Tenet Reports Strong Third Quarter 2024 Results; Raises 2024 Financial Outlook

Three Months Ended
September 30,

Nine Months Ended
September 30,

($ in millions, except per share results)

2024

2023

2024

2023

Net operating revenues

$5,122

$5,066

$15,593

$15,169

Net income available to Tenet common shareholders

$472

$101

$2,882

$367

Net income available to Tenet common shareholders per diluted share

$4.89

$0.94

$29.27

$3.41

Adjusted EBITDA ¹

$978

$854

$2,947

$2,529

Adjusted diluted earnings per share ¹

$2.93

$1.44

$8.47

$4.30

Three Months Ended
September 30,

Nine Months Ended
September 30,

Ambulatory segment results ($ in millions)

2024

2023

2024

2023

Revenues

Net operating revenues

$1,139

$941

$3,275

$2,788

Same-facility system-wide net patient service revenues ²

$1,895

$1,744

$5,516

$5,133

Volume Changes versus the Prior-Year Period

Same-facility system-wide surgical cases ²

1.0 %

4.1 %

0.4 %

6.2 %

Same-facility system-wide surgical cases on same-business day basis ²

(0.6) %

5.8 %

(0.1) %

6.8 %

Adjusted EBITDA, Margins and NCI

Adjusted EBITDA

$439

$370

$1,280

$1,080

Adjusted EBITDA margin

38.5%

39.3%

39.1%

38.7%

Adjusted EBITDA less NCI

$265

$233

$779

$678

Three Months Ended
September 30,

Nine Months Ended
September 30,

Hospital segment results ($ in millions)

2024

2023

2024

2023

Revenues

Net operating revenues

$3,983

$4,125

$12,318

$12,381

Same-hospital net patient service revenues ³

$3,383

$3,190

$10,298

$9,507

Same-Hospital Volume Changes versus the Prior-Year Period

Admissions

5.2%

0.6%

4.9%

2.6%

Adjusted admissions ⁴

2.7%

0.4%

2.3%

3.3%

Outpatient visits (including outpatient ER visits)

0.5%

(2.0)%

0.1%

(1.0)%

Emergency Room visits (inpatient and outpatient)

(0.2)%

(0.9)%

1.8%

1.3%

Hospital surgeries

0.6%

(0.7)%

-%

0.5%

Adjusted EBITDA

Adjusted EBITDA

$539

$484

$1,667

$1,449

Adjusted EBITDA margin

13.5%

11.7%

13.5%

11.7%

CONSOLIDATED ($ in millions, except per share amounts)

FY 2024 Outlook

Fourth Quarter
2024 Outlook

Net operating revenues

$20,600 to $20,800

$5,007 to $5,207

Net income available to Tenet common stockholders

$3,093 to $3,193

$211 to $311

Adjusted EBITDA

$3,900 to $4,000

$953 to $1,053

Adjusted EBITDA margin

18.9% to 19.2%

19.0% to 20.2%

Diluted income per common share

$31.56 to $32.58

$2.20 to $3.24

Adjusted net income

$1,090 to $1,150

$258 to $318

Adjusted diluted earnings per share

$11.12 to $11.73

$2.69 to $3.31

Equity in earnings of unconsolidated affiliates

$260 to $270

$78 to $88

Depreciation and amortization

$820 to $840

$195 to $215

Interest expense

$820 to $830

$197 to $207

Income tax expense ⁵

$1,185 to $1,215

$84 to $114

Net income available to NCI

$835 to $855

$225 to $245

Weighted average diluted common shares

~98 million

~96 million

NCI cash distributions

$725 to $775

Net cash provided by operating activities ⁶

$1,775 to $2,125

Adjusted net cash provided by operating activities ⁶

$1,950 to $2,250

Capital expenditures

$800 to $900

Free cash flow ⁶

$975 to $1,225

Adjusted free cash flow ⁶

$1,150 to $1,350

Ambulatory Segment ($ in millions)

