TENET HEALTHCARE CORP [THC] Filings

10-Q 1 thc-20240630.htm 10-Q thc-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

ý Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2024

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission File Number: 1-7293

TENET HEALTHCARE CORPORATION

(Exact name of Registrant as specified in its charter)

Nevada

(State of Incorporation)

95-2557091

(IRS Employer Identification No.)

14201 Dallas Parkway

Dallas, TX 75254

(Address of principal executive offices, including zip code)

(469) 893-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common stock, $0.05 par value

THC

New York Stock Exchange

6.875% Senior Notes due 2031

THC31

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes ý No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (each as defined in Exchange Act Rule 12b-2).

Large accelerated filer ý

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

Emerging growth company ¨



If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨ No ý

As of July 24, 2024, there were 95,822 shares (in thousands) of the Registrant’s common stock outstanding.

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TENET HEALTHCARE CORPORATION

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Financial Statements	1

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	51



PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in Millions, Share Amounts in Thousands

(Unaudited)


	June 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,880	$	1,228
Accounts receivable	2,817		2,914
Inventories of supplies, at cost	382		411

Assets held for sale	21		775
Other current assets	1,855		1,839
Total current assets	7,955		7,167
Investments and other assets	3,156		3,157
Deferred income taxes	85		77
Property and equipment, at cost, less accumulated depreciation and amortization ($6,016 at June 30, 2024 and $6,478 at December 31, 2023)	5,857		6,236
Goodwill	10,799		10,307
Other intangible assets, at cost, less accumulated amortization ($1,331 at June 30, 2024 and $1,447 at December 31, 2023)	1,413		1,368
Total assets	$	29,265	$	28,312
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	102	$	120
Accounts payable	1,270		1,408
Accrued compensation and benefits	788		930
Professional and general liability reserves	283		254
Accrued interest payable	149		200
Liabilities held for sale	11		69

Income tax payable	715		23
Other current liabilities	2,175		1,756
Total current liabilities	5,493		4,760
Long-term debt, net of current portion	12,769		14,882
Professional and general liability reserves	844		792
Defined benefit plan obligations	334		335
Deferred income taxes	245		326
Other long-term liabilities	1,711		1,709
Total liabilities	21,396		22,804
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries	2,813		2,391
Equity:
Shareholders’ equity:
Common stock, $0.05 par value; authorized 262,500 shares; 157,930 shares issued at June 30, 2024 and 157,271 shares issued at December 31, 2023	8		8
Additional paid-in capital	4,840		4,834
Accumulated other comprehensive loss	(177)		(181)
Retained earnings (accumulated deficit)	2,218		(192)
Common stock in treasury, at cost, 62,111 shares at June 30, 2024 and 57,321 shares at December 31, 2023	(3,414)		(2,861)
Total shareholders’ equity	3,475		1,608
Noncontrolling interests	1,581		1,509
Total equity	5,056		3,117
Total liabilities and equity	$	29,265	$	28,312

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in Millions, Except Per-Share Amounts

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net operating revenues	$	5,103	$	5,082	$	10,471	$	10,103
Grant income	5		8		5		11
Equity in earnings of unconsolidated affiliates	61		54		120		104
Operating expenses:
Salaries, wages and benefits	2,168		2,285		4,489		4,543
Supplies	908		891		1,836		1,782
Other operating expenses, net	1,148		1,125		2,302		2,218
Depreciation and amortization	208		213		416		430
Impairment and restructuring charges, and acquisition-related costs	29		16		56		37
Litigation and investigation costs	5		10		9		14
Net gains on sales, consolidation and deconsolidation of facilities	(58)		—		(2,558)		(13)
Operating income	761		604		4,046		1,207
Interest expense	(203)		(226)		(421)		(447)
Other non-operating income, net	29		6		54		4
Loss from early extinguishment of debt	—		(11)		(8)		(11)
Income before income taxes	587		373		3,671		753
Income tax expense	(110)		(80)		(860)		(164)





Net income	477		293		2,811		589
Less: Net income available to noncontrolling interests	218		170		401		323
Net income available to Tenet Healthcare Corporation common shareholders	$	259	$	123	$	2,410	$	266






Earnings per share available to Tenet Healthcare Corporation common shareholders:

Basic earnings per share	$	2.66	$	1.21	$	24.49	$	2.61



Diluted earnings per share	$	2.64	$	1.15	$	24.22	$	2.47



Weighted average shares and dilutive securities outstanding (in thousands):
Basic	97,267		101,766		98,424		102,028
Diluted	98,444		104,778		99,557		105,354

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

Dollars in Millions

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	477	$	293	$	2,811	$	589
Other comprehensive income:
Amortization of net actuarial loss included in other non-operating income, net	2		2		4		4


