Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Merger or Acquisition (June 2013)
20 slides from Tenet Healthcare's merger presentation, Jun 24, 2013
Slide 1: Acquisition of Vanguard Health Systems
Exhibit 99.2 Acquisition of Vanguard Health Systems A New Company for a New Healthcare Environment June 24, 2013
Slide 2: Disclosures / Forward-Looking Statements
Disclosures / Forward-Looking Statements Certain statements in our presentation are “forward-looking statements” under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on current expectations. However, actual resul
Slide 3: Acquisition Highlights
Acquisition Highlights • Tenet acquiring Vanguard for $21 cash per share, or an aggregate of $4.3 billion(a) • Unanimously approved by both Boards of Directors • Accretive to Tenet’s earnings in year one • $100-200 million in annual synergies expected – revenue cycle management efficiency and improv
Slide 4: Well-Positioned for the New Healthcare Environment
Well-Positioned for the New Healthcare Environment • 79 hospitals and 157 outpatient centers Increased • Applies proven cost management, quality improvement, care integration and Scale network development strategies across a broader platform • Enhances portfolio management opportunities Enhanced • E
Slide 5: Complementary Operational Strengths and Shared Values
Complementary Operational Strengths and Shared Values Tenet Vanguard Successful track record of Successful track record generating organic growth of generating growth by Hard-wired culture Systematic approach to cost of ethics and acquisition and strategic management (Performance compliance partners
Slide 6: Established Positions in Key Markets
Established Positions in Key Markets Greater Breadth Provides Opportunities for Revenue Growth (a) Excludes 2 Connecticut hospitals currently under LOI 5
Slide 7: Adds Important New Markets in Texas
Adds Important New Markets in Texas • Complements established Tenet positions in El Paso, Dallas Houston, Nacogdoches and Dallas 3 Hospitals 8 OP Centers • Both new markets demonstrate underlying population El Paso growth 3 Hospitals 8 OP Centers Nacogdoches • Vanguard showing strong organic growth
Slide 8: Geographic Presence Creates Substantial Benefit from Affordable Care Act
Geographic Presence Creates Substantial Benefit from Affordable Care Act Projected Expansion of Insurance Coverage with Healthcare Reform (a) 30% South Texas 25% Palm Beach County 20% San Antonio Rock Hill Downtown Coachella Valley El Paso County NW Houston Houston Phoenix Dallas 15% Miami Hilton He
Slide 9: Established Positions in Key Markets
Established Positions in Key Markets Greater Geographic Diversification Balances Revenue Sources Tenet Standalone Tenet Post-Acquisition(a) Other Other % of Revenues Markets Markets (n=10) (n=11) from #1 or 2 41% 30% Markets Market Share Markets with #1 or with #1 or #2 #2 Share (CY 2012) Share (n=1
Slide 10: Revenue Breakdown
Revenue Breakdown Broader Service Offering and Well-Balanced Payor Mix Revenues By Service, CY 2013 Revenues By Payor (a), CY 2013 Health plans 4% Services 10% Other 11% 10% 8% and other Medicaid 8% 8% Outpatient 31% 32% Medicare 22% 24% Inpatient 59% 56% Managed 58% 59% care(b) Tenet Post- Tenet Po
Slide 11: Builds Conifer's Position in Fast-Growing Healthcare Business Services Industry
Builds Conifer’s Position in Fast-Growing Healthcare Business Services Industry 28% increase in Conifer revenues (incremental $250 million added by Vanguard annually) Health plans operations augment Conifer’s value-based care capabilities Conifer Conifer Post- % Increase Current(a) Acquisition Net C
Slide 12: Enhanced Health Plan Expertise
Enhanced Health Plan Expertise Creates Greater Scale and New Opportunities Michigan ~18,000 lives California Massachusetts ~52,200 lives ~9,000 lives (b) Illinois ~32,000 lives Georgia • Vanguard health plan skills ~13,000 lives and capabilities diversify Tenet’s service offerings Arizona • Assists
Slide 13: Both Management Teams Bring Strong Growth Track Records to Combination
Both Management Teams Bring Strong Growth Track Records to Combination Tenet Vanguard (a) ($M) ($M) $1,250 1,203 15.0% $600 573 13.0% 1,126 1,036 13.0% $500 $1,000 955 420 11.0% $400 11.0% 323 299 $750 714 $300 9.0% 264 255 245 636 245 598 9.0% 525 $200 174 $500 7.0% 7.0% 396 $100 $250 5.0% $0 5.0%
Slide 14: Synergies are Significant and Achievable
Synergies are Significant and Achievable Clearly Identified Through Cost Savings, Benefits of Scale and Operating Opportunities Estimated Synergy Area Timing • Revenue Cycle 12-24 months Projected Management Efficiency Synergies and Improvement • Overhead Reduction 6-18 months $100 - 200 million • S
Slide 15: Analysis Shows Clear Synergy Opportunities
Analysis Shows Clear Synergy Opportunities Opportunities exist Example within Vanguard’s acute Vanguard Tenet care portfolio to capture market comparable synergies through cost (Q3 FY2013 facilities Cost metric YTD) (FY2012) optimization A large Vanguard -13% market shows $7,950 $6,923 potential for
Slide 16: Tenet Retains Significant Financial Flexibility
Tenet Retains Significant Financial Flexibility • Modest multiple compared to historical industry transactions • NPV of expected synergies of approximately $1.4 billion • Committed financing in place from Bank of America Merrill Lynch • Tenet to refinance Vanguard debt at attractive rates • Pro form
Slide 17: Next Steps and Road to Completion
Next Steps and Road to Completion • Definitive agreement – no Tenet shareholder vote; voting commitments received from Vanguard controlling shareholders • Regulatory approvals expected • Hart-Scott-Rodino • State and local approvals as required • Tenet intends to complete existing share repurchase p
Slide 18: Transaction Enhances Shareholder Value
Transaction Enhances Shareholder Value Substantial Synergies Maintains Increases Financial Scale Flexibility Expanded Broader Partnership Shareholder Service Opportunities Offering Value Upside Strong and from Complementary Affordable Management Care Act Teams Enhances Geographic Breadth 17
Slide 19: Reconciliation of EBITDA
Reconciliation of EBITDA Adjusted EBITDA, a non-GAAP term, is defined by the Company as net income (loss) attributable to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, net of tax; (2) net loss (income) attributable to noncontrol
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