Tenet fourth quarter adjusted EBITDA increases 28.9% to $281 million

Tenet Healthcare Corporation (NYSE:THC):

“We are reconfirming our 2011 outlook for adjusted EBITDA in a range of $1.150 billion to $1.250 billion and we are introducing our 2011 outlook for net cash provided by operating activities in the range of $570 million to $740 million.”

Fourth Quarter 2010 Key Metrics

• Net income attributable to common shareholders of $74 million in Q4'10, compared to $21 million in Q4'09, an increase of 252 percent
• Adjusted EBITDA of $281 million in Q4'10, compared to $218 million in Q4'09, an increase of 28.9 percent
• Adjusted EBITDA margin of 12.2 percent in Q4'10, compared to 9.6 percent in Q4'09, an increase of 260 basis points

2010 Key Metrics

• Net income attributable to common shareholders of $1.119 billion in 2010, compared to $181 million in 2009 (2010 net income included the recognition of $1.043 billion of tax benefits)
• Earnings of $2.04 per diluted share in 2010, compared to $0.37 per diluted share in 2009
• Adjusted EBITDA of $1.050 billion in 2010, compared to $982 million in 2009, an increase of 6.9 percent
• Adjusted EBITDA margin of 11.4 percent in 2010, compared to 10.9 percent in 2009, an increase of 50 basis points

Subsequent Events in Q1'11

• California Provider Fee Program received CMS final approval on January 18, 2011
  • $64 million will be recorded in net revenue in Q1'11

Tenet Healthcare Corporation (NYSE:THC) today reported adjusted EBITDA of $281 million for the fourth quarter ended December 31, 2010, an increase of $63 million, or 28.9 percent, compared to $218 million for the fourth quarter of 2009. Net income attributable to common shareholders for the fourth quarter of 2010 was $74 million, or $0.14 per diluted share, compared to $21 million, or $0.04 per diluted share, for the fourth quarter of 2009.

"Our volume trends showed significant improvement in November and December compared to the first ten months of the year. Those strengthening trends have continued into January and February 2011. In the fourth quarter of 2010 we achieved a 3.2 percent increase in paying outpatient visits compared to 2009's fourth quarter. Strong pricing growth and continued excellent cost performance also contributed to a solid quarter. Our full year 2010 adjusted EBITDA of $1.05 billion is the highest in seven years, and the seventh consecutive year of EBITDA growth. Our adjusted EBITDA margin of 12.2 percent in the fourth quarter is the highest fourth quarter margin we've reported in seven years, and our full year 2010 margin of 11.4 percent is the highest in seven years," said Trevor Fetter, president and chief executive officer. "We are reconfirming our 2011 outlook for adjusted EBITDA in a range of $1.150 billion to $1.250 billion and we are introducing our 2011 outlook for net cash provided by operating activities in the range of $570 million to $740 million."

Discussion of Results (Percentage changes compare Q4'10 to Q4'09, unless otherwise noted.)

Admissions and paying admissions declined by 2.0 percent and 2.2 percent, respectively. These declines were smaller than the respective declines of 3.5 percent and 3.9 percent in the sequential third quarter of 2010. Outpatient visits and paying outpatient visits increased by 2.9 and 3.2 percent, respectively compared to the fourth quarter of 2009. Adjusted admissions increased by 0.4 percent compared to the fourth quarter of 2009.

Net operating revenues were $2.301 billion, an increase of $40 million, or 1.8 percent, compared to net operating revenues of $2.261 billion in the fourth quarter of 2009. Net patient revenues per adjusted patient day increased by 2.4 percent.

Total controllable operating expenses decreased by $33 million, or 1.8 percent. This decrease included a favorable variance in malpractice expense. Total controllable costs per adjusted patient day declined by twenty dollars, or 1.0 percent. Controllable operating expenses is defined as the sum of salaries, wages and benefits, supplies, and other operating expenses.

Bad debt expense increased to $191 million from $181 million in the fourth quarter of 2009, an increase of $10 million, or 5.5 percent. The ratio of bad debt expense to net operating revenues rose to 8.3 percent, compared to 8.0 percent in the fourth quarter of 2009, an increase of 30 basis points. The sum of uninsured and charity admissions were flat in the fourth quarter, compared to the fourth quarter of 2009.

Adjusted net cash provided by operating activities was $180 million in the fourth quarter of 2010 compared to $159 million in the fourth quarter of 2009, an increase of $21 million, or 13.2 percent. Adjusted free cash flow used in continuing operations was $16 million in the fourth quarter of 2010 compared to a use of $33 million in the fourth quarter of 2009, a favorable change of $17 million. This was primarily the result of a decrease in tax payments, partially offset by an increase in working capital. Net cash provided by operating activities was $175 million in the fourth quarter of 2010 compared to $141 million in the fourth quarter of 2009, an increase of $34 million, or 24.1 percent. Cash and cash equivalents were $405 million at December 31, 2010, an increase of $7 million from September 30, 2010. In addition to the above items, the increase in cash includes the receipt of $50 million from the sale of certain medical office buildings and the use of $21 million to purchase eleven outpatient centers.

SOURCE Tenet Healthcare Corporation