
146
|
|
||
Long-term debt, net of current portion
|
|
$
|
14,223
|
|
|
$
|
14,791
|
|
|
|
Options
|
|
Weighted Average
Exercise Price Per Share |
|
Aggregate
Intrinsic Value |
|
Weighted Average
Remaining Life |
|||||
|
|
|
|
|
|
(In Millions)
|
|
|
|||||
Outstanding at December 31, 2017
|
|
2,564,822
|
|
|
$
|
20.35
|
|
|
|
|
|
||
Granted
|
|
604,012
|
|
|
20.60
|
|
|
|
|
|
|||
Exercised
|
|
(443,204
|
)
|
|
18.86
|
|
|
|
|
|
|||
Forfeited/Expired
|
|
(298,831
|
)
|
|
36.29
|
|
|
|
|
|
|||
Outstanding at March 31, 2018
|
|
2,426,799
|
|
|
$
|
18.72
|
|
|
$
|
13
|
|
|
7.1 years
|
Vested and expected to vest at March 31, 2018
|
|
2,426,799
|
|
|
$
|
18.72
|
|
|
$
|
13
|
|
|
7.1 years
|
Exercisable at March 31, 2018
|
|
535,906
|
|
|
$
|
17.92
|
|
|
$
|
3
|
|
|
2.8 years
|
|
|
Three Months Ended March 31,
|
||
|
|
2018
|
|
2017
|
Expected volatility
|
|
46%
|
|
49%
|
Expected dividend yield
|
|
0%
|
|
0%
|
Expected life
|
|
6.2 years
|
|
6.2 years
|
Expected forfeiture rate
|
|
0%
|
|
0%
|
Risk-free interest rate
|
|
2.72%
|
|
2.15%
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Number of
Options |
|
Weighted Average
Remaining Contractual Life |
|
Weighted Average
Exercise Price |
|
Number of
Options |
|
Weighted Average
Exercise Price |
||||||
$0.00 to $4.569
|
|
124,332
|
|
|
0.9 years
|
|
$
|
4.56
|
|
|
124,332
|
|
|
$
|
4.56
|
|
$4.57 to $19.759
|
|
1,292,315
|
|
|
7.5 years
|
|
18.18
|
|
|
5,434
|
|
|
18.99
|
|
||
$19.76 to $25.080
|
|
1,010,152
|
|
|
7.3 years
|
|
21.16
|
|
|
406,140
|
|
|
22.00
|
|
||
|
|
2,426,799
|
|
|
7.1 years
|
|
$
|
18.72
|
|
|
535,906
|
|
|
$
|
17.92
|
|
|
|
Restricted Stock
Units |
|
Weighted Average Grant
Date Fair Value Per Unit |
|||
Unvested at December 31, 2017
|
|
2,253,988
|
|
|
$
|
35.20
|
|
Granted
|
|
578,831
|
|
|
22.43
|
|
|
Vested
|
|
(689,648
|
)
|
|
35.62
|
|
|
Forfeited
|
|
(80,543
|
)
|
|
42.01
|
|
|
Unvested at March 31, 2018
|
|
2,062,628
|
|
|
$
|
31.21
|
|
|
|
Tenet Healthcare Corporation Shareholders’ Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Other Comprehensive Loss |
|
Accumulated
Deficit |
|
Treasury
Stock |
|
Noncontrolling
Interests |
|
Total Equity
|
|||||||||||||||||
|
|
Shares
Outstanding |
|
Issued Par
Amount |
|
|
|
|
|
|
|||||||||||||||||||||
Balances at December 31, 2017
|
|
100,972
|
|
|
$
|
7
|
|
|
$
|
4,859
|
|
|
$
|
(204
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
(2,419
|
)
|
|
$
|
686
|
|
|
$
|
539
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
31
|
|
|
130
|
|
|||||||
Distributions paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Accretion of redeemable noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||||||
Purchases (sales) of businesses and noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
|||||||
Cumulative effect of accounting change
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation expense, tax benefit and issuance of common stock
|
|
1,017
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
16
|
|
|||||||
Balances at March 31, 2018
|
|
101,989
|
|
|
$
|
7
|
|
|
$
|
4,833
|
|
|
$
|
(239
|
)
|
|
$
|
(2,248
|
)
|
|
$
|
(2,418
|
)
|
|
$
|
681
|
|
|
$
|
616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balances at December 31, 2016
|
|
99,686
|
|
|
$
|
7
|
|
|
$
|
4,827
|
|
|
$
|
(258
|
)
|
|
$
|
(1,742
|
)
|
|
$
|
(2,417
|
)
|
|
$
|
665
|
|
|
$
|
1,082
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
36
|
|
|
(17
|
)
|
|||||||
Distributions paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
(36
|
)
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||
Purchases (sales) of businesses and noncontrolling interests
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
|||||||
Cumulative effect of accounting change
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||||
Stock-based compensation expense and issuance of common stock
|
|
735
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||
Balances at March 31, 2017
|
|
100,421
|
|
|
$
|
7
|
|
|
$
|
4,834
|
|
|
$
|
(255
|
)
|
|
$
|
(1,739
|
)
|
|
$
|
(2,417
|
)
|
|
$
|
664
|
|
|
$
|
1,094
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
|
2018
|
|
2017
|
|
||||
Hospital Operations and other:
|
|
|
|
|
|
|
|
||
Net patient service revenues less provision for doubtful accounts from hospitals and related outpatient facilities
|
|
|
|
|
|
||||
Medicare
|
|
$
|
782
|
|
|
$
|
862
|
|
|
Medicaid
|
|
321
|
|
|
275
|
|
|
||
Managed care
|
|
2,368
|
|
|
2,433
|
|
|
||
Self-pay
|
|
37
|
|
|
13
|
|
|
||
Indemnity and other
|
|
135
|
|
|
145
|
|
|
||
Total
|
|
3,643
|
|
|
3,728
|
|
|
||
Physician practices net patient service revenues less provision for doubtful accounts
|
|
161
|
|
|
178
|
|
|
||
Net patient service revenues less provision for doubtful accounts
|
|
3,804
|
|
|
3,906
|
|
|
||
Health plans
|
|
6
|
|
|
65
|
|
|
||
Revenue from other sources
|
|
137
|
|
|
144
|
|
|
||
Hospital Operations and other total prior to inter-segment eliminations
|
|
3,947
|
|
|
4,115
|
|
|
||
Ambulatory Care
|
|
498
|
|
|
455
|
|
|
||
Conifer
|
|
404
|
|
|
402
|
|
|
||
Inter-segment eliminations
|
|
(150
|
)
|
|
(159
|
)
|
|
||
Net operating revenues
|
|
$
|
4,699
|
|
|
$
|
4,813
|
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
|
2018
|
|
2017
|
|
||||
Net patient service revenues less provision for doubtful accounts
|
|
$
|
469
|
|
|
$
|
428
|
|
|
Management fees
|
|
23
|
|
|
21
|
|
|
||
Revenue from other sources
|
|
6
|
|
|
6
|
|
|
||
Net operating revenues
|
|
$
|
498
|
|
|
$
|
455
|
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
|
2018
|
|
2017
|
|
||||
Revenue cycle services – Tenet
|
|
$
|
144
|
|
|
$
|
147
|
|
|
Revenue cycle services – other customers
|
|
232
|
|
|
224
|
|
|
||
Other services – Tenet
|
|
6
|
|
|
12
|
|
|
||
Other services – other customers
|
|
22
|
|
|
19
|
|
|
||
Net operating revenues
|
|
$
|
404
|
|
|
$
|
402
|
|
|
|
|
Balances at
Beginning
of Period
|
|
Litigation and
Investigation
Costs
|
|
Cash
Payments
|
|
Balances at
End of
Period
|
||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
12
|
|
|
$
|
6
|
|
|
$
|
(7
|
)
|
|
$
|
11
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
12
|
|
|
$
|
6
|
|
|
$
|
(7
|
)
|
|
$
|
11
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Balances at beginning of period
|
|
$
|
1,866
|
|
|
$
|
2,393
|
|
Net income
|
|
61
|
|
|
53
|
|
||
Distributions paid to noncontrolling interests
|
|
(30
|
)
|
|
(27
|
)
|
||
Purchase accounting adjustments
|
|
—
|
|
|
11
|
|
||
Accretion of redeemable noncontrolling interests
|
|
37
|
|
|
—
|
|
||
Purchases and sales of businesses and noncontrolling interests, net
|
|
8
|
|
|
—
|
|
||