FY 2024 Outlook

Net operating revenues

$4,375 to $4,425

Adjusted EBITDA

$1,760 to $1,800

NCI

$690 to $710

Adjusted EBITDA less NCI

$1,070 to $1,090

Changes versus prior year ⁷ :

Surgical cases volumes

Up 0.0% to 1.0%

Net revenues per surgical case

Up 6.0% to 7.0%

Hospital Segment ($ in millions)

FY 2024 Outlook

Net operating revenues

$16,225 to $16,375

Adjusted EBITDA

$2,140 to $2,200

NCI

$145 to $145

Changes versus prior year ⁷ :

Inpatient admissions

Up 4.0% to 5.0%

Adjusted admissions

Up 1.5% to 2.5%

Tenet Healthcare Corporation

Financial Statements and Reconciliations

Third Quarter Earnings Release

Table of Contents

Description

Page

Consolidated Statements of Operations

12

Consolidated Balance Sheets

14

Consolidated Statements of Cash Flows

15

Segment Reporting

17

Table #1 - Reconciliations of Net Income to Adjusted Net Income

18

Table #2 - Reconciliations of Net Income to Adjusted EBITDA

19

Table #3 - Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow

20

Table #4 - Reconciliations of Outlook Net Income to Outlook Adjusted Net Income

21

Table #5 - Reconciliations of Outlook Net Income to Outlook Adjusted EBITDA

22

Table #6 - Reconciliations of Outlook Net Cash Provided by Operating Activities to Outlook Free Cash Flow and Outlook Adjusted Free Cash Flow

23

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions, except per share amounts)

Three Months Ended September 30,

2024

%

2023

%

Change

Net operating revenues

$

5,122

100.0

%

$

5,066

100.0

%

1.1

%

Grant income

4

0.1

%

3

0.1

%

33.3

%

Equity in earnings of unconsolidated affiliates

62

1.2

%

51

1.0

%

21.6

%

Operating expenses:

Salaries, wages and benefits

2,218

43.3

%

2,288

45.2

%

(3.1

)%

Supplies

881

17.2

%

877

17.3

%

0.5

%

Other operating expenses, net

1,111

21.6

%

1,101

21.7

%

0.9

%

Depreciation and amortization

209

4.1

%

224

4.5

%

Impairment and restructuring charges, and acquisition-related costs

19

0.4

%

47

0.9

%

Litigation and investigation costs

9

0.2

%

14

0.3

%

Net losses (gains) on sales, consolidation and deconsolidation of facilities

(348

)

(6.8

)%

1

-

%

Operating income

1,089

21.3

%

568

11.2

%

Interest expense

(202

)

(227

)

Other non-operating income, net

35

4

Income before income taxes

922

345

Income tax expense

(241

)

(79

)

Net income

681

266

Less: Net income available to noncontrolling interests

209

165

Net income available to Tenet Healthcare Corporation common shareholders

$

472

$

101

Earnings per share available to Tenet Healthcare Corporation common shareholders:

Basic

$

4.93

$

0.99

Diluted

$

4.89

$

0.94

Weighted average shares and dilutive securities outstanding (in thousands):

Basic

95,665

101,544

Diluted

96,652

104,425

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions, except per share amounts)

Nine Months Ended September 30,

2024

%

2023

%

Change

Net operating revenues

$

15,593

100.0

%

$

15,169

100.0

%

2.8

%

Grant income

9

0.1

%

14

0.1

%

(35.7

)%

Equity in earnings of unconsolidated affiliates

182

1.2

%

155

1.0

%

17.4

%

Operating expenses:

Salaries, wages and benefits

6,707

43.0

%

6,831

45.0

%

(1.8

)%

Supplies

2,717

17.4

%

2,659

17.5

%

2.2

%

Other operating expenses, net

3,413

22.0

%

3,319

21.9

%

2.8

%

Depreciation and amortization

625

4.0

%

654

4.3

%

Impairment and restructuring charges, and acquisition-related costs

75

0.5

%

84

0.6

%

Litigation and investigation costs

18

0.1

%

28

0.2

%

Net gains on sales, consolidation and deconsolidation of facilities

(2,906

)

