Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q3 2019 Earnings Presentation
27 slides from Tenet Healthcare's earnings presentation, Nov 4, 2019
Slide 1: Investor Update: Third Quarter 2019 Financial Results
Investor Update Third Quarter 2019 Financial Results November 4, 2019
Slide 2: Forward-Looking Statements and Non-GAAP Financials
Forward-Looking Statements and Non-GAAP Financials Forward-Looking Statements This presentation includes “forward-looking statements.” These statements relate to future events, including, but not limited to, statements regarding our future earnings, financial position, operational and strategic init
Slide 3: Continued Strength of Results
Continued Strength of Results Third consecutive quarter of accelerating volume growth in the hospital portfolio USPI continues to deliver strong and consistent results – robust acquisition and de novo pipeline Raising 2019 Outlook for Adjusted EPS; reconfirming Outlook for Adjusted EBITDA Stepping
Slide 4: Q3'19 Financial Summary
Q3’19 Financial Summary Revenues were $4.568 billion with strong growth in hospital and ambulatory revenue Same-hospital patient revenue grew 5.8%; admissions increased 3.6% Ambulatory same-facility system-wide surgical revenue grew 6.9%; surgical cases grew 4.4% Adjusted EBITDA was $631 million
Slide 5: Same Hospital Growth Rates
Same Hospital Growth Rates Third consecutive quarter of accelerating hospital-based volume growth • Admissions increased 3.6% and adjusted admissions increased 2.8% • Revenue per adjusted admission increased 2.9% Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 Net Patient Revenue -3.
Slide 6: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth 6.9% growth in same-facility system-wide surgical revenue in Q3’19 – surgical cases grew 4.4% Q3 '17 Q4 '17 2017 Q1 '18 Q2 '18 Q3 '18 Q4 '18 2018 Q1 '19 Q2 '19 Q3 '19 (1) Surgical (ASCs & Surgical Hospitals) Revenue 1.1% 7.0% 4.9% 2.3% 6.6% 6.6% 3.7%
Slide 7: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials 17.5% growth in EBITDA less facility-level NCI in Q3’19 (excl. Aspen, divested in Q3’18) $ in millions Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 Net operating revenues $468 $545 $1,940 $498 $531 $502 $554 $2,085 $480 $524 $522 Less: Aspen $42
Slide 8: Conifer Health Solutions Segment
Conifer Health Solutions Segment Adjusted EBITDA was $90 million in Q3’19, up 11.1% - improved margin by 500 bps • Raising the range of Conifer’s Adjusted EBITDA Outlook in 2019 by $10 million $ in millions Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 Revenue from Tenet $149 $155
Slide 9: Outlook for 2019 – 4% to 7% growth in Adjusted EBITDA
Outlook for 2019 – 4% to 7% growth in Adjusted EBITDA Hospitals Same-hospital revenue growth of 4.0% to 5.5% Adjusted admissions growth of 1.5% to 2.5% Revenue per adjusted admissions growth of 2.5% to 3.0% Adjusted EBITDA growth of 1% to 5% Ambulatory Care Same-facility system-wide surgic
Slide 10: Outlook for 2019
Outlook for 2019 Outlook Key assumptions: $ in millions, except EPS for 2019 • $200 million cost reduction initiative; expect to Net Revenue $18,350 - $18,550 (1) Adjusted EBITDA $2,650 - $2,750 realize $50 million in 2019 and achieve $200 (1) Adjusted EBITDA Margin 14.4% - 14.8% million of annualiz
Slide 11: Outlook for 2019 – Segment Details
Outlook for 2019 – Segment Details Hospital Operations Ambulatory Conifer and Other Segment Segment Segment Net Operating Revenue ($M) (1) $15,450 - $15,575 Net Operating Revenue ($M) $2,100 - $2,150 Net Operating Revenue ($M) $1,375 - $1,400 Adjusted EBITDA ($M) $1,420 - $1,480 Adjusted EBITDA ($M)
Slide 12: Adjusted EBITDA Bridge from 2018 to 2019
Adjusted EBITDA Bridge from 2018 to 2019 ($ in millions) Hospitals Ambulatory Conifer Total 2018 Adjusted EBITDA - Actuals $1,411 $792 $357 $2,560 Hospital divestitures (1) $31 $31 Aspen divestiture ($16) ($16) Conifer Impact from Tenet and other client hospital divestitures ($40) ($40) Customer ter
