EX-99.1 2 thc-20221231ex991earningsr.htm EX-99.1 Document

Exhibit 99.1
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Tenet Reports Fourth Quarter and FY 2022 Results;
Provides 2023 Financial Outlook
Net income from continuing operations available to common shareholders in fourth quarter 2022 was $102 million, or $0.92 per diluted share

Adjusted diluted earnings per share from continuing operations1 of $1.96 in fourth quarter 2022

Consolidated Adjusted EBITDA1 in fourth quarter 2022 of $897 million, including $40 million of grant income

Fourth quarter 2022 Ambulatory Care Adjusted EBITDA excluding grant income grew 18.7% over fourth quarter 2021

Same-facility system-wide ambulatory surgical cases increased 0.7% versus fourth quarter 2021; Same-hospital adjusted admissions increased 2.9% versus fourth quarter 2021

Repurchased approximately 5.9 million shares of the Company's common stock for $250 million in the fourth quarter under a $1 billion share repurchase program

FY 2023 Adjusted EBITDA is expected to be in the range of $3.160 billion to $3.360 billion



DALLAS — February 9, 2023 — Tenet Healthcare Corporation (Tenet) (NYSE: THC) today announced its results for the quarter ended December 31, 2022.

"We closed the year with a strong fourth quarter and demonstrated operating discipline in a dynamic environment while providing patient-centered high quality care," said Saum Sutaria, M.D., Chief Executive Officer of Tenet. "Our momentum going into 2023 positions us for continued growth as we remain focused on expanding our industry-leading ambulatory business and investing in technology, innovation, and talent".




Page 1


Tenet’s results for fourth quarter 2022 versus fourth quarter 2021 are as follows:

Three Months Ended December 31,
Twelve Months Ended December 31,
($ in millions, except per share results)
2022202120222021
Net operating revenues
$4,990
$4,856
$19,174
$19,485
Net income available to Tenet common shareholders from continuing operations
$102
$250
$410
$915
Net income available to Tenet common shareholders from continuing operations per diluted share
$0.92
$2.30
$3.78
$8.43
Adjusted EBITDA1 excluding grant income
$857
$877
$3,275
$3,278
Adjusted EBITDA1
$897
$1,017
$3,469
$3,483
Adjusted diluted earnings per share from continuing operations1
$1.96
$2.70
$6.80
$7.58

Net income from continuing operations available to the Company’s common shareholders in the fourth quarter 2022 was $102 million, or $0.92 per diluted share, versus $250 million, or $2.30 per diluted share, in fourth quarter 2021.

Fourth quarter 2022 included COVID-related stimulus grant income of $40 million pre-tax ($30 million after-tax, or $0.28 per diluted share) versus $140 million pre-tax ($97 million after-tax, or $0.89 per diluted share) in fourth quarter 2021; also, fourth quarter 2022 included impairment and restructuring charges and acquisition-related costs of $129 million pre-tax ($101 million after-tax, or $0.95 per diluted share) versus $30 million pre-tax ($24 million after-tax, or $0.22 per diluted share) in the fourth quarter 2021.

Net income from continuing operations available to the Company’s common shareholders in 2022 was $410 million, or $3.78 per diluted share, versus $915 million, or $8.43 per diluted share, in 2021.

2022 results included impairment and restructuring charges, and acquisition-related costs of $226 million pre-tax ($183 million after-tax, or $1.66 per diluted share) versus $85 million pre-tax ($66 million after-tax, or $0.61 per diluted share) in 2021. Additionally, 2021 results included a pre-tax gain of $406 million ($276 million after-tax, or $2.54 per diluted share) associated with the divestiture of the Company's Miami-area hospitals.

The Company recognized additional income tax expense for the three and twelve months ended December 31, 2022 of approximately $7 million, or $0.07 per diluted share, and $123 million, or $1.11 per diluted share, respectively, as a result of the interest expense limitation regulations. The Company did not have any interest expense limited during 2021.



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Adjusted EBITDA excluding grant income in fourth quarter 2022 was $857 million compared to $877 million in fourth quarter 2021, reflecting lower COVID-related volume and acuity, elevated contract labor costs, partially offset by growth in our Ambulatory Care segment.

In January 2023, the Company entered into a definitive agreement for John Muir Health to purchase Tenet's interest in the San Ramon Regional Medical Center and First California Physician Partners OB/GYN for $142.5 million. The transaction is expected to be completed in 2023, subject to regulatory approvals and customary closing conditions.


Balance Sheet and Cash Flows

In the year ended December 31, 2020, the Company received approximately $1.5 billion of Medicare advance payments from CMS related to the pandemic. The Company completed the repayment of the advances as of December 31, 2022. $880 million and $616 million of the Medicare advances were repaid by the Company during the years ended December 31, 2022 and 2021, respectively.

