Tenet Health
J.P. Morgan Healthcare Conference
Ronald Rittenmeyer, Executive Chairman and CEO
January 12, 2021
FORWARD-LOOKING 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 for developments related to COVID-19, and are subject to numerous risks and uncertainties, many of which are outside of our control. 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-19 and the factors described under "Forward-Looking Statements" and "Risk Factors" in our Form 10-K for the year ended December 31, 2019, subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission (SEC).
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 Generally Accepted Accounting Principles (GAAP). Reconciliations of these non-GAAP
measures to the most comparable GAAP measures and management's reasoning for using them are included in our earnings press release dated October 20, 2020.
All EBITDA figures used in this presentation are Adjusted EBITDA.
TABLE OF
CONTENTS
Tenet Health Today Resiliency and Performance Commitment to Portfolio Evolution Operating Model Advancement Environmental, Social, Governance
3
TENET HEALTH
TODAY
65 Acute Care Hospitals
550+ Surgical & Other Facilities
50+ Health System Partners
10M Patient Encounters
Manila
$25B Revenue Managed by Conifer
110K Employees
Note: As of December 31, 2020
Acute Care Hospitals Surgical & Other Facilities Corporate Offices
4
A DIVERSIFIED |
HEALTHCARE |
COMPANY |
HOSPITALS | USPI | |
Competitive acute care | Leading surgical facility | |
portfolio positioned #1 or | platform with nearly 350 | |
#2 in 70% of markets | facilities across 33 states | |
2019 STATS
CONIFER
High performing revenue cycle company managing ~$25B of revenue
Tenet is a uniquely
positioned healthcare
services company with a
high-growth, high margin
ambulatory surgery division
Net Revenue
EBITDA
Margin
3 YEAR GOALS
EBITDA Growth
Portfolio
EBITDA Mix
CapEx/EBITDA
$14.9B
$1.4B
10%
2-3% p.a.
53% ~35%
35-45%
$2.2B
$0.9B
41%
10-15% p.a.
33% ~50%
5-10%
$1.4B
$0.4B
28%
4-7% p.a.
14% ~15%
5-10%
Note: Hospital segment includes corporate overhead and intersegment revenue eliminations | 5 |
RESILIENCY
AND
PERFORMANCE
SUSTAINED VOLUME RECOVERY
Demonstrated recovery despite COVID-19 resurgences by providing safe care settings, pivoting service line strategies, physicians choosing our care sites
STRONG PERFORMANCE MANAGEMENT
Quickly implemented cost management tactics, maintained ability to tightly
flex costs with proven record of achieving goals
CONSISTENT SAFETY AND CLINICAL OPERATIONS
Deployed protocols to keep staff infection rates in single digits, maintained
access to PPE and testing, administered ~50K COVID-19 vaccine doses
IMPROVED FINANCIAL POSITION
Maintained focus on cash flow through operations recovery and financing to continue to make strategic investments and debt repayments
6
SUSTAINED RECOVERY IN PERFORMANCE
Care delivery demonstrated
ability to safely recover
volumes, despite COVID-19
resurgences across markets
2020 Volume Statistics vs. Prior Year
101% | 85% | 89% | 89% |
67% |
IP Admits
106% | 85% | ||||
69% | 84% | ||||
OP Visits | 39% | ||||
100% | 85% | 89% | 90% | ||
Hospital | 45% | ||||
Surgeries | |||||
102% | 80% | 94% | 95% | ||
USPI | |||||
Surgeries | 20% | ||||
Pre-pandemic | April | May-June | Q3 | Q4E |
Note: Same-hospital basis for hospital statistics, same-facilitysystem-wide basis for USPI surgical cases | 7 |
IMPROVED
FINANCIAL
POSITION
Tenet is well positioned to make strategic investments to increase free cash flow, reduce debt and remains committed to the pathway to
<5x leverage
Actions Taken | ~$2.5B | |
Improved cash collection | In debt restructured to provide | |
performance; $1.3B of Notes issued | ~$50M of interest expense savings | |
to enhance liquidity; Revolver | and eliminated all significant debt | |
capacity increased $400M | maturities until 2023 | |
~$900M | ~$140M | |
Increase in secured debt capacity post | In anticipated proceeds from | |
SCD surgery center portfolio | divesting urgent care and completing | |
acquisition | MOB sale |
8
COMMITMENT TO PORTFOLIO EVOLUTION
SCALE AMBULATORY SURGERY
Continue to accelerate investments in USPI's strong pipeline of acquisitions and de novos as well as organic growth to meet growing patient demand
OPTIMIZE HOSPITAL MARKET PORTFOLIO
Strategically expand clinical programs to serve community needs as well as
selectively divest and optimize the hospital portfolio
STRENGTHEN CONIFER TO SPIN
