Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q1 2019 Earnings Presentation
24 slides from Tenet Healthcare's earnings presentation, Apr 29, 2019
Slide 1: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results April 29, 2019 •
Slide 2: Forward-Looking Statements
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 initiatives, and developments in the healthcare industr
Slide 3: Progress on 2019 Priorities
Progress on 2019 Priorities Achieved strong financial results through consistent execution Implemented strategic investments to improve performance Meaningfully improved hospital volume growth Continued to maintain tight cost management Reconfirming 2019 Outlook for revenue, Adjusted EBITDA and Adju
Slide 4: Q1'19 Financial Summary
Q1’19 Financial Summary Revenues were $4.545 billion with growth in both same-hospital and same-facility ambulatory revenue • Same-hospital patient revenue grew 1.9% • Ambulatory Care same-facility system-wide surgical revenue grew 4.2% • Conifer’s revenue declined 13.6% primarily due to divestiture
Slide 5: Same Hospital Growth Rates
Same Hospital Growth Rates 1.9% growth in same-hospital net patient revenue in Q1’19 Adjusted admissions increased 0.6% and admissions declined 0.1%; flu lowered adjusted admissions and admissions by 60 basis points and 80 basis points, respectively Revenue per adjusted admission increased 1.3%;
Slide 6: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth 4.2% growth in same-facility system-wide revenue in Q1’19 Q1 '17 Q2 '17 Q3 '17 Q4 '17 2017 Q1 '18 Q2 '18 Q3 '18 Q4 '18 2018 Q1 '19 (1) Surgical (ASCs & Surgical Hospitals) Revenue 6.9% 4.1% 1.1% 7.0% 4.9% 2.3% 6.6% 6.6% 3.7% 4.9% 4.2% Cases 0.5% -1.2%
Slide 7: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials 9.8% growth in EBITDA less facility-level NCI in Q1’19, excluding Aspen $ in millions Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Net operating revenues $455 $472 $468 $545 $1,940 $498 $531 $502 $554 $2,085 $480 Less: Aspen $44 $44 $42 $44 $174
Slide 8: Conifer Health Solutions Segment
Conifer Health Solutions Segment Adjusted EBITDA was $99 million in Q1’19 – improved margin by 410 basis points to 28.4% Revenue declined 13.6% in Q1’19 primarily due to client attrition following divestitures by Tenet and other clients. Revenue in Q1’18 included $10 million of contract terminatio
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 1.5% to 4.5% • Adjusted admissions growth of (1%) to 1% • Revenue per adjusted admissions growth of 2.5% to 3.5% • Adjusted EBITDA growth of 1% to 6% Ambulatory Care • Same-facility system-wide surgical
Slide 10: Outlook for 2019
Outlook for 2019 Key assumptions: Outlook $ in millions, except EPS for 2019 • $200 million cost reduction initiative; expect to Net Revenue (1) $18,000 - $18,400 Adjusted EBITDA $2,650 - $2,750 realize $50 million in 2019 and achieve $200 Adjusted EBITDA Margin (1) 14.7% - 14.9% million of annualiz
Slide 11: Outlook for 2019 – Segment Details
Outlook for 2019 – Segment Details Hospital Operations Ambulatory Conifer and Other Segment Segment Segment Net Operating Revenue ($M) (1) $15,150 - $15,400 Net Operating Revenue ($M) $2,050 - $2,150 Net Operating Revenue ($M) $1,375 - $1,425 Adjusted EBITDA ($M) $1,430 - $1,490 Adjusted EBITDA ($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: Appendix and Reconciliation of Non-GAAP Financial Measures
Appendix and Reconciliation of Non-GAAP Financial Measures
Slide 14: Revenue and EBITDA by Segment
Revenue and EBITDA by Segment $ in millions Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Hospital Operations and Other Net operating revenues (1)(2) $4,050 $4,060 $3,856 $4,184 $16,150 $3,941 $3,733 $3,754 $3,843 $15,271 $3,862 EBITDA $309 $346 $269 $538 $1,462 $402 $345 $312 $352
Slide 15: Health Plan Financial Results
Health Plan Financial Results $ in millions Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Net Operating Revenues $65 $25 $10 $10 $110 $6 $0 $8 $0 $14 $0 Equity in earnings of unconsolidated affiliates $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Salaries and Benefits -$5 -$4 -$4 -$3 -$16 -$2 -
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 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 19: Table #1 – Reconciliation to Adjusted EBITDA
Table #1 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA (Unaudited) (Dollars in millions) 2018 2019 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr Net income available (loss attributable) to Tenet Healthcare Corporat
Slide 20: Table #2 – Reconciliation to Adjusted Net Income from Continuing Operations
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 (Unaudited) (Dollars in millions except per share amounts) 2018 2019 1st Qtr 2nd Qtr 3rd Qtr 4
Slide 21: 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) 2018 2019 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr Net cash provided by operating activities $ 113 $ 348 $ 338 $ 250
Slide 22: Table #4 – Reconciliation of Outlook to 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) Q2 2019 2019 Low High Low High Net income available (loss attributable) to Tenet Healthcare Corporation commo
Slide 23: 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) Q2 2019 2019 Low Hi
Slide 24: 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 Operation (Dollars in millions) 2019 Low High Net cash provided by operating activities $ 1,070 $ 1,375 Less: Payments for restructuring charges, acquisition-related cost