Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q4 2023 Earnings Presentation
26 slides from Tenet Healthcare's earnings presentation, Feb 8, 2024
Slide 1: 4th Quarter 2023 Earnings Release Presentation
4th Quarter 2023 Earnings Release Presentation February 8, 2024
Slide 2: Cautionary Statements
Cautionary Statements This presentation includes “forward looking statements.” These statements relate to future events, including, but not limited to, statements regarding our liquidity, operating results, future earnings, financial position, operational and strategic initiatives, and developments
Slide 3: Fourth Quarter 2023 Highlights
Fourth Quarter 2023 Highlights Consolidated Adjusted EBITDA of $1.01 billion*, well above the upper end of our fourth quarter Outlook range Ambulatory Hospitals • 14% Adjusted EBITDA growth • 12% Adjusted EBITDA growth • 9.5% same-facility revenue growth • 2.6% same-hospital non-Covid admission grow
Slide 4: Financial Profile Continues to Improve
Financial Profile Continues to Improve ADJUSTED ADJUSTED ADJUSTED FREE CASH LEVERAGE NET REVENUE EBITDA EBITDA FLOW RATIO MARGIN $3.541B $1.623B $20.5B 5.9x 17.2% 45% 440 229% (2.0)x 7% bps $2.440B 12.8% 3.89x $19.1B $0.493B 2017 2023 2017 2023 2017 2023 2017 2023 2017 Q4'23 Reconciliations of these
Slide 5: Adjusted EBITDA With and Without Grant Income
Adjusted EBITDA With and Without Grant Income ($ in millions) $ In millions Q1’22 Q2’22 Q3’22 Q4’22 2022 YTD Q1’23 Q2’23 Q3’23 Q4’23 2023 YTD Adjusted EBITDA Excluding Grant Income Hospital Segment $602 $432 $468 $450 $1,952 $489 $466 $481 $546 $1,982 Ambulatory Segment $280 $317 $319 $407 $1,323 $3
Slide 6: 2024 Financial Outlook
2024 Financial Outlook ($ in millions) Income Available (Loss Attributable) to Tenet Common Consolidated Adjusted EBITDA Shareholders from Continuing Operations $3,285 to $2,172 to $3,541 $2,700 $3,485 $2,417 $3,500 $2,400 $200 $2,100 $1,800 $1,500 $3,000 $3,178 ~7% $1,200 $2,730 Growth* $900 $611 $
Slide 7: 2024 Financial Outlook
2024 Financial Outlook* Net operating revenues $19.9 to $20.3B Changes vs. prior year Ambulatory surgical case volumes Up 1-3% Adjusted EBITDA Ambulatory $1.615 to $1.685B Net revenue per surgical case Up 2-3% Hospitals $1.670 to $1.800B Consolidated $3.285 to $3.485B Inpatient admissions Up 1-3% Ad
Slide 8: FY 2024 Adjusted EBITDA Outlook Bridge from 2023
FY 2024 Adjusted EBITDA Outlook Bridge from 2023 ($ in millions) ($ in millions) Ambulatory Hospital Total 2023 EBITDA $1,544 $1,997 $3,541 Grant Income in 2023 ($1) ($15) ($16) Income from Cyber Incident Insurance Proceeds Received in 2023 - ($34) ($34) Government Related Reimbursement Reductions &
Slide 9: USPI
USPI
Slide 10: USPI Track Record of Double-Digit Growth and Strong Margins
USPI Track Record of Double-Digit Growth and Strong Margins Net Revenue ($M) Adjusted EBITDA ($M) $3,865 CAGR $1,544 CAGR 14.3% 13.1% $3,248 $1,327 $1,197 $2,718 $2,158 $895 $868 $2,085 $2,072 $792 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Adjusted 38.0% 41.5% 41.9% 44.0% 40.9% 39.
