Tenet Healthcare Corporation · NYSE:THC
Tenet Healthcare — Q2 2017 Earnings Presentation
24 slides from Tenet Healthcare's earnings presentation, Aug 7, 2017
Slide 1: Quarterly Results Presentation Second Quarter of 2017
Quarterly Results Presentation Second Quarter of 2017 August 7, 2017
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements in this presentation constitute “forward-looking statements” – that is, statements that relate to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial con
Slide 3: Q2'17 Financial Highlights
Q2’17 Financial Highlights Adjusted EBITDA was $570 million − The $59 million decline in Adjusted EBITDA as compared to $629 million (1) in Q2’16 was primarily due to: − $55 million of revenue being recorded under the California Provider Fee program in Q2’16 versus no revenue being recorded relate
Slide 4: Summary of Recent Developments
Summary of Recent Developments Increased ownership stake in USPI Effective July 3, 2017, Tenet owns 80% of USPI and can now include USPI in its consolidated tax return Completed sale of Houston assets Effective August 1, 2017, completed the sale of the Company’s Houston-area acute care hospitals
Slide 5: Revenue and EBITDA by Segment
Revenue and EBITDA by Segment $ in millions Q2'15 Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Hospital Operations and Other Net operating revenues after bad debt (1) $4,175 $4,179 $4,423 $17,023 $4,397 $4,202 $4,162 $4,143 $16,904 $4,050 $4,060 EBITDA $459 $383 $394 $1,683 $414 $415 $3
Slide 6: Health Plan Financial Results
Health Plan Financial Results Health plans are included in the Hospital Operations and Other segment $ in millions Q2'15 Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Net Operating Revenues $104 $106 $105 $423 $127 $136 $122 $97 $482 $65 $25 Equity in earnings of unconsolidated affiliate
Slide 7: Same Hospital Growth Rates
Same Hospital Growth Rates Q2'15 Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Adjusted Admissions 2.3% 0.7% 0.3% 2.4% 2.2% 0.5% 1.4% -0.5% 0.9% -2.5% -1.4% Admissions 1.7% -0.6% -1.8% 1.1% -0.1% -1.1% 0.4% -0.2% -0.2% -3.3% -2.2% Revenue Per Adjusted Admission 4.5% 5.8% 0.3% 3.1% 3.7% 3
Slide 8: Same Hospital Revenue Growth
Same Hospital Revenue Growth Same hospital revenue per adjusted admission growth with and without California Provider Fee revenue $ in millions, except per adjusted admission Q2'15 Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Current period same-hospital metrics, as reported each quarte
Slide 9: Uncompensated Care Trends
Uncompensated Care Trends $ in millions Q2 '15 Q3 '15 Q4 '15 2015 Q1 '16 Q2 '16 Q3 '16 Q4 '16 2016 Q1 '17 Q2 '17 Net Revenue before bad debt $4,843 $5,064 $5,417 $20,111 $5,420 $5,220 $5,216 $5,214 $21,070 $5,196 $5,173 Bad Debt Expense $352 $371 $391 $1,477 $376 $352 $367 $354 $1,449 $383 $371 % of
Slide 10: Ambulatory Care Same-Facility System-Wide Growth
Ambulatory Care Same-Facility System-Wide Growth Same-facility system-wide growth (1) Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 2016 Q1 '17 Q2 '17 Surgical (ASCs, Surgical Hospitals & Aspen) Revenue 6.7% 9.9% 12.5% 11.0% 11.8% 9.9% 6.0% 9.7% 6.2% 3.9% Cases 4.8% 5.3% 6.3% 9.0% 5.1% 4.1% 1.5%
Slide 11: Ambulatory Care Segment Financials
Ambulatory Care Segment Financials $ in millions Q2'15 Q3'15 Q4'15 2015 Q1'16 Q2'16 Q3'16 Q4'16 2016 Q1'17 Q2'17 Net operating revenues $322 $329 $397 $1,343 $429 $442 $448 $478 $1,797 $455 $472 % growth 12.6% 14.6% 28.9% 17.8% 45.4% 37.3% 36.2% 20.4% 33.8% 6.1% 6.8% Equity in earnings of unconsolid
Slide 12: Conifer Health Solutions Segment
Conifer Health Solutions Segment Revenue grew 3.6% to $400 million, driven by 9.4% growth in revenue from non-Tenet customers Adjusted EBITDA declined 4.8% year-over-year to $60 million in Q2’17. Third party revenue growth at Conifer includes business retained from hospitals that Tenet has sold.
Slide 13: Tenet Outlook for 2017
Tenet Outlook for 2017 $ in millions, except EPS 2017 Outlook Net Revenue $19,100 - $19,400 Adjusted EBITDA (1) $2,450 - $2,550 (1) Adjusted EBITDA Margin 12.8% - 13.1% (1) Adjusted diluted E.P.S. from continuing operations $0.69 - $0.99 Adjusted Cash Flow from Operations (1) $1,225 - $1,475 Capital
Slide 14: Segment Outlook for 2017
Segment Outlook for 2017 Hospital Operations Ambulatory Conifer and Other Segment Segment Segment Adjusted EBITDA $1.485 - $1.555 billion Adjusted EBITDA $700 - $720 million Adjusted EBITDA $265 - $275 million (1) (1) (1) Noncontrolling Interest $45 - $50 million Noncontrolling Interest $290 - $300
Slide 15: Summary
Summary Refinanced nearly 25% of the Company’s debt: extended maturities and lowered cash interest expense Simplifying and de-risking: completed the sale of the Company’s hospitals in Houston, certain home health and hospice assets, and portions of the Company’s health plan business Increased
Slide 16: Appendix and Reconciliation of Non-GAAP Financial Measures
Appendix and Reconciliation of Non-GAAP Financial Measures
Slide 17: 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 18: 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 19: 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 (Unaudited) (Dollars in millions) Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net loss attributable to Tenet Healthcare Corporation common
Slide 20: Table #2 – Impact of Certain Items on Continuing Operations
Table #2 – Pre-Tax, After-Tax and Earnings Per Share Impact of Certain Items on Continuing Operations (Unaudited) Three Months Ended Six Months Ended (Dollars in millions except per share amounts) June 30, June 30, 2017 2016 2017 2016 Adjustments to calculate Adjusted Diluted EPS (Expense) Income Im
Slide 21: 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 Six Months Ended (Dollars in millions) June 30, June 30, 2017 2016 2017 2016 Net cash provided by operating activities $ 215 $ 435 $ 401 $ 582 Purchases of property and equipment (150) (205) (348)
Slide 22: 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) Q3 2017 2017 Low High Low High Net loss attributable to Tenet Healthcare Corporation common sharehol
Slide 23: 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 $ 1,158 $ 1,413 Less: Payments for restructuring charges, acquisition-related costs and litigation costs and settlements (1
Slide 24: Foru
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