Foreign currency translation adjustments and other	—		—		1		—
Other comprehensive income before income taxes	2		2		5		4
Income tax expense related to items of other comprehensive income	—		(1)		(1)		(1)
Total other comprehensive income, net of tax	2		1		4		3
Comprehensive net income	479		294		2,815		592
Less: Comprehensive income available to noncontrolling interests	218		170		401		323
Comprehensive income available to Tenet Healthcare Corporation common shareholders	$	261	$	124	$	2,414	$	269

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in Millions

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Net income	$	2,811	$	589
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	416		430
Deferred income tax expense (benefit)	(93)		37
Stock-based compensation expense	36		33
Impairment and restructuring charges, and acquisition-related costs	56		37
Litigation and investigation costs	9		14
Net gains on sales, consolidation and deconsolidation of facilities	(2,558)		(13)
Loss from early extinguishment of debt	8		11
Equity in earnings of unconsolidated affiliates, net of distributions received	(3)		7
Amortization of debt discount and debt issuance costs	14		18

Net gains from the sale of investments and long-lived assets	(1)		(15)
Other items, net	(3)		(3)
Changes in cash from operating assets and liabilities:
Accounts receivable	77		7
Inventories and other current assets	16		160
Income taxes	713		(31)
Accounts payable, accrued expenses and other current liabilities	(124)		(168)
Other long-term liabilities	23		12
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements	(64)		(78)

Net cash provided by operating activities	1,333		1,047
Cash flows from investing activities:
Purchases of property and equipment	(385)		(367)
Purchases of businesses or joint venture interests, net of cash acquired	(510)		(96)
Proceeds from sales of facilities and other assets	4,048		16
Proceeds from sales of marketable securities and long-term investments	17		26
Purchases of marketable securities and long-term investments	(26)		(37)

Other items, net	(10)		(9)
Net cash provided by (used in) investing activities	3,134		(467)
Cash flows from financing activities:


Repayments of borrowings	(2,179)		(1,437)
Proceeds from borrowings	8		1,362
Repurchases of common stock	(548)		(90)
Debt issuance costs	—		(15)
Distributions paid to noncontrolling interests	(323)		(270)
Proceeds from the sale of noncontrolling interests	10		30
Purchases of noncontrolling interests	(88)		(79)
Advances from managed care payers	342		—


Other items, net	(37)		(5)
Net cash used in financing activities	(2,815)		(504)
Net increase in cash and cash equivalents	1,652		76
Cash and cash equivalents at beginning of period	1,228		858
Cash and cash equivalents at end of period	$	2,880	$	934

Supplemental disclosures:
Interest paid, net of capitalized interest	$	(459)	$	(445)
Income tax payments, net	$	(240)	$	(158)

See accompanying Notes to Condensed Consolidated Financial Statements.

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TENET HEALTHCARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Description of Business and Basis of Presentation

Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is a diversified healthcare services company headquartered in Dallas, Texas. Prior to December 31, 2023, our business was organized into three separate reporting segments: Hospital Operations and other, Ambulatory Care and Conifer. During the three months ended December 31, 2023, we combined our Hospital Operations and other and Conifer segments into a single reporting segment named Hospital Operations and Services (“Hospital Operations”). The results of the revenue cycle management and value-based care services we provide to hospitals, health systems, physician practices, employers and other clients previously reported under our Conifer segment are now combined with our Hospital Operations segment. See below for additional discussion of this change.

Our expansive, nationwide care delivery network now consists of our Hospital Operations and Ambulatory Care segments. As of June 30, 2024, our Hospital Operations segment was comprised of 52 acute care and specialty hospitals, a network of employed physicians and 148 outpatient facilities, including imaging centers, urgent care centers (each, a “UCC”), ancillary emergency facilities and micro‑hospitals. Our Ambulatory Care segment is comprised of the operations of our subsidiary USPI Holding Company, Inc. (“USPI”), which held indirect ownership interests in 520 ambulatory surgery centers and 24 surgical hospitals at June 30, 2024. USPI held noncontrolling interests in 160 of these facilities, which are recorded using the equity method of accounting. In addition, we operate a Global Business Center (“GBC”) in Manila, Philippines.

This quarterly report supplements our Annual Report on Form 10‑K for the year ended December 31, 2023 (“Annual Report”). As permitted by the Securities and Exchange Commission for interim reporting, we have omitted certain notes and disclosures that substantially duplicate those in our Annual Report. For further information, refer to the audited Consolidated Financial Statements and notes included in our Annual Report. Unless otherwise indicated, all dollar amounts presented in our Condensed Consolidated Financial Statements and these accompanying notes are expressed in millions (except per‑share amounts), and all share amounts are expressed in thousands.

Changes to prior-year presentation—As noted above, we combined our Hospital Operations and other and Conifer segments into a single reporting segment named Hospital Operations and Services (Hospital Operations) during the three months ended December 31, 2023. This change was made to reflect updates to the organizational and management structure of our Conifer and Hospital Operations and other segments. All prior‑period data presented in this report has been adjusted to conform to our new reporting segment structure.

