Tenet Healthcare Corporation (NYSE:THC) today reported adjusted EBITDA of $298 million for the quarter ended March 31, 2010, an increase of $20 million, or 7.2 percent, as compared to $278 million for the first quarter of 2009. Net income attributable to common shareholders for the first quarter of 2010 was $88 million, or $0.17 per diluted share, compared to $44 million, or $0.09 per diluted share, excluding a gain of $134 million, or $0.28 per diluted share, in the first quarter of 2009 related to the early extinguishment of debt. Including the gain, net income attributable to common shareholders in the first quarter of 2009 was $178 million, or $0.37 per diluted share.
“We achieved another quarter of solid progress in EBITDA growth”
"We achieved another quarter of solid progress in EBITDA growth," said Trevor Fetter, president and chief executive officer. "Strong unit revenue growth offset soft volumes to drive revenue growth of 3.4 percent in the first quarter. This growth, coupled with solid cost control, produced a 7.2 percent increase in adjusted EBITDA. In the context of the continuing weak economic environment this was a very strong performance. On the basis of this solid first quarter, we are pleased to confirm our outlook for 2010 adjusted EBITDA."
Discussion of Results
All percentage changes compare Q1'10 to Q1'09. Same hospital and total company statistics are identical.
First quarter 2010 EBITDA performance was driven by solid revenue growth and incremental cost efficiencies. Admissions and outpatient visits declined by 2.0 percent and 1.8 percent, respectively. A very light flu season and weather-related disruptions in some of our markets contributed to the softening in patient volumes. Commercial managed care admissions and outpatient visits declined by 7.2 percent and 6.4 percent, respectively, but the acuity of those volumes increased. The trends for both admissions and outpatient visits improved month-by-month in the quarter.
Net operating revenues increased by $77 million, or 3.4 percent, reflecting unit revenue improvement, higher acuity, and a slight increase in favorable prior year cost report adjustments. Unit revenue growth was particularly strong in our outpatient business which reported a 7.7 percent increase in net outpatient revenue per visit. Commercial managed care revenues increased by 2.8 percent, supported by higher acuity.
Total controllable operating expenses increased by 1.3 percent, or 3.5 percent per adjusted patient day. This increase included a 4.5 percent increase in salaries, wages and benefits per adjusted patient day, primarily the result of salary increases awarded to our broad employee population on October 1, 2009. Other operating expenses declined by $5 million, including a decline in malpractice expense.
Bad debt expense, increased by $33 million, or 21.2 percent, and was within our 2010 Outlook range. The increase in bad debt expense was primarily the result of an increase in uninsured admissions of 11.9 percent and a decline in collection rates from the first quarter of 2009. The Company's collection rate from self-pay declined to 29.9 percent in the first quarter of 2010 as compared to 31.4 percent in the first quarter of 2009, but only slightly from 30.1 percent in the fourth quarter of 2009. The significant decline in charity volumes in the first quarter of 2010 moderated the growth in the cost of providing uncompensated care, which increased by $6 million as compared to the first quarter of 2009.
Adjusted net cash used in operating activities from continuing operations was negative $17 million and adjusted free cash flow from continuing operations was negative $100 million, reflecting capital expenditures of $83 million. This is an improvement from the negative $133 million of adjusted free cash flow from continuing operations in the first quarter of 2009. The Company's usage of cash in the first quarter of each calendar year reflects annual cash payments for incentive compensation and our annual funding of the 401(k) match to employees. Cash and cash equivalents were $589 million at March 31, 2010. Net cash used in operating activities was $22 million in the first quarter of 2010 compared to net cash used in operating activities of $6 million in the first quarter of 2009. Numerous items contributed to the increase in cash usage in the first quarter of 2010, including a $52 million reduction in cash received from discontinued operations.
University of Liverpool invests £1M in state-of-the-art teaching facilities for healthcare students