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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: JULY 31, 1997
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(Date of earliest event reported)
TENET HEALTHCARE CORPORATION
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(Exact name of Registrant as specified in its charter)
NEVADA I-7293 95-2557091
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(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
3820 STATE STREET, SANTA BARBARA, CALIFORNIA 93105
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(Address of principal executive offices, including zip code)
(805) 563-7000
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On July 31, 1997, Tenet Healthcare Corporation reported in a press release,
dated July 31, 1997, its earnings for the fiscal quarter ended May 31, 1997. A
copy of the press release is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
99.1 Press Release, dated July 31, 1997
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TENET HEALTHCARE CORPORATION
By: /S/ TERENCE P. MCMULLEN
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Name: Terence P. McMullen
Title: Vice President
Date: August 6, 1997
1
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[LOGO] NEWS RELEASE
Investor contact: Paul J. Russell, (805) 563-7188
Media contact: Lance Ignon, (805) 563-6975
TENET FOURTH-QUARTER EPS FROM OPERATIONS UP 17 PERCENT
EPS FROM OPERATIONS UP 15 PERCENT FOR YEAR,
STRONG FOURTH-QUARTER VOLUME GROWTH
SANTA BARBARA, CALIF. -- JULY 31, 1997 -- Tenet Healthcare Corporation
(THC: NYSE, PSE) reported earnings from continuing operations of 41 cents per
share in its fourth fiscal quarter ended May 31, 1997, an increase of 17
percent compared with 35 cents in the fourth quarter of the prior year.
Earnings per share from continuing operations for the fiscal year were
$1.46, an increase of 15 percent from $1.27 in the prior year. The earnings
per share numbers for the quarter and year exclude the effects of all unusual
or non-recurring items, which resulted in a net loss for the fourth quarter
and year. Results for the year and all prior periods are restated to reflect
the pooling of interests merger with OrNda HealthCorp on January 30, 1997.
FOURTH QUARTER GROWTH
Net operating revenues for the fourth quarter were $2,351,400,000, an
increase of 15.9 percent compared with $2,028,200,000 in the prior year.
EBITDA of $419,100,000 in the quarter rose 9.3 percent from $383,600,000 in
the prior year. EBITDA margins of 17.8 percent compare with 18.9 percent in
the prior year quarter.
Income from continuing operations, excluding all unusual or non-recurring
items, was $127,551,000, compared with $104,990,000 in the fiscal 1996 fourth
quarter, an increase of 21.5 percent.
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"Our fourth quarter results provide a strong finish to a very successful
and eventful year for Tenet," said Jeffrey C. Barbakow, chairman and chief
executive officer of Tenet. In recapping the year's events, Barbakow cited
the successful acquisition of OrNda HealthCorp and eight other community
hospitals, and the completion of a major bank and public financing package
that improved the company's capital structure and significantly enhanced its
financial flexibility.
"Throughout the year, we substantially strengthened our local healthcare
delivery networks in many of the communities we serve, launched significant new
partnerships with other healthcare providers like the Cleveland Clinic and
MedPartners, and further enhanced our hospitals' programs and services. Our
business model of community-based healthcare, supported by the vast resources of
a national company, is increasingly proving its value."
"We remain highly focused on improving the quality and efficiency of our
facilities and networks, which we believe is the surest way to add value for
our shareholders," Barbakow concluded.
FISCAL YEAR GROWTH
Net operating revenues for the fiscal year ended May 31, 1997 were
$8,690,800,000, an increase of 12.8 percent from $7,705,700,000 in the 1996
fiscal year. EBITDA was $1,597,100,000 in fiscal 1997, up 10.7 percent from
$1,442,600,000 in fiscal 1996. EBITDA margins for the full year were 18.4
percent compared with 18.7 percent in fiscal 1996.
Income from continuing operations, excluding the effect of all unusual
or non-recurring items, was $444,703,000 in 1997, compared with $370,379,000
in fiscal 1996, an increase of 20.1 percent.
GROWTH IN PATIENT VOLUMES
The strong revenue growth in the year reflects improved patient volumes
at Tenet's hospitals, with volume growth accelerating in the fourth quarter.
Total admissions at Tenet's acute care hospitals increased 14.5 percent in
the quarter, and 10.2 percent for the year. Admissions increased 2.9 percent
on a same-facility basis for the quarter, and 1.3 percent for the year.
Total outpatient visits increased 24.8 percent in the quarter, and 22.3
percent for the year.
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On a same-facility basis, outpatient visits increased 11.2 percent for the
quarter and 11.0 percent for the year.
UNUSUAL ITEMS
Both fourth-quarter and full-year results include a number of unusual or
non-recurring items.
Merger, facility consolidation, and other non-recurring charges of
$467,722,000 before taxes were recorded in the 1997 fourth quarter and are
due principally to the planned closure, sale or conversion to alternate uses
of certain of the company's facilities and services in order to eliminate
duplication of services and excess capacity following the OrNda acquisition.
Additional factors are impairment losses related primarily to OrNda
facilities, a restructuring of Tenet's physician practice operations, and
additional merger-related costs. Substantially all of these costs are
non-cash charges. Tenet had previously indicated that it intended to record
such charges in its fourth-quarter financial statements. For the full year,
charges of $739,947,000 also include merger related costs recorded in the
third fiscal quarter.
