(Source: Business Wire)
Tenet Healthcare Corporation (NYSE:THC) today reported Adjusted EBITDA,
a non-GAAP term defined below, of $240 million for the third quarter
ended Sept. 30, 2009, an increase of $80 million, or 50 percent, as
compared to $160 million for the third quarter of 2008. On a
same-hospital basis, Adjusted EBITDA was $236 million for the third
quarter of 2009, an increase of $74 million, or 45.7 percent, as
compared to $162 million in the third quarter of 2008. The net loss
attributable to common shareholders for the third quarter of 2009 was $3
million, or $0.01 per share, compared to net income attributable to
common shareholders of $104 million, or $0.22 per share, for the third
quarter of 2008. Net income attributable to common shareholders in the
third quarter of 2008 included pre-tax gains on sales of investments of
$140 million.
"Our strategies drove a significant enhancement in earnings through the
first three quarters of 2009, making this the second consecutive quarter
in which we've generated year-over-year Adjusted EBITDA growth of 50
percent or better," said Trevor Fetter, president and chief executive
officer. "Adjusted free cash flow from continuing operations was also
solid at $142 million. Strong revenue growth, excellent cost control,
and robust growth in our outpatient business were more than sufficient
to offset an adverse shift in payer mix. While the economy has had some
effect year-to-date, it remains less than we would have expected in the
context of rising unemployment levels in many of our markets. Given our
strong year-to-date performance, we are raising our range for 2009
Adjusted EBITDA to $925 million to $975 million. Additionally, it is
important to recognize the strong reception Tenet received from the
capital markets this year as it successfully extended more than $2.3
billion of near-term debt maturities and raised fresh capital by
accessing the preferred equity market. These actions reduced our
leverage and created a much stronger and liquid balance sheet."
Continuing Operations
Net loss attributable to common shareholders was $3 million in the third
quarter of 2009, or $0.01 per share, including the following items with
an aggregate, net unfavorable impact of $18 million after-tax, or $0.04
per share:
1. Loss from discontinued operations, net of tax, of $5 million, or
$0.01 per share;
2. Favorable income tax adjustments of $3 million, or zero cents per
share, primarily related to a decrease in the Company's valuation
allowance for deferred tax assets and other tax adjustments;
3. Loss from early extinguishment of debt of $16 million pre-tax, $10
million after-tax before the deferred tax valuation allowance, or $0.02
per share;
4. Litigation and investigation costs of $3 million pre-tax, $2 million
after-tax before the deferred tax valuation allowance, or zero cents per
share; and
5. Impairment of long lived-assets and goodwill, and restructuring
charges of $7 million pre-tax, $4 million after-tax before the tax
valuation allowance, or $0.01 per share.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP term defined below, was $240 million, or a
margin of 10.6 percent of net operating revenues, in the third quarter
of 2009. This represents an increase of $80 million, or 50 percent, from
Adjusted EBITDA of $160 million in the third quarter of 2008, and a
margin increase of 310 basis points as compared to an Adjusted EBITDA
margin of 7.5 percent in the third quarter of 2008.
Same-hospital Adjusted EBITDA was $236 million in the third quarter of
2009, an increase of $74 million, or 45.7 percent, from the $162 million
in the third quarter of 2008. The same-hospital Adjusted EBITDA margin
increased by 290 basis points to 10.5 percent in the third quarter of
2009 compared to 7.6 percent in the third quarter of 2008. Same-hospital
financial data excludes the results from one of the Company's hospitals
as discussed below.
