Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Merger or Acquisition (November 2021)
15 slides from Tenet Healthcare's merger presentation, Nov 8, 2021
Slide 1: Ambulatory Surgery Expansion
Ambulatory Surgery Expansion Portfolio Acquisition and an Innovative Development Partnership November 8, 2021
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: A premier ASC portfolio at scale
A premier ASC portfolio at scale 92 centers and ambulatory support services Announcement Tenet and USPI to acquire SurgCenter Development (SCD) 5-year partnership and development agreement and establish an innovative development partnership ~$1.2B purchase price Essentially leverage neutral 3
Slide 4: Unique Scope
65 mature ambulatory surgery centers High quality, financially attractive and musculoskeletal focused centers Potential to acquire physician interest to consolidate and deliver synergies Unique Scope 27 ambulatory surgery centers in development stages 11 musculoskeletal-focused centers opened within
Slide 5: Leading Platform
Leading Platform The acquisition further scales USPI’s national platform and was enabled by strong performance of USPI and SCD centers Expected portfolio additions USPI surgical facilities 5
Slide 6: Acquiring SCD interest in 92 centers
Acquiring SCD interest in 92 centers Continued musculoskeletal focus High-quality physicians Strong operating performance ~80% 1,135+ ~38% MSK cases physicians margin Centers perform over 180K procedures Network of physicians from multiple Attractive financial profile that is per year, specializing
Slide 7: Complements USPI's national platform
Complements USPI’s national platform Network state – example Recent market scale – example New market entry – example d d Adding 15 centers to 47 existing in Florida Adding 17 centers to 16 existing in Maryland Entering Michigan at scale with 8 centers Pictured left to right: Advanced Surgery Center
Slide 8: USPI's Edge
Leading ambulatory management company USPI is the partner of choice for physicians with a commitment to quality and strong management capabilities that will be extended to SCD’s centers Track-record of delivering synergies USPI’s Edge USPI consistently delivers at or above target growth and cost syn
Slide 9: Deal Summary
~$1.2B Purchase price for SCD’s ownership interest buy-out Acquire 100% of SCD’s interest in mature and development centers (~39% interest in 86 centers and ~55% interest in 6 centers) Additional ~$250M to acquire physician interest to consolidate centers Deal Summary ~$175M Consolidated EBITDA by e
Slide 10: Favorable trajectory as centers ramp up and Tenet consolidates
Favorable trajectory as centers ramp up and Tenet consolidates Consolidated EBITDA - NCI EBITDA – NCI multiple EBITDA multiple $M x x ~$200-210 ~10.8x ~8.0x ~$125-135 ~7.2x ~5.2x End Year 1 Fully Ramped End Year 1 Fully Ramped End Year 1 Fully Ramped Note: Estimates for 92 mature and development cen
Slide 11: Strong financial returns for Tenet are expected
Strong financial returns for Tenet are expected Meaningful EPS Accretion (a) Enhanced EBITDA margin Strong Return on Invested Capital % Basis points % ~16% +55 bps ~9% 2021 Pro Forma 2021 Pro Forma Pro Forma End of Year 1 End of Year 1 End of Year 3 Note: 2021 Pro Forma figures assumes closing as of
Slide 12: Transaction is essentially leverage neutral
Transaction is essentially leverage neutral Leverage Neutral Anticipate leverage to increase ~0.25x immediately post transaction Leverage impact will decrease as centers ramp up to be essentially neutral Plan is to issue debt to finance this transaction Plan to issue $1.450 billion of First Lien Sec
Slide 13: Accelerating Tenet's strategy
Accelerating Tenet’s strategy Ambulatory portion of consolidated EBITDA Ambulatory footprint with SCD portfolio % # centers ~42% 50+ 493 27 65 ~33% 351 ~25% ~4% 2014 2016 2019 2021 Pro Q3 2021 Operational Development Development Post Forma Pro Forma Centers Centers Agreement Acquisition Note: 2021 P
Slide 14: Strategic Focus
Accelerates Tenet’s ambulatory surgery strategy Continues to reposition the portfolio toward a higher-growth segment Solidifies leadership in musculoskeletal services and its shift to ambulatory Engages centers earlier to deliver attractive synergies Strategic Focus Provides a USPI management option
Slide 15: Questions & Answers
Tenet Questions & Answers
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