The loss on disposal of long-term investments of $18,268,000 before
taxes in the 1997 fourth-quarter and year relates to price appreciation above
the exchange price of the approximately 8.3 million shares of Vencor common
stock owned by Tenet which underlie the company's 6% Exchangeable
subordinated notes due 2005. The company emphasized that this is a non-cash
charge that is expected to be offset by gains in later periods, either when
the notes are exchanged or if the Vencor shares decline in value.
A loss from discontinued operations of $134,000,000 after taxes was
recorded in the 1997 quarter and year, and reflects the recent settlement of
unusual patient and other litigation and the provision for future estimated
legal costs to settle and/or defend against the remaining litigation related
to the company's former psychiatric facilities. The company has recently
settled approximately 700 outstanding lawsuits by former patients of the
discontinued psychiatric facilities. The litigation stems from practices of
a subsidiary formerly owned by Tenet's predecessor, National Medical
Enterprises (NME). NME discontinued its psychiatric operations in 1994.
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The extraordinary charge of $47,398,000 after taxes for the 1997 year
reflects the costs of early retirement of debt refinanced in connection with
the OrNda acquisition.
Operating results and the unusual or nonrecurring items, expressed on an
earnings per share basis, were:
THREE MONTHS TWELVE MONTHS
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1997 1996 1997 1996
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Operations $ .41 $ .35 $1.46 $1.27
Merger, facility consolidation
and other non-recurring charges (1.04) (.18) (1.66) (.18)
Net gains/(losses) on disposals of
facilities and long term investments (.04) .02 (.04) .61
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Continuing operations (.67) .19 (.24) 1.70
Discontinued Operations (.43) (.08) (.44) (.08)
Extraordinary Charge -- (.08) (.16) (.08)
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Total ($1.10) $ .03 ($.84) $1.54
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Including all unusual or non-recurring items related to continuing
operations, Tenet had a net loss from continuing operations for the 1997
fourth quarter of $205,500,000, or 67 cents per share, compared with income
from continuing operations of $55,800,000, or 19 cents per share, in the 1996
fourth quarter.
For the full year, including all unusual or non-recurring items related
to continuing operations, Tenet recorded a loss from continuing operations of
$72,600,000, or 24 cents per share, compared with income from continuing
operations of $498,200,000, or $1.70 per share, in fiscal 1996.
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Including the loss from discontinued operations and the extraordinary
charge, Tenet recorded a net loss of $339,500,000, or $1.10 per share, in the
fourth quarter of fiscal 1997, compared with net income of $7,600,000, or 3
cents per share, in the fourth quarter of fiscal 1996.
Including the loss from discontinued operations and the extraordinary
charge, for the full year Tenet had a net loss of $254,000,000, or 84 cents
per share, compared with net income of $450,200,000, or $1.54 per share, in
fiscal 1996.
Tenet Healthcare, which is based in Santa Barbara, Calif. through
its subsidiaries owns and operates 131 acute care hospitals and numerous
related healthcare services from coast to coast. The company employs 105,000
people serving communities in 22 states. Tenet's name reflects its core
business philosophy: the importance of shared values between partners --
including employees, physicians, insurers and communities -- in providing a
full spectrum of quality healthcare. Tenet can be found on the World Wide
Web at www.tenethealth.com.
# # #
Listed: NYSE, PSE (THC)
[table to follow]
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TENET HEALTHCARE CORPORATION
Summary for
Quarter and Year Ended May 31, 1997
(Unaudited)
(in millions, except per share amounts)
Three Months Twelve Months
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1997 1996 1997 1996
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NET OPERATING REVENUES 2,351.4 2,028.2 8,690.8 7,705.7
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES,
DISCONTINUED OPERATIONS AND
EXTRAORDINARY CHARGE (278.5) 125.0 (20.6) 881.1
Taxes on income 73.0 (69.2) (52.0) (382.9)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE DISCONTINUED
OPERATIONS AND EXTRAORDINARY
CHARGE (205.5) 55.8 (72.6) 498.2
NET INCOME (339.5) 7.6 (254.0) 450.2
EARNINGS (LOSS) PER SHARE:
Operations 0.41 0.35 1.46 1.27
Merger, facility consolidation and
other non-recurring charges (1.04) (0.18) (1.66) (0.18)
Net gains/(losses) on disposals of
facilities and long-term investments (0.04) 0.02 (0.04) 0.61
CONTINUING OPERATIONS (0.67) 0.19 (0.24) 1.70
Discontinued operations (0.43) (0.08) (0.44) (0.08)
Extraordinary charge -- (0.08) (0.16) (0.08)
TOTAL (1.10) 0.03 (0.84) 1.54
AVERAGE SHARES AND SHARE
EQUIVALENTS OUTSTANDING (000'S) 307,829 300,815 304,153 295,062
(*) Included in income before income
taxes are:
1) Merger, facility consolidation
and other non-recurring charges (467.7) (85.9) (739.9) (85.9)
2) Gains/(losses) on disposals of
facilities and long-term
investments (18.3) 34.3 (18.3) 346.2