As of December 31, 2023, our business was organized into two reporting segments:

•our Hospital Operations segment, which includes (1) our acute care and specialty hospitals, physician practices, imaging centers, UCCs, ancillary emergency facilities and micro‑hospitals, and (2) the revenue cycle management and value‑based care services we provide to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture; and

•our Ambulatory Care segment, which is comprised of the ambulatory surgery center and surgical hospital operations of our subsidiary USPI.

In addition, due to its increased significance, income tax payable is now presented separately from other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

Although our Condensed Consolidated Financial Statements and these related notes are unaudited, we believe all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to be reasonable given the particular circumstances in which we operate. Actual results may vary from those estimates. The financial and statistical information we report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reporting periods and, therefore, may vary from the amounts presented herein. Although we make every effort to ensure that the information we report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot be responsible for the accuracy of the information they make available to the public.

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Operating results for the three and six‑month periods ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year. Reasons for this include, but are not limited to: the impact of the demand for, and availability of, qualified medical personnel on compensation costs; overall revenue and cost trends, particularly the timing and magnitude of price changes; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contract negotiations, settlements or terminations and payer consolidations; trends in patient accounts receivable collectability and associated implicit price concessions; the impact of cybersecurity incidents on our operations; fluctuations in interest rates; levels of malpractice insurance expense and settlement trends; impairment of long‑lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to cybersecurity incidents, natural disasters and weather‑related occurrences; the future course and impact of COVID‑19, or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity; litigation and investigation costs; acquisitions and dispositions of facilities and other assets; gains (losses) on sales, consolidation and deconsolidation of facilities; income tax rates and deferred tax asset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing and amounts of stock option and restricted stock unit grants to employees and directors; gains (losses) from early extinguishment of debt; and changes in occupancy levels and patient volumes.

Our hospitals and outpatient facilities are subject to various factors that affect our service mix, revenue mix and patient volumes and, thereby, impact our net patient service revenues and results of operations. These factors include, among others: changes in federal, state and local healthcare and business regulations; changes in general economic conditions nationally and regionally, including inflation and other factors; the number of uninsured and underinsured individuals in local communities treated at our facilities; disease hotspots and seasonal cycles of illness; climate and weather conditions; physician recruitment, satisfaction, retention and attrition; advances in technology and treatments that reduce length of stay or permit procedures to be performed in an outpatient rather than inpatient setting; local healthcare competitors; utilization pressure by managed care organizations, as well as managed care contract negotiations or terminations; performance data on quality measures and patient satisfaction, as well as standard charges for services; any unfavorable publicity about us, or our joint venture partners, that impacts our relationships with physicians and patients; and changing consumer behavior, including with respect to the timing of elective procedures. These considerations apply to year‑to‑year comparisons as well.

Cash and Cash Equivalents

We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents were $2.880 billion and $1.228 billion at June 30, 2024 and December 31, 2023, respectively. At June 30, 2024 and December 31, 2023, our book overdrafts were $165 million and $187 million, respectively, which were classified as accounts payable. Also at June 30, 2024 and December 31, 2023, $106 million and $100 million, respectively, of total cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets were intended for the operations of our insurance‑related subsidiaries.

In addition, at June 30, 2024 and December 31, 2023, we had $63 million and $154 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $47 million and $141 million, respectively, were included in accounts payable.

During the six months ended June 30, 2024 and 2023, we recorded right‑of‑use assets related to non‑cancellable finance leases of $30 million and $21 million, respectively, and related to non‑cancellable operating leases of $124 million and $74 million, respectively, in each case excluding right‑of‑use assets obtained through business acquisitions.

Goodwill

The following tables provide information on changes in the carrying amount of goodwill for each of our segments:


	Six Months Ended June 30,
	2024		2023
Hospital Operations:
Goodwill at beginning of period, net of accumulated impairment losses	$	3,119	$	3,411
Purchase price allocation adjustments	31		—

Goodwill related to assets held for sale and disposed	(281)		(30)
Goodwill at end of period, net of accumulated impairment losses	$	2,869	$	3,381

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	Six Months Ended June 30,
	2024		2023
Ambulatory Care:
Goodwill at beginning of period	$	7,188	$	6,712
Goodwill acquired during the year, net of purchase price allocation adjustments	815		260

Goodwill related to assets held for sale and disposed or deconsolidated facilities	(73)		(3)
Goodwill at end of period	$	7,930	$	6,969

Other Intangible Assets

The following table provides information regarding other intangible assets, which were included in the accompanying Condensed Consolidated Balance Sheets:


	Gross Carrying Amount		Accumulated Amortization		Net Book Value
At June 30, 2024:
Other intangible assets with finite useful lives:
Capitalized software costs	$	1,568	$	(1,125)	$	443
Contracts	312		(128)		184
Other	90		(78)		12
Other intangible assets with finite lives	1,970		(1,331)		639

Other intangible assets with indefinite useful lives:
Trade names	105		—		105
Contracts	665		—		665
Other	4		—		4
Other intangible assets with indefinite lives	774		—		774
Other intangible assets, net	$	2,744	$	(1,331)	$	1,413

