Tenet Announces Results for Fourth Quarter Ended December 31, 2005.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- Tenet Healthcare Tenet Healthcare Corporation (THC) is an operating company that owns and operates 57 hospitals in the United States [1]. It is based in Dallas, Texas. Its stock ticker symbol on the New York Stock Exchange is NYSE: THC. Corporation (NYSE NYSE See: New York Stock Exchange :THC THC tetrahydrocannabinol. THC n. Tetrahydrocannabinol; a compound that is obtained from cannabis or is made synthetically; it is the primary intoxicant in marijuana and hashish. ) today reported a net loss of $286 million, or $0.61 per share, for its fourth quarter ended December December: see month. 31, 2005. This compares to a net loss of $2.187 billion, or $4.68 per share, in the fourth quarter of 2004. (See Explanatory ex·plan·a·to·ry adj. Serving or intended to explain: an explanatory paragraph. ex·plan Note 1 for information regarding the previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). restatements and their impact on 2004 and 2005 results). The net loss for the fourth quarter of 2005 includes a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $251 million, or $0.54 per share, compared to a net loss of $1.712 billion, or $3.66 per share, in the fourth quarter of 2004. As discussed below, the loss from continuing operations in the fourth quarter of 2005 included eight items with an adverse aggregate net impact of $197 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. , or $0.42 per share. Loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the fourth quarter of 2005 was $19 million, or $0.04 per share compared to a loss of $475 million, or $1.02 per share, in the fourth quarter of 2004. In addition, we recorded a $16 million charge, net of tax benefit and related valuation allowance, or $0.03 per share, substantially related to estimated future asset retirement liabilities associated with asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. , which was recorded as of December 31, 2005 as a cumulative effect of a change in accounting principle associated with the adoption of a new accounting standard. "Tenet achieved another strong quarter of improved pricing and tight cost control strengthening the foundation of our business as we enter 2006," said Trevor Trev·or , William Originally William Trevor Cox. Born 1928. Irish writer noted for his darkly comedic stories and novels, including The Old Boys (1964) and The Day We Got Drunk on Cake (1967). Fetter, president and chief executive officer. "Despite this considerable progress on the pricing and cost fronts, our results for the fourth quarter and full year 2005 were adversely impacted by continuing declines in patient volumes and stubbornly stub·born adj. stub·born·er, stub·born·est 1. a. Unreasonably, often perversely unyielding; bullheaded. b. Firmly resolved or determined; resolute. See Synonyms at obstinate. 2. high levels of bad debt expense. We believe our ability to successfully reverse this volume erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. is limited by the continuing overhang Overhang Calculated as stock options granted, plus the remaining options to still be granted, and then divided by the total shares outstanding. Notes: A high percentage for the overhang is usually a bad thing. of government litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and investigation issues. The resolution of these issues remains among our highest priorities." "We have received increasing recognition of our investments in clinical quality in recent months," said Reynold Reynold is an English masculine name derived from an Old High German personal name made up of the elements "ragin" (advice, decision) and "wald" (ruler). It is a cognate of Rögnvaldr. Jennings Jennings, city (1990 pop. 11,305), seat of Jefferson Davis parish, SW La., on the Mermentau River; inc. 1888. Cotton and rice are grown, there is a bottling plant, and drugs, machinery, apparel, and water-treatment systems are manufactured. , chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "We are very pleased by the market's growing recognition of our advances in clinical quality which has been a major area of strategic focus over the last three years. Among investor-owned hospital companies, Tenet ranked #1 in nine of 15 quality metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. published by CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. on the "Hospital Compare" website. Forty-one of Tenet hospitals are designated "Centers of Excellence" by CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) in one or more clinical service lines. In addition, 18 of Tenet's hospitals have earned United Healthcare's Premium Status designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. for quality cardiovascular cardiovascular /car·dio·vas·cu·lar/ (-vas´ku-ler) pertaining to the heart and blood vessels. car·di·o·vas·cu·lar adj. Abbr. care as local centers of excellence. We take special pride in earning United's coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. quality distinctions as United has awarded this designation to just five percent their contracted hospitals. We believe this type of recognition for our investments in advancing clinical quality will play an increasingly important role in growing our business over the next few years. Another key element of our strategy to improve clinical quality and restore growth is a very targeted capital investment program. During the fourth quarter of 2005 we decided to accelerate certain capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. to $218 million for the quarter and $578 million for the year. These investments were generally made to upgrade clinical equipment and facilities in service lines with demonstrated growth potential." "Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , prior to capital expenditures, in the fourth quarter was $78 million," said Timothy Timothy, epistles in the New Testament Timothy, two letters of the New Testament. With Titus they comprise the Pastoral Epistles, in which St. Paul addresses his coworkers as the guardians and transmitters of his teaching. Pullen Pul´len n. 1. Poultry. , executive vice president and interim chief financial officer. "Operating performance improvement in the fourth quarter was constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. as Compact-adjusted bad debt expense remained high at 14.7 percent. This level of bad debt reflects continuing high levels of uninsured patients being treated within our emergency departments and was also negatively affected by our gulf coast hospitals impacted by Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. ."Continuing Operations The loss from continuing operations for the fourth quarter of 2005 was $251 million, or $0.54 per share, including the following eight items with an aggregate adverse net after-tax impact totaling approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $197 million or $0.42 per share: (1) positive adjustments to our prior year liability estimates primarily for a terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: retirement plan of $31 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , $20 million after-tax, or $0.04 per share; (2) positive adjustments to tax exposure reserves and the estimated provision for Federal and state income taxes based on filed tax returns totaling $36 million, or $0.08 per share; (3) an adverse, non-cash adjustment to increase the valuation allowance for deferred tax assets of $88 million, or $0.19 per share, associated with an increase in our deferred tax assets primarily related to the tax effect of our losses that could not be recognized for financial reporting purposes; (4) litigation and investigation costs of $165 million pre-tax, $107 million after-tax, or $0.23 per share, which included a net charge of $140 million pre-tax to accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. the settlement of a federal securities class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax net of expected insurance coverage; (5) impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $56 million pre-tax, $36 million after-tax, or $0.08 per share, net of insurance proceeds of $54 million; (6) costs related to the Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita of $15 million pre-tax and post-hurricane operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. related to our Gulf Coast operations of approximately $15 million pre-tax, totaling $19 million after-tax, or $0.04 per share; (7) an estimated loss on disposal recorded by one of our unconsolidated affiliates accounted for under the equity method of accounting, of which, our pre-tax impact was $10 million, $6 million after-tax, or $0.01 per share; and, (8) a net gain on sale of facilities of $4 million pre-tax, $3 million after-tax, or $0.01 per share, primarily to reduce reserves associated with hospitals sold in prior years. See Explanatory Notes for additional information regarding certain of these items. In addition, the company incurred stock compensation expense, included in salaries, wages and benefits, of $10 million pre-tax, $6 million after-tax, or $0.01 per share in the fourth quarter of 2005 as compared to $19 million pre-tax, $12 million after-tax, or $0.03 per share in the fourth quarter of 2004. Definition of Same-Hospital Data Same-hospital data for all periods presented excludes our six hospitals and imaging centers in the Gulf Coast Area that were impacted by Hurricane Katrina. Centennial Medical Center and St. Francis Francis, French prince, duke of Alençon and Anjou Francis, 1554–84, French prince, duke of Alençon and Anjou; youngest son of King Henry II of France and Catherine de' Medici. Hospital-Bartlett which both opened in June June: see month. 2004, are excluded from same-hospital statistics for the six months ended June 30, 2005 and 2004, but are included for the six months ended December 31, 2005 and 2004.
Admissions
Admissions, Patient Days and Surgeries Continuing General Hospitals
----------------------------
Q4'05 Q4'04 Change (%)
---------------------------------------- -------- -------- ----------
Admissions - Total 157,896 169,343 (6.8)
---------------------------------------- -------- -------- ----------
Uninsured Admissions 6,339 6,716 (5.6)
---------------------------------------- -------- -------- ----------
Uninsured Admissions/Total Admits (%) 4.0 4.0 -
---------------------------------------- -------- -------- ----------
Charity Care Admissions 2,856 2,169 31.7
---------------------------------------- -------- -------- ----------
Charity Care admissions as % of total 1.8 1.3 0.5 (1)
---------------------------------------- -------- -------- ----------
Admissions through Emergency Dept. (ED) 86,066 89,012 (3.3)
---------------------------------------- -------- -------- ----------
ED Admits as % of Total 54.5 52.6 1.9 (1)
---------------------------------------- -------- -------- ----------
Surgeries (inpatient and outpatient) 114,226 121,856 (6.3)
---------------------------------------- -------- -------- ----------
Patient Days - Total 809,577 877,259 (7.7)
---------------------------------------- -------- -------- ----------
(1) This change is the difference between the 2005 and 2004 amounts
shown.