Cash flows provided by operating activities for the year ended December 31, 2022 were $1.083 billion ($2.091 billion excluding $880 million of repayments associated with Medicare advances and $128 million of payroll tax deferrals from FY 2020) versus $1.568 billion for the year ended December 31, 2021 ($2.208 billion excluding $512 million of repayments associated with Medicare advances and $128 million of payroll tax deferrals).

The Company produced free cash flow1 of $321 million for the year ended December 31, 2022 ($1.329 billion excluding repayments of Medicare advances and deferred payroll tax payments) versus $910 million for the year ended December 31, 2021 ($1.550 billion excluding repayments of Medicare advances and deferred payroll tax payments).

In the fourth quarter of 2022, the Company repurchased approximately 5.9 million shares of common stock for $250 million.

In the fourth quarter of 2022, the Company purchased approximately $25 million aggregate principal amount of its 4.625% senior secured notes due in 2024 on the open market using available cash on hand.

The Company’s ratio of net debt plus the Medicare advances liability to Adjusted EBITDA1 was 4.10x at December 31, 2022 compared to 4.07x at December 31, 2021.

The Company had no outstanding borrowings on its $1.5 billion line of credit as of December 31, 2022.




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Ambulatory Care (Ambulatory) Segment

Tenet’s Ambulatory business segment is comprised of the operations of United Surgical Partners International (USPI). As of December 31, 2022, USPI had interests in 442 ambulatory surgery centers (300 consolidated) and 24 surgical hospitals (eight consolidated) in 35 states. Results for the year ended December 31, 2021 included USPI’s imaging centers (realigned under the Hospital segment as of April 1, 2021) and its urgent care centers (sold in April 2021). For all periods prior to June 30, 2022, the Company owned 95% of the voting stock of USPI.

Three Months Ended December 31,
Twelve Months Ended December 31,
Ambulatory segment results ($ in millions)
2022202120222021
Revenues
Net operating revenues
$933
$742
$3,248
$2,718
Same-facility system-wide net patient service revenues2
$1,763$1,712$6,241$5,968
Volume Changes versus the Prior-Year Period
Same-facility system-wide surgical cases2
0.7%
4.4%
2.0%
15.6%
Same-facility system-wide surgical cases on same-business day basis2
0.7%
6.1%
1.6%
16.6%
Adjusted EBITDA, Margins and Noncontrolling Interest (NCI)
Adjusted EBITDA excluding grant income
$407
$343
$1,323
$1,134
Adjusted EBITDA
$407
$371
$1,327
$1,197
Adjusted EBITDA margin excluding grant income
43.6%
46.2%
40.7%
41.7%
Adjusted EBITDA margin
43.6%
50.0%
40.9%
44.0%
Adjusted EBITDA less facility-level NCI excluding grant income
$262
$220
$865
$734
Adjusted EBITDA less facility-level NCI
$262
$236
$867
$770
Adjusted EBITDA less total NCI excluding grant income
$262
$214
$856
$715
Adjusted EBITDA less total NCI
$262
$229
$858
$749

Fourth quarter 2022 net operating revenues increased 25.7% compared to fourth quarter 2021 driven by additional revenues associated with the SurgCenter Development (SCD) acquisition completed in December 2021, service line growth and improved pricing yield.

Surgical business same-facility system-wide net patient service revenues increased 3.0% in fourth quarter 2022 compared to fourth quarter 2021, with cases up 0.7% and net revenue per case up 2.3%.

Adjusted EBITDA excluding grant income was $407 million in fourth quarter 2022 compared to $343 million in fourth quarter 2021, driven by the SCD acquisition, as well as new service line growth and improved pricing yield.

Adjusted EBITDA margin excluding grant income in fourth quarter 2022 declined relative to fourth quarter 2021 primarily due to higher supplies costs, higher other operating expenses associated with increased de novo development, partially offset by improved management of salaries, wages and benefits.


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Hospital Operations and Other (Hospital) Segment

Tenet’s Hospital business segment is primarily comprised of acute care and specialty hospitals, imaging centers, ancillary outpatient facilities, micro-hospitals and physician practices. Effective April 1, 2021, the Company’s imaging centers that were previously operated under USPI were realigned under the Hospital segment.

Three Months Ended December 31,
Twelve Months Ended December 31,
Hospital segment results ($ in millions)
2022202120222021
Revenues
Net operating revenues (prior to inter-segment eliminations)
$3,840
$3,910
$15,061
$15,982
Grant income
$40
$112
$190
$142
Same-hospital net patient service revenues3
$3,486
$3,545
$13,703
$14,043
Same-Hospital Volume Changes versus the Prior-Year Period
Admissions
0.5%
(3.9)%
(4.5)%
(0.1)%
Adjusted admissions4
2.9%
—%
(1.2)%
2.4%
Outpatient visits (including outpatient ER visits)
(2.8)%
8.8%
(4.8)%
15.7%
Emergency Room visits (inpatient and outpatient)
7.7%
16.3%
4.8%
8.9%
Hospital surgeries
(2.5)%
(1.4)%
(3.7)%
6.1%
Adjusted EBITDA
Adjusted EBITDA excluding grant income
$360
$440
$1,587
$1,789
Adjusted EBITDA
$400
$552
$1,777
$1,931
Adjusted EBITDA margin excluding grant income
9.4%
11.3%
10.5%
11.2%
Adjusted EBITDA margin
10.4%
14.1%
11.8%
12.1%

Fourth quarter 2022 net operating revenues declined 1.8% from fourth quarter 2021 due to lower COVID-related volume and acuity, partially offset by higher adjusted admissions and improved pricing yield.