Adjusted EBITDA is a non-GAAP term defined by the Company as net income
(loss) attributable to common shareholders of Tenet Healthcare
Corporation before: (1) the cumulative effect of changes in accounting
principle, net of tax; (2) net income attributable to noncontrolling
interests; (3) preferred stock dividends, (4) income (loss) from
discontinued operations, net of tax; (5) income tax (expense) benefit;
(6) net gains (losses) on sales of investments; (7) investment earnings
(loss); (8) gain (loss) from early extinguishment of debt; (9) interest
expense; (10) litigation and investigation (costs) benefit, net of
insurance recoveries; (11) hurricane insurance recoveries, net of costs;
(12) impairment of long-lived assets and goodwill and restructuring
charges, net of insurance recoveries; (13) amortization; and (14)
depreciation. A reconciliation of Adjusted EBITDA to net income (loss)
attributable to Tenet Healthcare Corporation common shareholders is
provided in Table #1 at the end of this release.
Same-Hospital Data
Same-hospital continuing operations data excludes Sierra Providence East
Medical Center, in El Paso, which opened on May 21, 2008. Same-hospital
continuing operations data is the primary form of tabular data
presentation in the narrative sections of this document. There are
currently 48 hospitals in same-hospital continuing operations. Sierra
Providence East Medical Center will be added to our same-hospital
reporting beginning in the first quarter of 2010.
Admissions, Patient Days and Surgeries
Admissions, Patient Days and Surgeries Same-Hospital Continuing Operations
Q3'09 Q3'08 Change (%)
Commercial Managed Care Admissions 33,204 34,759 (4.5)
Governmental Managed Care Admissions 29,539 27,065 9.1
Medicare Admissions 37,131 38,127 (2.6)
Medicaid Admissions 16,694 16,531 1.0
Uninsured Admissions 6,107 6,301 (3.1)
Charity Care Admissions 2,620 2,164 21.1
Other Admissions 3,357 3,578 (6.2)
Total Admissions 128,652 128,525 0.1
Paying Admissions (excludes Charity + Uninsured) 119,925 120,060 (0.1)
Charity Admissions + Uninsured Admissions 8,727 8,465 3.1
Admissions through Emergency Department 73,082 70,741 3.3
Commercial Managed Care Admits / Total Admits (%) 25.8 27.0 (1.2) ((a))
Emergency Department Admissions / Total Admits (%) 56.8 55.0 1.8((a))
Uninsured Admissions / Total Admissions (%) 4.7 4.9 (0.2) ((a))
Charity Admissions / Total Admissions (%) 2.0 1.7 0.3 ((a))
Surgeries -- Inpatient 38,828 39,121 (0.7)
Surgeries -- Outpatient 52,906 50,655 4.4
Surgeries -- Total 91,734 89,776 2.2
Patient Days -- Total 616,850 625,702 (1.4)
Adjusted Patient Days ((b)) 926,344 916,104 1.1
Patient Days -- Commercial Managed Care 132,119 136,970 (3.5)
Average Length of Stay (days) 4.8 4.9 (0.1) ((a))
Adjusted Patient Admissions ((b)) 194,568 189,536 2.7
((a)) This change is the difference between the Q3'09 and Q3'08 amounts shown.
((b)) "Adjusted Patient Days / Admissions" represents actual patient days / admissions adjusted to include outpatient services by multiplying actual patient days / admissions by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.
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Total admissions were relatively flat in the third quarter with an
increase of 0.1 percent as compared to the third quarter of 2008. In the
third quarter of 2008, total admissions had increased by 1.9 percent as
compared to the third quarter of 2007, providing a strong prior-year
comparative. Commercial managed care admissions declined by 4.5 percent,
which compared favorably to the 5.7 percent decline in the second
quarter of 2009.
The Company's California Region and its Philadelphia Market each
reported positive total admissions growth in the quarter. Tenet's other
regions reported admissions declines in the third quarter. Total surgery
growth remained strong growing by 2.2 percent with outpatient surgeries
growing by 4.4 percent but inpatient surgeries declining by 0.7 percent.
Flu related admissions were not a major factor in the quarter, adding
339 admissions to the third quarter of 2009 as compared to 17 flu
related admissions in the third quarter of 2008, an increase of 322
admissions.
