Tenet Reports Results for the First Quarter Ended March 31, 2019

• Tenet reported a net loss from continuing operations attributable to
  Tenet common shareholders of $27 million or $0.26 per diluted share in
  the first quarter of 2019 due in part to a $47 million pre-tax loss
  from the extinguishment of debt or $0.45 per diluted share.
• Adjusted diluted earnings per share from continuing operations were
  $0.54 in the first quarter of 2019, above the high end of the
  Company’s Outlook.
• Adjusted EBITDA was $613 million in the first quarter of 2019, above
  the midpoint of the Company’s Outlook. Adjusted EBITDA consisted of
  $337 million in the Hospital Operations and other segment, $177
  million in the Ambulatory Care segment and $99 million in the Conifer
  segment.
• Hospital segment same-hospital net patient service revenues grew 1.9
  percent in the first quarter of 2019: net revenue per adjusted
  admission increased 1.3 percent; adjusted admissions increased 0.6
  percent; and admissions decreased 0.1 percent.
• Ambulatory Care segment same-facility system-wide surgical revenue
  grew 4.2 percent in the first quarter of 2019, with surgical cases up
  2.8 percent and surgical revenue per case up 1.4 percent. Adjusted
  EBITDA less facility-level noncontrolling interest increased 9.8
  percent.
• Conifer segment revenues decreased 13.6 percent in the first quarter
  of 2019 primarily as a result of divestitures by Tenet and other
  customers; Adjusted EBITDA margins increased 410 basis points to 28.4
  percent reflecting the ongoing improvement in Conifer’s cost structure.
• Updating 2019 Outlook for net income and earnings per share;
  reiterating previously provided 2019 Outlook for revenue, Adjusted
  EBITDA, Adjusted EPS and Adjusted Free Cash Flow.

DALLAS–(BUSINESS WIRE)–Tenet Healthcare Corporation (NYSE: THC) reported a net loss from
continuing operations attributable to Tenet common shareholders of $27
million in the first quarter of 2019 compared to net income of $98
million in the first quarter of 2018. Adjusted EBITDA was $613 million
in the first quarter of 2019 above the midpoint of the Company’s Outlook
range of $575 million to $625 million.

Ronald A. Rittenmeyer, Executive Chairman and CEO, said, “We had a solid
start to the year, building on the many positive changes we made across
the enterprise in 2018. These changes include the continued addition of
new leadership as well as an infusion of fresh thinking, which are
helping to transform our approach to operations and overall enterprise
culture. In the first quarter, we continued to make progress in each of
our business segments through rigorous implementation of our
strategic initiatives, and we were pleased with our performance,
both operationally and financially. As we move through the year, we
remain focused on revenue growth and expense management to sharpen
operations and our competitive position.”

Results for the Quarter Ended March 31, 2019

Adjusted EBITDA was $613 million in the first quarter of 2019 compared
to $665 million in the first quarter of 2018. The decline was primarily
attributable to: (i) a $38 million increase in malpractice expense; (ii)
$11 million of losses generated by a risk-based contracting business in
California in the first quarter of 2019; (iii) $7 million due to the
divestiture of Aspen Healthcare, the Company’s former operations in the
United Kingdom; and (iv) $10 million of contract termination fees
received by Conifer in the first quarter of 2018 which did not occur
again in the first quarter of 2019. These four items were substantially
anticipated in the Company’s Outlook range provided in February.

Hospital Operations and Other Segment

Net operating revenues in the Hospital Operations and other segment were
$3.862 billion in the first quarter of 2019, down 2.2 percent from the
first quarter of 2018. The decline in revenue was due to hospital
divestitures, partially offset by same-hospital revenue growth.

On a same-hospital basis, net patient service revenues were $3.559
billion in the first quarter of 2019, up 1.9 percent from the first
quarter of 2018. Admissions declined 0.1 percent on a same-hospital
basis, adjusted admissions increased 0.6 percent and revenue per
adjusted admission increased 1.3 percent. A decline in flu cases lowered
admissions and adjusted admissions by 80 basis points and 60 basis
points, respectively.

Adjusted EBITDA in Tenet’s hospital segment was $337 million in the
first quarter of 2019 compared to $402 million in the first quarter of
2018. The $65 million decline was primarily due to a $38 million
increase in malpractice expense (comprised of a $21 million increase to
settle various claims and $17 million of discount rate adjustments), $11
million of losses generated by a risk-based contracting business in
California in the first quarter of 2019 and a stronger flu season in the
first quarter of 2018.

Selected operating expenses in the Hospital Operations and other segment
increased 4.0 percent on a per adjusted admission basis in the first
quarter of 2019 and increased 2.5 percent excluding the $38 million
increase in malpractice expense as well as the $11 million of losses
generated by a risk-based contracting business in California. Selected
operating expenses include salaries, wages and benefits, supplies and
other operating expenses and exclude the costs of the Company’s health
plan businesses. Salaries, wages and benefits increased 2.8 percent per
adjusted admission in the first quarter of 2019 and supply expense
remained substantially the same. Other operating expenses increased 9.4
percent per adjusted admission in the first quarter of 2019 and
increased 3.6 percent per adjusted admission excluding the increase in
malpractice expense and risk-based contracting losses in California
mentioned above.