(18.6

)%

(12

)

(0.1

)%

Operating income

5,135

32.9

%

1,775

11.7

%

Interest expense

(623

)

(674

)

Other non-operating income, net

89

8

Loss from early extinguishment of debt

(8

)

(11

)

Income before income taxes

4,593

1,098

Income tax expense

(1,101

)

(243

)

Net income

3,492

855

Less: Net income available to noncontrolling interests

610

488

Net income available to Tenet Healthcare Corporation common shareholders

$

2,882

$

367

Earnings per share available to Tenet Healthcare Corporation common shareholders:

Basic

$

29.56

$

3.60

Diluted

$

29.27

$

3.41

Weighted average shares and dilutive securities outstanding (in thousands):

Basic

97,505

101,869

Diluted

98,518

105,021

TENET HEALTHCARE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions)

September 30,

December 31,

2024

2023

ASSETS

Current assets:

Cash and cash equivalents

$

4,094

$

1,228

Accounts receivable

2,598

2,914

Inventories of supplies, at cost

356

411

Assets held for sale

20

775

Other current assets

1,691

1,839

Total current assets

8,759

7,167

Investments and other assets

3,064

3,157

Deferred income taxes

36

77

Property and equipment, at cost, less accumulated depreciation and amortization

5,552

6,236

Goodwill

10,588

10,307

Other intangible assets, at cost, less accumulated amortization

1,373

1,368

Total assets

$

29,372

$

28,312

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt

$

95

$

120

Accounts payable

1,265

1,408

Accrued compensation and benefits

879

930

Professional and general liability reserves

286

254

Accrued interest payable

248

200

Liabilities held for sale

12

69

Income tax payable

826

23

Other current liabilities

1,927

1,756

Total current liabilities

5,538

4,760

Long-term debt, net of current portion

12,776

14,882

Professional and general liability reserves

855

792

Defined benefit plan obligations

308

335

Deferred income taxes

260

326

Other long-term liabilities

1,560

1,709

Total liabilities

21,297

22,804

Commitments and contingencies

Redeemable noncontrolling interests in equity of consolidated subsidiaries

2,649

2,391

Equity:

Shareholders' equity:

Common stock

8

8

Additional paid-in capital

4,849

4,834

Accumulated other comprehensive loss

(175

)

(181

)

Retained earnings (accumulated deficit)

2,690

(192

)

Common stock in treasury, at cost

(3,538

)

(2,861

)

Total shareholders' equity

3,834

1,608

Noncontrolling interests

1,592

1,509

Total equity

5,426

3,117

Total liabilities and equity

$

29,372

$

28,312

TENET HEALTHCARE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)

Nine Months Ended

September 30,

2024

2023

Net income

$

3,492

$

855

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

625

654

Deferred income tax expense (benefit)

(29

)

75

Stock-based compensation expense

52

48

Impairment and restructuring charges, and acquisition-related costs

75

84

Litigation and investigation costs

18

28

Net gains on sales, consolidation and deconsolidation of facilities

(2,906

)

(12

)

Loss from early extinguishment of debt

8

11

Equity in earnings of unconsolidated affiliates, net of distributions received

(9

)

5

Amortization of debt discount and debt issuance costs

21

25

Net gains from the sale of investments and long-lived assets

(2

)

(25

)

Other items, net

(3

)

(1

)

Changes in cash from operating assets and liabilities:

Accounts receivable

183

31

Inventories and other current assets

10

(49

)

Income taxes

821

(46

)

Accounts payable, accrued expenses and other current liabilities

123

(38

)

Other long-term liabilities

18

10

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

(119

)

(105

)

Net cash provided by operating activities

2,378

1,550

Cash flows from investing activities:

Purchases of property and equipment

(601

)

(543

)