Same-hospital net patient service revenue per adjusted admission decreased 4.4% year-over-year for fourth quarter 2022 primarily due to lower COVID-related volumes and acuity, partially offset by improved pricing yield. COVID admissions were 4% of total admissions in the fourth quarter of 2022 versus 7% in the fourth quarter of 2021. Fourth quarter non-COVID inpatient admissions increased 4.3% over fourth quarter 2021.

Fourth quarter 2022 adjusted EBITDA and adjusted EBITDA margin decreased compared to fourth quarter 2021 primarily due to higher contract labor costs and premium pay due to the pandemic, decreased grant income, and lower COVID-related volumes and acuity, partially offset by continued strength in patient acuity due to the Company's focus on growing higher acuity services, improved pricing yield and cost efficiency actions.



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Conifer Segment

Tenet’s Conifer business segment provides comprehensive end-to-end and focused-point business process services, including hospital and physician revenue cycle management, patient communications and engagement support and value-based care solutions to hospitals, health systems, physician practices, employers, and other clients.

Three Months Ended December 31,
Twelve Months Ended December 31,
Conifer segment results ($ in millions)
2022202120222021
Net operating revenues
$326
$324
$1,316
$1,267
Adjusted EBITDA
$90
$94
$365
$355
Adjusted EBITDA margin
27.6%
29.0%
27.7%
28.0%

Fourth quarter 2022 net operating revenues increased 0.6%. Fourth quarter 2022 net operating revenues from external clients increased 6.4% over fourth quarter 2021 due to contractual rate increases and new business expansion.

Fourth quarter 2022 adjusted EBITDA and adjusted EBITDA margin declined compared to fourth quarter 2021 reflecting increased other operating expenses.








Page 6


2023 Outlook1

Tenet’s Outlook for full year 2023 (consolidated and by segment) and first quarter 2023 follows:
CONSOLIDATED ($ in millions, except per share amounts)
FY 2023 Outlook
First Quarter
2023 Outlook
Net operating revenues
$19,700 to $20,100
$4,700 to $4,900
Income from continuing operations available to Tenet common stockholders
$420 to $585
$90 to $125
Adjusted EBITDA
$3,160 to $3,360
$750 to $800
Adjusted EBITDA margin
16.0% to 16.7%
16.0% to 16.3%
Diluted income per common share from continuing operations
$3.89 to $5.43
$0.82 to $1.14
Adjusted net income from continuing operations
$505 to $630
$110 to $135
Adjusted diluted earnings per share from continuing operations
$4.68 to $5.85
$1.00 to $1.23
Equity in earnings of unconsolidated affiliates$200 to $220$35 to $45
Depreciation and amortization
$850 to $875
$210 to $220
Interest expense
$870 to $880
$215 to $225
Income tax expense5
$270 to $300
$60 to $70
Net income available to NCI
$620 to $670
$135 to $155
Weighted average diluted common shares
~107 million
~107 million
NCI cash distributions$540 to $580
Net cash provided by operating activities
$1,700 to $2,000
Adjusted net cash provided by operating activities
$1,825 to $2,075
Capital expenditures
$625 to $675
Free cash flow
$1,075 to $1,325
Adjusted free cash flow – continuing operations
$1,200 to $1,400









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Ambulatory Segment ($ in millions)
FY 2023 Outlook
Net operating revenues$3,550 to $3,650
Adjusted EBITDA$1,415 to $1,475
Total NCI (Facility level)$510 to $540
Adjusted EBITDA less total NCI$905 to $935
Changes versus prior year6:
  Surgical cases volumesUp 2.0% to 3.0%
  Net revenues per surgical caseUp 2.0% to 3.0%

Hospital Segment ($ in millions)
FY 2023 Outlook
Net operating revenues (prior to inter-segment eliminations)$15,315 to $15,565
Adjusted EBITDA$1,415 to $1,545
NCI$20 to $35
Changes versus prior year6:
  Inpatient admissionsUp 1.0% to 3.0%
  Adjusted admissionsUp 2.0% to 4.0%

Conifer Segment ($ in millions)
FY 2023 Outlook
Net operating revenues$1,285 to $1,335
Adjusted EBITDA$330 to $340
NCI$90 to $95



Management’s Webcast Discussion of Results

Tenet management will discuss the Company’s fourth quarter 2022 results in a webcast scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 9, 2023. Investors can access the webcast through the Company’s website at www.tenethealth.com/investors.

