Tenet Reports Fourth Quarter Adjusted EBITDA of $336 Million, an Increase of 16.7%
7.3% Growth in Net Operating Revenues
2.9% Increase in Adjusted Admissions
7.5% Growth in Surgeries
DALLAS--(BUSINESS WIRE)-- Tenet Healthcare Corporation (NYS: THC) today reported Adjusted EBITDA of $336 million for the fourth quarter ended December 31, 2012, an increase of $48 million, or 16.7 percent, as compared to Adjusted EBITDA of $288 million in the fourth quarter of 2011. Net income attributable to common shareholders in the quarter was $49 million, or $0.45 per share, compared to a loss of $76 million, or $0.70 per share, in the fourth quarter of 2011, which included an after-tax loss of $74 million due to the early extinguishment of debt, or $0.68 per share. Adjusted EBITDA for the year ended December 31, 2012 was $1.203 billion, an increase of $77 million, or 6.8 percent, as compared to Adjusted EBITDA of $1.126 billion in the year ended December 31, 2011.
"The fourth quarter provided a strong finish to 2012, which became our ninth consecutive year of consistent earnings growth, with compound annual EBITDA growth of 15 percent," said Trevor Fetter, president and chief executive officer. "Strong revenue growth and disciplined cost control were once again hallmarks of our financial performance. Net revenues grew by 7.3 percent reflecting strong volume increases and continued pricing strength. Our volume growth was one of the strongest in the investor-owned healthcare provider sector, and we recorded our ninth consecutive quarter of positive growth in adjusted admissions. Volume growth included another strong quarter of growth in outpatient surgeries which increased by 13.9 percent. Cost control was excellent with hospital operations restraining expense growth to just 1.9 percent per adjusted admission, and Conifer Health Solutions, Tenet's services business, reported another solid quarter contributing $31 million of Adjusted EBITDA."
Discussion of Results (Percentage changes compare Q4'12 to Q4'11, unless otherwise noted.)
Adjusted admissions increased 2.9 percent in the fourth quarter led by strong growth in outpatient visits of 7.3 percent. Approximately 80 percent of the outpatient visit growth was organic. Total admissions were flat. Total emergency department visits increased 8.6 percent and emergency department admissions increased 1.7 percent. The sum of uninsured and charity admissions increased 1.1 percent.
Bad debt expense as a percent of revenues was 7.9 percent, an increase of 20 basis points compared to 7.7 percent in the fourth quarter of 2011. The increase in bad debt expense was largely the result of the increase in uninsured patient volumes. Our self-pay collection rate was 28.9 percent in the fourth quarter of 2012, a 120 basis point improvement compared to 27.7 percent in the fourth quarter of 2011.
Net operating revenues were $2.331 billion, an increase of $159 million, or 7.3 percent, compared to net operating revenues of $2.172 billion in the fourth quarter of 2011. Commercial managed care revenue increased 5.2 percent, which reflected a 7.1 percent and 7.6 percent increase in commercial managed care revenue per patient day and per outpatient visit, respectively.
Total net patient revenue per adjusted admission was $11,866, an increase of 2.8 percent. This pricing increase primarily reflects improved terms in our contracts with commercial managed care payers, as well as higher Medicare reimbursement rates that became effective on October 1, partially offset by a softer payer mix.
Selected operating expenses of our hospital operations, defined as the sum of salaries, wages and benefits, supplies and other operating expenses excluding the Company's Conifer services business, increased by only 1.9 percent on a per adjusted admission basis. This cost metric excludes Conifer since Conifer does not generate incremental volumes, which impacts the relationship of this aggregate cost metric to patient volumes. Supplies expense per adjusted admission declined 1.1 percent. Electronic health record incentives were $27 million in the fourth quarter of 2012 compared to $5 million in the fourth quarter of 2011 and are not a part of the definition of selected operating expenses.
Cash and cash equivalents were $364 million at December 31, 2012 compared to $83 million at September 30, 2012. The Company had no outstanding balance on its bank line at December 31, 2012. Accounts receivable days improved by two days to 53 days down from 55 days at September 30, 2012. Approximately $57 million of aggregate revenues related to the California Provider Fee program and the Texas uncompensated care 1115 waiver program were recognized in Adjusted EBITDA in 2012, but were not yet received by year end.
Outlook for Adjusted EBITDA in First Quarter and Full Year 2013
The Company confirms its previously announced Outlook for 2013 Adjusted EBITDA of $1.325 billion to $1.425 billion. The $1.375 billion mid-point of this Outlook range is slightly above the current consensus estimate. For the first quarter of 2013, the Outlook range for Adjusted EBITDA is $250 million to $290 million. This first quarter Outlook excludes any contribution related to the managed care portion of the 30 month California Provider Fee program, which is now expected to contribute $53 million to Adjusted EBITDA in our quarter ending June 30, 2013.
Management's Webcast Discussion of Fourth Quarter Results
Tenet management will discuss the Company's fourth quarter 2012 results on a 10:00 AM (ET) webcast on February 26, 2013. This webcast may be accessed through Tenet's website at www.tenethealth.com/investors.
Additional information regarding Tenet's quarterly results of operations, including detailed tabular operational data, is contained in its Form 10-K report, which will be filed with the Securities and Exchange Commission and posted on the Tenet investor relations website before the webcast. This press release includes certain non-GAAP measures, such as Adjusted EBITDA. A reconciliation of non-GAAP measures included in this release is included in the financial tables at the end of this release.
Tenet Healthcare Corporation, a leading health care services company, through its subsidiaries operates 49 hospitals, 117 outpatient centers and Conifer Health Solutions, a leader in business process solutions for health care providers that serves over 600 hospital and other clients nationwide. Tenet's hospitals and related health care facilities are committed to providing high quality care to patients in the communities they serve. For more information, please visit www.tenethealth.com.
This document contains "forward-looking statements" - that is, statements relating to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include the factors disclosed under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended Dec. 31, 2012, our quarterly reports on Form 10-Q, periodic reports on Form 8-K and other filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking statements contained in this press release as a result of new information or future events or developments.
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