Balances at end of period
|
|
$
|
1,942
|
|
|
$
|
2,430
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Hospital Operations and other
|
|
$
|
526
|
|
|
$
|
519
|
|
Ambulatory Care
|
|
1,186
|
|
|
1,137
|
|
||
Conifer
|
|
230
|
|
|
210
|
|
||
Redeemable noncontrolling interests
|
|
$
|
1,942
|
|
|
$
|
1,866
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Hospital Operations and other
|
|
$
|
6
|
|
|
$
|
4
|
|
Ambulatory Care
|
|
35
|
|
|
35
|
|
||
Conifer
|
|
20
|
|
|
14
|
|
||
Net income attributable to redeemable noncontrolling interests
|
|
$
|
61
|
|
|
$
|
53
|
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Tax expense at statutory federal rate of 21% (35% for 2017)
|
$
|
55
|
|
|
$
|
1
|
|
State income taxes, net of federal income tax benefit
|
10
|
|
|
(7
|
)
|
||
Tax benefit attributable to noncontrolling interests
|
(18
|
)
|
|
(26
|
)
|
||
Nondeductible goodwill
|
5
|
|
|
—
|
|
||
Change in tax contingency reserves, including interest
|
—
|
|
|
(2
|
)
|
||
Stock-based compensation
|
4
|
|
|
8
|
|
||
Change in valuation allowance-interest expense limitation
|
12
|
|
|
—
|
|
||
Other items
|
2
|
|
|
(7
|
)
|
||
Income tax expense (benefit)
|
$
|
70
|
|
|
$
|
(33
|
)
|
|
|
Net Income Available (Loss Attributable)
to Common Shareholders (Numerator) |
|
Weighted
Average Shares (Denominator) |
|
Per-Share
Amount |
|||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||
Net income available to Tenet Healthcare Corporation common shareholders
for basic loss per share |
|
$
|
98
|
|
|
101,392
|
|
|
$
|
0.97
|
|
Effect of dilutive stock options, restricted stock units and deferred compensation units
|
|
—
|
|
|
1,264
|
|
|
(0.02
|
)
|
||
Net income available to Tenet Healthcare Corporation common shareholders for diluted loss per share
|
|
$
|
98
|
|
|
102,656
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
||
Net loss attributable to Tenet Healthcare Corporation common shareholders
for basic loss per share |
|
$
|
(52
|
)
|
|
100,000
|
|
|
$
|
(0.52
|
)
|
Effect of dilutive stock options, restricted stock units and deferred compensation units
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Net loss attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share
|
|
$
|
(52
|
)
|
|
100,000
|
|
|
$
|
(0.52
|
)
|
Investments
|
|
March 31, 2018
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Marketable equity securities — noncurrent
|
|
$
|
34
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable debt securities — noncurrent
|
|
22
|
|
|
7
|
|
|
15
|
|
|
—
|
|
||||
|
|
$
|
56
|
|
|
$
|
41
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Investments
|
|
December 31, 2017
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Marketable equity securities — noncurrent
|
|
$
|
35
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable debt securities — noncurrent
|
|
21
|
|
|
7
|
|
|
14
|
|
|
—
|
|
||||
|
|
$
|
56
|
|
|
$
|
42
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
|
March 31, 2018
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Long-lived assets held for sale
|
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
423
|
|
|
$
|
—
|
|
|
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
423
|
|
|
$
|
—
|
|
|
|
December 31, 2017
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Long-lived assets held for sale
|
|
$
|
456
|
|
|
$
|
—
|
|
|
$
|
456
|
|
|
$
|
—
|
|
Other than temporarily impaired equity method investments
|
|
113
|
|
|
—
|
|
|
113
|
|
|
—
|
|
||||
|
|
$
|
569
|
|
|
$
|
—
|
|
|
$
|
569
|
|
|
$
|
—
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Current assets
|
|
$
|
2
|
|
|
$
|
1
|
|
Property and equipment
|
|
3
|
|
|
1
|
|
||
Other intangible assets
|
|
1
|
|
|
2
|
|
||
Goodwill
|
|
20
|
|
|
10
|
|
||
Other long-term assets
|
|
1
|
|
|
—
|
|
||
Current liabilities
|
|
(1
|
)
|
|
(2
|
)
|
||
Long-term liabilities
|
|
(1
|
)
|
|
(1
|
)
|
||
Redeemable noncontrolling interests in equity of consolidated subsidiaries
|
|
(9
|
)
|
|
—
|
|
||
Noncontrolling interests
|
|
—
|
|
|
(3
|
)
|
||
Cash paid, net of cash acquired
|
|
(16
|
)
|
|
(6
|
)
|
||
Gains on consolidations
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
16,271
|
|
|
$
|
16,466
|
|
Ambulatory Care
|
|
5,811
|
|
|
5,822
|
|
||
Conifer
|
|
1,102
|
|
|
1,097
|
|
||
Total
|
|
$
|
23,184
|
|
|
$
|
23,385
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Capital expenditures:
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
120
|
|
|
$
|
183
|
|
Ambulatory Care
|
|
15
|
|
|
11
|
|
||
Conifer
|
|
8
|
|
|
4
|
|
||
Total
|
|
$
|
143
|
|
|
$
|
198
|
|
|
|
|
|
|
||||
Net operating revenues:
|
|
|
|
|
|
|
||
Hospital Operations and other total prior to inter-segment eliminations
(1)
|
|
$
|
3,947
|
|
|
$
|
4,115
|
|
Ambulatory Care
|
|
498
|
|
|
455
|
|
||
Conifer
|
|
|
|
|
|
|
||
Tenet
|
|
150
|
|
|
159
|
|
||
Other customers
|
|
254
|
|
|
243
|
|
||
Total Conifer
|
|
404
|
|
|
402
|
|
||
Inter-segment eliminations
|
|
(150
|
)
|
|
(159
|
)
|
||
Total
|
|
$
|
4,699
|
|
|
$
|
4,813
|
|
|
|
|
|
|
||||
Equity in earnings of unconsolidated affiliates:
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
Ambulatory Care
|
|
27
|
|
|
27
|
|
||
Total
|
|
$
|
25
|
|
|
$
|
29
|
|
|
|
|
|
|
||||
Adjusted EBITDA
(2)
:
|
|
|
|
|
|
|
||
Hospital Operations and other
(2)
|
|
$
|
402
|
|
|
$
|
309
|
|
Ambulatory Care
|
|
165
|
|
|
153
|
|
||
Conifer
|
|
98
|
|
|
65
|
|
||
Total
|
|
$
|
665
|
|
|
$
|
527
|
|
|
|
|
|
|
||||
Depreciation and amortization:
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
175
|
|
|
$
|
187
|
|
Ambulatory Care
|
|
17
|
|
|
22
|
|
||
Conifer
|
|
12
|
|
|
12
|
|
||
Total
|
|
$
|
204
|
|
|
$
|
221
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Adjusted EBITDA
(2)
|
|
$
|
665
|
|
|
$
|
527
|
|
Loss from divested and closed businesses
(i.e., the Company’s health plan businesses) |
|
(1
|
)
|
|
(16
|
)
|
||
Depreciation and amortization
|
|
(204
|
)
|
|
(221
|
)
|
||
Impairment and restructuring charges, and acquisition-related costs
|
|
(47
|
)
|
|
(33
|
)
|
||
Litigation and investigation costs
|
|
(6
|
)
|
|
(5
|
)
|
||
Interest expense
|
|
(255
|
)
|
|
(258
|
)
|
||
Loss from early extinguishment of debt
|
|
(1
|
)
|
|
—
|
|
||
Other non-operating expense, net
|
|
(1
|
)
|
|
(5
|
)
|
||
Gains on sales, consolidation and deconsolidation of facilities
|
|
110
|
|
|
15
|
|
||
Income from continuing operations, before income taxes
|
|
$
|
260
|
|
|
$
|
4
|
|
|
(1)
|
Hospital Operations and other revenues includes health plan revenues of
$6 million
for the
three
months ended
March 31, 2018
and
$65 million
for the three months ended March 31, 2017, respectively.
