Tenet Healthcare first-quarter adjusted EBITDA increases, cash balance decreases

By Jennifer Lanning Drey

Portland, Ore., May 6 - Tenet Healthcare Corp. posted first-quarter adjusted EBITDA of $234 million, demonstrating a 20.6% increase over the first quarter of 2007, the company reported during its quarterly earnings conference call held Tuesday.

"While we still have more work to do, this is the first quarter in a long time in which I would say we are pleased with our EBITDA performance," Trevor Fetter, chief executive officer of Tenet, said during the call.

Tenet had total debt of $4.78 billion at the March 31 quarter end, representing a $3 million increase from the company's balance at Dec. 31. Net debt was $4.50 billion at March 31, up from $4.20 billion at Dec. 31.

The company ended the quarter with cash and cash equivalents of $278 million, down from $572 million at Dec. 31. Cash disbursements in the first quarter included a $98 million reduction in payables for year-end 2007 capital expenditures, $116 million in 401(k) matching contributions and incentive payments, $32 million in principal payments related to a 2006 civil settlement with the federal government and $125 million in interest payments.

Tenet expects upcoming debt service obligations as well as a payment owed to the Department of Justice to cause the company's cash position to further drop during the second quarter to a low point for the year, Biggs Porter, chief financial officer of Tenet, said during the call.

"Going forward, we expect cash to build as a result of stronger operating performance in the second half of the year, initiatives to produce $400 million to $600 million of cash from balance sheet improvement actions and the resolution of the [University of Southern California] matter," Porter said.

Net cash used in operating activities during the first quarter was $133 million, compared to net cash used in operating activities of $154 million in the first quarter of 2007.

Tent posted a net loss of $31 million for the first quarter, compared with net income of $75 million in the first quarter of 2007.

Tenet is a Dallas-based owner and operator of acute care hospitals and related health care services.

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