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Admissions, Patient Days and Surgeries Same-Hospital
----------------------------
Q4'05 Q4'04 Change (%)
------------------------------------------------- -------- ----------
Admissions - Total 154,625 158,542 (2.5)
------------------------------------------------- -------- ----------
Uninsured Admissions 6,245 6,465 (3.4)
------------------------------------------------- -------- ----------
Uninsured Admissions/Total Admits (%) 4.0 4.1 (0.1) (1)
------------------------------------------------- -------- ----------
Charity Care Admissions 2,787 2,058 35.4
------------------------------------------------- -------- ----------
Charity Care admissions as % of total 1.8 1.3 0.5 (1)
------------------------------------------------- -------- ----------
Admissions through Emergency Dept. (ED) 84,083 83,660 0.5
------------------------------------------------- -------- ----------
ED Admits as % of Total 54.4 52.8 1.6 (1)
------------------------------------------------- -------- ----------
Surgeries (inpatient and outpatient) 111,416 113,001 (1.4)
------------------------------------------------- -------- ----------
Patient Days - Total 792,962 815,118 (2.7)
------------------------------------------------- -------- ----------
(1) This change is the difference between the 2005 and 2004 amounts
shown.
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Same-hospital admissions in the fourth quarter of 2005 were 154,625, a decline of 3,917 admissions, or 2.5 percent, compared to same-hospital admissions of 158,542 in the fourth quarter of 2004. Approximately 31% of this decline is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to our non-acute hospital units, including those skilled nursing and rehabilitation rehabilitation: see physical therapy. units that were closed subsequent to December 31, 2004. Same-hospital commercial managed care admissions declined by 4.7 percent during the fourth quarter of 2005 compared to the fourth quarter of 2004.
Outpatient Visits
Outpatient Visits Continuing General Hospitals
--------------------------------
Q4'05 Q4'04 Change (%)
------------------------------------ ---------- ---------- ----------
Total Visits 1,200,682 1,349,983 (11.1)
------------------------------------ ---------- ---------- ----------
Uninsured Visits 124,151 126,032 (1.5)
------------------------------------ ---------- ---------- ----------
Uninsured/ Total Visits (%) 10.3 9.3 1.0 (1)
------------------------------------ ---------- ---------- ----------
Charity Care Visits 5,171 4,590 12.7
------------------------------------ ---------- ---------- ----------
Charity Care / Total Visits (%) 0.4 0.3 0.1 (1)
------------------------------------ ---------- ---------- ----------
(1) This change is the difference between the 2005 and 2004 amounts
shown
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Outpatient Visits Same-Hospital
--------------------------------
Q4'05 Q4'04 Change (%)
------------------------------------ ---------- ---------- ----------
Total Visits 1,165,366 1,256,523 (7.3)
------------------------------------ ---------- ---------- ----------
Uninsured Visits 119,002 117,532 1.3
------------------------------------ ---------- ---------- ----------
Uninsured/ Total Visits (%) 10.2 9.4 0.8 (1)
------------------------------------ ---------- ---------- ----------
Charity Care Visits 5,131 4,567 12.3
------------------------------------ ---------- ---------- ----------
Charity Care / Total Visits (%) 0.4 0.4 - -
------------------------------------ ---------- ---------- ----------
(1) This change is the difference between the 2005 and 2004 amounts
shown
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Revenues
Revenues Continuing Operations Same-Hospital Operations
($ in millions)
------------------- ------------------------ ------------------------
Q4'05 Q4'04 Change (%) Q4'05 Q4'04 Change (%)
------------------- ------ ------ ---------- ------ ------ ----------
Net Operating
Revenues 2,299 2,402 (4.3) 2,253 2,257 (0.2)
------------------- ------ ------ ---------- ------ ------ ----------
Compact discounts 215 141 52.5 209 127 64.6
------------------- ------ ------ ---------- ------ ------ ----------
Compact-adjusted
Net Oper. Rev. (1) 2,514 2,543 (1.2) 2,462 2,384 3.3
------------------- ------ ------ ---------- ------ ------ ----------
Charity care 158 148 6.8 155 142 9.2
------------------- ------ ------ ---------- ------ ------ ----------
Provision for
Doubtful Accounts 172 193 (10.9) 157 185 (15.1)
------------------- ------ ------ ---------- ------ ------ ----------
Total uncompensated
care (1) (2) 545 482 13.1 521 454 14.8
------------------- ------ ------ ---------- ------ ------ ----------
Uncompensated care/
(Net Oper Rev +
Charity+ Compact)
(%) (1) 20.4 17.9 2.5 (3) 19.9 18.0 1.9 (3)
------------------- ------ ------ ---------- ------ ------ ----------
(1)Non-GAAP measure
(2)Defined as Compact discounts plus charity care plus provision
for doubtful accounts
(3)This change is the difference between the 2005 and 2004 amounts
shown
---------------------------------------------------------------------
Net operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for same-hospital operations were $2.253 billion in the fourth quarter of 2005, a decrease of $4 million, or 0.2 percent, as compared to $2.257 billion in the fourth quarter of 2004. Patient discounts provided under the Compact with Uninsured Patients ("Compact") reduced same-hospital net operating revenues in the fourth quarter of 2005 and 2004 by $209 million and $127 million, respectively. If the discounts under the Compact were added back to net operating revenues, it would have produced a non-GAAP measure of Compact-adjusted net operating revenues for the fourth quarter of 2005 of $2.462 billion, which would be an increase of $78 million or 3.3 percent compared to same-hospital Compact-adjusted net operating revenues of $2.384 billion for the fourth quarter of 2004. (A reconciliation of net operating revenue to Compact-adjusted net operating revenue, how the company uses the measures, and why the company believes these measures are useful, are provided in the tables below entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Additional Supplemental Non-GAAP Disclosures." The foregoing also applies to all non-GAAP measures described below). Tenet initiated the implementation of the Compact in June, 2004. The Compact was fully implemented in all the hospitals with the initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of Compact discounts in Texas on September September: see month. 1, 2005. Under the Compact, discounts are provided to uninsured patients at managed care-style rates established by each hospital. The Compact discount offered to an uninsured patient is recognized as a contractual allowance, which reduces net operating revenues at the time the account is recorded. Prior to implementing these discounting provisions under the Compact, the vast majority of these discounts was ultimately recognized to be uncollectible Adj. 1. uncollectible - not capable of being collected; "a bad (or uncollectible) debt" bad invalid - having no cogency or legal force; "invalid reasoning"; "an invalid driver's license" and, as a result, was then recorded in our provision for doubtful accounts. Pricing Pricing (Same-hospital) Q4'05 Q4'04 Change (%) ----------------------------------------- -------- ------- ---------- Net inpatient revenue per admission $10,108 $9,474 6.7 ----------------------------------------- -------- ------- ---------- Compact-adjusted net inpatient revenue per admission (1) 10,826 9,890 9.5 ----------------------------------------- -------- ------- ---------- Net outpatient revenue per visit 536 536 - ----------------------------------------- -------- ------- ---------- Compact-adjusted net outpatient revenue per visit (1) 620 584 6.2 ----------------------------------------- -------- ------- ---------- Net patient revenue from managed care payers ($mm) 1,117 1,081 3.3 ----------------------------------------- -------- ------- ---------- Stop loss payments from managed care payers ($mm) 98 129 (24.0) ----------------------------------------- -------- ------- ---------- (1) Non-GAAP measure --------------------------------------------------------------------- Same-hospital net inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. revenue per admission for the fourth quarter of 2005 was $10,108 compared to $9,474 in the fourth quarter of 2004. However, this unit measurement has been reduced by the Compact. If the discounts under the Compact are added back to net inpatient revenue, it produces a non-GAAP measure of same-hospital Compact-adjusted net inpatient revenue per admission of $10,826 for the fourth quarter of 2005, an increase of $936, or 9.5 percent, compared to $9,890 in the fourth quarter of 2004. Same-hospital net outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. revenue per visit was $536 in the fourth quarter of 2005 unchanged compared to $536 in the fourth quarter of 2004, which also includes the impact of the Compact. If the discounts under the Compact are added back to net outpatient revenue, it produces a non-GAAP measure of $620 in Compact-adjusted net outpatient revenue per visit in the fourth quarter of 2005, an increase of $36, or 6.2 percent, compared to $584 in the fourth quarter of 2004. The company disaggregates its total managed care business into three distinct categories: commercial managed care, managed Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. , and managed Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. . In the fourth quarter of 2005, approximately 80 percent of total managed care revenues are from Tenet's commercial managed care business, 13 percent from managed Medicare, and 7 percent from managed Medicaid. Managed care admissions in the fourth quarter of 2005 were 64 percent commercial, 19 percent managed Medicare, and 17 percent managed Medicaid. Managed care outpatient visits in the fourth quarter of 2005 were 77 percent commercial, 9 percent managed Medicare, and 14 percent managed Medicaid. The foregoing statistics on a same-hospital basis are consistent with the total hospital statistic statistic, n a value or number that describes a series of quantitative observations or measures; a value calculated from a sample. statistic a numerical value calculated from a number of observations in order to summarize them. . Same-hospital inpatient managed care base rates in the fourth quarter of 2005 increased by 11.7 percent for our total managed care portfolio and 12.9 percent for the commercial segment of the managed care portfolio as compared to the fourth quarter of 2004. Same-hospital net revenue per admission achieved an increase in excess of 12 percent in the commercial segment of our managed care business. The percentage increase in net revenue per admission is less than the percentage increase in inpatient base rates due to the reduction in the stop-loss stop-loss, n a general term referring to that category of coverage that provides insurance protection (reinsurance) to an employer for a self-funded plan. portion of our managed care reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. payments, as discussed below. On an aggregate portfolio yield basis, which includes managed Medicare and managed Medicaid in addition to our commercial managed care business, same-hospital net revenue per admission increased by 9.7 percent as compared to the fourth quarter of 2004. As a result of these pricing increases, total net patient revenue from managed care payers increased by 3.3 percent in the fourth quarter of 2005 relative to the fourth quarter of 2004 despite the decline in managed care patient volumes. Same-hospital stop-loss payments were $98 million in the fourth quarter of 2005, a decrease of $31 million from the $129 million received in the fourth quarter of 2004. The recent trend-line decline in stop-loss payments on a sequential One after the other in some consecutive order such as by name or number. quarter basis was not, however, evident as fourth quarter stop-loss payments actually increased by $1 million relative to the third quarter of 2005. Stop-loss payments were received on 4.2 percent of aggregate managed care admissions in the fourth quarter of 2005, and on 5.3 percent of commercial managed care admissions. The company believes that fourth quarter stop-loss payments are now within normal percentages for the industry, and expects stop-loss payments to stabilize stabilize See peg. at approximately these levels.