At December 31, 2023:
Other intangible assets with finite useful lives:
Capitalized software costs	$	1,712	$	(1,205)	$	507
Contracts	294		(164)		130
Other	91		(78)		13
Other intangible assets with finite lives	2,097		(1,447)		650

Other intangible assets with indefinite useful lives:
Trade names	105		—		105
Contracts	609		—		609
Other	4		—		4
Other intangible assets with indefinite lives	718		—		718
Other intangible assets, net	$	2,815	$	(1,447)	$	1,368

Estimated future amortization of intangible assets with finite useful lives at June 30, 2024 was as follows:


			Six Months Ending		Years Ending								Later Years
					December 31,
	Total		2024		2025		2026		2027		2028
Amortization of intangible assets	$	639	$	93	$	112	$	100	$	89	$	68	$	177

We recognized amortization expense of $89 million and $84 million in the accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2024 and 2023, respectively.

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Other Current Assets and Other Current Liabilities

The principal components of other current assets in the accompanying Condensed Consolidated Balance Sheets were as follows:


	June 30, 2024		December 31, 2023
Prepaid expenses	$	379	$	391
Contract assets	193		208
California provider fee program receivables	344		329
Receivables from other government programs	247		282
Guarantees	280		274
Non-patient receivables	310		260
Other	102		95
Total other current assets	$	1,855	$	1,839

At June 30, 2024, other current liabilities in the accompanying Condensed Consolidated Balance Sheet included $342 million of advances received from managed care payers designed to assist healthcare providers experiencing cash flow disruptions as a result of the February 2024 cyberattack on Change Healthcare, a clearinghouse for medical claims. There were no advances from managed care payers at December 31, 2023.

Investments in Unconsolidated Affiliates

As of June 30, 2024, we controlled 384 of the facilities in our Ambulatory Care segment and, therefore, consolidated their results. We account for many of the facilities in which our Ambulatory Care segment holds ownership interests (160 of 544 at June 30, 2024), as well as additional companies in which our Hospital Operations segment holds ownership interests, under the equity method as investments in unconsolidated affiliates and report only our share of net income as equity in earnings of unconsolidated affiliates in our condensed consolidated statements of operations. Summarized financial information for these equity method investees is included in the following table. For investments acquired during the reported periods, amounts in the table include 100% of the investee’s results beginning on the date of our acquisition of the investment.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net operating revenues	$	893	$	830	$	1,728	$	1,613
Net income	$	193	$	203	$	409	$	388
Net income available to the investees	$	97	$	121	$	220	$	228

NOTE 2. ACCOUNTS RECEIVABLE

The principal components of accounts receivable are presented in the table below:


	June 30, 2024		December 31, 2023

Patient accounts receivable	$	2,654	$	2,719
Estimated future recoveries	139		148
Cost report settlements receivable, net of payables and valuation allowances	24		47
Accounts receivable, net	$	2,817	$	2,914

We participate in various provider fee programs, which help reduce the amount of uncompensated care for indigent patients and those covered by Medicaid. The following table summarizes the amount and classification of assets and liabilities in the accompanying Condensed Consolidated Balance Sheets related to California’s provider fee program:


	June 30, 2024		December 31, 2023
Assets:
Other current assets	$	344	$	329
Investments and other assets	$	293	$	334

Liabilities:
Other current liabilities	$	164	$	172
Other long-term liabilities	$	103	$	135

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Uninsured and Charity Patient Costs

The following table presents our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Estimated costs for:
Uninsured patients	$	132	$	116	$	271	$	239
Charity care patients	25		28		46		52
Total	$	157	$	144	$	317	$	291

NOTE 3. CONTRACT BALANCES

Hospital Operations Segment

Our Hospital Operations segment’s contract assets and liabilities primarily derive from: (1) patients receiving ongoing inpatient care from one of our facilities at the end of the reporting period; and (2) timing differences between our performance of revenue cycle management and other contractually-based services and the invoicing or receipt of payment for these services. Our Hospital Operations segment’s contract assets were included in other current assets, and its contract liabilities were included in other current liabilities or other long‑term liabilities, depending upon when we expect to recognize the underlying revenue, in the accompanying Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023. Approximately 89% of our Hospital Operations segment’s contract assets meet the conditions for unconditional right to payment and are reclassified to patient receivables within 90 days.

The opening and closing balances of our Hospital Operations segment’s receivables, contract assets, and current and long-term contract liabilities were as follows:


	Receivables		Contract Assets – Unbilled Revenue		Contract Liabilities – Current Deferred Revenue		Contract Liabilities – Long-Term Deferred Revenue
December 31, 2023	$	21	$	208	$	59	$	12
June 30, 2024	28		193		83		13
Increase (decrease)	$	7	$	(15)	$	24	$	1

December 31, 2022	$	37	$	200	$	110	$	13
June 30, 2023	18		186		76		12
Decrease	$	(19)	$	(14)	$	(34)	$	(1)

The differences between the balances of our contract assets at December 31, 2023 and 2022 and the balances at June 30, 2024 and 2023 were primarily related to patients who were receiving inpatient acute care hospital services as of each year‑end date, but who were discharged during the following related six-month period.

