THC - Earnings call transcript Q1 2022 | Tenet Healthcare Corporation

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Operator

Greetings and welcome to Tenet Healthcare Corporation First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the forma presentation. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Will McDowell. you. Thank begin. may you Will,

Will McDowell

a discussion morning, everyone I Relations. joining call. for you pleased results quarter as well our Cancelmi, Chief Sutaria, Officer. and Tenet Chief Will McDowell, thank Executive and Dan a financial us am as Vice senior today's President in Financial Saum join participating discussion Investor Chairman; have for be will Tenet's Dr. Vice of Executive first and call Ron outlook. to XXXX management today's you Rittenmeyer, Executive Officer Good of President We're of

a statements Our plans today webcast tenethealth.com. this presentation, I'll under are could of management's expectations forward-looking included that and certain currently been morning Relations Investors is advised our are update includes recent information. posted Exchange Investor based With Form to and our information. website represent any subsequent obligation most presentation, today's call XX-K Factors in cautionary to section no statements call the of the Actual on results over discussed slide as the well in differ that, other based made Securities discussion has our with forward-looking and to the the Risk available Tenet on Commission. this to materially. filings as note turn statement Listeners and which during Saum. take should slide

Saum Sutaria

significant QX good and for with exited you morning, year. Thank momentum and a everyone. had quarter the We strong

the Our surge. in recovery effectively their month by operators through last month after Omicron managed accelerated and

guidance. enterprise EBITDA is from the revenues, should We prior EBITDA and of health sale, cases normalizing and of gain of QX significantly our for course, and the assumed midpoint after overall quarter. of in In on in decreased Even quarter adjusted increase our delivered are $XXX net Medicaid ahead the income, sector's improve a items in community a adjusted The $X.X revenues speculation guidance, a of Texas exceeded to a are, additional in million which incremental performed million adding that attractive QX in a billion as This core were adjusted supplemental COVID grand little with EBITDA, our operations result. delivered $XXX we marked bit year. operating the quarter. not earnings XX% have our which upside delivered expectations. We pleased performance, net of about -- and the

its with prior quarter excluding are the substantial partnership has same nearly the buy a SCD new cancellation center very Omicron both is adjusted increased under EBITDA. system-wide Let's in centers Compass our turn store in the of on grant at to progress last We XX% was January performing Physician's Integration USPI XX% offers facility million to facility had XXXX great given there EBITDA with Same from year. grew challenging high income, rebound business and was X% that higher Despite grew with adjusted units. March a volumes $XXX exceeding and of that a February transmissibility roughly USPI rates. cases agreement portfolio acquired and been these well. of on track by our new in is has additionally, months. and the development good receptivity basis. expectations. and our XX ahead our SCD and drove

added we six to new We continue by facilities. level have. QX, development are energized In activity truly of the USPI

against or pipeline. are thesis have investment syndication, robust in under long-term executing reinforces a This and behind construction de-novos We XX over Tenet. M&A the

track strong, their hospitals, our delivering to million adjusted the of record consistent maintain in $XXX performance EBITDA. hospitals Turning

the despite industry and operating drove our Omicron analytics. This the a real-time disciplined channel, Our strong processes operators their effectively cost the staffing by was and balanced resources maintain facing. surge, is recovery enabled during management

acuity February, we match COVID kept supply demand early admissions adjusted hospital services. focus adjusted case operating Although to dropping were very in of our same-store and In less trendline with our and ensured QX surgeries. performance emergency saw hospital-based for year, resources COVID January. and convenient the had pleased our access on We quickly had needed X.X% those that it. the to March, of by we our all services in were We last platform we than our for below XX% admissions who