Controllable Operating Expenses
Controllable Continuing Operations Same-Hospital Operations
Operating ------------------------ ------------------------
Expense Q4'05 Q4'04 Change Q4'05 Q4'04 Change
($mm) (%) (%)
------------------- ------ ------ ---------- ------ ------ ----------
Salaries, Wages &
Benefits 1,051 1,079 (2.6) 1,027 1,018 0.9
------------------- ------ ------ ---------- ------ ------ ----------
Supplies 424 443 (4.3) 416 412 1.0
------------------- ------ ------ ---------- ------ ------ ----------
Rent 44 45 (2.2) 42 42 -
------------------- ------ ------ ---------- ------ ------ ----------
Other Controllable
Operating Exp 511 495 3.2 492 460 7.0
------------------- ------ ------ ---------- ------ ------ ----------
Total Controllable
Operating Exp 2,030 2,062 (1.6) 1,977 1,932 2.3
------------------- ------ ------ ---------- ------ ------ ----------
Same-hospital controllable operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (consisting of salaries, wages and benefits, supplies, and other operating expenses) were $1.977 billion and $1.932 billion in the fourth quarters of 2005 and 2004, respectively. Same-hospital controllable operating expenses per equivalent patient day were $1,783 in the fourth quarter of 2005 compared to $1,698 in the fourth quarter of 2004, an increase of $85, or 5.0 percent.
Provision for Doubtful Accounts
Bad Debt Continuing Operations Same-Hospital
Operations
---------------------- ----------------------
Q4'05 Q4'04 Change (%) Q4'05 Q4'04 Change (%)
----------------------- ----- ----- ---------- ----- ----- ----------
Provision for Doubtful
Accounts ("Bad Debt")
($mm) 172 193 (10.9) 157 185 (15.1)
----------------------- ----- ----- ---------- ----- ----- ----------
Bad Debt / Net
Operating Revenues
(%) 7.5 8.0 (0.5) (2) 7.0 8.2 (1.2) (2)
----------------------- ----- ----- ---------- ----- ----- ----------
Bad Debt + Compact-
related Reduction
(1) ($mm) 370 323 14.6 350 301 16.3
----------------------- ----- ----- ---------- ----- ----- ----------
Compact Adjusted Bad
Debt / ( Net operating
revenues + Compact
discounts) (%) (1) 14.7 12.7 2.0 (2) 14.3 12.6 1.7 (2)
----------------------- ----- ----- ---------- ----- ----- ----------
(1)Non-GAAP measure
(2)This change is the difference between the 2005 and 2004 amounts
shown
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Same-hospital provision for doubtful accounts, or bad debt expense, was $157 million in the fourth quarter of 2005, a decrease of $28 million from the provision for doubtful accounts of $185 million in the fourth quarter of 2004. Same-hospital bad debt expense was 7.0 percent of net operating revenues in the fourth quarter of 2005, compared to 8.2 percent of net operating revenues in the fourth quarter of 2004. After adding back the Compact discounts to the bad debt expense and net operating revenues in both quarters, it produces a non-GAAP measure of 14.3 percent for same-hospital Compact-adjusted bad debt expense to Compact-adjusted net operating revenue for the fourth quarter of 2005 as compared to 12.6 percent for the fourth quarter of 2004. Accounts Receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying Accounts receivable were $1.525 billion at December 31, 2005, and $1.523 billion at September 30, 2005. Accounts receivable days outstanding for continuing operations increased to 59 days at December 31, 2005 from 58 days at September 30, 2005. Cash Flow Unrestricted cash was $1.373 billion at December 31, 2005, down $107 million from $1.480 billion at September 30, 2005. Unrestricted cash at December 31, 2005, as well as at September 30, 2005, excludes $263 million of cash restricted as collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although for standby standby Medtalk adjective Referring to the immediate availability of a certain specialist–anesthesiologist, surgeon, who can be deployed in a medical emergency. Cf Concurrent. letters of credit under the letter of credit facility that we entered into in December 2004. Net cash provided by operating activities was $78 million in the fourth quarter of 2005. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , this cash flow figure excludes capital expenditures, proceeds of asset sales, and certain other items. Excluding cash used by operating activities from discontinued operations of $8 million, our cash provided by operating activities would have been $86 million for the fourth quarter of 2005. Cash provided by operating activities was negatively impacted primarily by our reduced operating results. Capital expenditures in the fourth quarter of 2005 were $218 million. Substantially all capital expenditures in the fourth quarter were for continuing operations. Liquidity Total debt was $4.8 billion at December 31, 2005, unchanged from total debt on September 30, 2005. Net debt, a non-GAAP measure defined as total debt less cash and cash equivalents, was $3.4 billion at December 31, 2005, as compared to $3.3 billion at September 30, 2005. Income Taxes The income tax benefit of $56 million in the fourth quarter of 2005 on a pre-tax loss of $307 million from continuing operations includes $88 million of income tax expense to increase the valuation allowance for deferred tax assets associated with deferred tax assets established as a result of the tax effect of our losses that could not be recognized for financial reporting purposes. The income tax benefit of $56 million in the fourth quarter of 2005 also includes positive non-cash adjustments to tax exposure reserves and the estimated provision for Federal and state income taxes based on filed tax returns totaling $36 million. Discontinued Operations The loss from discontinued operations for the fourth quarter of 2005 was $19 million after-tax, or $0.04 per share, and includes the following two items with an aggregate negative net after-tax impact of approximately $30 million, or $0.07 per share: (1) impairment and restructuring charges of $21 million pre-tax, $13 million after-tax, or $0.03 per share; and (2) negative non-cash adjustment to increase the valuation allowance for deferred tax assets of approximately $17 million, or $0.04 per share associated with deferred tax assets established as a result of the tax effect of our losses that could not be recognized for financial reporting purposes. See Explanatory Notes for additional information regarding these items. 2006 Outlook Growth or erosion of patient volumes at our hospitals is a critical determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant. of hospital and total company profitability. The expected level of patient admissions and outpatient visits is one of the most difficult element of our business to forecast as it is largely outside our direct control. During 2005, Tenet experienced volume declines in both admissions and outpatient visits. In 2006, on a same-hospital basis (excludes six hospitals in the Gulf Coast that were impacted by Hurricane Katrina), the company has budgeted admission growth of approximately one percent and growth in outpatient visits of approximately one-half percent. If the company is able to achieve this budgeted volume growth in 2006, with the high degree of operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. inherent in the acute hospital industry, this should have a positive impact on Tenet's future results. