Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q3 2024 Earnings Presentation
24 slides from Tenet Healthcare's earnings presentation, Oct 29, 2024
Slide 1: 3rd Quarter 2024 Earnings Release Presentation
3rd Quarter 2024 Earnings Release Presentation October 29, 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: Third Quarter 2024 Highlights
Third Quarter 2024 Highlights Consolidated Adjusted EBITDA of $978 million, 15% above third quarter 2023 and well above the upper end of our third quarter Outlook range Ambulatory Hospitals • 19% Adjusted EBITDA growth • 11% Adjusted EBITDA growth (24% Adjusted EBITDA growth ex-divested hospitals**)
Slide 4: 2024 Financial Outlook ($ in millions)
2024 Financial Outlook ($ in millions) Income Available (Loss Attributable) to Tenet Common Consolidated Adjusted EBITDA Shareholders from Continuing Operations $3,900 to $3,093 to $4,000 $3,500 $4,000 $3,193 $100 $3,000 $3,541 $2,500 $3,500 $252 $2,000 $3,289* ~20% $1,500 $3,000 Growth** $2,730 $1,
Slide 5: 2024 Financial Outlook
2024 Financial Outlook* Net operating revenues $20.6 to $20.8B Changes vs. prior year Ambulatory surgical case volumes Up 0 - 1% Adjusted EBITDA Ambulatory $1.76 to $1.80B Net revenue per surgical case Up 6 - 7% Hospitals $2.14 to $2.20B Consolidated $3.90 to $4.00B Inpatient admissions Up 4 - 5% Ad
Slide 6: FY 2024 Adjusted EBITDA Outlook Bridge ($ in millions)
FY 2024 Adjusted EBITDA* Outlook Bridge ($ in millions) ($ in millions) Ambulatory Hospital Total 2024 Initial Guidance $1,650 $1,735 $3,385 Central Coast Divestiture - ($24) ($24) Michigan HRA Adjustment - $209 $209 Incremental USPI Acquisition & Development Activity Above Initial Plan $30 - $30 Ap
Slide 7: USPI
USPI
Slide 8: USPI Track Record of Double-Digit Growth and Strong Margins
USPI Track Record of Double-Digit Growth and Strong Margins Net Revenue ($M) Adjusted EBITDA ($M) $4,400 $1,780 CAGR CAGR $3,865 14.5% $1,544 13.3% $3,248 $1,327 $1,197 $2,718 $895 $868 $2,085 $2,158 $2,072 $792 2018 2019 2020 2021 2022 2023 2024E 2018 2019 2020 2021 2022 2023 2024E Midpoint* Midpoi
Slide 9: USPI Long Term Organic Growth Consistency
USPI Long Term Organic Growth Consistency 6.0% Same-facility System-wide Organic Growth Rates Driven by Revenue CAGR from 2015-2024 USPI Leadership in Strategy & Execution Established Expertise in Starting New Service Lines 14.5% 162 9.7% Service Line Additions 9.2% YTD 2024 7.5% 6.0% Expansion of H
Slide 10: USPI Case Mix / Clinical Quality
USPI Case Mix / Clinical Quality 2023 Case Mix Commitment to Quality Drives Strong Patient Experience Ophthalmology 10% All Other Specialties 20% Gastrointestinal 38% Musculoskeletal 96.6 32% 2023 Overall Patient Experience Score 10
Slide 11: 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 – 2024 544 8-10x 5-7x <2.0x Initial Acquisition Exceeded Exceeded Multiple Targeted Acquisition Targeted De Novo Effective Multiple* Effective Multiple 267
Slide 12: Cash Flow and Capital
Cash Flow and Capital
Slide 13: 2024 Cash Flows Continue to Support Growth
2024 Cash Flows Continue to Support Growth $829M Q3 2024 Free Cash Flow ▪ Our cash flow and balance sheet position provide us capital allocation ($656M Free financial flexibility: Cash Flow- NCI) ✓ Ample liquidity and access to capital markets to pursue our growth strategy while returning capital to
Slide 14: Significant Deleveraging of the Balance Sheet
Significant Deleveraging of the Balance Sheet LEVERAGE RATIO (EBITDA) LEVERAGE RATIO (EBITDA-NCI) 6.95x 5.86x 4.85x 3.89x 2.80x 2.22x 2017 2023 9/30/2024 2017 2023 9/30/2024 Substantial reduction in leverage following significant performance improvement and hospital sales Note: The September 30, 202
Slide 15: Debt Maturity Profile - No Significant Maturities Until 2027
Debt Maturity Profile - No Significant Maturities Until 2027 Maturity Profile as of September 30, 2024 4,000 $3,450 3,500 $3,000 $3,100 3,000 2,500 2,000 1,500 2,000 2,500 $1,712 1,500 $1,400 362 1,000 1,500 1,400 1,450 1,350 500 600 0 2024 2025 2026 2027 2028 2029 2030 2031 $ in millions First Lien
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: 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 18: 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 to Common Shareholders (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (Dollars in millions, except p
Slide 19: 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 Nine Months Ended September 30, September 30, (Dollars in millions) 2024 2023 2024 2023 Net income available to T
Slide 20: 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 (Unaudited) 2024 (Dollars in millions) Q3 YTD Net cash provided by operating activities $ 1,045 $ 2,378 Purchases of property and equipment (216) (6
Slide 21: 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 to Common Shareholders (Unaudited) Fourth Quarter 2024 FY 2024 (1) The figures shown represent the Company's estim
Slide 22: 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) Fourth Quarter 2024 FY 2024 (1) The figures shown represent the Company's estimate for (Dollars in millions) Low Hig
Slide 23: Supplemental Non-GAAP disclosures
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 (1) The figures shown represent the Company's estimate for (Dollars in millions) Low High restructuring
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