Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q2 2024 Earnings Presentation
24 slides from Tenet Healthcare's earnings presentation, Jul 24, 2024
Slide 1: 2nd Quarter 2024 Earnings Release Presentation
2nd Quarter 2024 Earnings Release Presentation July 24, 2024
Slide 2: Cautionary Statements
Cautionary Statements This presentation includes “forward looking statements.” These statements relate to future events, including, but not limited to, statements regarding our liquidity, operating results, future earnings, financial position, operational and strategic initiatives, and developments
Slide 3: Second Quarter 2024 Highlights
Second Quarter 2024 Highlights Consolidated Adjusted EBITDA of $945 million, 12% above second quarter 2023 and well above the upper end of our second quarter Outlook range Ambulatory Hospitals • 21% Adjusted EBITDA growth • 5.2% same-hospital admission growth • 7.1% same-facility revenue growth • 12
Slide 4: 2024 Financial Outlook ($ in millions)
2024 Financial Outlook ($ in millions) Income Available (Loss Attributable) to Tenet Common Consolidated Adjusted EBITDA Shareholders from Continuing Operations $3,825 to $3,500 $2,825 to $4,000 $3,975 $2,930 $3,000 $150 $3,541 $2,500 $3,500 $242 $2,000 $3,299* ~18% $1,500 $3,000 Growth** $2,730 $1,
Slide 5: 2024 Financial Outlook
2024 Financial Outlook* Net operating revenues $20.6 to $21.0B Changes vs. prior year Ambulatory surgical case volumes Up 1 - 2% Adjusted EBITDA Ambulatory $1.750 to $1.810B Net revenue per surgical case Up 4.5 - 5.5% Hospitals $2.075 to $2.165B Consolidated $3.825 to $3.975B Inpatient admissions Up
Slide 6: FY 2024 Adjusted EBITDA Outlook Bridge ($ in millions)
FY 2024 Adjusted EBITDA* Outlook Bridge ($ in millions) ($ in millions) Ambulatory Hospital Total 2024 Initial Guidance Mid-point $1,650 $1,735 $3,385 Central Coast Divestiture - ($24) ($24) Michigan HRA Adjustment - $209 $209 Incremental USPI Acquisition & Development Activity Above Initial Plan $3
Slide 7: USPI
USPI
Slide 8: USPI Track Record of Double-Digit Growth and Strong Margins
USPI Track Record of Double-Digit Growth and Strong Margins Net Revenue ($M) Adjusted EBITDA ($M) $4,400 $1,780 CAGR CAGR $3,865 14.5% $1,544 13.3% $3,248 $1,327 $1,197 $2,718 $895 $868 $2,085 $2,158 $2,072 $792 2018 2019 2020 2021 2022 2023 2024E 2018 2019 2020 2021 2022 2023 2024E Midpoint* Midpoi
Slide 9: USPI Long Term Organic Growth Consistency
USPI Long Term Organic Growth Consistency 5.9% Same-facility System-wide Organic Growth Rates Driven by Revenue CAGR from 2015-2024 USPI Leadership in Strategy & Execution Established Expertise in Starting New Service Lines 14.5% 79 9.7% Service Line Additions 9.2% YTD 2024 6.8% 6.0% Expansion of Hi
Slide 10: USPI Case Mix / Clinical Quality
USPI Case Mix / Clinical Quality 2023 Case Mix Commitment to Quality Drives Strong Patient Experience Ophthalmology 10% All Other Specialties 20% Gastrointestinal 38% Musculoskeletal 96.6 32% 2023 Overall Patient Experience Score 10
Slide 11: USPI Acquisitions and De Novos Deliver Significant Returns on Invested Capital
USPI Acquisitions and De Novos Deliver Significant Returns on Invested Capital Total Number of Facilities Achievement of Attractive Returns 2017 – 2024 544 8-10x 5-7x <2.0x Initial Acquisition Exceeded Exceeded Multiple Targeted Acquisition Targeted De Novo Effective Multiple Effective Multiple 267
Slide 12: Cash Flow and Capital
Cash Flow and Capital
Slide 13: 2024 Cash Flows Continue to Support Growth
2024 Cash Flows Continue to Support Growth ▪ Our cash flow and balance sheet position provide us capital allocation $602M financial flexibility: Q2 ✓ Ample liquidity and access to capital markets to pursue our growth 2024 Free Cash Flow strategy while returning capital to shareholders ($441M Free Ca
Slide 14: Significant Deleveraging of the Balance Sheet
Significant Deleveraging of the Balance Sheet LEVERAGE RATIO (EBITDA) LEVERAGE RATIO (EBITDA-NCI) 7.0x 5.86x 4.85x 3.89x 3.27x 2.61x 2017 2023 6/30/2024 2017 2023 6/30/2024 Substantial reduction in leverage following significant performance improvement and hospital sales Note: The June 30, 2024 cash
Slide 15: Debt Maturity Profile - No Significant Maturities Until 2027
Debt Maturity Profile - No Significant Maturities Until 2027 Maturity Profile as of June 30, 2024 4,000 $3,450 3,500 $3,000 $3,100 3,000 2,500 2,000 1,500 2,000 2,500 $1,712 1,500 $1,400 362 1,000 1,500 1,400 1,450 1,350 500 600 0 2024 2025 2026 2027 2028 2029 2030 2031 $ in millions First Lien Note
Slide 16: Capital Deployment Priorities
Capital Deployment Priorities We prioritize the deployment of the free cash flow generated by our businesses to the following areas: M&A and de novo investments – baseline intention is Investments in our ASC platform $250 million per year Continued investment in technology, robotics, and Investments
Slide 17: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations NON-GAAP FINANCIAL INFORMATION This presentation contains financial measures that are not in accordance with accounting principles generally accepted in the United States of America (GAAP). Reconciliations of these non-GAAP measures to the most comparable GAAP measur
Slide 18: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #1 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income Available to Common Shareholders (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (Dollars in millions, except per share am
Slide 19: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #2 – Reconciliations of Net Income Available to Tenet Healthcare Corporation Common Shareholders to Adjusted EBITDA (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (Dollars in millions) 2024 2023 2024 2023 Net income available to Tenet Health
Slide 20: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #3 – Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow (Unaudited) 2024 (Dollars in millions) Q2 YTD Net cash provided by operating activities $ 747 $ 1,333 Purchases of property and equipment (145) (385
Slide 21: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #4 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income Available to Common Shareholders (Unaudited) Third Quarter 2024 FY 2024 (1) The figures shown represent the Company's estima
Slide 22: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #5 – Reconciliations of Outlook Net Income Available to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA (Unaudited) Third Quarter 2024 FY 2024 (1) The figures shown represent the Company's estimate for (Dollars in millions) Low High
Slide 23: Supplemental Non-GAAP disclosures
Supplemental Non-GAAP disclosures Table #6 – Reconciliations of Outlook Net Cash Provided by Operating Activities to Outlook Free Cash Flow and Outlook Adjusted Free Cash Flow (Unaudited) FY 2024 (1) The figures shown represent the Company's estimate for (Dollars in millions) Low High restructuring
Slide 24: Tenet Health