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , if the negative volume trends of 2005 continue, Tenet is unlikely to achieve its current objectives for operating performance in 2006. Based on current financial objectives and operational goals which can be affected by a number of factors, it is anticipated that same-hospital net operating revenues in 2006 will be similar to the $9.6 billion reported in 2005. Growth in discounts to net revenue under the Compact reduces overall revenue growth. Compact discounts are expected to grow from $718 million in 2005 to approximately $900 million in 2006, when the Compact program will have been fully implemented for the full year at all hospitals. If the discounts under the Compact of $718 million in 2005 and the expected discounts of approximately $900 million in 2006 are added back to net operating revenues, it would produce a non-GAAP measure of same-hospital Compact-adjusted net operating revenue resulting in growth in the range of approximately two percent between periods. Approximately 80 percent of expected managed care revenues in 2006 were negotiated prior to year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005. Base price increases in these renegotiated contracts were generally in the range of mid- mid- pref. Middle: midbrain. to high-single digits on a percentage basis. We expect to offset a portion of the anticipated growth in controllable operating expenses (consisting of salaries, wages and benefits, supplies and other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ) below the applicable rate of medical cost inflation through a wide range of operating initiatives that are in various stages of implementation. Compact-adjusted bad debt expense trended up in 2005, reflecting an underlying growth trend in the number of uninsured patients and self-pay revenue. These items are not entirely within the Company's control and as a result are difficult to project. If Compact discounts are added back to bad debt expense, we expect Compact-adjusted bad debt as a percentage of net revenues to be approximately 14 percent for 2006. Tenet expects reported bad debt expense to decline as a result of all of our hospitals being on the Compact for the full year. Depreciation and amortization expense in 2006 is expected to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $400 million, and interest expense is expected to approximate $410 million. The forecasted level of interest expense assumes the company's level of outstanding debt in 2006 remains constant with the current level. The company's outlook for pre-tax income (loss) in 2006 ranges from breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations to a $100 million pre-tax loss from continuing operations. Income tax expense (benefit) for continuing operations will be immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. given the impact of any tax valuation allowance. The company expects net cash flows from operating activities to be positive in 2006 in the range of $300 to $400 million. Net cash flow from operating activities, less expected capital expenditures of $550 to $650 million, is expected to be negative in the range of $200 million to $300 million. This outlook does not include the impact of potential payments to resolve litigation or investigations, nor any impairment, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). or special charges, or the operating results of discontinued operations, or receipt of cash for recoveries for outstanding claims from our insurance carriers. Any resolution of litigation or investigation issues could significantly impact results in 2006 and beyond and may change our outlook. Restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of Prior Period Financial Statements Concurrently con·cur·rent adj. 1. Happening at the same time as something else. See Synonyms at contemporary. 2. Operating or acting in conjunction with another. 3. Meeting or tending to meet at the same point; convergent. with the issuance of this release, the Company has filed an 8-K regarding additional adjustments to the restatement of prior period financial statements arising out of the previously disclosed independent accounting investigation. As a result of the impact of these additional adjustments on our 2004 results, the company recorded audit differences that were previously deemed immaterial for 2004, which will result in us restating all of our previously reported 2005 quarterly financial statements due to the effect of the 2004 differences on our 2005 quarterly periods. Additional information regarding these restatements can be found in Explanatory Note 1 to this release and in the 8-K. Management's Web Cast Review of Fourth Quarter Results Tenet management will discuss fourth quarter 2005 results on a webcast event scheduled to begin at 10:30 AM (ET) on March 2, 2006. This webcast may be accessed through Tenet's website at www.tenethealth.com. Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at www.tenethealth.com. Some of the statements in this release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such statements are based on our current expectations and could be affected by numerous factors and are subject to various risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended Dec. 31, 2004, our quarterly reports on Form 10-Q Form 10-Q See 10-Q. and periodic reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Do not rely on any forward-looking statement, as we cannot predict or control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(Unaudited)
----------------------------------------
(Dollars in millions Three Months Ended December 31
except per share amounts)
----------------------------------------
2005 % 2004 (1) % Change
----------------------------------------
Net operating revenues $2,299 100.0% $2,402 100.0% (4.3%)
Operating expenses:
Salaries, wages and
benefits (1,051) 45.7% (1,079) 44.9% (2.6%)
Supplies (424) 18.4% (443) 18.4% (4.3%)
Provision for doubtful
accounts (172) 7.5% (193) 8.0% (10.9%)
Other operating
expenses (3) (555) 24.1% (540) 22.5% 2.8%
Depreciation (81) 3.5% (96) 4.0% (15.6%)
Amortization (8) 0.4% (4) 0.2% 100.0%
Impairment of long-
lived assets and
goodwill,
and restructuring
charges (4) (56) 2.4% (1,249) 52.0%
Loss from hurricanes
and related costs (5) (15) 0.7% - ---
Costs of litigation
and investigations (6) (165) 7.2% (45) 1.9%
Loss from early
extinguishment of
debt - --- (8) 0.3%
---------------------------------------------------------------------
Operating loss (228) (9.9%) (1,255) (52.2%)
---------------------------------------------------------------------
Interest expense (100) (91)
Investment earnings 18 7
Minority interests (1) 9
Net gain on sales of
facilities and long-term
investments 4 1
---------------------------------------------------------------------
Loss from continuing
operations before income
taxes (307) (1,329)
---------------------------------------------------------------------
Income tax (expense)
benefit (8) 56 (383)
---------------------------------------------------------------------
Loss from continuing
operations (251) (1,712)
---------------------------------------------------------------------
Discontinued operations:
Income (loss) from
operations of asset
group 5 (46)
Impairment of long-lived
assets and goodwill,
and restructuring
charges (7) (21) (24)
Litigation settlements - (395)
Net gain (loss) on sales
of asset group (1) 38
Income tax (expense)
benefit (8) (2) (48)
---------------------------------------------------------------------
Loss from discontinued
operations (19) (475)
---------------------------------------------------------------------
---------------------------------------------------------------------
Cumulative effect of change
in accounting principle,
net (16) -
---------------------------------------------------------------------
----------------------------------------------------------------------
Net loss $(286) $(2,187)
---------------------------------------------------------------------
Diluted loss per common share and
common equivalent share:
Continuing Operations $(0.54) $(3.66)
Discontinued Operations (0.04) (1.02)
Cumulative Effect
of Change in Accounting
Principle, net (0.03) 0.00
-------- --------
$(0.61) $(4.68)
======== ========
---------------------------- -------- ------ -------- ------- -------
Weighted average shares and
dilutive securities
(if applicable)
outstanding
(in thousands): 469,607 467,040
---------------------------- -------- ------ -------- ------- -------
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(Unaudited)
------------------------------------------
(Dollars in millions Year Ended December 31
except per share
amounts)
------------------------------------------
2005 % 2004 (1) % Change
------------------------------------------
Net operating revenues $ 9,614 100.0% $ 9,908 100.0% (3.0%)
Operating expenses:
Salaries, wages and
benefits (4,388) 45.6% (4,328) 43.7% 1.4%
Supplies (1,774) 18.4% (1,723) 17.4% 3.0%
Provision for
doubtful accounts
(2) (698) 7.2% (1,203) 12.1% (42.0%)