Purchases of businesses or joint venture interests, net of cash acquired

(524

)

(110

)

Proceeds from sales of facilities and other assets

4,965

38

Proceeds from sales of marketable securities and long-term investments

25

40

Purchases of marketable securities and long-term investments

(46

)

(54

)

Other items, net

(18

)

(7

)

Net cash provided by (used in) investing activities

3,801

(636

)

Cash flows from financing activities:

Repayments of borrowings

(2,212

)

(1,478

)

Proceeds from borrowings

16

1,368

Repurchases of common stock

(672

)

(90

)

Debt issuance costs

-

(16

)

Distributions paid to noncontrolling interests

(496

)

(425

)

Proceeds from the sale of noncontrolling interests

13

37

Purchases of noncontrolling interests

(127

)

(127

)

Advances from managed care payers

342

-

Repayments of advances from managed care payers

(160

)

-

Other items, net

(17

)

13

Net cash used in financing activities

(3,313

)

(718

)

Net increase in cash and cash equivalents

2,866

196

Cash and cash equivalents at beginning of period

1,228

858

Cash and cash equivalents at end of period

$

4,094

$

1,054

Supplemental disclosures:

Interest paid, net of capitalized interest

$

(555

)

$

(589

)

Income tax payments, net

$

(308

)

$

(212

)

TENET HEALTHCARE CORPORATION

SEGMENT REPORTING

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in millions)

2024

2023

2024

2023

Net operating revenues:

Ambulatory Care

$

1,139

$

941

$

3,275

$

2,788

Hospital Operations and Services

3,983

4,125

12,318

12,381

Total

$

5,122

$

5,066

$

15,593

$

15,169

Equity in earnings of unconsolidated affiliates:

Ambulatory Care

$

61

$

50

$

175

$

149

Hospital Operations and Services

1

1

7

6

Total

$

62

$

51

$

182

$

155

Adjusted EBITDA:

Ambulatory Care

$

439

$

370

$

1,280

$

1,080

Hospital Operations and Services

539

484

1,667

1,449

Total

$

978

$

854

$

2,947

$

2,529

Adjusted EBITDA margins:

Ambulatory Care

38.5

%

39.3

%

39.1

%

38.7

%

Hospital Operations and Services

13.5

%

11.7

%

13.5

%

11.7

%

Total

19.1

%

16.9

%

18.9

%

16.7

%

Capital expenditures:

Ambulatory Care

$

28

$

20

$

65

$

58

Hospital Operations and Services

188

156

536

485

Total

$

216

$

176

$

601

$

543

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #1 - Reconciliations of Net Income Available to Tenet Healthcare Corporation Common

Shareholders to Adjusted Net Income Available to Common Shareholders

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in millions, except per share amounts)

2024

2023

2024

2023

Net income available to Tenet Healthcare Corporation common shareholders

$

472

$

101

$

2,882

$

367

Less:

Impairment and restructuring charges, and acquisition-related costs

(19

)

(47

)

(75

)

(84

)

Litigation and investigation costs

(9

)

(14

)

(18

)

(28

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

348

(1

)

2,906

12

Loss from early extinguishment of debt

-

-

(8

)

(11

)

Tax and noncontrolling interests impact of above items

(130

)

10

(755

)

17

Adjusted net income available to common shareholders

$

282

$

153

$

832

$

461

Diluted earnings per share

$

4.89

$

0.94

$

29.27

$

3.41

Less:

Impairment and restructuring charges, and acquisition-related costs

(0.20

)

(0.45

)

(0.76

)

(0.80

)

Litigation and investigation costs

(0.09

)

(0.13

)

(0.19

)

(0.27

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

3.60

(0.01

)

29.50

0.12

Loss from early extinguishment of debt

-

-

(0.08

)

(0.10

)

Tax and noncontrolling interests impact of above items

(1.35

)

0.09

(7.67

)

0.16

Adjusted diluted earnings per share

$

2.93

$

1.44

$

8.47

$

4.30

Weighted average basic shares outstanding (in thousands)