Slide 13: Additional Information: Appendix and Reconciliation of Non-GAAP Financial Measures
Additional Information Appendix and Reconciliation of Non-GAAP Financial Measures
Slide 14: Revenue and EBITDA by Segment
Revenue and EBITDA by Segment $ in millions Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 Hospital Operations and Other Net operating revenues (1)(2) $3,856 $4,184 $16,150 $3,941 $3,733 $3,754 $3,843 $15,271 $3,862 $3,826 $3,850 EBITDA $269 $538 $1,462 $402 $345 $312 $352 $1,411 $3
Slide 15: Health Plan Financial Results
Health Plan Financial Results $ in millions Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 Net Operating Revenues $10 $10 $110 $6 $0 $8 $0 $14 $0 $1 $0 Equity in earnings of unconsolidated affiliates $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Salaries and Benefits -$4 -$3 -$16 -$2 -$1 -$1 -$1
Slide 16: Uncompensated Care Trends
Uncompensated Care Trends Revenue Recognition Accounting Rules and Uncompensated Care Effective January 1, 2018, Tenet adopted FASB ASU 2014-09 using a modified retrospective method of application. Under ASU 2014-09, the estimated uncollectible amounts due from uninsured and underinsured patients
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss attributable (income available)
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures (continued on the prior page) The Company believes that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to other GAAP and non-GAAP measures, as factors in determining the e
Slide 19: Table #1 – Reconciliation to Adjusted EBITDA for 2019
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2019 (Unaudited) (Dollars in millions) 2019 1st Qtr 2nd Qtr 3rd Qtr YTD Net income available (loss attributable) to Tenet Healthcare $ (19) $ 17 $ (232) $
Slide 20: Table #1 – Reconciliation to Adjusted EBITDA for 2018
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2018 (Unaudited) (Dollars in millions) 2018 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Net income available (loss attributable) to Tenet Healthcare $ 99 $ 26 $
Slide 21: Table #2 – Reconciliation to Adjusted Net Income for 2019
Table #2 – Reconciliations of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2019 (Unaudited) (Dollars in millions except per share amounts) 2019 1st Qtr 2nd Qtr 3rd Q
Slide 22: Table #2 – Reconciliation to Adjusted Net Income for 2018
Table #2 – Reconciliations of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available from Continuing Operations to Common Shareholders for 2018 (Unaudited) (Dollars in millions except per share amounts) 2018 1st Qtr 2nd Qtr 3rd Q
Slide 23: Table #3 – Reconciliation to Free Cash Flow and Adjusted Free Cash Flow
Table #3 – Reconciliations of Net Cash Provided By Operating Activities to Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations (Unaudited) (Dollars in millions) 2019 1st Qtr 2nd Qtr 3rd Qtr YTD Net cash provided by operating activities $ 10 $ 284 $ 419 $ 713 Purchases of property a
Slide 24: Table #4 – Reconciliation of Outlook Adjusted EBITDA
Table #4 – Reconciliation of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA (Unaudited) (Dollars in millions) Q4 2019 2019 Low High Low High Net income available (loss attributable) to Tenet Healthcare Corporation commo
Slide 25: Table #5 – Reconciliation of Outlook Adjusted Net Income
Table #5 – Reconciliations of Outlook Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available from Continuing Operations to Common Shareholders (Unaudited) (Dollars in millions except per share amounts) Q4 2019 2019 Low Hi
Slide 26: Table #6 – Reconciliation of Outlook Adjusted Free Cash Flow
Table #6 – Reconciliation of Outlook Net Cash Provided by Operating Activities to Outlook Adjusted Free Cash Flow from Continuing Operations (Dollars in millions) 2019 Low High Net cash provided by operating activities $ 1,045 $ 1,325 Less: Payments for restructuring charges, acquisition-related cos
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