Improve leadership, capabilities and performance to ensure Conifer is
prepared to spin
COMMITMENT TO QUALITY & EXPERIENCE
Continue to track and improve internal as well as external measures on
quality, safety, patient experience and physician experience
9
EXPANDING IN AMBULATORY SURGERY
Continuing to grow USPI's leadership in segment with high growth, high margin, strong cash flow and attractive return on invested
capital
Note: Tenet acquired USPI in 2015
Adjusted EBITDA from Ambulatory
% EBITDA | |||
45% | |||
~33% | |||
~25% | |||
~4% | |||
2014 | 2016 | 2019 | 2021E |
10
ACQUIRED 45 CENTERS FROM SCD
Portfolio of predominantly
musculoskeletal centers
maintained strong
performance in December
and integration is tracking
~$1.1B
~$210M
~60%
~$40 - 50M
~10%
Purchase price for the portfolio
Acquired 100% SCD interest and additional interest from physicians
EBITDA generated by 45 acquired centers
~$430M in center-level net revenue and healthy EBITDA margins
Maximum center ownership acquired by USPI
EBITDA-NCI of ~$130M; Tenet consolidates substantially all of the centers
Synergies estimated at ~20-25% EBITDA
Conservative pathway to high 6x EBITDA-NCI multiple by year 3
Estimated return on invested capital by year 3
Note: As of December 31, 2020
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The portfolio added three types of opportunities
Network states - example | Pioneering center - example | New market entry - example |
Added 10 centers to the network in Florida | White Fence, over 10K total joints performed | Entered in Indiana at scale with 7 centers | ||
Pictured left to right: SurgCenter of Palm Beach Gardens, White Fence Surgical Suites in Ohio, Munster Specialty Surgery Center | 12 |
Built upon USPI's premier network in 2020
61 | 73 | 3,700+ |
New, high-quality surgical | New service line starts | New physicians on medical |
facilities added to the portfolio, | including orthopedics, spine, | staff, maintaining culture of |
including five under construction | robotics and bariatrics | quality and patient experience |
13
Furthering USPI's growth in 2021
$150M+ ~25-40 6%+
Planned acquisition capital, with | Tuck-in acquisitions and de | Expected annual same-store |
the potential for more with the | novo to be funded; excludes | surgical revenue growth given |
right opportunities | potential corporate acquisitions | track-record of organic growth |
14
ENHANCING CARE PROVIDED BY OUR HEALTH SYSTEMS
Investing in high-quality clinical programs to serve growing acute and chronic care needs in strategic hospital markets
San Antonio, TX | Palm Beach, FL |
Launched CT surgery at North Central and a | Achieved additional Comprehensive Stroke |
market-wide neurosciences program | certifications at Delray and St. Mary's |
Phoenix, AZ | Palm Springs, CA |
Achieved Comprehensive Stroke certification | Recognized for 30 years of award winning care |
at Abrazo Central Campus | at the Comprehensive Cancer Center |
El Paso, TX | Rock Hill, SC |
Launched bariatrics program at East Campus | Started construction of a new medical campus |
and expanded market-wide MFM program | in Fort Mill, South Carolina |
15
Continue to enrich specialty medical group complement
Dr. Matt Dobbs, Orthopedics | Dr. Sonia Eden, Neurosurgery | Dr. Emun Abdu, Neurosurgery |
The Paley Institute, Palm Beach | DMC Medical Group, Detroit | Abrazo Neuroscience Institute, Phoenix |
Dr. Richard Farnum, Urogynecology | Dr. David Fox, Orthopedics | Dr. Kapil Lotun, Interventional Cardiology |
Providence Medical Partners, El Paso | Northeast Orthopedics, San Antonio | Carondelet Heart & Vascular Institute, Tucson |
16
STRENGTHENING CONIFER PRIOR TO THE SPIN
Improving Conifer with a
stronger leadership team,
"client-first" mindset, and
focus on operational
excellence
End to End | Tech-Enabled | Financial | |||||
Revenue Cycle | Point Solutions | Services | |||||
Optimize performance and | Activate a more focused | Launch financial services for | |||||
client experience | growth pipeline | health systems | |||||
• | Focus on cash | • | Prioritize best-in-class | • | Deliver efficient and | ||
performance and | services such as Coding | effective support for | |||||
maintain cash collections | with Coding Quality | function such as | |||||
at ~100% targets | above 97% | accounting, AP, payroll | |||||
• | Continue to invest in | • | Customize offerings to | • Co-brand and operate as | |||
