Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q2 2018 Earnings Presentation
27 slides from Tenet Healthcare's earnings presentation, Aug 6, 2018
Slide 1: Investor Presentation Quarter ended June 30, 2018
Investor Presentation Quarter ended June 30, 2018
Slide 2: Forward-Looking Statements and Non-GAAP Financial Information
FORWARD-LOOKING STATEMENTS This presentation includes “forward-looking statements.” These statements relate to future events, including, but not limited to, statements with respect to our business outlook and forecasts with respect to our future earnings and financial position, as well as future dev
Slide 3: Progress on Key Priorities
Progress on Key Priorities Adjusted EBITDA grew 11% on an apples-to-apples basis 1 Performance Ambulatory delivering strong and consistent results: EBITDA less facility level NCI up 21% Conifer’s EBITDA was up 35% on an apples-to-apples basis High visibility on $195 million in cost savings i
Slide 4: Q2'18 Financial Highlights
Q2’18 Financial Highlights Adjusted EBITDA was $634 million, up $64 million from Q2’17, driven by growth in the Ambulatory and Conifer segments Hospital segment same-hospital patient revenue grew 3.2% − Adjusted admissions declined 0.2% and admissions declined 2.3%, with growth in many markets o
Slide 5: Same Hospital Growth Rates
Same Hospital Growth Rates Net patient revenue grew 3.2% on a same-hospital basis; acuity continues to grow Adjusted admissions declined 0.2% and grew approximately 1.1% excluding Chicago, Detroit and targeted service line closures Chicago and Detroit lowered Tenet’s same-hospital adjusted admis
Slide 6: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth Same-facility system-wide revenue grew 6.9% in Q2’18 In the surgical business, same-facility system-wide revenue grew 6.6%, with cases up 3.4% and revenue per case up 3.1%, reflecting growth in higher-acuity surgical procedures. In the non-surgica
Slide 7: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials EBITDA less facility-level NCI grew 20.8% in Q2’18 and 15.0% in the first half of 2018 Targeting 9% to 11% EBITDA less facility-level NCI growth in 2018 $ in millions Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 YTD Net operating revenues $442
Slide 8: Conifer Health Solutions Segment
Conifer Health Solutions Segment Raising Conifer’s Adjusted EBITDA Outlook by $20 million to $350-$360 million in 2018; growth of 24%-27% vs. 2017 Targeting Adjusted EBITDA margins of ~22% in 2018 (excluding $17 million of customer termination fees in 1H18) and exploring additional opportunities t
Slide 9: Outlook for 2018
Outlook for 2018 Key assumptions included in the 2018 Outlook: Prior Updated Same hospital revenue growth of 2.5% to 4.5% $ in millions, except EPS Outlook Outlook Same-facility system-wide revenue growth of 4% Net Revenue $17,900 - $18,300 $17,900 - $18,300 to 6% at USPI and a promising pipelin
Slide 10: Segment Outlook for 2018
Segment Outlook for 2018 Key changes to the segment Outlook include: Increasing Conifer’s EBITDA Outlook range by $20 million and lowering the hospital segment’s EBITDA Outlook range by $20 million; updating the Outlook for noncontrolling interest expense for the hospital and Conifer segments. R
Slide 11: Adjusted EBITDA Bridge from 2017 to 2018
Adjusted EBITDA Bridge from 2017 to 2018 ($ in millions) Hospital Ambulatory Conifer Total 2017 Adjusted EBITDA - Actuals $1,462 $699 $283 $2,444 California Provider Fee revenue (17) (17) Houston Divestiture completed in 3Q'17 (25) (25) Divestitures to be completed in 2018 (partial year impact) (55)
Slide 12: Summary
Summary Adjusted EBITDA up 11% in Q2’18 on a normalized basis Improving financial performance • Hospital same-facility net patient revenue grew 3.2% and Adjusted EBITDA was up 0.6% on a normalized basis • Ambulatory same-facility system-wide revenue grew 6.9% and Adjusted EBITDA less facility-le
Slide 13: Appendix and Reconciliation of Non-GAAP Financial Measures
Appendix and Reconciliation of Non-GAAP Financial Measures
Slide 14: 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 15: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued from 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
Slide 16: Revenue and EBITDA by Segment
Revenue and EBITDA by Segment $ in millions 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 Hospital Operations and Other (1)(2) Net operating revenues $17,023 $4,397 $4,202 $4,162 $4,143 $16,904 $4,050 $4,060 $3,856 $4,184 $16,150 $3,941 $3,733 EBITDA $1,683 $414 $415 $33
Slide 17: Health Plan Financial Results
Health Plan Financial Results Health plans were included in the Adjusted EBITDA for the Hospital Operations and Other segment prior to 2017 $ in millions 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 * Net Operating Revenues $423 $127 $136 $122 $97 $482 $65 $25 $10 $10 $
Slide 18: 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 19: 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 YTD Net income available to Tenet Healthcare Corporation common $ 99 $ 26 $ 125 shareholders Le
Slide 20: Table #1 – Reconciliation to Adjusted EBITDA for 2017
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA for 2017 (Unaudited) (Dollars in millions) 2017 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Net loss attributable to Tenet Healthcare Corporation common $ (53) $ (55
Slide 21: Table #2 – Reconciliation to Adjusted Net Income for 2018
Table #2 – Reconciliation 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 YTD Ne
Slide 22: Table #2 – Reconciliation to Adjusted Net Income for 2017
Table #2 – Reconciliation of Net Loss Attributable to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available (Loss Attributable) from Continuing Operations to Common Shareholders for 2017 (Unaudited) (Dollars in millions except per share amounts) 2017 1st Qtr 2nd Qtr 3rd Q
Slide 23: Table #3 – Reconciliation to 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) 2018 1st Qtr 2nd Qtr YTD Net cash provided by operating activities $ 113 $ 348 $ 461 Purchases of property and equipment
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) Q3 2018 2018 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 – Reconciliation 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) Q3 2018 2018 Low Hig
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) 2018 Low High Net cash provided by operating activities $ 1,220 $ 1,525 Less: Payments for restructuring charges, acquisition-related cos
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