The slide presentation associated with the webcast referenced above, a copy of this earnings press release, and a related supplemental financial disclosures document will be available on the Company’s Investor Relations website on February 9, 2023.



Page 8


Cautionary Statement

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company’s expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, especially with regards to developments related to COVID-19. Particular uncertainties that could cause the Company’s actual results to be materially different than those expressed in the Company’s forward-looking statements include, but are not limited to, the impact of the COVID-19 pandemic and other factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended
December 31, 2021, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

Footnotes

1.Tables and discussions throughout this earnings release include certain financial measures, including those related to our first quarter and full year 2023 Outlook, that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of GAAP measures to the Adjusted (non-GAAP) measures used are detailed in Tables #1-6 included at the end of this earnings release. Management’s reasoning for the use of these non-GAAP measures and descriptions of the various non-GAAP measures are included in the Non-GAAP Financial Measures section of this earnings release.
2.Same-facility system-wide revenues and statistical information include the results of the facilities in which the Ambulatory segment has an investment that are not consolidated by Tenet. To help analyze the segment’s results of operations, management uses system-wide measures, which include revenues and cases of both consolidated and unconsolidated facilities.
3.Same-hospital revenues and statistical data include those for hospitals and hospital-affiliated outpatient centers operated by the Company’s Hospital segment continuously from January 1, 2020 through December 31, 2022. Amounts associated with physician practices are excluded.
4.Adjusted admissions represent actual patient admissions adjusted to include outpatient services provided by facilities in our Hospital segment by multiplying actual patient admissions by the sum of gross inpatient revenues and outpatient revenues, then dividing that result by gross inpatient revenues.
5.Income tax expense is calculated by multiplying 24% (the federal corporate tax rate of 21% plus an estimate of state taxes) by the sum of: pretax income less GAAP facility level NCI expense plus permanent differences, and non-deductible interest expense.
6.Change versus prior year is presented on a same-facility system-wide basis for USPI Ambulatory surgical cases and on a same-hospital basis for hospital statistics.





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About Tenet Healthcare

Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas. Our care delivery network includes United Surgical Partners International, the largest ambulatory platform in the country, which operates or has ownership interests in more than 465 ambulatory surgery centers and surgical hospitals. We also operate 61 acute care and specialty hospitals, approximately 110 other outpatient facilities, a network of leading employed physicians and a global business center in Manila, Philippines. Our Conifer Health Solutions subsidiary provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve. For more information, please visit www.tenethealth.com.

Contact Information
Investor Contact
Media Contact
Will McDowellRobert Dyer
469-893-2387469-893-2640
william.mcdowell@tenethealth.com
mediarelations@tenethealth.com



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Non-GAAP Financial Measures

The Company believes the non-GAAP measures described below are useful to investors and analysts because they present additional information on the Company’s financial performance. Investors, analysts, Company management and the Company’s Board of Directors utilize these non-GAAP measures, in addition to GAAP measures, to track the Company’s financial and operating performance and compare the Company’s performance to its peer companies, which use similar non-GAAP financial measures in their presentations and earnings releases. The Human Resources Committee of the Company’s Board of Directors also uses certain of these measures to evaluate management’s performance for the purpose of determining incentive compensation. Additional information regarding the purpose and utility of specific non-GAAP measures used in this release is set forth below.

Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) the cumulative effect of changes in accounting principles, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, net of tax, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non-operating income (expense), net, (7) interest expense, (8) litigation and investigation benefit (costs), net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition-related costs, (11) depreciation and amortization and (12) income (loss) from divested and closed businesses (i.e., health plan businesses). Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
Adjusted diluted earnings (loss) per share from continuing operations, a non-GAAP measure, is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, divided by the weighted average diluted shares outstanding in the reporting period.
Adjusted net income available (loss attributable) from continuing operations to Tenet common shareholders, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet common shareholders before (1) income (loss) from discontinued operations, net of tax, (2) gain (loss) from early extinguishment of debt, (3) litigation and investigation benefit (costs), net of insurance recoveries, (4) net gains (losses) on sales, consolidation and deconsolidation of facilities, (5) impairment and restructuring charges and acquisition-related costs, (6) income (loss) from divested and closed businesses (i.e., health plan businesses) and (7) the associated impact of these items on taxes and noncontrolling interests. Litigation and investigation costs excluded do not include ordinary course of business malpractice and other litigation and related expenses.
Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) net cash provided by (used in) operating activities, less (2) purchases of property and equipment for continuing operations.
Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments, a non-GAAP measure, is defined by the Company as (1) Free Cash Flow plus (2) repayments of Medicare Advances and Deferred Payroll Tax Payments.
Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations.
Adjusted Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments, a non-GAAP measure, is defined by the Company as (1) Adjusted Free Cash Flow plus (2) repayments of Medicare Advances and Deferred Payroll Tax Payments.
Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations.