Ambulatory Care Segment

The Ambulatory Care segment produced net operating revenues of $480
million in the first quarter of 2019, a decrease of 3.6 percent compared
to $498 million in the first quarter of 2018. The decline in revenue was
due to the divestiture of Aspen Healthcare in the third quarter of 2018.
Aspen generated $49 million of revenue and $7 million of Adjusted EBITDA
and Adjusted EBITDA less facility-level noncontrolling interest in the
first quarter of 2018. After normalizing for the divestiture of Aspen,
the Ambulatory Care segment generated Adjusted EBITDA of $177 million in
the first quarter of 2019, up 12.0 percent from $158 million in the
first quarter of 2018 and Adjusted EBITDA less facility-level
noncontrolling interest was $112 million, up 9.8 percent from $102
million in the first quarter of 2018.

The results of many of the facilities in which the Ambulatory Care
segment has an investment are not consolidated by Tenet (of the 334
facilities at March 31, 2019, the results of 108 were accounted for
under the equity method for unconsolidated affiliates). 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. On a same-facility system-wide basis, revenue
in the Ambulatory Care segment increased 4.2 percent in the first
quarter of 2019, with cases increasing 0.9 percent and revenue per case
increasing 3.3 percent. In the surgical business, which represents the
majority of the revenue in the Ambulatory segment, same-facility
system-wide revenue grew 4.2 percent in the first quarter of 2019, with
cases up 2.8 percent and revenue per case up 1.4 percent.

Conifer Segment

During the first quarter of 2019, Conifer’s revenue declined 13.6
percent to $349 million, primarily due to client attrition following
divestitures by Tenet and other customers, down from $404 million in the
first quarter of 2018. Revenue from third party customers declined 20.1
percent to $203 million in the first quarter of 2019. The year-over-year
revenue and EBITDA comparisons were also impacted by $10 million of
contract termination fees received by Conifer in the first quarter of
2018, which did not occur again in the first quarter of 2019.

Conifer generated $99 million of Adjusted EBITDA in the first quarter of
2019, up 1.0 percent from $98 million in the first quarter of 2018 and
up 12.5 percent after adjusting for the $10 million of contract
termination fees in the first quarter of 2018. Adjusted EBITDA margins
increased 410 basis points to 28.4 percent, reflecting the ongoing
improvement in Conifer’s cost structure.

Net Income and Earnings Per Share

Tenet reported a net loss from continuing operations attributable to
Tenet common shareholders of $27 million, or $0.26 per diluted share, in
the first quarter of 2019 compared to net income of $98 million, or
$0.95 per diluted share, in the first quarter of 2018. The net loss in
the first quarter of 2019 included a $47 million pre-tax loss from the
early extinguishment of debt; net income in the first quarter of 2018
included $110 million of pre-tax gains on sales, consolidation and
deconsolidation of facilities, primarily comprised of a $98 million gain
from the sale of MacNeal Hospital and other operations affiliated with
the hospital and a gain of $13 million from the sales of the Company’s
minority interests in four North Texas hospitals.

After adjusting for the items listed on Table #2, Tenet produced
Adjusted net income from continuing operations available to Tenet common
shareholders of $56 million, or $0.54 per diluted share, in the first
quarter of 2019, compared to $59 million, or $0.57 per diluted share, in
the first quarter of 2018.

A reconciliation of GAAP net income available (loss attributable) to
Tenet common shareholders to Adjusted net income available (loss
attributable) from continuing operations and Adjusted diluted earnings
(loss) per share from continuing operations is contained in Table #2 at
the end of this release.

Cash Flow and Liquidity

Cash and cash equivalents were $252 million at March 31, 2019 compared
to $411 million at December 31, 2018. The Company had $190 million of
outstanding borrowings on its $1 billion credit line as of March 31,
2019. Accounts receivable days outstanding from continuing operations
were 58.6 at March 31, 2019 compared to 56.5 at December 31, 2018.

Net cash provided by operating activities was $10 million in the first
quarter of 2019, representing a $103 million decrease compared to $113
million in the first quarter of 2018. After subtracting $192 million and
$143 million of capital expenditures in the first quarters of 2019 and
2018, respectively, Free Cash Flow was an outflow of $182 million in the
first quarter of 2019, a decrease of $152 million compared to an outflow
of $30 million in the first quarter of 2018. Adjusted Free Cash Flow was
an outflow of $148 million in the first quarter of 2019, representing a
$152 million decrease from an inflow of $4 million in the first quarter
of 2018.

Net cash used in investing activities was $139 million in the first
quarter of 2019 compared to $373 million of net cash provided by
investing activities in the first quarter of 2018. Results in the first
quarter of 2019 included $62 million of proceeds from the sales of
facilities, long-term investments and other assets compared to $559
million in the first quarter of 2018.

