01—Abstract
Summary
Summary of the 10-K filed February 22, 2016. Cited figures are marked; the original filing is the authoritative source.
Tenet Healthcare Corporation reported net operating revenues before provision for doubtful accounts of $20.11 billiona for 2015, up from $17.91 billion in 2014, and net operating revenues of $18.63 billion after a $1.48 billion provision for doubtful accounts.
The company recorded a net loss attributable to Tenet common shareholders of $140 millionb in 2015, compared with net income of $0.12 per diluted share... more precisely, a loss of $1.43 per diluted share from continuing operations, versus $0.34 per diluted share in 2014. Adjusted EBITDA rose to $2.28 billion from $1.95 billion, and net cash provided by operating activities was $1.03 billion, up from $687 million. The year was defined by portfolio restructuring.
Tenet combined its freestanding ambulatory surgery and imaging assets with United Surgical Partners International into a joint venture in which it holds a 50.1% interest, acquired Aspen Healthcare in the United Kingdom, formed new hospital joint ventures in Birmingham, Alabama and Tucson, Arizona, and agreed to sell its Atlanta-area hospitals to WellStar Health System. Ambulatory Care was reported as a new segment, and redeemable noncontrolling interests rose to $2.27 billionc, reflecting put/call obligations tied to the USPI joint venture. The filing also highlights significant legal and leverage risks.
Total long-term debt was approximately $14.4 billiond at year-end, and the company increased its reserve for the Clinica de la Mama qui tam action and related criminal investigation to $238 million from $20 million after making a settlement offer. Tenet did not pay cash dividends and had a $500 million share repurchase authorization, under which it had repurchased about $40 million of stock through December 31, 2015.
02—Key points
Key Highlights
- Net operating revenues before provision for doubtful accounts rose to $20.11 billion in 2015 from $17.91 billion in 2014, and net operating revenues were $18.63 billion after a $1.48 billion provision for doubtful accounts.
- Loss from continuing operations was $1.43 per diluted share in 2015, compared with diluted earnings of $0.34 per share in 2014; impairment and restructuring charges, and acquisition-related costs totaled $318 million, and litigation and investigation costs were $291 million.
- Adjusted EBITDA increased to $2.28 billion from $1.95 billion, with Adjusted EBITDA margin of 12.2% versus 11.8% in 2014.
- Net cash provided by operating activities was $1.03 billion in 2015, up from $687 million in 2014, while capital expenditures were $842 million.
- Tenet formed the USPI joint venture (50.1% owned), acquired Aspen Healthcare in the U.K., formed joint ventures with Baptist Health System, Dignity Health and Ascension Arizona, and Baylor Scott & White Health, and agreed to sell its Atlanta-area hospitals to WellStar Health System.
- Total long-term debt was approximately $14.4 billion at December 31, 2015, and redeemable noncontrolling interests were $2.27 billion, largely tied to USPI put/call arrangements.
- The company increased its reserve for the Clinica de la Mama qui tam action and DOJ criminal investigation from $20 million to $238 million, reflecting an offer to resolve the matters.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 22, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Operating Income | $1.08B$925.00M | +16.4% |
| Interest Expense | $912.00M$754.00M | +21.0% |
| Net Income | -$140.00M$12.00M | −1266.7% |
| EPS (Basic) | $-1.41$0.12 | −1275.0% |
| EPS (Diluted) | $-1.41$0.12 | −1275.0% |
| Shares Outstanding (Basic) | 99.17M97.80M | +1.4% |
| Shares Outstanding (Diluted) | 99.17M100.29M | −1.1% |
05—Questions
Frequently Asked Questions
How did Tenet's revenue and profitability change in 2015?
Net operating revenues before provision for doubtful accounts increased to $20.11 billion from $17.91 billion, and net operating revenues were $18.63 billion versus $16.60 billion. Tenet reported a net loss attributable to common shareholders of $140 million in 2015, with a diluted loss of $1.43 per share from continuing operations, compared with diluted earnings of $0.34 per share from continuing operations in 2014. Results were weighed down by $318 million of impairment, restructuring and acquisition-related costs and $291 million of litigation and investigation costs.
What were the main portfolio changes during 2015?
Tenet combined its freestanding ambulatory surgery and imaging assets with USPI's short-stay surgical facilities into a joint venture in which it owns 50.1%, and acquired Aspen Healthcare in the United Kingdom. It also formed a 60%-owned joint venture in Birmingham, Alabama, a 60%-owned joint venture in Tucson, Arizona, and two Baylor Scott & White Health joint ventures effective January 1, 2016. It completed the sale of Saint Louis University Hospital and agreed to sell its two North Carolina hospitals and its Atlanta-area hospitals.
What are the major debt and capital structure considerations?
Long-term debt, net of current portion, was $14.38 billion at December 31, 2015, up from $11.51 billion a year earlier. The company had $995 million available under its $1 billion revolving Credit Agreement and about $105 million of standby letters of credit outstanding under its LC Facility. Put/call arrangements with USPI joint venture partners may require cash or share settlement, and Welsh Carson delivered a January 2016 put notice with an estimated repurchase cost of $127 million.
What legal matters could materially affect Tenet?
Tenet and four hospital subsidiaries are defendants in the Clinica de la Mama qui tam civil action, and the U.S. Department of Justice is conducting a criminal investigation related to the same arrangements. Tenet increased its reserve for these matters to $238 million and made an offer on February 18, 2016 to resolve them, but the company said the final terms could materially exceed the reserve. Tenet also settled several antitrust nurse-compensation class actions and other matters.
Does Tenet pay dividends or repurchase shares?
Tenet has not paid cash dividends on its common stock since the first quarter of fiscal 1994 and does not currently intend to pay dividends. Its board authorized a repurchase of up to $500 million of common stock in November 2015 through December 2016; through December 31, 2015, Tenet had paid about $40 million to repurchase 1,242,806 shares.
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