Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q1 2018 Earnings Presentation
25 slides from Tenet Healthcare's earnings presentation, Apr 30, 2018
Slide 1: Investor Presentation Quarter ended March 31, 2018
Investor Presentation Quarter ended March 31, 2018
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: Improving Performance, Operations, Strategic Initiatives and Leadership
Improving Performance, Operations, Strategic Initiatives and Leadership Adjusted EBITDA exceeded high-end of Outlook in Q1’18; strong performance in each segment Positive volume growth in our hospitals with a focus on higher-acuity services Performance Ambulatory EBITDA less facility-level NCI
Slide 4: Q1'18 Financial Highlights
Q1’18 Financial Highlights Adjusted EBITDA was $665 million. Key items that impacted Adjusted EBITDA growth included: − California Provider Fee revenue ($64 million in Q1’18 versus $0 in Q1’17) − Divestitures of Houston, MacNeal Hospital, Philadelphia and the Dallas JV ($6 million loss in Q1’18 ve
Slide 5: Same Hospital Growth Rates
Same Hospital Growth Rates Focused on growing high-acuity inpatient service lines Adjusted admissions increased 0.6% and admissions increased 0.3% Revenue per adjusted admission increased 6.0% and was up 4.1% excluding the California Provider Fee in both periods An increase in flu cases added
Slide 6: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth Same-facility system-wide revenue grew 2.7% in Q1’18 In the surgical business, same-facility system-wide revenue grew 2.3%, with cases down 0.5% and revenue per case up 2.8%, reflecting growth in higher-acuity surgical procedures. Note that the surg
Slide 7: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials EBITDA less facility-level NCI grew 9.0% in Q1’18 Continue to target 8% to 11% EBITDA less facility-level NCI growth in 2018 $ in millions Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Net operating revenues $429 $442 $448 $478 $1,797 $455 $472
Slide 8: Conifer Health Solutions Segment
Conifer Health Solutions Segment Raising Conifer’s Adjusted EBITDA Outlook to $330-$340 million in 2018, representing growth of 17%-20% vs. 2017 Targeting Adjusted EBITDA margins of 21.6% in 2018, up ~400 basis points from 2017 driven substantially by improvements in Conifer’s cost structure. Expl
Slide 9: Raising Tenet's Adjusted EBITDA Outlook on Conifer Outperformance
Raising Tenet’s Adjusted EBITDA Outlook on Conifer Outperformance Key assumptions included in the 2018 Outlook: $ in millions, except EPS 2018 Outlook Same hospital revenue growth of 2.5% to 4.5% Net Revenue $17,900 - $18,300 (1) Same-facility system wide revenue growth of 4% to 6% at Adjusted E
Slide 10: Segment Outlook for 2018
Segment Outlook for 2018 Hospital Operations Ambulatory Conifer and Other Segment Segment Segment Net Operating Revenue ($M) (1) $14,900 - $15,150 Net Operating Revenue ($M) $2,050 - $2,150 Net Operating Revenue ($M) $1,525 - $1,575 Adjusted EBITDA ($M) $1,450 - $1,510 Adjusted EBITDA ($M) $770 - $8
Slide 11: Adjusted EBITDA Bridge from 2017 to 2018
Adjusted EBITDA Bridge from 2017 to 2018 ($ 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) (50)
Slide 12: Summary
Summary Sustainably improving performance, operations, strategic positioning and leadership Delivering compelling financial performance • Adjusted EBITDA exceeded the high end of the Outlook • Hospital same-facility revenue grew 6.7% with adjusted admissions up 0.6% • Ambulatory same-facility sy
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 (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 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 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 EBITDA $1,683 $414 $415 $334 $358 $1,521
Slide 17: Health Plan Financial Results
Health Plan Financial Results Health plans are included in the Hospital Operations and Other segment $ in millions 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Q3'17 Q4'17 2017 Q1'18 Net Operating Revenues $423 $127 $136 $122 $97 $482 $65 $25 $10 $10 $110 $6 Equity in earnings of unconsolidated aff
Slide 18: Uncompensated Care Trends
Uncompensated Care Trends New 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 patie
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) 2017 2018 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr Net income available (loss attributable) to Tenet $ (53) $ (55) $ (36
Slide 20: Table #2 – Reconciliation to Adjusted Net Income from Continuing Operations
Table #2 – Reconciliation of Net Income Available (Loss Attributable) to Tenet Healthcare Corporation Common Shareholders to Adjusted Net Income (Loss) from Continuing Operations Attributable to Common Shareholders (Unaudited) (Dollars in millions except per share amounts) 2017 2018 1st Qtr 2nd Qtr
Slide 21: Table #3 – Reconciliations 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) 2017 2018 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 1st Qtr Net cash provided by operating activities $ 186 $ 215 $ 308 $ 491
Slide 22: Table #4 – Reconciliation of Outlook to Outlook Adjusted EBITDA
Table #4 – Reconciliation of Outlook Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted EBITDA (Unaudited) (Dollars in millions) Q2 2018 2018 Low High Low High Net income available (loss attributable) to Tenet Healthcare Corporation common sharehol
Slide 23: Table #5 – Reconciliation of Outlook Adjusted Net Income
Table #5 – Reconciliation of Outlook Net Income (Loss) Attributable to Tenet Healthcare Corporation Common Shareholders to Outlook Adjusted Net Income (Loss) from Continuing Operations Attributable to Common Shareholders (Unaudited) (Dollars in millions except per share amounts) Q2 2018 2018 Low Hig
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 Operations (Dollars in millions) 2018 Low High Net cash provided by operating activities $ 1,245 $ 1,550 Less: Payments for restructuring charges, acquisition-related cos
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