|
(2)
|
Hospital Operations and other Adjusted EBITDA excludes health plan EBITDA of
$(1) million
for the
three
months ended
March 31, 2018
and
$(16) million
for the
three
months ended
March 31, 2017
.
|
•
|
Management Overview
|
•
|
Forward-Looking Statements
|
•
|
Sources of Revenue for Our Hospital Operations and Other Segment
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Critical Accounting Estimates
|
|
|
Continuing Operations
Three Months Ended March 31, |
|
|||||||
Selected Operating Statistics
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|
|||
Hospital Operations and other – hospitals and related outpatient facilities
|
|
|
|
|
|
|
|
|||
Number of hospitals (at end of period)
|
|
69
|
|
|
76
|
|
|
(7
|
)
|
(1)
|
Total admissions
|
|
182,306
|
|
|
196,907
|
|
|
(7.4
|
)%
|
|
Adjusted patient admissions
(2)
|
|
320,868
|
|
|
347,150
|
|
|
(7.6
|
)%
|
|
Paying admissions (excludes charity and uninsured)
|
|
172,490
|
|
|
186,648
|
|
|
(7.6
|
)%
|
|
Charity and uninsured admissions
|
|
9,816
|
|
|
10,259
|
|
|
(4.3
|
)%
|
|
Emergency department visits
|
|
697,001
|
|
|
733,051
|
|
|
(4.9
|
)%
|
|
Total surgeries
|
|
110,231
|
|
|
121,404
|
|
|
(9.2
|
)%
|
|
Patient days — total
|
|
858,648
|
|
|
923,339
|
|
|
(7.0
|
)%
|
|
Adjusted patient days
(2)
|
|
1,486,139
|
|
|
1,603,698
|
|
|
(7.3
|
)%
|
|
Average length of stay (days)
|
|
4.71
|
|
|
4.69
|
|
|
0.4
|
%
|
|
Average licensed beds
|
|
18,685
|
|
|
20,440
|
|
|
(8.6
|
)%
|
|
Utilization of licensed beds
(3)
|
|
51.1
|
%
|
|
50.2
|
%
|
|
0.9
|
%
|
(1)
|
Total visits
|
|
1,842,539
|
|
|
2,039,942
|
|
|
(9.7
|
)%
|
|
Paying visits (excludes charity and uninsured)
|
|
1,725,976
|
|
|
1,908,212
|
|
|
(9.6
|
)%
|
|
Charity and uninsured visits
|
|
116,563
|
|
|
131,730
|
|
|
(11.5
|
)%
|
|
Ambulatory Care
|
|
|
|
|
|
|
|
|||
Total consolidated facilities (at end of period)
|
|
230
|
|
|
217
|
|
|
13
|
|
(1)
|
Total cases
|
|
495,301
|
|
|
455,576
|
|
|
8.7
|
%
|
|
|
|
|
(1)
|
The change is the difference between the 2018 and 2017 amounts shown.
|
|
(2)
|
Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services provided by facilities in our Hospital Operations and other segment by multiplying actual patient admissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.
|
|
(3)
|
Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds.
|
|
|
Continuing Operations
Three Months Ended March 31, |
|
|||||||||
Revenues
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|
|||||
Net operating revenues
|
|
|
|
|
|
|
|
|||||
Hospital Operations and other prior to inter-segment eliminations
|
|
$
|
3,947
|
|
|
$
|
4,115
|
|
|
(4.1
|
)%
|
|
Ambulatory Care
|
|
498
|
|
|
455
|
|
|
9.5
|
%
|
|
||
Conifer
|
|
404
|
|
|
402
|
|
|
0.5
|
%
|
|
||
Inter-segment eliminations
|
|
(150
|
)
|
|
(159
|
)
|
|
(5.7
|
)%
|
|
||
Total
|
|
$
|
4,699
|
|
|
$
|
4,813
|
|
|
(2.4
|
)%
|
|
|
|
Continuing Operations
Three Months Ended March 31, |
|||||||||
Selected Operating Expenses
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|||||
Hospital Operations and other
|
|
|
|
|
|
|
|||||
Salaries, wages and benefits
|
|
$
|
1,840
|
|
|
$
|
1,980
|
|
|
(7.1
|
)%
|
Supplies
|
|
666
|
|
|
671
|
|
|
(0.7
|
)%
|
||
Other operating expenses
|
|
889
|
|
|
1,015
|
|
|
(12.4
|
)%
|
||
Total
|
|
$
|
3,395
|
|
|
$
|
3,666
|
|
|
(7.4
|
)%
|
Ambulatory Care
|
|
|
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
$
|
162
|
|
|
$
|
150
|
|
|
8.0
|
%
|
Supplies
|
|
106
|
|
|
94
|
|
|
12.8
|
%
|
||
Other operating expenses
|
|
92
|
|
|
85
|
|
|
8.2
|
%
|
||
Total
|
|
$
|
360
|
|
|
$
|
329
|
|
|
9.4
|
%
|
Conifer
|
|
|
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
$
|
225
|
|
|
$
|
250
|
|
|
(10.0
|
)%
|
Supplies
|
|
2
|
|
|
—
|
|
|
100.0
|
%
|
||
Other operating expenses
|
|
79
|
|
|
87
|
|
|
(9.2
|
)%
|
||
Total
|
|
$
|
306
|
|
|
$
|
337
|
|
|
(9.2
|
)%
|
Total
|
|
|
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
$
|
2,227
|
|
|
$
|
2,380
|
|
|
(6.4
|
)%
|
Supplies
|
|
774
|
|
|
765
|
|
|
1.2
|
%
|
||
Other operating expenses
|
|
1,060
|
|
|
1,187
|
|
|
(10.7
|
)%
|
||
Total
|
|
$
|
4,061
|
|
|
$
|
4,332
|
|
|
(6.3
|
)%
|
Rent/lease expense
(1)
|
|
|
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
59
|
|
|
$
|
62
|
|
|
(4.8
|
)%
|
Ambulatory Care
|
|
20
|
|
|
18
|
|
|
11.1
|
%
|
||
Conifer
|
|
4
|
|
|
5
|
|
|
(20.0
|
)%
|
||
Total
|
|
$
|
83
|
|
|
$
|
85
|
|
|
(2.4
|
)%
|
|
|
|
(1)
|
Included in other operating expenses.