Slide 11: USPI Long Term Organic Growth Consistency
USPI Long Term Organic Growth Consistency 5.8% Same-facility System-wide Organic Growth Rates Driven by Revenue CAGR from 2015-2023 USPI Leadership in Strategy & Execution Established Expertise in Starting New Service Lines 14.5% 129 9.7% Service Line Additions 9.2% FY 2023 6.0% Expansion of High Pa
Slide 12: USPI Case Mix / Clinical Quality
USPI Case Mix / Clinical Quality 2023 Case Mix Commitment to Quality Drives Strong Patient Experience Opthalmology 10% All Other Specialties 20% Gastrointestinal 38% Musculoskeletal 96.6 32% 2023 Overall Patient Experience Score 12
Slide 13: USPI Acquisitions and De Novos Deliver Significant Returns on Invested Capital
USPI Acquisitions and De Novos Deliver Significant Returns on Invested Capital Total Number of Facilities Achievement of Attractive Returns 2017 – 2023 469 485 ~8.0x <5.0x <2.0x Initial Acquisition Exceeded Exceeded Multiple Targeted Acquisition Targeted De Novo Effective Multiple Effective Multiple
Slide 14: Cash Flow and Capital
Cash Flow and Capital
Slide 15: 2023 Cash Flows Continue to Support Growth
2023 Cash Flows Continue to Support Growth ▪ Our cash flow and balance sheet position provide us capital allocation financial flexibility: ✓ Ample liquidity and access to capital markets to pursue our growth $1.62B strategy while returning capital to shareholders FY2023 Free Cash Flow* ▪ M&A activit
Slide 16: Capital Deployment Priorities
Capital Deployment Priorities We prioritize the deployment of the free cash flow generated by our businesses to the following areas: M&A and de novo investments – baseline intention is Investments in our ASC platform $250 million per year Continued investment in technology, robotics, and Investments
Slide 17: Commitment to Deleveraging
Commitment to Deleveraging LEVERAGE RATIO (EBITDA) LEVERAGE RATIO (EBITDA-NCI) 6.25x 5.35x 4.85x 4.21x 3.89x 3.32x 2019 2023 2023 Proforma 2019 2023 2023 Proforma Substantial reduction in leverage following significant performance improvement and hospital sales 2023 Proforma assumes $2.74 billion af
Slide 18: Debt Maturity Profile - No Significant Maturities Until 2026
Debt Maturity Profile - No Significant Maturities Until 2026 Maturity Profile as of December 31, 2023 4,000 $3,450 3,500 $3,000 $3,100 3,000 2,500 2,000 $2,100 1,500 2,000 $1,712 2,500 1,500 $1,400 362 1,000 2,100 1,500 1,400 1,450 1,350 500 600 0 2024 2025 2026 2027 2028 2029 2030 2031 $ in million
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations NON-GAAP FINANCIAL INFORMATION This presentation contains financial measures that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of these non-GAAP measures to the most comparable GAAP measur
Slide 20: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #1 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders (Unaudited) Three Months Ended Year Ended December 31, December 31, (Dollars in
Slide 21: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA (Unaudited) Three Months Ended Year Ended December 31, December 31, (Dollars in millions) 2023 2022 2023 2022 Net income available to Tenet Heal
Slide 22: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #3 – Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations (Unaudited) 2023 2022 (Dollars in millions) Q4 YTD (Dollars in millions) Q4 YTD Net cash provided by operating activities
Slide 23: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #4 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders (Unaudited) First Quarter 2024 FY 2024 (Dollars in millions, exc
Slide 24: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #5 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA (Unaudited) First Quarter 2024 FY 2024 (Dollars in millions) Low High Low High (1) The figures shown represent the Company's est
Slide 25: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #6 – Reconciliations of Outlook Net Cash Provided by Operating Activities to Outlook Free Cash Flow – Continuing Operations and Outlook Adjusted Free Cash Flow – Continuing Operations (Unaudited) (Dollars in millions) FY 2024 (1) The figures shown represent th
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