TENET HEALTHCARE CORP - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - August 1, 2017

Attached files

file filename
EX-99.1 - EXHIBIT 99.1 - TENET HEALTHCARE CORPexhibit991houstonrelease.htm
8-K - 8-K - TENET HEALTHCARE CORPform8-k.htm
Exhibit 99.2


Unaudited Pro Forma Financial Statements
The following Unaudited Pro Forma Financial Statements are based on the Company’s historical consolidated results of operations and financial position, adjusted to give effect to the Transaction, as defined in Item 2.01 of this Form 8-K, as if it had been completed on March 31, 2017 with respect to the pro forma condensed balance sheet and as of January 1, 2016 with respect to the pro forma condensed statements of operations.
The Unaudited Pro Forma Financial Statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“Annual Report”) and its unaudited condensed consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2017 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q ("Quarterly Report") for the three months ended March 31, 2017. The Unaudited Pro Forma Financial Statements may differ materially from the future financial position or results of operations due to a number of factors described in “Risk Factors” under Item 1A of Part 1 of our Annual Report and “Forward-Looking Statements” under Item 1 of Part 1 of our Annual Report.


1



Tenet Healthcare Corporation
Unaudited Pro Forma Condensed Balance Sheet
March 31, 2017
 
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
572

 
$
755

 
(a)
 
$
1,327

Accounts receivable, less allowance for doubtful accounts
 
2,960

 
(112
)
 
(a)
 
2,848

Inventories of supplies, at cost
 
324

 
(9
)
 
(a)
 
315

Income tax receivable
 
26

 
(8
)
 
(a)
 
18

Assets held for sale
 
3

 
 
 
 
 
3

Other current assets
 
1,167

 
(9
)
 
(a)
 
1,158

Total current assets
 
5,052

 
617

 
 
 
5,669

Investments and other assets
 
1,260

 
(4
)
 
(a)
 
1,256

Deferred income taxes
 
930

 
(140
)
 
(a)
 
790

Property and equipment, at cost, less accumulated depreciation and amortization
 
7,976

 
(209
)
 
(a)
 
7,767

Goodwill
 
7,429

 
(310
)
 
(a)
 
7,119

Other intangible assets, at cost, less accumulated amortization
 
1,863

 
(37
)
 
(a)
 
1,826

Total assets 
 
$
24,510

 
$
(83
)
 
 
 
$
24,427

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
147

 
$
(1
)
 
(a)
 
$
146

Accounts payable
 
1,179

 
(14
)
 
(a)
 
1,165

Accrued compensation and benefits
 
739

 
(11
)
 
(a)
 
728

Professional and general liability reserves
 
201

 
 
 
 
 
201

Accrued interest payable
 
327

 
 
 
 
 
327

Liabilities held for sale
 
—

 
 
 
 
 
—

Accrued legal settlement costs
 
11

 
 
 
 
 
11

Other current liabilities
 
1,163

 
(7
)
 
(a)
 
1,156

Total current liabilities
 
3,767

 
(33
)
 
 
 
3,734

Long-term debt, net of current portion
 
15,071

 
(1
)
 
(a)
 
15,070

Professional and general liability reserves
 
614

 
 
 
 
 
614

Defined benefit plan obligations
 
624

 
 
 
 
 
624

Deferred income taxes
 
289

 
 
 
 
 
289

Other long-term liabilities
 
621

 
(1
)
 
(a)
 
620

Total liabilities
 
20,986

 
(35
)
 
 
 
20,951

Commitments and contingencies
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests in equity of consolidated subsidiaries
 
2,430

 
 
 
 
 
2,430

Equity:
 
 
 
 
 
 
 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
Common stock
 
7

 
 
 
 
 
7

Additional paid-in capital
 
4,834

 
 
 
 
 
4,834

Accumulated other comprehensive loss
 
(255
)
 
 
 
 
 
(255
)
Accumulated deficit
 
(1,739
)
 
(33
)
 
(a)
 
(1,772
)
Common stock in treasury, at cost
 
(2,417
)
 
 
 
 
 
(2,417
)
Total shareholders’ equity
 
430

 
(33
)
 
 
 
397

Noncontrolling interests
 
664

 
(15
)
 
(a)
 
649

Total equity
 
1,094

 
(48
)
 
 
 
1,046

Total liabilities and equity
 
$
24,510

 
$
(83
)
 
 
 
$
24,427




2



Notes to Unaudited Pro Forma
Condensed Balance Sheet

(a)
Records the proceeds from the sale of the Houston-area hospitals and related facilities, derecognition of the related assets and liabilities and noncontrolling interests, and the related after-tax loss on sale, using an effective rate of 37%, which includes the federal statutory rate of 35% and the applicable state taxes, adjusted for the impact of nondeductible goodwill.
 