|
|
|
Continuing Operations
Three Months Ended March 31, |
|||||||||
Selected Operating Expenses per Adjusted Patient Admission
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|||||
Hospital Operations and other
|
|
|
|
|
|
|
|||||
Salaries, wages and benefits per adjusted patient admission
(1)
|
|
$
|
5,727
|
|
|
$
|
5,686
|
|
|
0.7
|
%
|
Supplies per adjusted patient admission
(1)
|
|
2,079
|
|
|
1,929
|
|
|
7.8
|
%
|
||
Other operating expenses per adjusted patient admission
(1)
|
|
2,755
|
|
|
2,673
|
|
|
3.1
|
%
|
||
Total per adjusted patient admission
|
|
$
|
10,561
|
|
|
$
|
10,288
|
|
|
2.7
|
%
|
|
|
|
(1)
|
Calculation excludes the expenses from our health plan businesses. Adjusted patient admissions represents actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital Operations and other segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.
|
•
|
Net cash provided by operating activities before interest, taxes, discontinued operations and restructuring charges, acquisition-related costs, and litigation costs and settlements of
$315 million
;
|
•
|
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements of
$33 million
;
|
•
|
Capital expenditures of
$143 million
;
|
•
|
Proceeds from the sales of facilities and other assets of
$425 million
;
|
•
|
Proceeds from sales of marketable securities, long-term investments and other assets of
$134 million
, primarily due to the sales of our minority interests in four North Texas hospitals;
|
•
|
Interest payments of
$169 million
;
|
•
|
$51 million of payments to purchase approximately
$28 million
aggregate principal amount of our
6.750%
senior unsecured notes due 2023 and approximately
$22 million
aggregate principal amount of our
7.000%
senior unsecured notes due 2025; and
|
•
|
$64 million
of distributions paid to noncontrolling interests.
|
•
|
Decreased cash receipts of $82 million related to the California provider fee program;
|
•
|
A
$9 million
increase
in payments on reserves for restructuring charges, acquisition-related costs, and litigation costs and settlements;
|
•
|
Additional interest payments of $39 million in the 2018 period primarily due to only one six-month interest payment in July 2017 related to our 7.500% senior secured second lien notes due 2022, which were issued in December 2016, compared to two interest payments in 2018 (January and July 2018); changes in the timing of certain interest payments as a result of our refinancing transactions in 2017 also impacted the year-over-year comparison;
|
•
|
Increased cash flows from our health plan businesses of $27 million due to cash outflows in the 2017 period resulting from the sales and wind-down of these businesses in 2017, compared to negligible cash flows in the 2018 period; and
|
•
|
The timing of other working capital items.
|
|
|
Three Months Ended
March 31, |
|||||||
Net Patient Revenues Less Implicit Price Concessions and Provision for Doubtful Accounts from:
|
|
2018
|
|
2017
|
|
Increase
(Decrease) (1) |
|||
Medicare
|
|
21.5
|
%
|
|
23.1
|
%
|
|
(1.6
|
)%
|
Medicaid
|
|
8.8
|
%
|
|
7.4
|
%
|
|
1.4
|
%
|
Managed care
(2)
|
|
65.0
|
%
|
|
65.2
|
%
|
|
(0.2
|
)%
|
Self-pay
|
|
1.0
|
%
|
|
0.3
|
%
|
|
0.7
|
%
|
Indemnity and other
|
|
3.7
|
%
|
|
4.0
|
%
|
|
(0.3
|
)%
|
|
|
|
(1)
|
The increase (decrease) is the difference between the 2018 and 2017 percentages shown.
|
|
(2)
|
Includes Medicare and Medicaid managed care programs.
|
|
|
Three Months Ended
March 31, |
|||||||
Admissions from:
|
|
2018
|
|
2017
|
|
Increase
(Decrease) (1) |
|||
Medicare
|
|
26.9
|
%
|
|
27.0
|
%
|
|
(0.1
|
)%
|
Medicaid
|
|
6.2
|
%
|
|
6.4
|
%
|
|
(0.2
|
)%
|
Managed care
(2)
|
|
59.1
|
%
|
|
59.0
|
%
|
|
0.1
|
%
|
Self-pay
|
|
5.4
|
%
|
|
5.3
|
%
|
|
0.1
|
%
|
Indemnity and other
|
|
2.4
|
%
|
|
2.3
|
%
|
|
0.1
|
%
|
|
|
|
(1)
|
The increase (decrease) is the difference between the 2018 and 2017 percentages shown.
|
|
(2)
|
Includes Medicare and Medicaid managed care programs.
|
|
|
Three Months Ended
March 31, |
||||||
Revenue Descriptions
|
|
2018
|
|
2017
|
||||
Medicare severity-adjusted diagnosis-related group — operating
|
|
$
|
424
|
|
|
$
|
450
|
|
Medicare severity-adjusted diagnosis-related group — capital
|
|
38
|
|
|
41
|
|
||
Outliers
|
|
27
|
|
|
21
|
|
||
Outpatient
|
|
194
|
|
|
201
|
|
||
Disproportionate share
|
|
58
|
|
|
71
|
|
||
Direct Graduate and Indirect Medical Education
(1)
|
|
56
|
|
|
66
|
|
||
Other
(2)
|
|
(17
|
)
|
|
—
|
|
||
Adjustments for prior-year cost reports and related valuation allowances
|
|
2
|
|
|
12
|
|
||
Total Medicare net patient revenues
|
|
$
|
782
|
|
|
$
|
862
|
|
|
|
|
(1)
|
Includes Indirect Medical Education revenues earned by our children’s hospitals under the Children’s Hospitals Graduate Medical Education Payment Program administered by the Health Resources and Services Administration of HHS.
|
|
(2)
|
The other revenue category includes inpatient psychiatric units, inpatient rehabilitation units, one long-term acute care hospital (which was divested in 2017), other revenue adjustments, and adjustments related to the estimates for current-year cost reports and related valuation allowances.