Other operating
expenses (3) (2,183) 22.7% (2,215) 22.4% (1.4%)
Depreciation (352) 3.7% (368) 3.7% (4.3%)
Amortization (30) 0.3% (20) 0.2% 50.0%
Impairment of long-
lived assets and
goodwill, and
restructuring
charges (4) (266) 2.8% (1,284) 13.0%
Loss from hurricanes
and related costs
(5) (55) 0.6% - ---
Costs of litigation
and investigations
(6) (212) 2.2% (74) 0.7%
Loss from early
extinguishment of
debt (15) 0.2% (13) 0.1%
-------------------------------------------------------------------
Operating loss (359) (3.7%) (1,320) (13.4%)
-------------------------------------------------------------------
Interest expense (405) (333)
Investment earnings 59 20
Minority interests (7) 3
Net gain on sales of
facilities and long-term
investments 4 7
-------------------------------------------------------------------
Loss from continuing
operations before income
taxes (708) (1,623)
-------------------------------------------------------------------
Income tax benefit (8) 87 (286)
-------------------------------------------------------------------
Loss from continuing
operations (621) (1,909)
-------------------------------------------------------------------
Discontinued operations:
Loss from operations of
asset group (47) (284)
Impairment of long-lived
assets and goodwill,
and restructuring
charges (7) (56) (439)
Litigation settlements - (395)
Net gain on sales of
asset group 19 71
Income tax (expense)
benefit (8) (3) 150
-------------------------------------------------------------------
Loss from discontinued
operations (87) (897)
-------------------------------------------------------------------
-------------------------------------------------------------------
Cumulative effect of
change in accounting
principle, net (16) -
--------------------------------------------------------------------
-------------------------------------------------------------------
Net loss $ (724) $ (2,806)
-------------------------------------------------------------------
Diluted loss per common
share and common
equivalent share:
Continuing
Operations $ (1.32) $ (4.10)
Discontinued
Operations (0.19) (1.92)
Cumulative Effect
of Change in
Accounting
Principle, net (0.03) 0.00
-------- --------
$ (1.54) $ (6.02)
======== ========
-------------------------------------------------------------------
Weighted average shares
and dilutive securities
(if applicable)
outstanding
(in thousands): 468,898 466,226
-------------------------- -------- ------ -------- ------- -------
TENET HEALTHCARE CORPORATION
BALANCE SHEET DATA
Dollars in millions
(Unaudited)
-------------------
December December
31, 2005 31,
2004(1)
-------------------
Cash and cash equivalents $ 1,373 $ 654
Restricted cash - 263
Net accounts receivable 1,525 1,692
Income tax receivable - 530
Assets held for sale 11 114
Other current assets 599 731
-------- --------
Current assets 3,508 3,984
Current liabilities (2,292) (2,114)
-------- --------
Net working capital 1,216 1,870
Investments and other assets 380 296
Restricted cash 263 -
Net property and equipment 4,620 4,820
Goodwill 800 800
Net intangible assets 241 169
Long-term debt, net of current portion (4,784) (4,395)
Other long-term liabilities and minority interests (1,715) (1,861)
Total shareholders' equity (1,021) (1,699)
CASH FLOW DATA
Dollars in millions
(Unaudited)
-------------------
Year Year
Ended Ended
December December
31, 2005 31, 2004
-------------------
Net cash provided by operating activities $ 763 $ (82)
Cash flows from investing activities:
Purchases of property and equipment (578) (474)
Construction of new hospitals --- (84)
Proceeds from sales of facilities, long-
term investments and other assets 173 502
Insurance recoveries 75 -
Cash inflow related to escrow accounts to
fund construction costs - 88
Other items (62) (44)
Cash flows from financing activities:
Payments of borrowings (25) (17)
Sale of new senior notes 773 954
Repurchases of senior notes (413) (555)
Restricted cash related to letter of
credit facility - (263)
Other items 13 10
--------- -------
Net increase in cash and cash equivalents $ 719 $ 35
======= =======
Supplemental disclosures:
Interest paid, net of capitalized interest $ (357) $ (260)
Income tax refunds received (payments made),
net 530 (46)
TENET HEALTHCARE CORPORATION
GENERAL HOSPITALS
SELECTED STATISTICS - CONTINUING OPERATIONS
Year Ended December 31, 2005
(Unaudited)
(Dollar amounts in millions except for net inpatient revenue per
patient day and per admission, and net outpatient revenue per visit)
Three Months Ended
December 31
2005 2004 (1) Change
---------- ------------------
Net inpatient revenues $ 1,590 $ 1,597 (0.4%)
Net outpatient revenues $ 641 $ 714 (10.2%)
Number of hospitals (at end of (a)
period) 69 69 -
Licensed beds (at end of period) 17,863 17,902 (0.2%)
Average licensed beds 17,842 17,902 (0.3%)
Utilization of licensed beds 49.3% 53.3% (4.0)(a)
Patient days 809,577 877,259 (7.7%)
Equivalent patient days 1,134,196 1,226,990 (7.6%)
Net inpatient revenue per patient
day $ 1,964 $ 1,820 7.9%
Admissions 157,896 169,343 (6.8%)
Equivalent admissions 223,084 238,949 (6.6%)
Net inpatient revenue per
admission $ 10,070 $ 9,431 6.8%
Average length of stay (days) 5.1 5.2 0.1 (a)
Surgeries 114,226 121,856 (6.3%)
Net outpatient revenue per visit $ 534 $ 529 0.9%
Outpatient visits 1,200,682 1,349,983 (11.1%)
Sources of net patient revenue
Medicare 28.2% 27.3% 0.9%(a)
Medicaid 8.0% 7.4% 0.6%(a)
Indemnity, self-pay and other 12.5% 15.3% (2.8%)(a)
Same-hospital (b)
Net inpatient revenues $ 1,563 $ 1,502 4.1%
Net outpatient revenues $ 625 $ 673 (7.1%)
Number of hospitals (at end of (a)
period) 63 63 -
Average licensed beds 16,565 16,624 (0.4%)
Utilization of licensed beds 52.0% 53.3% (1.3%)(a)
Patient days 792,962 815,118 (2.7%)
Net inpatient revenue per patient
day $ 1,971 $ 1,843 7.0%
Admissions 154,625 158,542 (2.5%)
Net inpatient revenue per
admission $ 10,108 $ 9,474 6.7%
Average length of stay (days) 5.1 5.1 - (a)
Net outpatient revenue per visit $ 536 $ 536 -
Outpatient visits 1,165,366 1,256,523 (7.3%)
(a) This change is the difference between the 2005 and 2004 amounts
shown.
(b)Excludes two hospitals that were opened during 2004 for the six-
month periods ended June 30, 2004 and 2005.
Excludes six hospitals in the Gulf Coast that were impacted by
Hurricane Katrina for all periods presented.
Year Ended December 31
---------- ---------- -------
2005 2004 (1) Change
---------- ---------- -------
Net inpatient revenues $ 6,492 $ 6,536 (0.7%)
Net outpatient revenues $ 2,785 $ 2,999 (7.1%)
Number of hospitals (at end of (a)
period) 69 69 -
Licensed beds (at end of period) 17,863 17,902 (0.2%)
Average licensed beds 17,889 17,861 0.2%
Utilization of licensed beds 52.7% 54.5% (1.8%)(a)
Patient days 3,443,777 3,565,672 (3.4%)
Equivalent patient days 4,826,715 4,971,498 (2.9%)
Net inpatient revenue per patient
day $ 1,885 $ 1,833 2.8%
Admissions 668,587 687,857 (2.8%)
Equivalent admissions 944,328 967,138 (2.4%)
Net inpatient revenue per
admission $ 9,710 $ 9,502 2.2%
Average length of stay (days) 5.2 5.2 - (a)
Surgeries 484,105 493,397 (1.9%)
Net outpatient revenue per visit $ 539 $ 529 1.9%
Outpatient visits 5,164,801 5,664,357 (8.8%)
Sources of net patient revenue
Medicare 27.5% 26.1% 1.4%(a)
Medicaid 8.3% 7.4% 0.9%(a)
Managed care 50.8% 49.7% 1.1%(a)
Indemnity, self-pay and other 13.4% 16.8% (3.4%)(a)
Same-hospital (b)
Net inpatient revenues $ 6,178 $ 6,155 0.4%
Net outpatient revenues $ 2,635 $ 2,806 (6.1%)
Number of hospitals (at end of (a)
period) 63 63 -
Average licensed beds 16,504 16,557 (0.3%)
Utilization of licensed beds 53.9% 54.8% (0.9%)(a)
Patient days 3,248,097 3,320,069 (2.2%)
Net inpatient revenue per patient
day $ 1,902 $ 1,854 2.6%
Admissions 634,026 644,844 (1.7%)
Net inpatient revenue per
admission $ 9,744 $ 9,545 2.1%
Average length of stay (days) 5.1 5.1 (0.0)(a)
Net outpatient revenue per visit $ 544 $ 532 2.3%
Outpatient visits 4,848,144 5,279,331 (8.2%)
(a) This change is the difference between the 2005 and 2004 amounts
shown.
(b) Excludes two hospitals that were opened during 2004 for the six-
month periods ended June 30, 2004 and 2005.
Excludes six hospitals in the Gulf Coast that were impacted by
Hurricane Katrina for all periods presented.
