Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q3 2017 Earnings Presentation
25 slides from Tenet Healthcare's earnings presentation, Nov 6, 2017
Slide 1: Quarterly Results Presentation Third Quarter of 2017
Quarterly Results Presentation Third Quarter of 2017 November 6, 2017
Slide 2: Forward-Looking Statements; 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: Key Priorities
Key Priorities Improve financial performance: Implement changes designed to enhance Tenet’s growth and margin trajectory Organic growth: Organic volume growth in hospitals, ambulatory facilities and Conifer Quality and patient satisfaction: High quality care and improved patient satisfaction;
Slide 4: Q3'17 Financial Highlights
Q3’17 Financial Highlights Adjusted EBITDA was $507 million and grew ~5% after normalizing for three items − The $75 million decline in Adjusted EBITDA, as compared to $582 million (1) in Q3’16, was primarily due to: − $55 million of revenue being recorded under the California Provider Fee program
Slide 5: Revenue and EBITDA by Segment
Revenue and EBITDA by Segment EBITDA in the hospital segment grew ~5% in Q3’17 after normalizing for certain items The three normalizing items were (i) $55 million of California Provider Fee revenue; (ii) ~$20 million impact from Hurricane Irma; and (iii) ~$20 million decline related to the Housto
Slide 6: Health Plan Financial Results
Health Plan Financial Results Health plans are included in the Hospital Operations and Other segment $ in millions Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Net Operating Revenues $106 $105 $423 $127 $136 $122 $97 $482 $65 $25 $10 Equity in earnings of unconsolidated affiliates
Slide 7: Same Hospital Growth Rates
Same Hospital Growth Rates Hurricane Irma lowered same-hospital admissions and adjusted admissions by ~50 basis points Adjusted admissions declined 0.8% excluding the impact from the hurricanes and patients insured by Humana in both periods. Admissions declined 1.2% excluding the impact from the
Slide 8: California Provider Fee and the Effect on Same Hospital Revenue Growth
California Provider Fee and the Effect on Same Hospital Revenue Growth Revenue per adjusted admission increased 1.3% excluding $ in millions, except per adjusted admission Q1'17 Q2'17 Q3'17 Current period same-hospital metrics, as reported each quarter the California Provider Fee program Inpatient r
Slide 9: Cost Reduction Initiative
Cost Reduction Initiative Targeting $150 million of cost reductions Ongoing actions through mid-2018 are expected to yield $150 million of annualized run-rate savings by the end of 2018 75% of the savings are expected to be achieved in the Hospital Operations and other segment 25% of the savings
Slide 10: Uncompensated Care Trends
Uncompensated Care Trends $ in millions Q3 '15 Q4 '15 2015 Q1 '16 Q2 '16 Q3 '16 Q4 '16 2016 Q1 '17 Q2 '17 Q3 '17 Net Revenue before bad debt $5,064 $5,417 $20,111 $5,420 $5,220 $5,216 $5,214 $21,070 $5,196 $5,173 $4,941 Bad Debt Expense $371 $391 $1,477 $376 $352 $367 $354 $1,449 $383 $371 $355 % of
Slide 11: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth Same-day same-facility system-wide revenue grew 4.0% excluding the impact from the hurricanes Same-day same-facility system-wide volumes grew 0.7% excluding the impact from the hurricanes Same-facility system-wide growth (1) Q3 '15 Q4 '15 Q1 '16 Q2
Slide 12: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials EBITDA less facility-level NCI grew approximately 5% excluding the hurricanes Hurricanes Harvey and Irma lowered EBITDA by ~$10 million and EBITDA less facility-level NCI by ~$4 million in Q3’17. $ in millions Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q
Slide 13: Conifer Health Solutions Segment
Conifer Health Solutions Segment Revenue grew 0.8% to $401 million, driven by 5.4% growth in revenue from non-Tenet customers Adjusted EBITDA was flat year-over-year at $79 million in Q3’17. Third party revenue growth at Conifer includes business retained from hospitals that Tenet has sold. $ in
Slide 14: Tenet Outlook for 2017
Tenet Outlook for 2017 Lowered the midpoint of the 2017 Adjusted EBITDA $ in millions, except EPS 2017 Outlook Outlook by $100 million to reflect: Net Revenue $18,900 - $19,100 (1) Adjusted EBITDA $2,375 - $2,425 ~$60 million due to Hurricanes Harvey and Irma, prior to Adjusted EBITDA Margin (1) 1
Slide 15: Segment Outlook for 2017
Segment Outlook for 2017 Hospital Operations Ambulatory Conifer and Other Segment Segment Segment Adjusted EBITDA $1.430 - $1.450 billion Adjusted EBITDA $680 - $700 million Adjusted EBITDA $265 - $275 million (1) (1) (1) Noncontrolling Interest ~$40 million Noncontrolling Interest $280 - $290 milli
Slide 16: Summary
Summary Adjusted EBITDA performance in the third quarter was very good, considering the items impacting results Outlook for 2017 lowered to reflect the impact of the hurricanes, Medicaid cuts in Florida and Texas, executive severance costs, and a softer volume environment, partially offset by sa
Slide 17: Appendix and Reconciliation of Non-GAAP Financial Measures
Appendix and Reconciliation of Non-GAAP Financial Measures
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, 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, (2) net loss (income) attributable to noncontrolling i
Slide 19: 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 20: Table #1 – Reconciliation of Adjusted EBITDA to Net Income (Loss)
Table #1 – Reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders (Dollars in millions) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss attributable to Tenet Healthcare Corporation common s
Slide 21: Table #2 – Pre-Tax, After-Tax and EPS Impact of Certain Items
Table #2 – Pre-Tax, After-Tax and Earnings (Loss) Per Share Impact of Certain Items on Continuing Operations (Unaudited) Three Months Ended Nine Months Ended (Dollars in millions except per share amounts) September 30, September 30, 2017 2016 2017 2016 Adjustments to calculate Adjusted Diluted EPS (
Slide 22: Table #3 – Reconciliations of Free Cash Flow and Adjusted Free Cash Flow
Table #3 – Reconciliations of Free Cash Flow and Adjusted Free Cash Flow (Unaudited) Three Months Ended Nine Months Ended (Dollars in millions) September 30, September 30, 2017 2016 2017 2016 Net cash provided by operating activities $ 308 $ 269 $ 709 $ 851 Purchases of property and equipment (144)
Slide 23: Table #4 – Reconciliation of Outlook Adjusted EBITDA
Table #4 – Reconciliation of Outlook Adjusted EBITDA to Outlook Net Income Attributable to Tenet Healthcare Corporation Common Shareholders (Unaudited) (Dollars in millions, except per share amounts) Q4 2017 2017 Low High Low High Net income (loss) attributable to Tenet Healthcare Corporation common
Slide 24: Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow
Table #5 – Reconciliation of Outlook Adjusted Free Cash Flow for the Year Ending December 31, 2017 (Dollars in millions) 2017 Low High Net cash provided by operating activities $ 1,017 $ 1,267 Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements (1
Slide 25: Foru
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