|
|
|
Three Months Ended
March 31, |
||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||
Hospital Location
|
|
Medicaid
|
|
Managed
Medicaid |
|
Medicaid
|
|
Managed
Medicaid |
||||||||
Alabama
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
—
|
|
Arizona
|
|
—
|
|
|
43
|
|
|
1
|
|
|
50
|
|
||||
California
|
|
109
|
|
|
110
|
|
|
42
|
|
|
109
|
|
||||
Florida
|
|
24
|
|
|
37
|
|
|
19
|
|
|
42
|
|
||||
Georgia
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Illinois
|
|
16
|
|
|
15
|
|
|
19
|
|
|
17
|
|
||||
Massachusetts
|
|
12
|
|
|
12
|
|
|
8
|
|
|
12
|
|
||||
Michigan
|
|
102
|
|
|
81
|
|
|
93
|
|
|
87
|
|
||||
Missouri
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Pennsylvania
|
|
2
|
|
|
7
|
|
|
19
|
|
|
50
|
|
||||
South Carolina
|
|
4
|
|
|
9
|
|
|
3
|
|
|
9
|
|
||||
Tennessee
|
|
1
|
|
|
9
|
|
|
—
|
|
|
8
|
|
||||
Texas
|
|
29
|
|
|
55
|
|
|
48
|
|
|
60
|
|
||||
|
|
$
|
321
|
|
|
$
|
378
|
|
|
$
|
275
|
|
|
$
|
444
|
|
•
|
A market basket increase of 2.8% for Medicare severity-adjusted diagnosis-related group (“MS-DRG”) operating payments for hospitals reporting specified quality measure data and that are meaningful users of electronic health record (“EHR”) technology (hospitals that do not report specified quality measure data and/or are not meaningful users of EHR technology will receive a reduced market basket increase); CMS is also proposing certain
|
•
|
Market basket index and multifactor productivity reductions required by the ACA of 0.75% and 0.8%, respectively; and
|
•
|
A 0.5% increase required under the 21st Century Cures Act;
|
•
|
Updates to the three factors used to determine the amount and distribution of Medicare uncompensated care disproportionate share (“UC-DSH”) payments, including the continuation of the transition from using low-income days to estimated uncompensated care costs for the distribution of the UC-DSH amounts;
|
•
|
A 1.7% net increase in the capital federal MS-DRG rate;
|
•
|
An increase in the cost outlier threshold from $26,537 to $27,545;
|
•
|
The application of the Medicare IPPS post-acute transfer payment policy to “early discharges” from the hospital to hospice care as required by the Bipartisan Budget Act of 2018; and
|
•
|
Effective January 1, 2019, the requirement that hospitals make available to the public a list of their current standard charges via the Internet in a machine readable format and update this information at least annually or more often as appropriate.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Estimated costs for:
|
|
|
|
|
|
|
||
Self-pay patients
|
|
$
|
146
|
|
|
$
|
160
|
|
Charity care patients
|
|
35
|
|
|
30
|
|
||
Total
|
|
$
|
181
|
|
|
$
|
190
|
|
Medicaid DSH and other supplemental revenues
|
|
$
|
220
|
|
|
$
|
158
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Net operating revenues:
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
3,947
|
|
|
$
|
4,491
|
|
Ambulatory Care
|
|
498
|
|
|
462
|
|
||
Conifer
|
|
404
|
|
|
402
|
|
||
Inter-segment eliminations
|
|
(150
|
)
|
|
(159
|
)
|
||
Net operating revenues before provision for doubtful accounts
|
|
4,699
|
|
|
5,196
|
|
||
Less provision for doubtful accounts
|
|
—
|
|
|
383
|
|
||
Net operating revenues
|
|
4,699
|
|
|
4,813
|
|
||
Equity in earnings of unconsolidated affiliates
|
|
25
|
|
|
29
|
|
||
Operating expenses:
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
2,227
|
|
|
2,380
|
|
||
Supplies
|
|
774
|
|
|
765
|
|
||
Other operating expenses, net
|
|
1,060
|
|
|
1,187
|
|
||
Electronic health record incentives
|
|
(1
|
)
|
|
(1
|
)
|
||
Depreciation and amortization
|
|
204
|
|
|
221
|
|
||
Impairment and restructuring charges, and acquisition-related costs
|
|
47
|
|
|
33
|
|
||
Litigation and investigation costs
|
|
6
|
|
|
5
|
|
||
Gains on sales, consolidation and deconsolidation of facilities
|
|
(110
|
)
|
|
(15
|
)
|
||
Operating income
|
|
$
|
517
|
|
|
$
|
267
|
|
|
|
Three Months Ended
March 31, |
|||||||||
Selected Operating Expenses
|
|
2018
|
|
2017
|
|
Increase
(Decrease)
|
|||||
Hospital Operations and other — Same-Hospital
|
|
|
|
|
|
|
|||||
Salaries, wages and benefits
|
|
$
|
1,807
|
|
|
$
|
1,776
|
|
|
1.7
|
%
|
Supplies
|
|
654
|
|
|
612
|
|
|
6.9
|
%
|
||
Other operating expenses
|
|
856
|
|
|
865
|
|
|
(1.0
|
)%
|
||
Total
|
|
$
|
3,317
|
|
|
$
|
3,253
|
|
|
2.0
|
%
|
Ambulatory Care
|
|
|
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
$
|
162
|
|
|
$
|
150
|
|
|
8.0
|
%
|
Supplies
|
|
106
|
|
|
94
|
|
|
12.8
|
%
|
||
Other operating expenses
|
|
92
|
|
|
85
|
|
|
8.2
|
%
|
||
Total
|
|
$
|
360
|
|
|
$
|
329
|
|
|
9.4
|
%
|
Conifer
|
|
|
|
|
|
|
|
|
|
||
Salaries, wages and benefits
|
|
$
|
225
|
|
|
$
|
250
|
|
|
(10.0
|
)%
|
Supplies
|
|
2
|
|
|
—
|
|
|
100.0
|
%
|
||
Other operating expenses
|
|
79
|
|
|
87
|
|
|
(9.2
|
)%
|
||
Total
|
|
$
|
306
|
|
|
$
|
337
|
|
|
(9.2
|
)%
|
Total
|
|
|
|
|
|
|
|||||
Salaries, wages and benefits
|
|
$
|
2,194
|
|
|
$
|
2,176
|
|
|
0.8
|
%
|
Supplies
|
|
762
|
|
|
706
|
|
|
7.9
|
%
|
||
Other operating expenses
|
|
1,027
|
|
|
1,037
|
|
|
(1.0
|
)%
|
||
Total
|
|
$
|
3,983
|
|
|
$
|
3,919
|
|
|
1.6
|
%
|
Rent/lease expense
(1)
|
|
|
|
|
|
|
|
|
|
||
Hospital Operations and other
|
|
$
|
58
|
|
|
$
|
56
|
|
|
3.6
|
%
|
Ambulatory Care
|
|
20
|
|
|
18
|
|
|
11.1
|
%
|
||
Conifer
|
|
4
|
|
|
5
|
|
|
(20.0
|
)%
|
||
Total
|
|
$
|
82
|
|
|
$
|
79
|
|
|
3.8
|
%
|
|
|
|
(1)
|
Included in other operating expenses.
|
•
|
Hospital Operations and other, which
is comprised of our acute care and specialty hospitals, ancillary outpatient facilities, urgent care centers, microhospitals and physician practices
. As described in Note 4 to the accompanying Condensed Consolidated Financial Statements, certain of our facilities are classified as held for sale at March 31, 2018.
|
•
|
Ambulatory Care, which is comprised of our USPI joint venture’s ambulatory surgery centers, urgent care centers, imaging centers and surgical hospitals, as well as Aspen’s hospitals and clinics, which are classified as held for sale at March 31, 2018 as described in Note 4 to the accompanying Condensed Consolidated Financial Statements.
|
•
|
Conifer, which
provides healthcare business process services in the areas of hospital and physician revenue cycle management and value-based care solutions to healthcare systems, as well as individual hospitals, physician practices, self-insured organizations, health plans and other entities
.