In the six months ended June 30, 2024 and 2023, we recognized revenue totaling $52 million and $70 million, respectively, from our revenue cycle management services that was included in the opening current deferred revenue liability. This revenue consists primarily of prepayments for those contract clients who were billed in advance, changes in estimates related to metric‑based services, and up‑front integration services that are recognized over the service period.

Contract Costs—At June 30, 2024 and December 31, 2023, unamortized client contract setup costs were $20 million and $22 million, respectively, and were presented as part of investments and other assets in the accompanying Condensed Consolidated Balance Sheets.

NOTE 4. DISPOSITION OF ASSETS AND LIABILITIES

In November 2023, we entered into a definitive agreement for the sale of three hospitals located in South Carolina and certain related operations (together, the “SC Hospitals”), all of which were held by our Hospital Operations segment. The assets and liabilities related to the SC Hospitals were included in assets held for sale and liabilities held for sale, respectively, in the accompanying Condensed Consolidated Balance Sheet at December 31, 2023. We completed the sale of the SC Hospitals in January 2024, resulting in the recognition of a pre-tax gain on sale of $1.677 billion in the six months ended June 30, 2024.

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In January 2024, we entered into a definitive agreement for the sale of four hospitals and certain related operations located in Orange County and Los Angeles County, California (the “OCLA CA Hospitals”), including facilities from both our Hospital Operations and Ambulatory Care segments. We completed the sale of the OCLA CA Hospitals in March 2024, resulting in the recognition of a pre-tax gain on sale of $526 million in the six months ended June 30, 2024.

In February 2024, we entered into a definitive agreement for the sale of two hospitals and certain related operations located in San Luis Obispo County, California (the “Central CA Hospitals”), all of which were held by our Hospital Operations segment. We completed the sale of the Central CA Hospitals in March 2024, resulting in the recognition of a pre-tax gain on sale of $275 million in the six months ended June 30, 2024.

We completed the sale of three additional ambulatory surgery centers held by our Ambulatory Care segment during the six months ended June 30, 2024, resulting in the recognition of a total pre-tax gain on the sales of $43 million.

Gains recognized from the disposition of the assets described above are included in net gains on sales, consolidation and deconsolidation of facilities in the accompanying Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2024.

Assets and liabilities classified as held for sale at June 30, 2024 were comprised of the following:




Other current assets	$	5


Other intangible assets	16

Other current liabilities	(11)



Net assets held for sale	$	10

The following table presents amounts included in income before income taxes, related to a significant component of our business that was recently disposed of:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023


SC Hospitals (includes a $1.677 billion gain on sale in the six months ended June 30, 2024)	$	3	$	32	$	1,689	$	60

NOTE 5. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION‑RELATED COSTS

Our impairment tests presume stable, improving or, in some cases, declining operating results in our facilities, which are based on programs and initiatives being implemented that are designed to achieve each facility’s most recent projections. If these projections are not met, or negative trends occur that impact our future outlook, future impairments of long‑lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material.

We record costs associated with restructuring efforts in our statement of operations as they are incurred. Our restructuring plans typically focus on the alignment of our operations in the most strategic and cost‑effective structure, such as the establishment of support operations at our GBC, among other things. Certain restructuring and acquisition‑related costs are based on estimates. Changes in estimates are recognized as they occur.

During the six months ended June 30, 2024, we recorded impairment and restructuring charges and acquisition‑related costs of $56 million, consisting of $32 million of restructuring charges, $22 million of acquisition‑related transaction costs and $2 million of impairment charges. Restructuring charges consisted of $14 million of legal costs related to the sale of certain businesses, $6 million of employee severance costs, $5 million related to the transition of various administrative functions to our GBC and $7 million of other restructuring costs.

During the six months ended June 30, 2023, we recorded impairment and restructuring charges and acquisition‑related costs of $37 million, consisting of $31 million of restructuring charges, $4 million of acquisition‑related transaction costs and $2 million of impairment charges. Restructuring charges consisted of $11 million of legal costs related to the sale of certain businesses, $7 million related to the transition of various administrative functions to our GBC, $6 million of employee severance costs, $2 million of contract and lease termination fees, and $5 million of other restructuring costs.