The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the estimated fair value of shares of the Company’s common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment. The Company does not use Adjusted EBITDA to measure liquidity, but instead to measure operating performance.

The Company uses, and believes investors use, Free Cash Flow and Adjusted Free Cash Flow, and Free Cash Flow and Adjusted Free Cash Flow excluding repayments of Medicare Advances and Deferred Payroll Tax Payments as supplemental non-GAAP measures to analyze cash flows generated from the Company’s operations. The Company believes these measures are useful to investors in evaluating its ability to fund distributions paid to noncontrolling interests or for acquisitions, purchasing equity interests in joint ventures or repaying debt.

These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in the Company’s financial statements, they do not provide a complete measure of the Company’s operating performance. For example, the Company’s definitions of Free Cash Flow and Adjusted Free Cash Flow do not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows from Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, or (ii) distributions paid to noncontrolling interests. Accordingly, investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

See corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures in Tables #1 - 6 below.


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Tenet Healthcare Corporation
Financial Statements and Reconciliations
Fourth Quarter Earnings Release

Table of Contents

Page 12



    
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per share amounts)Three Months Ended December 31,
2022%2021%Change
Net operating revenues$4,990 100.0 %$4,856 100.0 %2.8 %
Grant income40 0.8 %138 2.8 %(71.0)%
Equity in earnings of unconsolidated affiliates65 1.3 %77 1.6 %(15.6)%
Operating expenses:  
Salaries, wages and benefits2,306 46.2 %2,188 45.0 %5.4 %
Supplies860 17.2 %838 17.3 %2.6 %
Other operating expenses, net1,032 20.7 %1,029 21.2 %0.3 %
Depreciation and amortization213 4.3 %201 4.1 %
Impairment and restructuring charges, and acquisition-related costs129 2.6 %30 0.6 %
Litigation and investigation costs20 0.4 %52 1.1 %
Net gains on sales, consolidation and deconsolidation of facilities(1)— %(18)(0.4)%
Operating income536 10.7 %751 15.5 %
Interest expense(219)(221)
Other non-operating income (loss), net(2)
Income from continuing operations, before income taxes321 528 
Income tax expense(47)(108)
Income from continuing operations, before discontinued operations274 420 
Discontinued operations:
Loss from operations— (1)
Loss from discontinued operations (1)
Net income274 419 
Less: Net income available to noncontrolling interests172 170 
Net income available to Tenet Healthcare Corporation common shareholders
$102 $249 
Amounts available to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax$102 $250 
Loss from discontinued operations, net of tax— (1)
Net income available to Tenet Healthcare Corporation common shareholders$102 $249 
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations$0.98 $2.33 
Discontinued operations— (0.01)
$0.98 $2.32 
Diluted
Continuing operations$0.92 $2.30 
Discontinued operations— (0.01)
$0.92 $2.29 
Weighted average shares and dilutive securities outstanding
   (in thousands):
Basic104,519 107,150
Diluted106,368 108,890




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TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per share amounts)Twelve Months Ended December 31,
2022%2021%Change
Net operating revenues$19,174 100.0 %$19,485 100.0 %(1.6)%
Grant income194 1.0 %191 1.0 %1.6 %
Equity in earnings of unconsolidated affiliates216 1.1 %218 1.1 %(0.9)%
Operating expenses:  
Salaries, wages and benefits8,844 46.1 %8,878 45.6 %(0.4)%
Supplies3,273 17.0 %3,328 17.1 %(1.7)%
Other operating expenses, net3,998 20.8 %4,206 21.6 %(4.9)%
Depreciation and amortization841 4.4 %855 4.4 %
Impairment and restructuring charges, and acquisition-related costs226 1.2 %85 0.4 %
Litigation and investigation costs70 0.4 %116 0.6 %
Net gains on sales, consolidation and deconsolidation of facilities(1)— %(445)(2.3)%
Operating income2,333 12.2 %2,871 14.7 %
Interest expense(890)(923)
Other non-operating income, net10 14 
Loss from early extinguishment of debt(109)(74)
Income from continuing operations, before income taxes1,344 1,888 
Income tax expense(344)(411)
Income from continuing operations, before discontinued operations1,000 1,477 
Discontinued operations:
Income (loss) from operations(1)
Income (loss) from discontinued operations1 (1)
Net income1,001 1,476 
Less: Net income available to noncontrolling interests590 562 
Net income available to Tenet Healthcare Corporation common shareholders
$411 $914 
Amounts available to Tenet Healthcare Corporation common shareholders
Income from continuing operations, net of tax$410 $915 
Income (loss) from discontinued operations, net of tax(1)
Net income available to Tenet Healthcare Corporation common shareholders$411 $914 
Earnings (loss) per share available (attributable) to Tenet Healthcare Corporation common shareholders:
Basic
Continuing operations$3.83 $8.56 
Discontinued operations0.01 (0.01)
$3.84 $8.55 
Diluted
Continuing operations$3.78 $8.43 
Discontinued operations0.01 (0.01)
$3.79 $8.42 
Weighted average shares and dilutive securities outstanding
   (in thousands):
Basic106,929 106,833
Diluted110,516 108,571