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Fiscal 2005 by Calendar Quarter
(Unaudited)
----------------------------------------
(Dollars in millions except 3 Months Ended
per share amounts)
----------------------------------------
3/31/05 (1) 6/30/05 (1) 9/30/05 (1)
----------------------------------------
Net operating revenues $ 2,501 $ 2,420 $ 2,394
Operating expenses:
Salaries, wages and
benefits (1,124) (1,114) (1,099)
Supplies (457) (447) (446)
Provision for doubtful
accounts (167) (153) (206)
Other operating expenses
(3) (527) (547) (554)
Depreciation (90) (86) (95)
Amortization (6) (6) (10)
Impairment and
restructuring charges
(4) (9) 4 (205)
Loss from hurricanes and
related costs (5) - - (40)
Costs of litigation and
investigations (6) (8) (11) (28)
Loss from early
extinguishment of debt (15) - -
----------------------------------------------------------------------
Operating income (loss) 98 60 (289)
----------------------------------------------------------------------
Interest expense (101) (102) (102)
Investment earnings 9 15 17
Minority interests (3) (3) -
Net gain on sales of
facilities and long-term
investments - - -
----------------------------------------------------------------------
Income (loss) from continuing
operations before
income taxes 3 (30) (374)
----------------------------------------------------------------------
Income tax (expense) benefit
(8) 17 18 (4)
----------------------------------------------------------------------
Income (loss) from continuing
operations 20 (12) (378)
----------------------------------------------------------------------
Discontinued operations:
Income (loss) from
operations of asset group (39) (20) 7
Impairment of long-lived
assets and goodwill,
and restructuring charges
(7) (7) (1) (27)
Net gain (loss) on sales of
asset group 22 - (2)
Income tax (expense) benefit
(8) - - (1)
----------------------------------------------------------------------
Loss from discontinued
operations (24) (21) (23)
before
----------------------------------------------------------------------
Cumulative effect of change in
accounting principle, net - - -
----------------------------------------------------------------------
-------------------------------------------------------------------
Net loss $ (4) $ (33) $ (401)
----------------------------------------------------------------------
Diluted earnings (loss) per
common share
and common equivalent
share:
Continuing Operations $ 0.04 $ (0.03) $ (0.80)
Discontinued
Operations (0.05) (0.04) (0.05)
Cumulative Effect of
Change in Accounting 0.00 0.00 0.00
Principle, net
------------------------------------
$ (0.01) $ (0.07) (0.85)
======================================
----------------------------------------------------------------------
Weighted average shares and
dilutive securities
(if applicable) outstanding
(in thousands): 468,947 468,758 469,179
----------------------------------------------------------------------
--------------------
3
(Dollars in millions except per share Months Year Ended
amounts) Ended
----------------------
12/31/05 12/31/05
---------- ----------
Net operating revenues 2,299 $ 9,614
Operating expenses:
Salaries, wages and benefits (1,051) (4,388)
Supplies (424) (1,774)
Provision for doubtful accounts (172) (698)
Other operating expenses (3) (555) (2,183)
Depreciation (81) (352)
Amortization (8) (30)
Impairment and restructuring charges (4) (56) (266)
Loss from hurricanes and related costs
(5) (15) (55)
Costs of litigation and investigations
(6) (165) (212)
Loss from early extinguishment of debt - (15)
----------------------------------------------------------------------
Operating income (loss) (228) (359)
----------------------------------------------------------------------
Interest expense (100) (405)
Investment earnings 18 59
Minority interests (1) (7)
Net gain on sales of facilities and long-term
investments 4 4
----------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes (307) (708)
----------------------------------------------------------------------
Income tax (expense) benefit (8) 56 87
----------------------------------------------------------------------
Income (loss) from continuing operations (251) (621)
----------------------------------------------------------------------
Discontinued operations:
Income (loss) from operations of asset group 5 (47)
Impairment of long-lived assets and
goodwill,
and restructuring charges (7) (21) (56)
Net gain (loss) on sales of asset group (1) 19
Income tax (expense) benefit (8) (2) (3)
----------------------------------------------------------------------
Loss from discontinued operations (19) (87)
----------------------------------------------------------------------
----------------------------------------------------------------------
Cumulative effect of change in accounting
principle, net (16) (16)
----------------------------------------------------------------------
----------------------------------------------------------------------
Net loss $ (286) $ (724)
----------------------------------------------------------------------
Diluted earnings (loss) per common share
and common equivalent share:
Continuing Operations $ (0.54) $ (1.32)
Discontinued Operations (0.04) (0.19)
Cumulative Effect of Change in
Accounting (0.03) (0.03)
Principle, net
-------------------
$ (0.61) $ (1.54)
====================
---------------------------------------------- --------------------
Weighted average shares and dilutive
securities
(if applicable) outstanding (in thousands): 469,607 468,898
---------------------------------------------- ---------- ----------
TENET HEALTHCARE CORPORATION
GENERAL HOSPITALS
SELECTED STATISTICS - CONTINUING OPERATIONS
Fiscal 2005 by Calendar Quarter
(Unaudited)
(Dollar amounts in millions except for net inpatient revenue per
patient day and per admission, and net outpatient revenue per visit)
---------------------------------------
Three Months Ended
--------------------------------------
3/31/05 (1) 6/30/05 (1) 9/30/05 (1)
---------------------------------------
Net inpatient revenues $ 1,701 $ 1,598 $ 1,603
Net outpatient revenues $ 709 $ 727 $ 708
Number of hospitals (at end
of period) 69 69 69
Licensed beds at end of
period 17,941 17,897 17,859
Average licensed beds 17,924 17,930 17,859
Utilization of licensed
beds 57.9% 53.0% 50.8%
Patient days 934,203 865,396 834,601
Equivalent patient days 1,291,165 1,222,322 1,179,032
Net inpatient revenue per
patient day $ 1,821 $ 1,847 $ 1,921
Admissions 178,458 168,526 163,707
Equivalent admissions 248,225 239,747 233,272
Net inpatient revenue per
admission $ 9,532 $ 9,482 $ 9,792
Average length of stay
(days) 5.2 5.1 5.1
Surgeries 123,101 125,907 120,871
Net outpatient revenue per
visit $ 515 $ 542 $ 568
Outpatient visits 1,376,156 1,341,793 1,246,170
Sources of net patient
revenue
Medicare 28.2% 27.2% 26.5%
Medicaid 8.1% 8.3% 8.8%
Managed care 50.6% 50.2% 51.1%
Indemnity, self-pay and
other 13.1% 14.3% 13.6%
Same-hospital
Net inpatient revenues $ 1,594 $ 1,488 $ 1,533
Net outpatient revenues $ 655 $ 677 $ 678
Number of hospitals (at end
of period) 61 61 63
Average licensed beds 16,435 16,434 16,582
Utilization of licensed
beds 58.4% 53.4% 52.0%
Patient days 863,280 798,546 793,309
Net inpatient revenue per
patient day $ 1,846 $ 1,863 $ 1,932
Admissions 166,056 156,663 156,682
Net inpatient revenue per
admission $ 9,599 $ 9,498 $ 9,784
Average length of stay
(days) 5.2 5.1 5.1
Net outpatient revenue per
visit $ 516 $ 550 $ 573
Outpatient visits 1,268,847 1,231,513 1,182,418
----------------------------
Three Months Year Ended
Ended
----------------------------
12/31/05 12/31/05
----------------------------
Net inpatient revenues $ 1,590 $ 6,492
Net outpatient revenues $ 641 $ 2,785
Number of hospitals (at end of period) 69 69
Licensed beds at end of period 17,863 17,863
Average licensed beds 17,842 17,889
Utilization of licensed beds 49.3% 52.7%
Patient days 809,577 3,443,777
Equivalent patient days 1,134,196 4,826,715
Net inpatient revenue per patient day $ 1,964 $ 1,885
Admissions 157,896 668,587
Equivalent admissions 223,084 944,328
Net inpatient revenue per admission $ 10,070 $ 9,710
Average length of stay (days) 5.1 5.2
Surgeries 114,226 484,105
Net outpatient revenue per visit $ 534 $ 539
Outpatient visits 1,200,682 5,164,801
Sources of net patient revenue
Medicare 28.2% 27.5%
Medicaid 8.0% 8.3%
Managed care 51.3% 50.8%
Indemnity, self-pay and other 12.5% 13.4%
Same-hospital
Net inpatient revenues $ 1,563 $ 6,178
Net outpatient revenues $ 625 $ 2,635
Number of hospitals (at end of period) 63 63
Average licensed beds 16,565 16,504
Utilization of licensed beds 52.0% 53.9%
Patient days 792,962 3,248,097
Net inpatient revenue per patient day $ 1,971 $ 1,902
Admissions 154,625 634,026
Net inpatient revenue per admission $ 10,108 $ 9,744
Average length of stay (days) 5.1 5.1
Net outpatient revenue per visit $ 536 $ 544
Outpatient visits 1,165,366 4,848,144
TENET HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Fiscal 2004 by Calendar Quarter
(Unaudited)
---------------------------------------
(Dollars in millions except 3 Months Ended
per share amounts)
---------------------------------------
3/31/04 (1) 6/30/04 (1) 9/30/04 (1)
---------------------------------------
Net operating revenues $ 2,576 $ 2,510 $ 2,420
Operating expenses:
Salaries, wages and
benefits (1,091) (1,089) (1,069)
Supplies (434) (425) (421)
Provision for doubtful
accounts (2) (277) (482) (251)
Other operating expenses
(3) (531) (587) (557)
Depreciation (90) (90) (92)
Amortization (5) (5) (6)
Impairment of long-lived
assets and goodwill,
and restructuring
charges (9) (24) (2)
Costs of litigation and
investigations (10) (9) (10)
Loss from early
extinguishment of debt - (5) -
----------------------------------------------------------------------
Operating income (loss) 129 (206) 12
----------------------------------------------------------------------
Interest expense (77) (74) (91)
Investment earnings 4 3 6
Minority interests (5) - (1)
Net gain on sales of facilities
and long-term investments - 6 -
----------------------------------------------------------------------
Income (loss) from continuing
operations
before income taxes 51 (271) (74)
----------------------------------------------------------------------
