Tenet Healthcare J.P. Morgan Healthcare Conference - Saum Sutaria, M.D., CEO
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Tenet Healthcare
J.P. Morgan Healthcare Conference
Saum Sutaria, M.D., CEO
January 11, 2022
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 in legislation, regulation, and the healthcare industry more
generally. These forward-looking statements represent management’s expectations, based on currently available information, as to the outcome and timing of future
events, but, by their nature, address matters that are uncertain, particularly with regard to developments related to the COVID pandemic. Actual results, performance
or achievements could differ materially from those expressed in any forward-looking statement.
Examples of uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-
looking statements include, but are not limited to, developments related to COVID, and the factors described under “Forward-Looking Statements” and “Risk Factors”
in our Form 10-K for the year ended December 31, 2020, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.
We assume no obligation to update any forward-looking statements or information subsequent to the dates such statements are made. Investors are cautioned not to
place undue reliance on our forward-looking statements.
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 measures and management’s reasoning for using these non-GAAP financial measures
are included in our earnings press releases dated October 20, 2021, and February 26, 2018, which are available on our website at www.tenethealth.com/investors.
We are not able to reconcile certain forward-looking non-GAAP financial measures to the most comparable U.S. GAAP financial measures without unreasonable
efforts due to uncertainty regarding items outside of our control.
2
AGENDA
• Tenet Health Transformation
• The Next Phase of Growth
• Our Strong Operating Model
3
GROWTH-CENTRIC PORTFOLIO STRATEGY
Refined portfolio to enable growth, divested 5 hospital markets since 2017 for ~$1.75B
of proceeds (~$2.5B of revenue, ~$105M of Adjusted EBITDA), increased strategic
capital deployment, expanded USPI’s network and reinvested in Conifer's technology
RESTRUCTURED OPERATIONS AND PROCESSES
Executed $450M enterprise-wide efficiency agenda in 2018 through 2020 and
TENET HEALTH established data-driven performance management processes
QUALITY AND SAFETY WITH CONSISTENT OUTCOMES
TRANSFORMATION
Implemented focused and measurable quality and safety agenda, resulting in a 2.5-
fold increase in number of acute hospitals with overall 4- and 5-star CMS ratings
RESILIENCY IN PERFORMANCE AMIDST COVID-19
Consistently met or beat quarterly earnings guidance, reduced leverage ratio and
increased free cash flow generation
Note: Annual revenue and Adjusted EBITDA of the five hospital markets based on a trailing 12-month basis at the time of sale 4
Significantly improved financial profile
ADJUSTED ADJUSTED
NET REVENUE ADJUSTED EBITDA EBITDA MARGIN FREE CASH FLOW DEBT LEVERAGE
$19.1B $19.7B(a) 16.8% $1.3B(b) 5.9x
3%
$3.3B(a) 31%
12.8% -41%
35%
~$2.44B 160%
3.5x
$0.5B
2017 2021G 2017 2021G 2017 2021G 2017 2021G 2017 Q3 2021
Note: 2021G is based on mid-point of guidance range from our earnings press release dated October 20, 2021. Reconciliations of these non-GAAP measures to the most comparable GAAP measures and management’s reasoning
for using these non-GAAP financial measures are included in our earnings press releases dated October 20, 2021, and February 26, 2018, which are available on our website at www.tenethealth.com/investors
(a) Since 2017, five hospital markets have been divested that had annual revenues and Adjusted EBITDA of ~$2.5 billion and ~$105 million, respectively, on a trailing 12-month basis at the time of sale
5
(b) Before the repayment of ~$700 million of Medicare advances and deferred payroll taxes
Strengthened all business units
HOSPITALS USPI CONIFER
Restructured the portfolio and invested in high Focused on ambulatory surgery and fully Redesigned the service delivery model,
acuity services, enabling same-hospital Adjusted realized integration benefits which continue leveraging technology and globalization to
EBITDA to grow 25%+ since 2017 to deliver value as the network scales improve performance
Case mix index Surgical facilities Offshore headcount
1.74 342 ~3,000
1.47 267
~1,000
2017 Q3 2021 2017 Q3 2021 2017 Q3 2021
Adjusted EBITDA margin Adjusted EBITDA margin Adjusted EBITDA margin
11.4% 41.8% 27.7%
9.0% 36.0%
17.7%
2017 YTD Q3 2021 2017 YTD Q3 2021 2017 YTD Q3 2021
Note: Hospital segment includes corporate overhead and intersegment revenue eliminations; offshore headcount includes internal and external labor; reconciliations of these non-GAAP measures to the most comparable GAAP
measures and management’s reasoning for using these non-GAAP financial measures are included in our earnings press releases dated October 20, 2021, and February 26, 2018, which are available on our website at 6
www.tenethealth.com/investors
A repositioned care delivery portfolio
60
76
Acute Care
Hospitals
438
267
Surgical
Facilities
End of 2017 End of 2021
Note: Includes acute care hospitals and USPI surgical facilities including those we operate, as well as de novo and other facilities in which we have an ownership interest from the recently completed SCD transaction 7
Leading ambulatory surgery platform
DIFFERENTIATORS AMBULATORY SURGERY FACILITIES
438
• Partner of choice for physicians
• Focused on ambulatory surgery
250+ 250+
• Highly diversified development pipeline
145+
127+
• Track-record of delivering synergies
• Strong margins and cash flow generation