 
 
 
 
 
 
 
 
 
 
 


3



Tenet Healthcare Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 2016

(Dollars in millions except per share amounts)
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Net operating revenues before provision for doubtful accounts
 
$
21,070

 
$
(712
)
 
(a)
 
$
20,358

Less: Provision for doubtful accounts
 
1,449

 
(133
)
 
(a)
 
1,316

Net operating revenues 
 
19,621

 
(579
)
 
 
 
19,042

Equity in earnings of unconsolidated affiliates
 
131

 
 
 
 
 
131

Operating expenses:
 
 
 
 
 
 
 
 
Salaries, wages and benefits
 
9,356

 
(247
)
 
(a)
 
9,109

Supplies
 
3,124

 
(76
)
 
(a)
 
3,048

Other operating expenses, net
 
4,891

 
(181
)
 
(a)
 
4,710

Electronic health record incentives
 
(32
)
 
2

 
(a)
 
(30
)
Depreciation and amortization
 
850

 
(21
)
 
(a)
 
829

Impairment and restructuring charges, and acquisition-related costs
 
202

 
 
 
 
 
202

Litigation and investigation costs
 
293

 
 
 
 
 
293

Gains on sales, consolidation and deconsolidation of facilities
 
(151
)
 
 
 
 
 
(151
)
Operating income
 
1,219

 
(56
)
 
 
 
1,163

Interest expense
 
(979
)
 
1

 
(a)
 
(978
)
Other non-operating income (expense), net
 
8

 
 
 
 
 
8

Net income from continuing operations, before income taxes
 
248

 
(55
)
 
 
 
193

Income tax benefit (expense)
 
(67
)
 
19

 
(b)
 
(48
)
Net income from continuing operations 
 
181

 
(36
)
 
 
 
145

Less: Net income attributable to noncontrolling interests
 
368

 
(3
)
 
(a)
 
365

Net loss attributable to Tenet Healthcare Corporation common shareholders 
 
$
(187
)
 
$
(33
)
 
 
 
$
(220
)
Loss per share attributable to Tenet Healthcare Corporation common shareholders:
 
 
 
 
 
 
 
 
Basic
 
$
(1.88
)
 
 
 
 
 
$
(2.22
)
Diluted
 
$
(1.88
)
 
 
 
 
 
$
(2.22
)
Weighted average shares and dilutive securities outstanding (in thousands):
 
 
 
 
 
 
 
 
Basic
 
99,321

 
 
 
 
 
99,321

Diluted
 
99,321

 
 
 
 
 
99,321




4



Tenet Healthcare Corporation
Unaudited Pro Forma Condensed Statement of Operations
For the Three Months Ended March 31, 2017

(Dollars in millions except per share amounts)
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Net operating revenues before provision for doubtful accounts
 
$
5,196

 
$
(182
)
 
(a)
 
$
5,014

Less: Provision for doubtful accounts
 
383

 
(39
)
 
(a)
 
344

Net operating revenues 
 
4,813

 
(143
)
 
 
 
4,670

Equity in earnings of unconsolidated affiliates
 
29

 
 
 
 
 
29

Operating expenses:
 
 
 
 
 
 
 
 
Salaries, wages and benefits
 
2,380

 
(63
)
 
(a)
 
2,317

Supplies
 
765

 
(18
)
 
(a)
 
747

Other operating expenses, net
 
1,187

 
(45
)
 
(a)
 
1,142

Electronic health record incentives
 
(1
)
 
 
 
 
 
(1
)
Depreciation and amortization
 
221

 
(6
)
 
(a)
 
215

Impairment and restructuring charges, and acquisition-related costs
 
33

 
 
 
 
 
33

Litigation and investigation costs
 
5

 
 
 
 
 
5

Gains on sales, consolidation and deconsolidation of facilities
 
(15
)
 
 
 
 
 
(15
)
Operating income
 
267

 
(11
)
 
 
 
256

Interest expense
 
(258
)
 
 
 
 
 
(258
)
Other non-operating income (expense), net
 
(5
)
 
 
 
 
 
(5
)
Net income (loss) from continuing operations, before income taxes
 
4

 
(11
)
 
 
 
(7
)
Income tax benefit (expense)
 
33

 
4

 
(b)
 
37

Net income from continuing operations
 
37

 
(7
)
 
 
 
30

Less: Net income attributable to noncontrolling interests
 
89

 
(1
)
 
(a)
 
88

Net loss attributable to Tenet Healthcare Corporation common shareholders
 
$
(52
)
 
$
(6
)
 
 
 
$
(58
)
Loss per share attributable to Tenet Healthcare Corporation common shareholders:
 
 
 
 
 
 
 
 
Basic
 
$
(0.52
)
 
 
 
 
 
$
(0.58
)
Diluted
 
$
(0.52
)
 
 
 
 
 
$
(0.58
)
Weighted average shares and dilutive securities outstanding (in thousands):
 
 
 
 
 
 
 
 
Basic
 
100,000

 
 
 
 
 
100,000

Diluted
 
100,000

 
 
 
 
 
100,000




5




Notes to Unaudited Pro Forma
Condensed Statement of Operations

(a)
Eliminates the historical revenue and operating expenses of the divested Houston-area hospitals and related facilities.
 
 
(b)
Reflects the applicable income tax effects of the pro forma adjustments in this column at an effective tax rate of 37%, which includes the federal statutory rate of 35% plus applicable state taxes, adjusted for nondeductible expenses.
 
 
 
 



6

Stock widget

Investing forum

TENET HEALTHCARE CORP Reports