March expectations length indicated, pay premium reduced and in our XX%, of I Our surgical reduced all and operators XX% over volumes than as January. strong Nearly they higher March. our over outpaced were our of in XX% internal stay were by about were in by markets

mix programs enabled in higher investments roughly is pre-COVID X% adjusted Case was than than prior admission higher X.XX Our in sustained acuity. per was and higher specialty index year. continued XX% QX, which revenue

high We women's trauma, enhance to neurosciences, services our services, across continue cardiovascular, surgical health. hospitals, acuity including and

and in example, in and in women's expanded an access fibrillation lab Carolina. atrial cath new in included biplane Paso, South protocol For Antonio, a QX, an Beach procedural capacity expanded this enhanced tower in San care El Palm capabilities

continued also this improvement infections. to reduction South decline third Our in see Carolina in ongoing Phoenix in of were year-over-year XX% track. very is San in new serious quarter are This healthcare Fort developments events in campus with a safety which pleased hospital and slated on hospital We Carolina, Mill, our open to clinical and includes Antonio, South year. quality a in acquired the

had growth into quarter hospital a in five-year next had Conifer delivered in this contract we win EBITDA, Conifer's Conifer of year. will four hospitals growth. Baptist Brookwood return X% joint month May, new a Baptist maintained a $XX sales adjusted serve services revenue to health margin in which over Conifer; soon Of with is million stronger cycle approximately part topline start will to of at are a a The note, year Birmingham. conifer to have client and end-to-end XX.X%. Turning for system the prior venture. capabilities pipeline. begin commercial good that translated strong

capabilities scaled We our during continue the service from quickly quarter, expanding to clients centers. enrich X,XXX global our delivery to roughly offshore have We automation and global capabilities now team providing while footprint.

and an with addition remaining commitment ongoing of have broader functions begun part part enterprise to Tenet, to certain we integrate Conifer effectiveness. of as within efficiency the Tenet In

In our the foundation briefly of meaningfully Tenet, business care I to and terms to ongoing position, in which of relationships comment continue enterprise managed both improve. of our on liquidity also initiatives the

are sight Shield pleased care value-based of patients continue our an extension pleased and both as announce to We contract to and access these optimization. with markets ensure our Texas. of relationship Blue XXXX for four-year in Blue of importantly, care in especially they nationwide with I'm new a initiatives, through Cross support Aetna with of

to well all as effective and cash sheet flow of as the during during performance has corporate significant management. operational agencies. generation, in Our with quarter prior increases rating was credit quarter recognized by three balance upgrade This our rating the led years the

have certain sheet XX multiple reduce annual medical We items buildings payments. this times. resulting These in cash, debt of Birmingham million almost us million also of far to sold an office us EBITDA of which proactively save will approximately in interest $XXX cash year cash using our proceeds balance and allowed $XXX in $XX so of million

with hospitals flexed substantial are for and reiterating with million performance performing the Omicron and have USPI do quarter The volume our margin both delivered our and In growth $XXX with outlook extraordinarily the for expansion. top the the as hospital-based improvements. growth XXXX. well year We surgeries on We our or well, well year. executed line significant midpoint as and guidance in very month-over-month to a our range and minus impact, and a plus Conifer are pleased quarter of start tackled

COVID away. ago. a year were reflect part many A melt COVID coming on in assumed with surge were in of we time year and very where large we a XXXX would Let's vaccines at early this the ago place, off

remember And then of the with Some of Delta XXXX was Omicron. rest consumed you and conversations. probably those

our to this given a it over acuity supported position, to USPI's we turn plan. grow QX is the update committed ability hospital heads and despite level first This segment I'll against at executing performance in of informed our simply later committed consistently scale demonstrates detailed to order We QX So plan recovery our high to quarter challenges a discipline better priorities high to prudent to base. our leading by seeing operational strategic in in volume team with In due in in our look client we outperformance and to are and and pandemic. enhance care our now already our Dan down, financial operate We Conifer's new more better to realtime analytics. ongoing execute recognize results. being a for our to a guidance commitment at about continue perform point, remain summary, and variants, are XXXX. and keep

Dan Cancelmi

Thanks Saum, morning, and good everyone.