• Commitment to quality and experience
Note: Based on recent company filings and websites; includes USPI surgical facilities which we operate as well as de novo and other facilities in which we have an ownership interest from the recently completed SCD transaction 8
Acquired nearly all of SurgCenter Development
UNIQUE SCOPE STRONG FINANCIALS ATTRACTIVE SYNERGIES
86 ~$275M ~$45M
mature and de fully ramped fully ramped
novo centers Adjusted synergies(a)
EBITDA(a)
Acquisition included an ownership Strong performance with fully ramped Synergies estimated to be ~16% of fully
interest in 86 mature and de novo MSK- estimated consolidated net revenue of ramped estimated Adjusted EBITDA,
focused centers, ambulatory support ~$675M, ~40% Adjusted EBITDA driven by USPI differentiated
services and a development partnership margin and minimal debt management capabilities
(a) Estimates for 86 mature and development centers with phased consolidation and fully ramped by Years 3 to 4 9
HIGH QUALITY, SPECIALTY CARE
Enhance access to community-based specialty care to meet the evolving healthcare
needs in the communities we serve
DISTINCTIVE AMBULATORY SURGERY PLATFORM
Utilize USPI’s unique development and management capabilities to further increase
THE NEXT competitive two-way and three-way JVs in high growth specialties
STAGE OF A LEADER IN NEW SERVICES IN LOWER COST SETTINGS
Continue to lead the introduction of high acuity services and state of the art technology
GROWTH into our acute care hospitals, ambulatory surgery centers and physician practices
ECOSYSTEM OF LEADING PHYSICIANS
Engage with locally, regionally and nationally recognized physicians with a shared
commitment to quality, safety and patient experience
10Enhancing high acuity hospital services
The Hospitals of Providence East Campus in Delray Medical Center became the first hospital The DMC Children’s Hospital of Michigan
El Paso began a $20M investment to expand in the region to offer MR-guided focused recently opened a Fetal Care Center to increase
capacity to enhance care for stroke, women’s ultrasound to treat essential tremors as part of prenatal diagnosis of congenital anomalies, one
health, surgical services and trauma services investments in technology and capacity of several investments in specialized services
11Increasing healthcare access in growing communities
2.5%+ population growth 2.5%+ population growth 3.0%+ population growth
58% commercial 52% commercial 50% commercial
Planning to open Fort Mill Hospital in August Breaking ground on a new healthcare Breaking ground on a new healthcare
2022, providing a new hospital and medical campus in Westover, inclusive of a campus in Buckeye, inclusive of a
office space for a growing community hospital, ASC and medical office space hospital, ASC and medical office space
Source: Census Community Survey (2019 release, published 2021); Clarivate / DRG Managed Market Surveyor (published June 2021) 12Continuing to scale USPI’s national platform
ACQUISITION CAPITAL DE NOVO CENTERS HIGH QUALITY PHYSICIANS
Anticipate at least $200M in acquisition capital Target syndication of 15 – 20 de novos in Expand USPI medical staff with high quality
to be deployed in 2022 with a robust and 2022 including both two-way and three-way physicians, including continuing to add higher
growing pipeline joint ventures acuity services (e.g., total joint, robotics)
13Targeting ~600 USPI centers by end of 2025
ILLUSTRATIVE USPI PORTFOLIO PATHWAY
30-32+ 575 - 600+
30-40+
77-90+
438
End of 2021 Surgical Facility SCD Development Additional De End of 2025 Goal
Acquisition Goal Partnership Goal Novos Goal
Note: End of 2021 USPI surgical facilities includes facilities which we operate as well as de novo and other facilities in which we have an ownership interest from the recently completed SCD transaction 14Diversifying Conifer’s clients
REVENUE CYCLE REVENUE CYCLE VALUE-BASED CARE
NEW CLIENTS RENEWALS NEW CLIENTS
Revamped lead generation and sales support Continue to deliver on service levels to Continue to modernize engagement and
to engage new point solution and end to end maintain and grow with existing clients for delivery model to increase clients utilizing
revenue clients hospital and physician revenue cycle population health and financial risk services
Note: Not exhaustive 15EXEMPLIFYING A HIGH-PERFORMANCE CULTURE
Follow a nimble, data-driven, decision-making process and prioritize measurable
outcomes that improve our services to clinicians and patients
OUR ACTING ON OUR COMMITMENT TO TALENT AND DIVERSITY
Continue to attract and retain strong talent and a workforce that reflects the
OPERATING communities we care for; ~57% of new hires in 2021 were ethnically diverse
APPLYING GLOBALIZATION AND AUTOMATION
MODEL IS
Continuously improve the effectiveness and efficiency of processes, including scaling
STRONG the Global Business Center to ~2,100 employees in the Philippines
UPHOLDING STRONG CORPORATE GOVERNANCE
Committed to sound corporate governance policies that protect the long-term interests
of shareholders, promote accountability, and give shareholders a voice
16TENET ADJUSTED EBITDA MIX
TENET IS WELL ~48%
~39%
53%
Hospital 60%
POSITIONED TO
ACHIEVE END ~50%
33% ~42%
OF 2023 GOALS USPI 28%
Conifer 12% 14% ~10% ~11%
2017 2019 2021 PF End of 2023 Goal
Note: 2021 pro forma (PF) assumes the SCD closing occurred January 1, 2021, and fully ramped Adjusted EBITDA of ~$275M for the SCD
centers acquired in December 2021; end of 2023 goal is on a pro forma basis with Conifer included 17An Attractive
Healthcare Services
Growth Company
Care delivery facilities Corporate offices
18You can also read