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NOTE 6. LONG-TERM DEBT

The table below presents our long‑term debt included in the accompanying Condensed Consolidated Balance Sheets:


	June 30, 2024		December 31, 2023
Senior unsecured notes:
6.125% due 2028	$	2,500	$	2,500
6.875% due 2031	362		362
Senior secured first lien notes:


4.875% due 2026	—		2,100
5.125% due 2027	1,500		1,500
4.625% due 2028	600		600
4.250% due 2029	1,400		1,400
4.375% due 2030	1,450		1,450
6.125% due 2030	2,000		2,000
6.750% due 2031	1,350		1,350
Senior secured second lien notes:
6.250% due 2027	1,500		1,500

Finance leases, mortgages and other notes	311		361
Unamortized issue costs and note discounts	(102)		(121)
Total long-term debt	12,871		15,002
Less: Current portion	102		120
Long-term debt, net of current portion	$	12,769	$	14,882

Senior Unsecured Notes and Senior Secured Notes

At June 30, 2024, we had senior unsecured notes and senior secured notes with aggregate principal amounts outstanding of $12.662 billion. These notes have fixed interest rates ranging from 4.250% to 6.875% and require semi‑annual interest payments in arrears. A payment of the principal and any accrued but unpaid interest is due upon the maturity date of the respective notes, which dates are staggered from February 2027 through November 2031.

In March 2024, we redeemed all $2.100 billion aggregate principal amount outstanding of our 4.875% senior secured first lien notes due 2026 in advance of their maturity date. We paid $2.100 billion using cash on hand to redeem the notes. In connection with the redemption, we recorded a loss from early extinguishment of debt of $8 million in the three months ended March 31, 2024, primarily related to the write-off of associated unamortized issuance costs.

Credit Agreement

We have a senior secured revolving credit facility (as amended, the “Credit Agreement”) that provides for revolving loans in an aggregate principal amount of up to $1.500 billion with a $200 million subfacility for standby letters of credit. Outstanding revolving loans accrue interest depending on the type of loan at either (a) a base rate plus an applicable margin ranging from 0.25% to 0.75% per annum or (b) Term Secured Overnight Financing Rate (“SOFR”), Daily Simple SOFR or the Euro Interbank Offered Rate (EURIBOR) (each, as defined in the Credit Agreement) plus an applicable margin ranging from 1.25% to 1.75% per annum and (in the case of Term SOFR and Daily Simple SOFR only) a credit spread adjustment of 0.10%, in each case based on available credit. An unused commitment fee payable on the undrawn portion of the revolving loans ranges from 0.25% to 0.375% per annum based on available credit. Our borrowing availability is based on a specified percentage of eligible inventory and accounts receivable, including self‑pay accounts. At June 30, 2024, we had no cash borrowings outstanding under the Credit Agreement, and we had less than $1 million of standby letters of credit outstanding. Based on our eligible receivables, $1.500 billion was available for borrowing under the Credit Agreement at June 30, 2024.

Letter of Credit Facility

We have a letter of credit facility (as amended to date, the “LC Facility”) that provides for the issuance, from time to time, of standby and documentary letters of credit in an aggregate principal amount of up to $200 million. We amended the LC Facility in September 2023 to, among other things, (1) extend the scheduled maturity date from September 12, 2024 to March 16, 2027, and (2) replace the London Interbank Offered Rate (LIBOR) with Term SOFR as the reference interest rate. Drawings under any letter of credit issued under the LC Facility that we have not reimbursed within three business days after notice thereof accrue interest at a base rate, as defined in the LC Facility, plus a margin of 0.50% per annum. An unused commitment fee is payable at an initial rate of 0.25% per annum with a step up to 0.375% per annum should our secured‑debt‑to‑EBITDA ratio equal or exceed 3.00 to 1.00 at the end of any fiscal quarter. A fee on the aggregate outstanding

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amount of issued but undrawn letters of credit accrues at a rate of 1.50% per annum. An issuance fee equal to 0.125% per annum of the aggregate face amount of each outstanding letter of credit is payable to the account of the issuer of the related letter of credit. The LC Facility is subject to an effective maximum secured debt covenant of 4.25 to 1.00. At June 30, 2024, we had $108 million of standby letters of credit outstanding under the LC Facility.

NOTE 7. GUARANTEES

At June 30, 2024, the maximum potential amount of future payments under our income guarantees to certain physicians who agree to relocate and revenue collection guarantees to hospital‑based physician groups providing certain services at our hospitals was $340 million. We had a total liability of $280 million recorded for these guarantees included in other current liabilities in the accompanying Condensed Consolidated Balance Sheet at June 30, 2024.

At June 30, 2024, we also had issued guarantees of the indebtedness and other obligations of our investees to third parties, the maximum potential amount of future payments under which was approximately $80 million. Of the total, $18 million relates to the obligations of consolidated subsidiaries, which obligations were recorded in other current liabilities in the accompanying Condensed Consolidated Balance Sheet at June 30, 2024.

NOTE 8. EMPLOYEE BENEFIT PLANS

Share-Based Compensation Plans

The accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2024 and 2023 include $36 million and $33 million, respectively, of pre-tax compensation costs related to our stock‑based compensation arrangements. At June 30, 2024, there were $92 million of total unrecognized compensation costs related to our share‑based compensation awards. These costs are expected to be recognized over a weighted average (“Wtd. Avg.”) period of 2.2 years.