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TENET HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,December 31,
(Dollars in millions)20222021
ASSETS
Current assets:
Cash and cash equivalents$858 $2,364 
Accounts receivable2,943 2,770 
Inventories of supplies, at cost405 384 
Other current assets1,775 1,557 
Total current assets
5,981 7,075 
Investments and other assets3,147 3,254 
Deferred income taxes19 65 
Property and equipment, at cost, less accumulated depreciation and amortization
6,462 6,427 
Goodwill10,123 9,261 
Other intangible assets, at cost, less accumulated amortization
1,424 1,497 
Total assets
$27,156 $27,579 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$145 $135 
Accounts payable1,504 1,300 
Accrued compensation and benefits778 896 
Professional and general liability reserves255 254 
Accrued interest payable213 203 
Contract liabilities110 959 
Other current liabilities1,471 1,362 
Total current liabilities
4,476 5,109 
Long-term debt, net of current portion14,934 15,511 
Professional and general liability reserves790 791 
Defined benefit plan obligations331 421 
Deferred income taxes217 36 
Contract liabilities – long-term13 15 
Other long-term liabilities1,787 1,439 
Total liabilities
22,548 23,322 
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries
2,149 2,203 
Equity:  
Shareholders’ equity:  
Common stock
Additional paid-in capital4,778 4,877 
Accumulated other comprehensive loss(181)(233)
Accumulated deficit(803)(1,214)
Common stock in treasury, at cost(2,660)(2,410)
Total shareholders’ equity1,142 1,028 
Noncontrolling interests
1,317 1,026 
Total equity
2,459 2,054 
Total liabilities and equity
$27,156 $27,579 








Page 15


    
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Twelve Months Ended
(Dollars in millions)December 31,
20222021
Net income$1,001 $1,476 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization841 855 
Deferred income tax expense209 250 
Stock-based compensation expense56 56 
Impairment and restructuring charges, and acquisition-related costs226 85 
Litigation and investigation costs70 116 
Net gains on sales, consolidation and deconsolidation of facilities(1)(445)
Loss from early extinguishment of debt109 74 
Equity in earnings of unconsolidated affiliates, net of distributions received(10)
Amortization of debt discount and debt issuance costs33 33 
Pre-tax (income) loss from discontinued operations(1)
Net gains from the sale of investments and long-lived assets(117)(23)
Other items, net13 (10)
Changes in cash from operating assets and liabilities:  
Accounts receivable(140)(197)
Inventories and other current assets(64)(52)
Income taxes(26)68 
Accounts payable, accrued expenses, contract liabilities and other current liabilities(898)(584)
Other long-term liabilities(15)28 
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements(214)(153)
Net cash used in operating activities from discontinued operations, excluding income taxes(1) 
Net cash provided by operating activities1,083 1,568 
Cash flows from investing activities:  
Purchases of property and equipment(762)(658)
Purchases of businesses or joint venture interests, net of cash acquired(234)(1,220)
Proceeds from sales of facilities and other assets210 1,248 
Proceeds from sales of marketable securities, long-term investments and other assets76 31 
Purchases of marketable securities and equity investments(92)(108)
Other items, net(6)(7)
Net cash used in investing activities(808)(714)
Cash flows from financing activities:  
Repayments of borrowings(2,851)(3,221)
Proceeds from borrowings2,023 2,872 
Repurchases of common stock(250)— 
Debt issuance costs(24)(31)
Distributions paid to noncontrolling interests(560)(423)
Proceeds from the sale of noncontrolling interests27 25 
Purchases of noncontrolling interests(100)(27)
Medicare advances and grants received by unconsolidated affiliates, net of recoupment— (67)
Other items, net(46)(64)
Net cash used in financing activities(1,781)(936)
Net decrease in cash and cash equivalents(1,506)(82)
Cash and cash equivalents at beginning of period2,364 2,446 
Cash and cash equivalents at end of period$858 $2,364 
Supplemental disclosures:  
Interest paid, net of capitalized interest$(848)$(937)
Income tax payments, net$(161)$(92)


Page 16


    
TENET HEALTHCARE CORPORATION
SEGMENT REPORTING
(Unaudited)
Three Months EndedTwelve Months Ended
(Dollars in millions)December 31,December 31,
2022202120222021
Net operating revenues (1) :
    