Net cash used in financing activities was $30 million in the first
quarter of 2019 compared to $123 million used in the first quarter of
2018.

Reconciliations of net cash provided by operating activities to both
Free Cash Flow and Adjusted Free Cash Flow are contained in Table #3 at
the end of this release.

Outlook

The Company’s Outlook for 2019 includes:

• Revenue of $18.0 billion to $18.4 billion,
• Net income from continuing operations available to Tenet common
  shareholders of $17 million to $117 million,
• Adjusted EBITDA of $2.650 billion to $2.750 billion,
• Net cash provided by operating activities of $1.070 billion to $1.375
  billion,
• Adjusted Free Cash Flow of $600 million to $800 million,
• Diluted earnings per share from continuing operations of $0.16 to
  $1.10, and
• Adjusted diluted earnings per share from continuing operations of
  $2.08 to $2.59.

The Outlook for 2019 assumes equity in earnings of unconsolidated
affiliates of $180 million to $190 million, depreciation and
amortization expense of $805 million to $825 million, interest expense
of $985 million to $995 million, net income available to noncontrolling
interests of $425 million to $445 million and an average diluted share
count of 106 million.

The Company’s Outlook for the second quarter of 2019 includes:

• Revenue of $4.400 billion to $4.700 billion,
• Net income available (loss attributable) from continuing operations to
  Tenet common shareholders ranging from a loss of $5 million to income
  of $40 million,
• Adjusted EBITDA of $625 million to $675 million,
• Diluted earnings (loss) per share from continuing operations ranging
  from a loss of $0.05 per share to earnings of $0.38 per share, and
• Adjusted diluted earnings per share from continuing operations ranging
  from $0.29 to $0.63.

The Outlook for the second quarter assumes equity in earnings of
unconsolidated affiliates of $40 million to $45 million, depreciation
and amortization expense of $200 million to $210 million, interest
expense of $240 million to $250 million, net income available to
noncontrolling interests of $100 million to $110 million, and an average
diluted share count of 104 million.

Additional details on Tenet’s Outlook for both the second quarter and
calendar year 2019 are available in Tables #4, #5 and #6 at the end of
this press release and in an accompanying slide presentation that will
be accessible through the Company’s website at www.tenethealth.com/investors.

Management’s Webcast Discussion of First
Quarter Results

Tenet management will discuss the Company’s first quarter 2019 results
on a webcast scheduled for 9:00 a.m. Eastern Time (8:00 a.m. Central
Time) on April 30, 2019. Investors can access the webcast through the
Company’s website at www.tenethealth.com/investors.
A set of slides, which will be referred to on the conference call, will
be available on the Quarterly Results section of the Company’s website.

Additional information regarding Tenet’s quarterly results of operations
is contained in its Form 10-Q report for the period ended March 31,
2019, which will be filed with the Securities and Exchange Commission
and posted on the Company’s website.

This press release includes certain non-GAAP measures, such as Adjusted
EBITDA, Adjusted net income available (loss attributable) from
continuing operations to Tenet common shareholders, Adjusted diluted
earnings (loss) per share from continuing operations, Free Cash Flow and
Adjusted Free Cash Flow. Reconciliations of these measures to the most
comparable GAAP measures are contained in the tables at the end of this
release.

Tenet Healthcare Corporation (NYSE: THC) is a national diversified
healthcare services company headquartered in Dallas, TX, with 110,000
employees. Through an expansive care network that includes United
Surgical Partners International, we operate 65 hospitals and
approximately 500 other healthcare facilities, including surgical
hospitals, ambulatory surgery centers, urgent care and imaging centers
and other outpatient facilities. We also operate Conifer Health
Solutions, which provides revenue cycle management and value-based care
services to hospitals, health systems, physician practices, employers
and other customers. At the center of everything we do is a commitment
to deliver the right care, in the right place, at the right time, and to
continually improve and advance the healthcare delivery system in the
markets we serve. For more information, please visit www.tenethealth.com.

The terms “THC,” “Tenet Healthcare Corporation,” “the company,” “we,”
“us” or “our” refer to Tenet Healthcare Corporation or one or more of
its subsidiaries or affiliates as applicable.

This release contains “forward-looking statements” – that is, statements
that relate 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,” “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. Particular
uncertainties that could cause our actual results to be materially
different than those expressed in our forward-looking statements
include, but are not limited to, the factors disclosed under
“Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the
year ended December 31, 2018, and subsequent Form 10-Q filings and other
filings with the Securities and Exchange Commission.

Tenet uses its Company website to provide important information to
investors about the Company including the posting of important
announcements regarding financial performance and corporate developments.

Contacts

Investor Contact
Brendan Strong
469-893-6992
investorrelations@tenethealth.com

Media
Contact
Lesley Bogdanow
469-893-2640
mediarelations@tenethealth.com

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