|
|
|
Same-Hospital
Continuing Operations
|
||||||||
|
|
Three Months Ended
March 31, |
||||||||
Admissions, Patient Days and Surgeries
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
||||
Number of hospitals (at end of period)
|
|
69
|
|
|
69
|
|
|
—
|
|
(1)
|
Total admissions
|
|
179,208
|
|
|
178,725
|
|
|
0.3
|
%
|
|
Adjusted patient admissions
(2)
|
|
314,022
|
|
|
312,003
|
|
|
0.6
|
%
|
|
Paying admissions (excludes charity and uninsured)
|
|
169,548
|
|
|
169,601
|
|
|
—
|
%
|
|
Charity and uninsured admissions
|
|
9,660
|
|
|
9,124
|
|
|
5.9
|
%
|
|
Admissions through emergency department
|
|
123,224
|
|
|
115,133
|
|
|
7.0
|
%
|
|
Paying admissions as a percentage of total admissions
|
|
94.6
|
%
|
|
94.9
|
%
|
|
(0.3
|
)%
|
(1)
|
Charity and uninsured admissions as a percentage of total admissions
|
|
5.4
|
%
|
|
5.1
|
%
|
|
0.3
|
%
|
(1)
|
Emergency department admissions as a percentage of total admissions
|
|
68.8
|
%
|
|
64.4
|
%
|
|
4.4
|
%
|
(1)
|
Surgeries — inpatient
|
|
46,575
|
|
|
47,539
|
|
|
(2.0
|
)%
|
|
Surgeries — outpatient
|
|
61,754
|
|
|
62,895
|
|
|
(1.8
|
)%
|
|
Total surgeries
|
|
108,329
|
|
|
110,434
|
|
|
(1.9
|
)%
|
|
Patient days — total
|
|
843,793
|
|
|
837,488
|
|
|
0.8
|
%
|
|
Adjusted patient days
(2)
|
|
1,453,447
|
|
|
1,440,173
|
|
|
0.9
|
%
|
|
Average length of stay (days)
|
|
4.71
|
|
|
4.69
|
|
|
0.4
|
%
|
|
Licensed beds (at end of period)
|
|
18,089
|
|
|
18,107
|
|
|
(0.1
|
)%
|
|
Average licensed beds
|
|
18,089
|
|
|
18,107
|
|
|
(0.1
|
)%
|
|
Utilization of licensed beds
(3)
|
|
51.8
|
%
|
|
51.4
|
%
|
|
0.4
|
%
|
(1)
|
|
|
|
(1)
|
The change is the difference between 2018 and 2017 amounts shown.
|
|
(2)
|
Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services provided by facilities in our Hospital Operations and other segment by multiplying actual patient admissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.
|
|
(3)
|
Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds.
|
|
|
Same-Hospital
Continuing Operations |
||||||||
|
|
Three Months Ended
March 31, |
||||||||
Outpatient Visits
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
||||
Total visits
|
|
1,798,885
|
|
|
1,817,295
|
|
|
(1.0
|
)%
|
|
Paying visits (excludes charity and uninsured)
|
|
1,684,875
|
|
|
1,705,091
|
|
|
(1.2
|
)%
|
|
Charity and uninsured visits
|
|
114,010
|
|
|
112,204
|
|
|
1.6
|
%
|
|
Emergency department visits
|
|
684,057
|
|
|
652,284
|
|
|
4.9
|
%
|
|
Surgery visits
|
|
61,754
|
|
|
62,895
|
|
|
(1.8
|
)%
|
|
Paying visits as a percentage of total visits
|
|
93.7
|
%
|
|
93.8
|
%
|
|
(0.1
|
)%
|
(1)
|
Charity and uninsured visits as a percentage of total visits
|
|
6.3
|
%
|
|
6.2
|
%
|
|
0.1
|
%
|
(1)
|
|
|
|
(1)
|
The change is the difference between 2018 and 2017 amounts shown.
|
|
|
Same-Hospital
Continuing Operations |
|||||||||
|
|
Three Months Ended
March 31, |
|||||||||
Revenues
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|||||
Total segment net operating revenues
(1)
|
|
$
|
3,733
|
|
|
$
|
3,540
|
|
|
5.5
|
%
|
Selected revenue data – hospitals and related outpatient facilities
|
|
|
|
|
|
|
|||||
Net patient revenues
(1)(2)
|
|
$
|
3,594
|
|
|
$
|
3,368
|
|
|
6.7
|
%
|
Net patient revenue per adjusted patient admission
(1)(2)
|
|
$
|
11,445
|
|
|
$
|
10,796
|
|
|
6.0
|
%
|
Net patient revenue per adjusted patient day
(1)(2)
|
|
$
|
2,473
|
|
|
$
|
2,339
|
|
|
5.7
|
%
|
|
|
|
(1)
|
Revenues are net of implicit price concessions and provision for doubtful accounts.
|
|
(2)
|
Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services provided by facilities in our Hospital Operations and other segment by multiplying actual patient admissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.
|
|
|
Same-Hospital
Continuing Operations |
||||||||
|
|
Three Months Ended
March 31, |
||||||||
Total Segment Selected Operating Expenses
|
|
2018
|
|
2017
|
|
Increase
(Decrease) |
||||
Salaries, wages and benefits as a percentage of net operating revenues
|
|
48.4
|
%
|
|
50.2
|
%
|
|
(1.8
|
)%
|
(1)
|
Supplies as a percentage of net operating revenues
|
|
17.5
|
%
|
|
17.3
|
%
|
|
0.2
|
%
|
(1)
|
Other operating expenses as a percentage of net operating revenues
|
|
22.9
|
%
|
|
24.4
|
%
|
|
(1.5
|
)%
|
(1)
|
|
|
|
(1)
|
The change is the difference between 2018 and 2017 amounts shown.
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Accounts
Receivable |
|
Accounts
Receivable
Before
Allowance
for Doubtful
Accounts
|
|
Allowance
for Doubtful
Accounts
|
|
Net
|
||||||||
Medicare
|
|
$
|
241
|
|
|
$
|
257
|
|
|
$
|
—
|
|
|
$
|
257
|
|
Medicaid
|
|
91
|
|
|
95
|
|
|
—
|
|
|
95
|
|
||||
Net cost report settlements receivable (payable) and valuation allowances
|
|
(10
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Managed care
|
|
1,470
|
|
|
1,709
|
|
|
204
|
|
|
1,505
|
|
||||
Self-pay uninsured
|
|
51
|
|
|
407
|
|
|
351
|
|
|
56
|
|
||||
Self-pay balance after insurance
|
|
97
|
|
|
240
|
|
|
149
|
|
|
91
|
|
||||
Estimated future recoveries
|
|
127
|
|
|
132
|
|
|
—
|
|
|
132
|
|
||||
Other payers
|
|
295
|
|
|
453
|
|
|
151
|
|
|
302
|
|
||||
Total Hospital Operations and other
|
|
2,362
|
|
|
3,297
|
|
|
855
|
|
|
2,442
|
|
||||
Ambulatory Care
|
|
155
|
|
|
215
|
|
|
43
|
|
|
172
|
|
||||
Total discontinued operations
|
|
2
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
|
|
$
|
2,519
|
|
|
$
|
3,514
|
|
|
$
|
898
|
|
|
$
|
2,616
|
|
|
|
March 31, 2018
|
|||||||||||||
|
|
Medicare
|
|
Medicaid
|
|
Managed
Care |
|
Indemnity,
Self-Pay and Other |
|
Total
|
|||||
0-60 days
(1)
|
|
89
|
%
|
|
58
|
%
|
|
61
|
%
|
|
28
|
%
|
|
56
|
%
|
61-120 days
|
|
6
|
%
|
|
17
|
%
|
|
15
|
%
|
|
16
|
%
|
|
15
|
%
|
121-180 days
|
|
2
|
%
|
|
11
|
%
|
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
Over 180 days
|
|
3
|
%
|
|
14
|
%
|
|
16
|
%
|
|
46
|
%
|
|
21
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
(1)
|
The 0-60 days aging category has been impacted by the reclassification of certain unbilled accounts to contract assets due to the adoption of ASU 2014-09 effective January 1, 2018. See Notes 1 and 3 to our accompanying Condensed Consolidated Financial Statements for additional information.