Ambulatory Care$933 $742 $3,248 $2,718 
Hospital Operations and other (prior to inter-segment eliminations) 3,840 3,910 15,061 15,982 
Conifer  
Tenet109 120 451 482 
Other clients217 204 865 785 
Total Conifer revenues326 324 1,316 1,267 
Inter-segment eliminations(109)(120)(451)(482)
Total$4,990 $4,856 $19,174 $19,485 
Equity in earnings of unconsolidated affiliates:    
Ambulatory Care$63 $63 $206 $193 
Hospital Operations and other14 10 25 
Total$65 $77 $216 $218 
Adjusted EBITDA (including grant income):    
Ambulatory Care$407 $371 $1,327 $1,197 
Hospital Operations and other 400 552 1,777 1,931 
Conifer90 94 365 355 
Total$897 $1,017 $3,469 $3,483 
Adjusted EBITDA margins (including grant income):
Ambulatory Care43.6 %50.0 %40.9 %44.0 %
Hospital Operations and other10.4 %14.1 %11.8 %12.1 %
Conifer27.6 %29.0 %27.7 %28.0 %
Total18.0 %20.9 %18.1 %17.9 %
Adjusted EBITDA margins (excluding grant income):
Ambulatory Care43.6 %46.2 %40.7 %41.7 %
Hospital Operations and other9.4 %11.3 %10.5 %11.2 %
Conifer27.6 %29.0 %27.7 %28.0 %
Total17.2 %18.1 %17.1 %16.8 %
Capital expenditures:
Ambulatory Care$17 $17 $75 $66 
Hospital Operations and other263 283 668 578 
Conifer10 19 14 
Total$290 $304 $762 $658 
(1) Net operating revenues include the impact of implicit price concessions and bad debts


Page 17


    
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #1 – Reconciliations of Net Income Available to Tenet Healthcare Corporation
Common Shareholders to Adjusted Net Income Available from Continuing Operations
to Common Shareholders
(Unaudited)
(Dollars in millions, except per share amounts)Three Months EndedTwelve Months Ended
December 31,December 31,
2022202120222021
Net income available to Tenet Healthcare Corporation common shareholders$102 $249 $411 $914 
Net (loss) income from discontinued operations— (1)(1)
Net income from continuing operations102 250 410 915 
Less: Impairment and restructuring charges, and acquisition-related
            costs
  (129)(30)(226)(85)
Litigation and investigation costs(20)(52)(70)(116)
Net gains on sales, consolidation and deconsolidation of facilities18 445 
Loss from early extinguishment of debt— — (109)(74)
Loss from divested and closed businesses— (1)— (1)
Tax and noncontrolling interests impact of above items 37 21 70 (77)
Adjusted net income available from continuing operations to common shareholders$213 $294 $744 $823 
Diluted earnings per share from continuing operations$0.92 $2.30 $3.78 $8.43 
Less: Impairment and restructuring charges, and acquisition-related
            costs
(1.21)(0.27)(2.04)(0.78)
Litigation and investigation costs(0.19)(0.48)(0.63)(1.07)
Net gains on sales, consolidation and deconsolidation of facilities0.01 0.17 0.01 4.10 
Loss from early extinguishment of debt— — (0.99)(0.68)
Loss from divested and closed businesses— (0.01)— (0.01)
Tax and noncontrolling interests impact of above items0.35 0.19 0.63 (0.71)
Adjusted diluted earnings per share from continuing operations$1.96 $2.70 $6.80 $7.58 
Weighted average basic shares outstanding (in thousands) 104,519 107,150 106,929 106,833 
Weighted average dilutive shares outstanding (in thousands)106,368 108,890 110,516 108,571 


Page 18


    
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation
Common Shareholders to Adjusted EBITDA
(Unaudited)
(Dollars in millions)Three Months EndedTwelve Months Ended
December 31,December 31,
2022202120222021
Net income available to Tenet Healthcare Corporation common shareholders$102 $249 $411 $914 
Less: Net income available to noncontrolling interests(172)(170)(590)(562)
  (Loss) income from discontinued operations, net of tax— (1)(1)
Income from continuing operations274 420 1,000 1,477 
Income tax expense(47)(108)(344)(411)
Loss from early extinguishment of debt— — (109)(74)
Other non-operating income (loss), net(2)10 14 
Interest expense(219)(221)(890)(923)
Operating income536 751 2,333 2,871 
Litigation and investigation costs(20)(52)(70)(116)
Net gains on sales, consolidation and deconsolidation of facilities18 445 
Impairment and restructuring charges, and acquisition-related costs(129)(30)(226)(85)
Depreciation and amortization(213)(201)(841)(855)
Loss from divested and closed businesses— (1)— (1)
Adjusted EBITDA $897 $1,017 $3,469 $3,483 
Net operating revenues$4,990 $4,856 $19,174 $19,485 
Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues2.0 %5.1 %2.1 %4.7 %
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)18.0 %20.9 %18.1 %17.9 %