95,665

101,544

97,505

101,869

Weighted average dilutive shares outstanding (in thousands)

96,652

104,425

98,518

105,021

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #2 - Reconciliations of Net Income Available to Tenet Healthcare Corporation Common

Shareholders to Adjusted EBITDA

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in millions)

2024

2023

2024

2023

Net income available to Tenet Healthcare Corporation common shareholders

$

472

$

101

$

2,882

$

367

Less:

Net income available to noncontrolling interests

(209

)

(165

)

(610

)

(488

)

Net income

681

266

3,492

855

Income tax expense

(241

)

(79

)

(1,101

)

(243

)

Loss from early extinguishment of debt

-

-

(8

)

(11

)

Other non-operating income, net

35

4

89

8

Interest expense

(202

)

(227

)

(623

)

(674

)

Operating income

1,089

568

5,135

1,775

Litigation and investigation costs

(9

)

(14

)

(18

)

(28

)

Net gains (losses) on sales, consolidation and deconsolidation of facilities

348

(1

)

2,906

12

Impairment and restructuring charges, and acquisition-related costs

(19

)

(47

)

(75

)

(84

)

Depreciation and amortization

(209

)

(224

)

(625

)

(654

)

Adjusted EBITDA

$

978

$

854

$

2,947

$

2,529

Net operating revenues

$

5,122

$

5,066

$

15,593

$

15,169

Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues

9.2

%

2.0

%

18.5

%

2.4

%

Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)

19.1

%

16.9

%

18.9

%

16.7

%

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #3 - Reconciliations of Net Cash Provided by Operating Activities to

Free Cash Flow and Adjusted Free Cash Flow

(Unaudited)

2024

(Dollars in millions)

Q3

YTD

Net cash provided by operating activities

$

1,045

$

2,378

Purchases of property and equipment

(216

)

(601

)

Free cash flow

$

829

$

1,777

Net cash provided by investing activities

$

667

$

3,801

Net cash used in financing activities

$

(498

)

$

(3,313

)

Net cash provided by operating activities

$

1,045

$

2,378

Less:

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

(55

)

(119

)

Adjusted net cash provided by operating activities

1,100

2,497

Purchases of property and equipment

(216

)

(601

)

Adjusted free cash flow

$

884

$

1,896

2023

(Dollars in millions)

Q3

YTD

Net cash provided by operating activities

$

503

$

1,550

Purchases of property and equipment

(176

)

(543

)

Free cash flow

$

327

$

1,007

Net cash used in investing activities

$

(169

)

$

(636

)

Net cash used in financing activities

$

(214

)

$

(718

)

Net cash provided by operating activities

$

503

$

1,550

Less:

Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements

(27

)

(105

)

Adjusted net cash provided by operating activities

530

1,655

Purchases of property and equipment

(176

)

(543

)

Adjusted free cash flow

$

354

$

1,112

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #4 - Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common

Shareholders to Outlook Adjusted Net Income Available to Common Shareholders

(Unaudited)

Fourth Quarter 2024

FY 2024

(Dollars in millions, except per share amounts)

Low

High

Low

High

Net income available to Tenet Healthcare Corporation common shareholders

$

211

$

311

$

3,093

$

3,193

Less:

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements ⁽¹⁾

(57

)

(7

)

(150

)

(100

)

Net gains on sales, consolidation and deconsolidation of facilities ⁽²⁾

-

-

2,906

2,906

Loss from early extinguishment of debt ⁽²⁾

-

-

(8

)

(8

)

Tax and noncontrolling interests impact of above items

10

-

(745

)

(755

)

Adjusted net income available to common shareholders

$

258

$

318

$

1,090

$

1,150

Diluted earnings per share

$

2.20

$

3.24

$

31.56

$

32.58

Less:

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements

(0.59

)

(0.07

)

(1.53

)

(1.02

)