Income tax benefit (expense) (24) 103 18
----------------------------------------------------------------------
Income (loss) from continuing
operations 27 (168) (56)
----------------------------------------------------------------------
Discontinued operations:
Loss from operations of asset
group (78) (123) (37)
Impairment of long-lived
assets and goodwill,
and restructuring charges (137) (269) (9)
Litigation settlements - - -
Net gain (loss) on sales of
asset group (2) 31 4
Income tax benefit 71 106 21
----------------------------------------------------------------------
Loss from discontinued
operations (146) (255) (21)
----------------------------------------------------------------------
----------------------------------------------------------------------
Net loss $ (119) $ (423) $ (77)
----------------------------------------------------------------------
Diluted earnings (loss) per
common share and common
equivalent share:
Continuing Operations $ 0.05 $ (0.36) $ (0.12)
Discontinued
Operations (0.31) (0.55) (0.05)
-------------------------------------
$ (0.26) $ (0.91) $ (0.17)
=====================================
----------------------------------------------------------------------
Weighted average shares and
dilutive securities
(if applicable) outstanding
(in thousands): 465,590 465,922 466,646
----------------------------------------------------------------------
---------------------------------
(Dollars in millions except per 3 Months Ended Year Ended
share amounts)
---------------------------------
12/31/04 (1) 12/31/04 (1)
---------------------------------
Net operating revenues $ 2,402 $ 9,908
Operating expenses:
Salaries, wages and benefits (1,079) (4,328)
Supplies (443) (1,723)
Provision for doubtful
accounts (2) (193) (1,203)
Other operating expenses (3) (540) (2,215)
Depreciation (96) (368)
Amortization (4) (20)
Impairment of long-lived
assets and goodwill,
and restructuring charges (1,249) (1,284)
Costs of litigation and
investigations (45) (74)
Loss from early extinguishment
of debt (8) (13)
----------------------------------------------------------------
Operating income (loss) (1,255) (1,320)
----------------------------------------------------------------
Interest expense (91) (333)
Investment earnings 7 20
Minority interests 9 3
Net gain on sales of facilities and
long-term investments 1 7
----------------------------------------------------------------
Income (loss) from continuing
operations
before income taxes (1,329) (1,623)
----------------------------------------------------------------
Income tax benefit (expense) (383) (286)
----------------------------------------------------------------
Income (loss) from continuing
operations (1,712) (1,909)
----------------------------------------------------------------
Discontinued operations:
Loss from operations of asset
group (46) (284)
Impairment of long-lived assets
and goodwill,
and restructuring charges (24) (439)
Litigation settlements (395) (395)
Net gain (loss) on sales of asset
group 38 71
Income tax benefit (48) 150
----------------------------------------------------------------
Loss from discontinued operations (475) (897)
----------------------------------------------------------------
----------------------------------------------------------------
Net loss $ (2,187) $ (2,806)
----------------------------------------------------------------
Diluted earnings (loss) per common
share and common
equivalent share:
Continuing Operations $ (3.66) $ (4.10)
Discontinued Operations (1.02) (1.92)
----------------------------
$ (4.68) $ (6.02)
============================
----------------------------------------------------------------
Weighted average shares and
dilutive securities
(if applicable) outstanding (in
thousands): 467,040 466,226
----------------------------------------------------------------
TENET HEALTHCARE CORPORATION
GENERAL HOSPITALS
SELECTED STATISTICS - CONTINUING OPERATIONS
Fiscal 2004 by Calendar Quarter
(Unaudited)
(Dollar amounts in millions except for net inpatient revenue per
patient day and per admission, and net outpatient revenue per visit)
----------------------------------------------------
3 Months Ended
---------------------------------------------------
3/31/04 (1) 6/30/04 (1) 9/30/04 (1) 12/31/04(1)
----------- ----------- ----------- -----------
Net inpatient
revenues $ 1,706 $ 1,654 $ 1,579 $ 1,597
Net outpatient
revenues $ 779 $ 760 $ 746 $ 714
Number of
hospitals (at
end of period) 67 69 69 69
Licensed beds
at end of
period 17,770 17,976 17,933 17,902
Average
licensed beds 17,770 17,839 17,932 17,902
Utilization of
licensed beds 58.4% 54.0% 52.7% 53.3%
Patient days 943,597 875,841 868,975 877,259
Equivalent
patient days 1,297,396 1,227,690 1,219,423 1,226,990
Net inpatient
revenue per
patient day $ 1,808 $ 1,888 $ 1,817 $ 1,820
Admissions 179,459 169,844 169,211 169,343
Equivalent
admissions 248,361 240,104 239,723 238,949
Net inpatient
revenue per
admission $ 9,506 $ 9,738 $ 9,332 $ 9,431
Average length
of stay (days) 5.3 5.2 5.1 5.2
Surgeries 126,288 122,852 122,401 121,856
Net outpatient
revenue per
visit $ 513 $ 518 $ 561 $ 529
Outpatient
visits 1,517,078 1,468,350 1,328,946 1,349,983
Sources of net
patient revenue
Medicare 25.9% 25.9% 25.3% 27.3%
Medicaid 7.4% 7.0% 7.8% 7.4%
Managed care 49.6% 49.6% 49.3% 50.0%
Indemnity,
self-pay
and other 17.1% 17.5% 17.6% 15.3%
Same-hospital
Net inpatient
revenues $ 1,603 $ 1,552 $ 1,498 $ 1,502
Net outpatient
revenues $ 728 $ 707 $ 698 $ 673
Number of
hospitals (at
end of period) 61 61 63 63
Average
licensed beds 16,482 16,480 16,640 16,624
Utilization of
licensed beds 58.7% 54.2% 52.9% 53.3%
Patient days 880,807 813,549 810,595 815,118
Net inpatient
revenue per
patient day $ 1,820 $ 1,908 $ 1,848 $ 1,843
Admissions 168,374 159,020 158,908 158,542
Net inpatient
revenue per
admission $ 9,520 $ 9,760 $ 9,427 $ 9,474
Average length
of stay (days) 5.2 5.1 5.1 5.1
Net outpatient
revenue per
visit $ 513 $ 517 $ 565 $ 536
Outpatient
visits 1,418,544 1,368,462 1,235,802 1,256,523
------------------
Year Ended
------------------
12/31/04(1)
------------------
Net inpatient revenues $6,536
Net outpatient revenues $2,999
Number of hospitals (at
end of period) 69
Licensed beds at end of
period 17,902
Average licensed beds 17,861
Utilization of licensed
beds 54.5%
Patient days 3,565,672
Equivalent patient days 4,971,498
Net inpatient revenue per
patient day $1,833
Admissions 687,857
Equivalent admissions 967,138
Net inpatient revenue per
admission $9,502
Average length of stay
(days) 5.2
Surgeries 493,397
Net outpatient revenue per
visit $529
Outpatient visits 5,664,357
Sources of net patient
revenue
Medicare 26.1%
Medicaid 7.4%
Managed care 49.7%
Indemnity, self-pay and
other 16.8%
Same-hospital
Net inpatient revenues $6,155
Net outpatient revenues $2,806
Number of hospitals (at
end of period) 63
Average licensed beds 16,557
Utilization of licensed
beds 54.8%
Patient days 3,320,069
Net inpatient revenue per
patient day $1,854
Admissions 644,844
Net inpatient revenue per
admission $9,545
Average length of stay
(days) 5.1
Net outpatient revenue per
visit $532
Outpatient visits 5,279,331
Additional Supplemental Non-GAAP Disclosures In March 2004, we announced that, in accordance with state laws, we would be implementing managed care-style pricing for most of our uninsured patients under our Compact with Uninsured Patients ("Compact"). The discounts for uninsured patients began to be phased in during the second quarter of 2004 and were in effect at 40 of our hospitals by December 31, 2004 and at all 69 of our hospitals by December 31, 2005. Our Compact is designed to offer managed care-style discounts to most uninsured patients, which enables us to offer lower rates to those patients who historically have been charged standard gross charges. A significant portion of those accounts had often been written down as provision for doubtful accounts if the accounts were not collected. Under the Compact, the discount offered to uninsured patients is recognized as a contractual allowance, which reduces net operating revenues at the time the self-pay accounts are recorded and should reduce our provision for doubtful accounts. In light of the phase-in phase-in n. A gradual introduction: a phase-in of new personal policies. of the discounts for uninsured patients under the Compact, the Company is providing supplemental data in addition to required data in accordance with generally accepted accounting principles ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). It does so to show the effect that the discounts under the Compact have had on the company's historical results of operations, without estimating or suggesting the effect on future results of operations. This supplemental information has inherent limitations because discounts under the Compact during the periods presented are not indicative indicative: see mood. of future periods. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the limitations, the Company finds the information useful to the extent it better enables it and users of its financial statements to evaluate net operating revenue trends and measure certain operating expense categories, which are largely influenced by volumes and generally are analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. as a percent of net operating revenues. The tables below illustrate certain operating expense categories as a percent of net operating revenues excluding discounts under the Compact and the additional provisions for doubtful accounts, as described above, for the three-month periods ended December 31, 2005 and December 31, 2004. The tables also illustrate same-hospital net inpatient revenue per admission and same-hospital net outpatient revenue per visit excluding the discounts under the Compact, as described above, for the three-month periods ended December 31, 2005 and December 31, 2004. For all non-GAAP measures provided, the tables below present the comparable GAAP measures and a reconciliation of the different measures. The company believes the consistent use of this supplemental information provides it and users of its financial statements with reliable period-to-period comparisons. Investors are encouraged, however, to use GAAP measures when evaluating the Company's financial performance.