Outpatient Visits
Outpatient Visits Same-Hospital Continuing Operations
Q3'09 Q3'08 Change (%)
Commercial Managed Care OP Visits 351,592 351,594 -
Governmental Managed Care OP Visits 186,544 155,156 20.2
Medicare OP Visits 212,008 207,515 2.2
Medicaid OP Visits 75,936 68,103 11.5
Uninsured OP Visits 97,189 98,282 (1.1)
Charity Care OP Visits 7,135 5,320 34.1
Other OP Visits 52,685 52,028 1.3
Total OP Visits 983,089 937,998 4.8
Paying OP Visits (excludes Uninsured + Charity) 878,765 834,396 5.3
OP Surgery Visits 52,906 50,655 4.4
Emergency Department OP Visits 357,122 326,769 9.3
Charity + Uninsured OP Visits 104,324 103,602 0.7
Charity + Uninsured OP Visits / Total OP Visits (%) 10.6 11.0 (0.4) ((a))
Paying OP Visits / Total OP Visits 89.4 89.0 0.4 ((a))
Commercial OP Visits / Total Visits (%) 35.8 37.5 (1.7) ((a))
((a)) This change is the difference between the Q3'09 and Q3'08 amounts shown.
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Total same-hospital outpatient volume grew by 45,091 visits, or 4.8
percent, in the third quarter of 2009 compared to the third quarter of
2008. Tenet has now reported year-over-year growth in outpatient visits
in six of the last seven quarters.
Changes in outpatient payer mix included growth in paying patients which
rose to 89.4 percent of total outpatient visits, an increase of 40 basis
points as compared to 89.0 percent in the third quarter of 2008, and a
smaller contribution from commercial outpatient visits, which declined
to 35.8 percent of total outpatient visits, a decline of 170 basis
points as compared to 37.5 percent in the third quarter of 2008.
Newly opened or acquired facilities contributed 1,814 visits, net of the
loss of visits from centers which were closed in the period following
September 30, 2008. Excluding this net incremental volume from new
facilities, organic growth in outpatient visits would have been an
increase of 43,277 visits, or growth of 4.6 percent.
Outpatient surgeries also reported a strong quarter increasing by 4.4
percent. Outpatient surgeries grew by 3.5 percent in the second quarter
of 2009. Outpatient imaging also continued its growth trend, increasing
by 2.7 percent relative to the third quarter of 2008. Emergency
Department outpatient visits increased by 30,353 visits, or 9.3 percent,
in the third quarter of 2009 as compared to the third quarter of 2008.
This increase in Emergency Department outpatient visits contributed 67
percent of the increase in total outpatient visits in the quarter.
Charity plus uninsured outpatient visits increased by 0.7 percent as
compared to a decline rate of 3.4 percent in the second quarter of 2009.
Flu-related outpatient visits were 5,271 in the third quarter of 2009 as
compared to 214 in the third quarter of 2008. This increase of 5,057
visits accounted for 11 percent of the total increase in outpatient
visits of 45,091.
All of the Company's regions exhibited growth in outpatient visits in
the third quarter with the strongest growth coming from the Central and
Florida Regions and the Philadelphia Market, each of which saw
outpatient visit growth in excess of 8 percent. The Company's California
and Southern States Regions grew outpatient visits by more than one
percent.
Revenues
Revenues ($ in millions) Same-Hospital Continuing Operations
Q3'09 Q3'08 Change (%)
Net Operating Revenues 2,238 2,127 5.2
Net Patient Revenue from Commercial Managed Care 886 850 4.2
Revenues from the Uninsured 166 152 9.2
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Revenue growth remained robust in the third quarter of 2009 with an
increase of $111 million, or 5.2 percent, on a same-hospital basis.
Favorable prior-year cost report adjustments contributed $11 million to
net operating revenues in the third quarter of 2009 as compared to a
contribution of $10 million in the third quarter of 2008. Excluding
prior year cost report adjustments from both quarters, same-hospital
revenues would have shown the same increase of 5.2 percent.