Net gains on sales, consolidation and deconsolidation of facilities

-

-

29.65

29.65

Loss from early extinguishment of debt

-

-

(0.08

)

(0.08

)

Tax and noncontrolling interests impact of above items

0.10

-

(7.60

)

(7.70

)

Adjusted diluted earnings per share

$

2.69

$

3.31

$

11.12

$

11.73

Weighted average basic shares outstanding (in thousands)

95,000

95,000

97,000

97,000

Weighted average dilutive shares outstanding (in thousands)

96,000

96,000

98,000

98,000

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities or losses from the early extinguishment of debt because the Company does not believe that it can forecast these items with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to transactions that have already occurred in 2024.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #5 - Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation

Common Shareholders to Outlook Adjusted EBITDA

(Unaudited)

Fourth Quarter 2024

FY 2024

(Dollars in millions)

Low

High

Low

High

Net income available to Tenet Healthcare Corporation common shareholders

$

211

$

311

$

3,093

$

3,193

Less:

Net income available to noncontrolling interests

(225

)

(245

)

(835

)

(855

)

Income tax expense

(84

)

(114

)

(1,185

)

(1,215

)

Interest expense

(207

)

(197

)

(830

)

(820

)

Loss from early extinguishment of debt ⁽²⁾

-

-

(8

)

(8

)

Other non-operating income, net

26

36

115

125

Net gains on sales, consolidation and deconsolidation of facilities ⁽²⁾

-

-

2,906

2,906

Impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements ⁽¹⁾

(57

)

(7

)

(150

)

(100

)

Depreciation and amortization

(195

)

(215

)

(820

)

(840

)

Adjusted EBITDA

$

953

$

1,053

$

3,900

$

4,000

Net income available to Tenet Healthcare Corporation common shareholders

$

211

$

311

$

3,093

$

3,193

Net operating revenues

$

5,007

$

5,207

$

20,600

$

20,800

Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues

4.2

%

6.0

%

15.0

%

15.4

%

Adjusted EBITDA as a % of net operating revenues (Adjusted EBITDA margin)

19.0

%

20.2

%

18.9

%

19.2

%

(1)

The figures shown represent the Company's estimate for restructuring charges plus the actual year-to-date results for impairment and restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast impairment charges, acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company does not generally forecast net gains on sales, consolidation and deconsolidation of facilities or losses from the early extinguishment of debt because the Company does not believe that it can forecast these items with sufficient accuracy since it is indeterminable at the time the Company provides its financial Outlook. The figures shown relate to transactions that have already occurred in 2024.

TENET HEALTHCARE CORPORATION

Additional Supplemental Non-GAAP disclosures

Table #6 - Reconciliations of Outlook Net Cash Provided by Operating Activities

to Outlook Free Cash Flow and Outlook Adjusted Free Cash Flow

(Unaudited)

FY 2024

(Dollars in millions)

Low

High

Net cash provided by operating activities

$

1,775

$

2,125

Purchases of property and equipment

(800

)

(900

)

Free cash flow

$

975

$

1,225

Net cash provided by operating activities

$

1,775

$

2,125

Less:

Payments for restructuring charges, acquisition-related costs and litigation costs and settlements ⁽¹⁾

(175

)

(125

)

Adjusted net cash provided by operating activities

1,950

2,250

Purchases of property and equipment

(800

)

(900

)

Adjusted free cash flow ⁽²⁾

$

1,150

$

1,350

(1)

The figures shown represent the Company's estimate for restructuring payments plus the actual year-to-date payments for restructuring charges, acquisition-related costs, and litigation costs and settlements. The Company does not generally forecast payments for acquisition-related costs, and litigation costs and settlements because it does not believe that it can forecast these items with sufficient accuracy since some of these items are indeterminable at the time the Company provides its financial Outlook.

(2)

The Company's definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows From Financing Activities on the Company's Consolidated Statement of Cash Flows, including items such as (i) cash used to repay borrowings, and (ii) distributions paid to noncontrolling interests.