|
|
|
December 31, 2017
|
|||||||||||||
|
|
Medicare
|
|
Medicaid
|
|
Managed
Care |
|
Indemnity,
Self-Pay and Other |
|
Total
|
|||||
0-60 days
|
|
89
|
%
|
|
66
|
%
|
|
65
|
%
|
|
28
|
%
|
|
60
|
%
|
61-120 days
|
|
6
|
%
|
|
16
|
%
|
|
14
|
%
|
|
17
|
%
|
|
13
|
%
|
121-180 days
|
|
2
|
%
|
|
10
|
%
|
|
7
|
%
|
|
9
|
%
|
|
7
|
%
|
Over 180 days
|
|
3
|
%
|
|
8
|
%
|
|
14
|
%
|
|
46
|
%
|
|
20
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
0-60 days
|
|
$
|
88
|
|
|
$
|
81
|
|
61-120 days
|
|
9
|
|
|
12
|
|
||
121-180 days
|
|
4
|
|
|
3
|
|
||
Over 180 days
|
|
4
|
|
|
4
|
|
||
Total
|
|
$
|
105
|
|
|
$
|
100
|
|
•
|
decreased
expenses associated with our health plan businesses
of
$71 million
due to the sale and wind-down of these businesses in 2017; partially offset by
|
•
|
increased
malpractice expense
of
$19 million
; and
|
•
|
increased
medical fees
of
$10 million
.
|
•
|
management services revenues, computed as a percentage of each facility’s net revenues (often net of bad debt expense); and
|
•
|
our share of each facility’s net income (loss), which is computed by multiplying the facility’s net income (loss) times the percentage of each facility’s equity interests owned by our USPI joint venture.
|
•
|
equity in earnings of unconsolidated affiliates
—our share of the net income (loss) of each facility, which is based on the facility’s net income (loss) and the percentage of the facility’s outstanding equity interests owned by us; and
|
•
|
management and administrative services revenues, which is included in our net operating revenues
—income we earn for managing the day-to-day operations of each facility, usually quantified as a percentage of each facility’s net revenues less bad debt expense.
|
|
|
Three Months Ended
March 31, |
|||||||||
Ambulatory Care Results of Operations
|
|
2018
|
|
2017
|
|
Increase
|
|||||
Net operating revenues
|
|
$
|
498
|
|
|
$
|
455
|
|
|
9.5
|
%
|
Equity in earnings of unconsolidated affiliates
|
|
$
|
27
|
|
|
$
|
27
|
|
|
—
|
%
|
Salaries, wages and benefits
|
|
$
|
162
|
|
|
$
|
150
|
|
|
8.0
|
%
|
Supplies
|
|
$
|
106
|
|
|
$
|
94
|
|
|
12.8
|
%
|
Other operating expenses, net
|
|
$
|
92
|
|
|
$
|
85
|
|
|
8.2
|
%
|
Ambulatory Care Facility Growth
|
|
Three Months Ended
March 31, 2018 |
|
Net revenues
|
|
2.7
|
%
|
Cases
|
|
3.2
|
%
|
Net revenue per case
|
|
(0.5
|
)%
|
Ambulatory Care Facilities
|
|
Three Months Ended
March 31, 2018 |
|
Facilities:
|
|
|
|
With a healthcare system partner
|
|
195
|
|
Without a healthcare system partner
|
|
143
|
|
Total facilities operated
|
|
338
|
|
Change from December 31, 2017
|
|
|
|
Acquisitions
|
|
4
|
|
De novo
|
|
2
|
|
Dispositions/Mergers
|
|
(1
|
)
|
Total increase in number of facilities operated
|
|
5
|
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Tax expense at statutory federal rate of 21% (35% for 2017)
|
$
|
55
|
|
|
$
|
1
|
|
State income taxes, net of federal income tax benefit
|
10
|
|
|
(7
|
)
|
||
Tax benefit attributable to noncontrolling interests
|
(18
|
)
|
|
(26
|
)
|
||
Nondeductible goodwill
|
5
|
|
|
—
|
|
||
Change in tax contingency reserves, including interest
|
—
|
|
|
(2
|
)
|
||
Stock-based compensation
|
4
|
|
|
8
|
|
||
Change in valuation allowance-interest expense limitation
|
12
|
|
|
—
|
|
||
Other items
|
2
|
|
|
(7
|
)
|
||
Income tax expense (benefit)
|
$
|
70
|
|
|
$
|
(33
|
)
|
|
|
Three Months Ended March 31,
|
|||||||
|
|
2018
|
|
2017
|
|
||||
Net income available (loss attributable) to Tenet Healthcare Corporation
common shareholders
|
|
$
|
99
|
|
|
$
|
(53
|
)
|
|
Less: Net income attributable to noncontrolling interests
|
|
(92
|
)
|
|
(89
|
)
|
|
||
Income (loss) from discontinued operations, net of tax
|
|
1
|
|
|
(1
|
)
|
|
||
Income from continuing operations
|
|
190
|
|
|
37
|
|
|
||
Income tax benefit (expense)
|
|
(70
|
)
|
|
33
|
|
|
||
Loss from early extinguishment of debt
|
|
(1
|
)
|
|
—
|
|
|
||
Other non-operating expense, net
|
|
(1
|
)
|
|
(5
|
)
|
|
||
Interest expense
|
|
(255
|
)
|
|
(258
|
)
|
|
||
Operating income
|
|
517
|
|
|
267
|
|
|
||
Litigation and investigation costs
|
|
(6
|
)
|
|
(5
|
)
|
|
||
Gains on sales, consolidation and deconsolidation of facilities
|
|
110
|
|
|
15
|
|
|
||
Impairment and restructuring charges, and acquisition-related costs
|
|
(47
|
)
|
|
(33
|
)
|
|
||
Depreciation and amortization
|
|
(204
|
)
|
|
(221
|
)
|
|
||
Loss from divested and closed businesses (i.e., the Company’s health plan businesses)
|
|
(1
|
)
|
|
(16
|
)
|
|
||
Adjusted EBITDA
|
|
$
|
665
|
|
|
$
|
527
|
|
|
|
|
|
|
|
|
||||
Net operating revenues
|
|
$
|
4,699
|
|
|
$
|
4,813
|
|
|
Less: Net operating revenues from health plans
|
|
6
|
|
|
65
|
|
|
||
Adjusted net operating revenues
|
|
$
|
4,693
|
|
|
$
|
4,748
|
|
|
|
|
|
|
|
|
||||
Net income available (loss attributable) to Tenet Healthcare Corporation
common shareholders as a % of net operating revenues
|
|
2.1
|
%
|
|
(1.1
|
)%
|
|
||
|
|
|
|
|
|
||||
Adjusted EBITDA as % of adjusted net operating revenues
(Adjusted EBITDA margin)
|
|
14.2
|
%
|
|
11.1
|
%
|
|
•
|
Decreased cash receipts of $82 million related to the California provider fee program;
|
•
|
A
$9 million
increase
in payments on reserves for restructuring charges, acquisition-related costs, and litigation costs and settlements;
|
•
|
Additional interest payments of $39 million in the 2018 period primarily due to only one six-month interest payment in July 2017 related to our 7.500% senior secured second lien notes due 2022, which were issued in December 2016, compared to two interest payments in 2018 (January and July 2018); changes in the timing of certain interest payments as a result of our refinancing transactions in 2017 also impacted the year-over-year comparison;
|
•
|
Increased cash flows from our health plan businesses of $27 million due to cash outflows in the 2017 period resulting from the sales and wind-down of these businesses in 2017, compared to negligible cash flows in the 2018 period; and
|
•
|
The timing of other working capital items.