TENET HEALTHCARE CORPORATION
Additional Supplemental Non-GAAP Disclosures
Operating Measures Adjusted for the Impact of the Compact
(Unaudited)
-------------------------------------
Quarter Ended December 31, 2005
-------------------------------------
Actual GAAP Compact Non-GAAP
Amounts Adjustments Adjusted
Amounts
----------------------- ------------
(Dollars in millions except net inpatient revenue per admission and
net outpatient revenue per visit)
Net operating revenues $ 2,299 $ 215 $ 2,514
Operating expenses:
Salaries and benefits (1,051) - (1,051)
Supplies (424) - (424)
Provision for doubtful
accounts (172) (198) (370)
Other operating expenses (3) (555) - (555)
Same-hospital
Net inpatient revenue $ 1,563 $ 111 $ 1,674
Net outpatient revenue $ 625 $ 98 $ 723
Admissions 154,625 154,625
Outpatient Visits 1,165,366 1,165,366
Net inpatient revenue per
admission $ 10,108 $ 10,826
Net outpatient revenue per visit $ 536 $ 620
-------------------------------------
Quarter Ended December 31, 2004 (1)
-------------------------------------
Actual GAAP Compact Non-GAAP
Amounts Adjustments Adjusted
Amounts
-------------------------------------
(Dollars in millions except net inpatient revenue per admission and
net outpatient revenue per visit)
Net operating revenues $ 2,402 $ 141 $ 2,543
Operating expenses:
Salaries and benefits (1,079) - (1,079)
Supplies (443) - (443)
Provision for doubtful
accounts (193) (130) (323)
Other operating expenses (3) (540) - (540)
Same-hospital
Net inpatient revenue $ 1,502 $ 66 $ 1,568
Net outpatient revenue $ 673 $ 61 $ 734
Admissions 158,542 158,542
Outpatient Visits 1,256,523 1,256,523
Net inpatient revenue per
admission $ 9,474 $ 9,890
Net outpatient revenue per visit $ 536 $ 584
---------------------
Quarter Ended
December 31, 2005
---------------------
GAAP % of Non-GAAP %
Net of
Operating Adjusted
Revenues Net
Operating
Revenues
---------- ----------
(Dollars in millions except net inpatient revenue per
admission and net outpatient revenue per visit)
Net operating revenues 100.0% 100.0%
Operating expenses:
Salaries and benefits 45.7% 41.8%
Supplies 18.4% 16.9%
Provision for doubtful accounts 7.5% 14.7%
Other operating expenses (3) 24.1% 22.1%
Same-hospital
Net inpatient revenue
Net outpatient revenue
Admissions
Outpatient Visits
Net inpatient revenue per admission
Net outpatient revenue per visit
---------- ----------
Quarter Ended
December 31, 2004
(1)
---------------------
GAAP % of Non-GAAP %
Net of
Operating Adjusted
Revenues Net
Operating
Revenues
---------- ----------
(Dollars in millions except net inpatient revenue per
admission and net outpatient revenue per visit)
Net operating revenues 100.0% 100.0%
Operating expenses:
Salaries and benefits 44.9% 42.4%
Supplies 18.4% 17.4%
Provision for doubtful accounts 8.0% 12.7%
Other operating expenses (3) 22.5% 21.2%
Same-hospital
Net inpatient revenue
Net outpatient revenue
Admissions
Outpatient Visits
Net inpatient revenue per admission
Net outpatient revenue per visit
TENET HEALTHCARE CORPORATION Explanatory Notes 1. As disclosed in a Form 8-K filed on January January: see month. 19, 2006, the Company, as a result of an independent accounting investigation, determined that it was necessary to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its financial statements for the fiscal years ended May 31, 2000, 2001 and 2002, the seven-month transition period ended December 31, 2002, and the calendar years ended December 31, 2003 and 2004, and that these financial statements should no longer be relied upon. The approximate impact of the restatement adjustments anticipated at the time of filing was disclosed in the Form 8-K. As disclosed in a Form 8-K filed on February February: see month. 22, 2006, the Company concluded that a $120 million component of a $744 million deferred tax valuation allowance previously charged against additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements was incorrect Incorrect means to not be correct and may also refer to:
In the course of finalizing the adjustments resulting from the independent accounting investigation, additional adjustments were identified and it has been determined that certain prior period reserves released by the Company during the fiscal years ended December 31, 2003 and 2004 should have been released as of December 31, 2002 or earlier. As a result, it is necessary to further restate the Company's financial statements for the calendar year ended December 31, 2004 and periods back to and including the fiscal year ended May 31, 1999. Since the financial statements for the calendar year ended December 31, 2004 are being restated for these adjustments, the company recorded audit differences that were previously deemed immaterial for 2004, which will result in us restating all of our previously reported 2005 quarterly financial statements due to the effect of the 2004 audit differences on our 2005 quarterly periods. As a result of the foregoing, the Company's previously reported financial statements for the 2005 quarterly periods should also no longer be relied upon. The applicable restated financial results are reflected in this press release and will be included in the Company's 2005 Annual Report on Form 10-K and Form 10-Q/As for the 2005 quarterly periods, to be subsequently filed. 2. During the quarter ended June 30, 2004, we recorded additional provisions for doubtful accounts in the amount of $196 million in continuing operations to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. self-pay patient accounts receivable. This change in how we estimate the net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. of patient accounts receivable was primarily attributable to the continued increase in the number of uninsured and underinsured un·der·in·sure tr.v. un·der·in·sured, un·der·in·sur·ing, un·der·in·sures To insure under a policy that provides inadequate benefits: Be certain that you are not underinsured against catastrophic illness. patients. 3. Other operating expenses included malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services. expense of $50 million and $37 million for the quarters ended December 31, 2005 and 2004, respectively. For the twelve months ended December 31, 2005 and 2004, malpractice expense was $228 million and $254 million, respectively. The decline in 2005 is substantially due to the second quarter of 2004 including additional expense as a result of (1) the increasing of reserves reflecting adverse loss development and (2) changes in claim payment patterns whereby a shorter maturity discount rate began to be used. In addition, 2005 malpractice expense decreased due to lower patient volumes, a decline in reported claims, and improved loss development. Also included is a net gain of $10 million and $25 million for the twelve months ended December 31, 2005 and 2004, respectively, primarily from the sale of certain home health agencies, hospices, clinics and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . 4. During the year ended December 31, 2005, we recorded impairment and restructuring charges totaling $ 266 million. These charges consisted primarily of $157 million to write-down long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets due to damage to our hospitals caused by Hurricanes Katrina and Wilma, reduced by $64 million of insurance proceeds for property damage received from our insurance carriers prior to December 31, 2005, and $167 million to write-down long-lived assets to their estimated fair values, primarily due to the adverse current and anticipated future financial trends at twelve of our hospitals. The remaining charge of $6 million reflects $11 million in employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , benefits and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs, $6 million of lease termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. and other costs and $4 million in non-cash stock option modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. costs related to terminated employees, offset by a $15 million reduction of reserves. 5. Loss from hurricanes and related costs were $15 million and $55 million for the quarter and year ended December 31, 2005, respectively. These costs are a direct result of Hurricanes Katrina and Wilma that impacted our hospitals in the Gulf Coast area and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and during August and October October: see month. 2005, respectively. Included in the $55 million is $33 million of relief pay and other employee-related expenses, $11 million in inventory and other working capital write-offs and $11 million in evacuation evacuation /evac·u·a·tion/ (e-vak?u-a´shun) 1. an emptying. 2. catharsis; emptying of the bowels. e·vac·u·a·tion n. and other costs. 6. Costs of litigation and investigations in continuing operations were $165 million and $212 million for the quarter and year ended December 31, 2005, respectively, and consisted primarily of $140 million for the net settlement of securities and derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. lawsuits, $7 million in final settlement of the Redding Redding, city (1990 pop. 66,462), seat of Shasta co., N central Calif., on the Sacramento River; inc. 1872. A principal tourist center for a mountain and lake region, it also has lumbering, food-processing, and diverse manufacturing. Medical Center patient litigation, $7 million to settle the Florida Attorney General The Florida Attorney General is an elected official in the U.S. state of Florida. The position has a four year term of office with a two term limit. Attorney General Term of Service Joseph Branch 1845 - 1846 Augustus E. Maxwell 1846 - 1848 James T. matters and costs to defend ourselves in various investigations and lawsuits, in particular the Alvarado Al·va·ra·do , Pedro de 1485-1541. Spanish general and colonial administrator who took part in the conquest of Mexico and became governor of Guatemala (1530). trial and the SEC investigation. 7. During the year ended December 31, 2005, we recorded impairment and restructuring charges of $56 million in discontinued operations consisting primarily of $40 million for the write-down of long-lived assets to their estimated fair values, less estimated costs to sell, $12 million in employee severance, retention and other costs, $7 million of lease termination costs and a $3 million reduction in reserves recorded in prior periods. 8. Income tax benefit of $56 million in continuing operations for the three months ended December 31, 2005 included the following: (1) positive adjustment to tax exposure reserves and a positive adjustment to the estimated provision for Federal and state income taxes based on filed tax returns totaling $36 million and (2) income tax expense of $88 million to increase the valuation allowance for our deferred tax assets. Income tax expense of $2 million in discontinued operations for the three months ended December 31, 2005 included income tax expense of $17 million to increase the valuation allowance for our deferred tax assets. |
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