Page 19


    
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #3 – Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations
(Unaudited)
(Dollars in millions)2022
Q4Full Year
Net cash provided by operating activities$421 $1,083 
Purchases of property and equipment(290)(762)
Free cash flow131 321 
Add back: Medicare Advance Repayments— 880 
Payroll Tax Deferral Payments128 128 
Free cash flow, excluding repayment of Medicare Advances and Deferred Payroll Tax Payments$259 $1,329 
Net cash used in investing activities$(306)$(808)
Net cash used in financing activities$(465)$(1,781)
Net cash provided by operating activities$421 $1,083 
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements(57)(214)
Net cash used in operating activities from discontinued operations— (1)
Adjusted net cash provided by operating activities from continuing operations478 1,298 
Purchases of property and equipment(290)(762)
Adjusted free cash flow – continuing operations188 536 
Add back: Medicare Advance Repayments— 880 
Payroll Tax Deferral Payments128 128 
Adjusted free cash flow – continuing operations, excluding repayments of Medicare Advances and Deferred Payroll Tax Payments$316 $1,544 



Page 20


    
(Dollars in millions) 2021
Q4Full Year
Net cash provided by operating activities$357 $1,568 
Purchases of property and equipment(304)(658)
Free cash flow53 910 
Add back: Medicare Advance Repayments186 512 
Payroll Tax Deferral Payments128 128 
Free cash flow, excluding repayment of Medicare Advances and Deferred Payroll Tax Payments$367 $1,550 
Net cash used in investing activities$(1,516)$(714)
Net cash provided by (used in) financing activities$1,231 $(936)
Net cash provided by operating activities$357 $1,568 
Less: Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements(37)(153)
Net cash provided by operating activities from discontinued operations— 
Adjusted net cash provided by operating activities from continuing operations393 1,721 
Purchases of property and equipment(304)(658)
Adjusted free cash flow – continuing operations89 1,063 
Add back: Medicare Advance Repayments186 512 
Payroll Tax Deferral Payments128 128 
Adjusted free cash flow – continuing operations, excluding repayments of Medicare Advances and Deferred Payroll Tax Payments$403 $1,703 



Page 21


    
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #4 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders
(Unaudited)


(Dollars in millions, except per share amounts)
First Quarter 2023
FY 2023
LowHighLowHigh
Net income available to Tenet Healthcare Corporation common shareholders$90 $125 $420 $585 
Net income from continuing operations90 125 420 585 
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(1)
(25)(15)(100)(50)
Tax impact of above items
15 
Adjusted net income available from continuing operations to common shareholders$110 $135 $505 $630 
Diluted earnings per share from continuing operations$0.82 $1.14 $3.89 $5.43 
Less: Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(0.23)(0.14)(0.93)(0.47)
Tax impact of above items
0.05 0.05 0.14 0.05 
Adjusted diluted earnings per share from continuing operations$1.00 $1.23 $4.68 $5.85 
Weighted average basic shares outstanding (in thousands)103,000 103,000 103,000 103,000 
Weighted average dilutive shares outstanding (in thousands)107,000 107,000 107,000 107,000 

(1)    The figures shown represent the Company's estimate for restructuring charges. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.







Page 22


    
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #5 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA
(Unaudited)

(Dollars in millions)
First Quarter 2023
FY 2023
LowHighLowHigh
Net income available to Tenet Healthcare Corporation common shareholders$90 $125 $420 $585 
Less: Net income available to noncontrolling interests(135)(155)(620)(670)
Income tax expense
(60)(70)(270)(300)
Interest expense
(225)(215)(880)(870)
Other non-operating expense, net(5)— (20)(10)
Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements(1)
(25)(15)(100)(50)
Depreciation and amortization
(210)(220)(850)(875)
Adjusted EBITDA$750 $800 $3,160 $3,360 
Income from continuing operations$90 $125 $420 $585 
Net operating revenues$4,700 $4,900 $19,700 $20,100 
Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues1.9 %2.6 %2.1 %2.9 %
Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)16.0 %16.3 %16.0 %16.7 %

(1)    The figures shown represent the Company's estimate for restructuring charges. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.



Page 23


    

TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP disclosures
Table #6 – Reconciliations of Outlook Net Cash Provided by Operating Activities
to Outlook Free Cash Flow
Continuing Operations and Outlook Adjusted Free Cash
Flow
Continuing Operations
(Unaudited)


(Dollars in millions)FY 2023
LowHigh
Net cash provided by operating activities$1,700 $2,000 
Purchases of property and equipment – continuing operations(625)(675)
Free cash flow – continuing operations$1,075 $1,325 
Net cash provided by operating activities$1,700 $2,000 
Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements(1)
(125)(75)
Adjusted net cash provided by operating activities – continuing operations
1,825 2,075 
Purchases of property and equipment – continuing operations(625)(675)
Adjusted free cash flow – continuing operations(2)
$1,200 $1,400 
(1)    The figures shown represent the Company's estimate for restructuring payments. The Company does not generally forecast payments for acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)    The Company’s definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company’s Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, and (ii) distributions paid to noncontrolling interests.



Page 24