Stock Options

The following table provides information about our stock option activity during the six months ended June 30, 2024:


	Number of Options	Wtd. Avg. Exercise Price Per Share		Aggregate Intrinsic Value		Wtd. Avg. Remaining Life
				(In Millions)





Outstanding at December 31, 2023	384,440	$	22.79

Exercised	(155,943)	$	22.64

Outstanding at June 30, 2024	228,497	$	22.88	$	25	3.7 years

During the six months ended June 30, 2024 and 2023, 155,943 and 76,507 stock options, respectively, were exercised with an aggregate intrinsic value of $13 million and $4 million, respectively. We did not grant any stock options during either of the six-month periods ended June 30, 2024 or 2023.

The following table provides additional information about our outstanding stock options, all of which were vested and exercisable, at June 30, 2024:


	Options Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Wtd. Avg. Remaining Contractual Life	Wtd. Avg. Exercise Price Per Share
$18.99 to $20.609	161,285	3.3 years	$	19.99
$20.61 to $35.430	67,212	4.5 years	$	29.82
	228,497	3.7 years	$	22.88

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Restricted Stock Units

The following table presents information about our restricted stock unit (“RSU”) activity during the six months ended June 30, 2024:


	Number of RSUs	Wtd. Avg. Grant Date Fair Value Per RSU
Unvested at December 31, 2023	1,421,063	$	66.46
Granted	572,055	$	94.64
Performance-based adjustment	205,075	$	66.48
Vested	(660,080)	$	65.29
Forfeited	(1,961)	$	62.64
Unvested at June 30, 2024	1,536,152	$	81.35

We grant both time‑based RSUs that vest over a prescribed period and performance-based RSUs that vest subject to the achievement of specified performance goals within a pre‑established time frame. The performance-based RSUs may contain provisions that increase or decrease the number of RSUs that ultimately vest, depending upon the level of achievement. For certain of our performance‑based awards, the number of RSUs that ultimately vest is also subject to adjustment based on the achievement of a market‑based condition. In aggregate, these adjustments range from 0% to a maximum of 250% of the number of RSUs initially granted for awards made in 2024, from 0% to 225% for awards made in 2023 and from 0% to 200% for awards granted prior to 2023.

Previously, grants of RSUs to our non‑employee directors as part of their annual compensation vested immediately and were settled on the third anniversary of the date of grant. Beginning in 2024, annual compensation grants to our non‑employee directors vest on the first anniversary of the date of grant.

The table below summarizes the time-based RSUs granted during the six months ended June 30, 2024:


No. of RSUs						Vesting Terms
263,714						RSUs will vest ratably over a three‑year period from the grant date
11,002						RSUs granted to our non-employee directors for the 2024-25 board service year, which will vest on the first anniversary of the grant date

The table below summarizes the performance-based RSUs granted during the six months ended June 30, 2024:


No. of RSUs		Performance Period	Potential Vesting Range
	Vesting Terms		Minimum		Maximum
291,734	RSUs will vest on the third anniversary of the grant date	2024 to 2026	—	%	250	%

5,605	RSUs will vest on the third anniversary of the grant date	2024 to 2026	—	%	150	%

The table below summarizes the time-based RSUs granted during the six months ended June 30, 2023:


No. of RSUs						Vesting Terms
301,562						RSUs will vest ratably over a three‑year period from the grant date
42,626						RSUs will vest on the fifth anniversary of the grant date
37,740						RSUs granted to our non-employee directors for the 2023-24 board service year, which vested immediately
33,586						RSUs that were scheduled to vest, and did vest, in December 2023

7,720						RSUs will vest on the third anniversary of the grant date

The table below summarizes the performance-based RSUs granted during the six months ended June 30, 2023:


No. of RSUs		Performance Period	Potential Vesting Range
	Vesting Terms		Minimum		Maximum
301,562	RSUs will vest on the third anniversary of the grant date	2023 to 2025	—	%	225	%

7,720	RSUs will vest on the third anniversary of the grant date	2023 to 2025	—	%	150	%

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During the six months ended June 30, 2024 and 2023, we issued 205,075 and 185,901 RSUs as a result of our level of achievement with respect to previously-awarded performance-based RSUs.

The fair value of an RSU is based on our share price on the grant date. The fair value of an RSU with a market‑based condition is estimated through the use of a Monte Carlo simulation. Significant inputs used in our valuation of these RSUs included the following:


	Six Months Ended June 30,
	2024	2023
Expected volatility	34.9% - 52.1%	53.6% - 65.6%

Risk-free interest rate	4.4% - 4.9%	4.2% - 4.8%

USPI Management Equity Plan

USPI maintains a separate restricted stock plan (the “USPI Management Equity Plan”) under which it grants RSUs representing a contractual right to receive one share of USPI’s non‑voting common stock in the future. The vesting of RSUs granted under the USPI Management Equity Plan varies based on the terms of the underlying award agreement. Once the RSUs have vested and the subsequent requisite holding period is met, during specified times, the participant can sell the underlying shares to USPI at their estimated fair market value. At our sole discretion, the purchase of any non‑voting common shares can be made in cash or in shares of Tenet’s common stock.