|
|
|
Maturity Date, Years Ending December 31,
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
||||||||||||||||
|
|
(Dollars in Millions)
|
||||||||||||||||||||||||||||||
Fixed rate long-term debt
|
|
$
|
146
|
|
|
$
|
598
|
|
|
$
|
2,671
|
|
|
$
|
1,941
|
|
|
$
|
3,577
|
|
|
$
|
6,174
|
|
|
$
|
15,107
|
|
|
$
|
15,141
|
|
Average effective interest rates
|
|
5.3
|
%
|
|
5.8
|
%
|
|
6.2
|
%
|
|
4.7
|
%
|
|
8.5
|
%
|
|
6.2
|
%
|
|
6.5
|
%
|
|
|
(3)
|
|
Articles of Incorporation and Bylaws
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
(b)
|
|
|
|
|
|
(4)
|
|
Instruments Defining the Rights of Security Holders, Including Indentures
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
(10)
|
|
Material Contracts
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
(b)
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
(31)
|
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
(b)
|
|
|
|
|
|
(32)
|
|
||
|
|
|
|
(101 INS)
|
|
XBRL Instance Document
|
|
|
|
|
|
(101 SCH)
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
(101 CAL)
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
(101 DEF)
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
(101 LAB)
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
(101 PRE)
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
* Management contract or compensatory plan or arrangement.
|
|
|
TENET HEALTHCARE CORPORATION
(Registrant)
|
|
|
|
Date: April 30, 2018
|
By:
|
/s/ R. SCOTT RAMSEY
|
|
|
R. Scott Ramsey
|
|
|
Vice President and Controller
|
|
|
(Principal Accounting Officer)
|
|
Exhibit 10(c)
|
1.
|
Grant
. The Committee has granted You RSUs representing 288,660 Shares in consideration for services to be performed by You for the Company or a Subsidiary of the Company.
|
2.
|
Vesting
. Except as otherwise provided in Section 3 below, the RSUs will vest in equal installments according to the following schedule; provided You remain an employee of the Company on each applicable vesting date: June 1, 2018, September 1, 2018, December 1, 2018, March 1, 2019, June 1, 2019, September 1, 2019, December 1, 2019 and February 28, 2020.
|
3.
|
Termination of Employment
.
All unvested RSUs will vest in the event Your employment is terminated for any of the following reasons:
|
•
|
Death;
|
•
|
Disability (as defined in the Employment Agreement by and between You and the Company, effective as of March 1, 2018 (the “
Employment Agreement
”)); and
|
•
|
A termination of Your employment by the Company other than for Cause or by you for Good Reason (as such terms are defined in the Employment Agreement).
|
4.
|
Tax Withholding
. Except as otherwise provided in the Employment Agreement, upon the vesting of Your RSUs, Your RSUs will be settled in Shares within 30 days and You will recognize ordinary income. The Company is required to withhold payroll taxes due with respect to that ordinary income. Pursuant to the Plan, at its option the Committee either may (a) have the Company withhold Shares having a Fair Market Value equal to the amount of the minimum tax withholding or (b) require You to pay to the Company the amount of the tax withholding.
|
5.
|
Rights as Shareholder
. You will not have any rights of a shareholder prior to the vesting of the RSUs, at which time You will have all of the rights of a shareholder with respect to the Shares received upon the vesting of those RSUs, including the right to vote those Shares and receive all dividends and other distributions, if any, paid or made with respect thereto. Any Shares distributed as dividends with respect to the Shares subject to the RSUs will be subject to the same vesting schedule as the underlying RSUs.
|
6.
|
Transferability
. The RSUs generally may not be transferred, assigned or made subject to any encumbrance, pledge, or charge. Limited exceptions to this rule apply in the case of death, divorce, or gift as provided in Section 12.3 of the Plan.
|
7.
|
Effect on Other Employee Benefit Plans
. The value of the RSUs evidenced by this Certificate will not be included as compensation, earnings, salaries, or other similar terms used when calculating Your benefits under any employee benefit plan sponsored by the Company or a Subsidiary, except as such plan otherwise expressly provides.
|
8.
|
No Employment Rights
. Nothing in this Certificate will confer upon You any right to continue in the employ or service of the Company or any Subsidiary or affect the right of the Company or a Subsidiary to terminate Your employment at any time with or without cause.
|
9.
|
Amendment
. By written notice to You, the Committee reserves the right to amend the Plan or the provisions of this Certificate provided that no such amendment will impair in any material respect Your rights under this Certificate without Your consent except as required to comply with applicable securities laws or Section 409A of the Code.
|
10.
|
Severability
. If any term or provision of this Certificate is declared by any court or government authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any term or provision of this Certificate not declared to be unlawful or invalid. Any term or provision of this Certificate so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to such term or provision to the fullest extent possible while remaining lawful and valid.
|
11.
|
Construction
. A copy of the Plan has been made available to You and additional copies of the Plan are available upon request to the Company’s Corporate Secretary at the Company’s principal executive office during normal business hours. To the extent that any term or provision of this Certificate violates or is inconsistent with an express term or provision of the Plan, the Plan term or provision shall govern and any inconsistent term or provision in this Certificate shall be of no force or effect.
|
12.
|
Binding Effect and Benefit
. This Certificate shall be binding upon and, subject to the terms and conditions hereof, inure to the benefit of the Company, its successors and assigns, and You and Your successors and assigns.
|
13.
|
Entire Understanding
. This Certificate embodies the entire understanding and agreement of the Company and You in relation to the subject matter hereof, and no promise, condition, representation or warranty, expressed or implied, not herein stated, shall bind the Company or You.
|
14.
|
Governing Law
. This Certificate shall be governed by, and construed in accordance with, the laws of the State of Nevada.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tenet Healthcare Corporation (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
|
Date: April 30, 2018
|
/s/ RONALD A. RITTENMEYER
|
|
Ronald A. Rittenmeyer
|
|
Executive Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tenet Healthcare Corporation (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: April 30, 2018
|
/s/ DANIEL J. CANCELMI
|
|
Daniel J. Cancelmi
|
|
Chief Financial Officer
|
|
|
Date: April 30, 2018
|
/s/ RONALD A. RITTENMEYER
|
|
Ronald A. Rittenmeyer
|
|
Executive Chairman and Chief Executive Officer
|
|
|
|
|
Date: April 30, 2018
|
/s/ DANIEL J. CANCELMI
|
|
Daniel J. Cancelmi
|
|
Chief Financial Officer
|