Tenet Healthcare leadership took a victory lap for investors today at the J.P. Morgan Healthcare Conference, breaking down the progress of their multiyear restructuring and underscoring the growth potential of United Surgical Partners International (USPI), the hospital chain’s ambulatory surgery subsidiary.
For the former, CEO Saum Sutaria, M.D., said the company has divested from five hospital markets since 2017 for roughly $1.75 billion of proceeds (annual revenues of about $2.5 billion) and increased its investments in high acuity services.
Still, the company is on track to increase its adjusted net revenue for 2021 by 3% compared to 2017 and has increased same-hospital adjusted EBITDA by more than 25% as of the third fiscal quarter of 2021.
Sutaria also said Tenet is on track to open more high acuity centers in favorable markets across the country and highlighted a trio of projects in Fort Mill, South Carolina; Westover, Texas; and Buckeye, Arizona.
Meanwhile, USPI—Tenet’s “gem for the future”—hit 438 centers by the end of 2021 and is now well ahead of competitors Amsurg and Surgical Care Affiliates in terms of locations, Sutaria said. It’s also set to add or open more than 150 more locations thanks in large part to last year’s acquisition and development deal with SurgCenter Development.
USPI on the whole delivers strong margins and cash flow generation for Tenet, Sutaria said, not to mention synergies within markets it shares with Tenet hospitals.
By the end of 2023, he said the company hopes USPI will account for roughly 50% of Tenet’s adjusted EBITDA mix with hospitals claiming 39% and Conifer (its revenue cycle management solutions business) claiming the remaining 11%. Currently (2021 pro forma), that mix falls at 42% USPI, 48% hospitals and 10% Conifer.
“Tenet is an attractive and investable growth company. We are more capital efficient, we produce greater free cash flow, we are committed to debt reduction and our business is aligned with the highest growth areas of the future,” Sutaria said.“We are energized by the opportunities ahead and I am confident in our ability to continue our positive trajectory.”
Investors did not seem to be against Sutaria’s pitch, as Tenet’s stock price increased about 4% over the course of the CEO’s presentation.
Alongside the presentation, the company submitted a filing stating it believes it will meet Wall Street's consensus earnings estimate for 2021.