The following table summarizes RSU activity under the USPI Management Equity Plan during the six months ended June 30, 2024:


	Number of RSUs	Wtd. Avg. Grant Date Fair Value Per RSU
Unvested at December 31, 2023	607,984	$	34.13

Vested	(605,987)	$	34.13
Forfeited	(1,997)	$	34.13
Unvested at June 30, 2024	—	$	34.13

USPI did not make any grants under the USPI Management Equity Plan during the six months ended June 30, 2024 or 2023. At June 30, 2024, there were 453 thousand outstanding vested shares of non‑voting common stock eligible to be sold to USPI.

NOTE 9. EQUITY

The following tables present the changes in consolidated equity (dollars in millions, share amounts in thousands):


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Treasury Stock		Noncontrolling Interests		Total Equity
	Shares Outstanding	Issued Par Amount
Balances at December 31, 2023	99,950	$	8	$	4,834	$	(181)	$	(192)	$	(2,861)	$	1,509	$	3,117
Net income	—	—		—		—		2,151		—		82		2,233
Distributions paid to noncontrolling interests	—	—		—		—		—		—		(78)		(78)
Other comprehensive income	—	—		—		2		—		—		—		2

Sales of businesses and noncontrolling interests, net	—	—		(5)		—		—		—		(23)		(28)

Repurchases of common stock	(2,811)	—		—		—		—		(280)		—		(280)
Stock-based compensation expense and issuance of common stock	534	—		(23)		—		—		—		—		(23)
Balances at March 31, 2024	97,673	8		4,806		(179)		1,959		(3,141)		1,490		4,943
Net income	—	—		—		—		259		—		97		356
Distributions paid to noncontrolling interests	—	—		—		—		—		—		(70)		(70)
Other comprehensive income	—	—		—		2		—		—		—		2

Purchases of businesses and noncontrolling interests, net	—	—		12		—		—		—		64		76
Repurchases of common stock	(1,990)	—		—		—		—		(273)		—		(273)

Stock-based compensation expense and issuance of common stock	136	—		22		—		—		—		—		22
Balances at June 30, 2024	95,819	$	8	$	4,840	$	(177)	$	2,218	$	(3,414)	$	1,581	$	5,056

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	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury Stock		Noncontrolling Interests		Total Equity
	Shares Outstanding	Issued Par Amount
Balances at December 31, 2022	102,247	$	8	$	4,778	$	(181)	$	(803)	$	(2,660)	$	1,317	$	2,459
Net income	—	—		—		—		143		—		74		217
Distributions paid to noncontrolling interests	—	—		—		—		—		—		(61)		(61)
Other comprehensive income	—	—		—		2		—		—		—		2

Purchases of businesses and noncontrolling interests, net	—	—		2		—		—		—		17		19
Repurchases of common stock	(906)	—		—		—		—		(50)		—		(50)

Stock-based compensation expense and issuance of common stock	571	—		(6)		—		—		—		—		(6)
Balances at March 31, 2023	101,912

TENET HEALTHCARE CORP [THC] Filings
10-Q	[2024-07-30]
10-Q	[2024-04-30]
10-K	[2024-02-16]
10-Q	[2023-10-30]
10-Q	[2023-07-31]
10-Q	[2023-04-28]
10-K	[2023-02-21]
10-Q	[2022-10-28]
10-Q	[2022-07-29]
10-Q	[2022-04-29]
10-K	[2022-02-18]
10-Q	[2021-10-29]
10-Q	[2021-07-30]
10-Q	[2021-04-30]
10-K	[2021-02-19]
10-Q	[2020-10-30]
10-Q	[2020-08-03]
10-Q	[2020-05-04]
10-K	[2020-02-24]
10-Q	[2019-11-04]
10-Q	[2019-08-05]
10-Q	[2019-04-29]
10-K	[2019-02-25]
10-Q	[2018-11-05]
10-Q	[2018-08-06]
10-Q	[2018-04-30]
10-K	[2018-02-26]
10-Q	[2017-11-07]
10-Q	[2017-08-07]
10-Q	[2017-05-01]
10-K	[2017-02-27]
10-Q	[2016-10-31]
10-Q	[2016-08-01]
10-Q	[2016-05-02]
10-K	[2016-02-22]
10-Q	[2015-11-02]
10-Q	[2015-08-03]
10-Q	[2015-05-04]
10-K	[2015-02-23]
10-Q	[2014-11-03]
10-Q	[2014-08-04]
10-Q	[2014-05-05]
10-K	[2014-02-24]
10-Q	[2013-11-04]
10-Q	[2013-08-06]
10-Q	[2013-04-30]
10-K	[2013-02-26]
10-Q	[2012-11-07]
10-Q	[2012-08-07]
10-Q	[2012-05-08]
10-K	[2012-02-28]