offshoring and | address a client's | an extension of the | |||||
automation | specific challenge | health system client | |||||
• | Maintain client | • | Continue to invest in | • | Leverage Tenet offshore | ||
reference-ability >85% | technology | expertise | |||||
17
TENET
ENTERPRISE OPERATING MODEL ADVANCEMENT
GLOBALIZING & IMPROVING SERVICES
Mature the Global Business Center to increase functions supported as well
as continue to realize efficiencies and process improvements
DELIVERING CONTINUOUS IMPROVEMENT
Continue to utilize analytical insights in action-oriented management processes
to identify and implement initiatives to capture additional efficiencies
INVESTING IN TALENT & CULTURE
Cultivate a high-performance culture that embraces data-driven decision
making and talent management processes that promote diversity and inclusion
18
SCALING THE GLOBAL BUSINESS CENTER
Tenet Global Business Center
# Employees
~5,000
First large provider to establish a captive center in the Philippines
Over 10 core functions, 30 sub- functions with 2,500+ process flows
All Tenet markets served with over
400 performance metrics in place
~3,000
~1,600
<50
Year end 2019 | Year end 2020 Year end 2021E Year end 2023E |
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PROMOTING TALENT & CULTURE
We are committed to
developing talent,
recognizing everyday
impact and supporting
our employees
RECOGNIZING TALENT | HEALTHCARE HEROES | TENET CARE FUND |
Continuing to promote talent | Expanding a decade-old | Supporting ~1,200 colleagues |
from within, as well as attract | tradition in celebrating our | facing hardships with ~$2M |
external talent | peer-nominated heroes | raised in 2020 |
20
ENVIRONMENTAL,
SOCIAL,
GOVERNANCE
BUILDING A SUSTAINABLE FUTURE
Includes proactive initiatives with measurable impact, such as the reusable
sharps container program diverting 600K+ pounds of plastic from landfills
RECOGNIZING OUR SOCIAL RESPONSIBILITIES
Includes ensuring access to care with ~$7B in uncompensated care in 2019
and promoting community service, diversity and employee recognition
UPHOLDING SOUND GOVERNANCE
Includes significant Board refreshment with nine new directors since 2017 and
all members who uphold strong principles and high standards of governance
21
BUILDING A SUSTAINABLE FUTURE
We understand our responsibility to create the best places to provide care, while minimizing our impact on the environment
Commitment #1
Improving the physical
plant
Commitment #2
Reducing resource
consumption
Commitment #3
Fostering community
alignment & partnerships
22
CONTINUING OUR COMMITMENT TO DIVERSITY
We recognize that providing compassionate care to our diverse communities also means embracing diversity within our workplace
47% Of workforce is ethnically diverse
51% Of new hires ethnically diverse
45% Leadership diversity based on gender and / or ethnicity
58% Board diversity based on gender and / or ethnicity
Note: As of January 2021 | 23 |
Reflecting the communities we serve within our company
Black Hispanic Asian & Other White
Detroit | El Paso | |||||
% Hospital Employees | % Hospital Employees | |||||
13% | 2% | |||||
35% | 4% | |||||
52% | ||||||
2% | ||||||
11% | 81% | |||||
Orange County
% Hospital Employees
5%
29%21%
46%
Note: As of January 2021 | 24 |
SOUND GOVERNANCE
Our governance includes
diversity of experience
and our Board of Director
refreshment has been
strong with 9 new
directors since 2017
25
Changes implemented to improve governance practices
1.
2.
3.
4.
Strong Lead Director with defined and robust responsibilities
Active shareholder outreach and engagement
Proxy access on market standard terms
Shareholder right to call special meetings at 25% vote threshold
Tenet was rated in top 10% of peer group by leading proxy advisor
26
TENET HEALTH
IN 2021
COMPETITIVE ADVANTAGE & STRATEGY
Enhanced position in higher acuity, high growth specialties with strong
quality, safety, patient and physician experience
HIGH-PERFORMANCE CULTURE
Supported by data-driven decision making, continuous improvement, talent
management, and transparency in all communications
STRONG PORTFOLIO & PERFORMANCE
Higher performing go-forward portfolio with greater free cash flow generation,
capital efficiency and secured debt capacity
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Tenet Healthcare Corporation published this content on 12 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 January 2021 14:07:04 UTC