start Let's Slide X. on

industry and quarter, above in strong availability our across and in pressure first facing. a results the wage the early the financial significantly COVID expectations. are continuing were providers the Our labor surge Despite inflationary quarter

sale in $XXX generated all attractive mentioned. a office buildings of very As of businesses from Saum million certain we our Saum included three our effective our high by the cash strong patient million control a a mentioned, quarter, of of were challenging $XX continued net consolidated the and results well. acuity adjust gain Also, proceeds $XXX cost medical driven performed million, environment. In multiple for results at as

our Texas than of we midpoint that we to quarter to the quarter we the programs would our gain grand a supplemental Texas $XX the the able were and $XXX the if resolve later. well or $X We the which you approved Medicaid earned approval In this million on of the adjusted the in of recognize consolidated and second earlier million the guidance. guidance approved addition, of able we that as produced million, that in we sale revenue, pleased result CMS were as programs exclude Medicaid CMSs exceeded CMS revenue as funding Even Texas of and in be quarter, EBITDA in anticipated. income XXXX were assumed

in high key particularly each increase moved at QX last quarter, to cases few beginning and like the income items grand highlight the continues demonstrating deliver quality I'd due Omicron. patients. USPI continues In to the adjusted of orthopedic as we the X% quarter. adjusted quarter be pandemic, improved to last grew produced strong growth in levels XXX% grand strong to XX% recovery our with XX.X%. provide volume USPI's Surgical segments, GI its and despite surgical through compared to in early excluding excluding care and a a our EBITDA from the margin continuing to volumes COVID strong USPI. their were Now to EBITDA, cases year, and year, very USPI clinical of for surge income pre-pandemic compared cases

continuing Turning hospitals very the our challenging to our good delivered another quarter, business, hospital environment. despite

pressures, be costs. staffing nurse effective to contract temporary continues management labor Our extremely especially the despite cost

the quarter see benefit numbers, flat last costs As past you a labor wages increasing over of compared our in to can were despite and quarter, in pressures consolidated salary revenue first as percentage year's the year. our

lines. yield focus Our case our as index on strong higher in service and mix investments strategic remain margin higher acuity, revenue continue we

Our we pleased mentioned, we're contributed was announced hospitals, especially surge other in ambulatory facilities, a multi-year given Texas. statewide impact hospital recently to as our performance with And signed adjusted new of with Saum all from contract which the Both admissions. contracts decline physicians a Aetna Cross and X.X% Omicron, multi-year and our impressive national of Blue the also providers. cover a to contract of

a year, growth growth businesses. to Also continued EBITDA represented to turn good of XX.X%. strong first which last up EBITDA delivered top each we're now adjusted and margin our quarter. Let's so line nice to revenue the Overall, million over conifer, start quarter in produce their resumed X% a the of Conifer $XX also Conifer of X%. of year to

our structure. Medicare of XX, million $XXX received we Slide that We in quarter to let's flow the generated Moving the free in cash capital of pandemic-related flows, before XXXX. sheet and review repayment cash advances balance

reminder, due cash our contributions a our requirements, quarter to certain capital for working quarter annual our first softest annual is As XXXk matching employees. the such generating as oftentimes flow

$X.X line to continued maintain and billion of credit available liquidity our facilities. under sufficient more We than cash resources

our quarter, we the approximately of $X.X cash borrowings line. billion of and under end hand the of on no had outstanding As

we due retired our $XXX XXXX. in As in the previously million announced notes X.X% secured quarter, of

far Together, three $XXX unsecured quarter purchased notes this interest payments. so save open actions annually six Additionally, market. year, million will of future us cash due we've in $XX our XXXX these and the in million in

our continued focus and was 'XX X.X on EBITDA adjusted our to XX, EBITDA leverage ratio As a times times of compared XX. X.X December March de-leveraging, result growth

back look you EBITDA. secured billion. was if reminder, ratio a six is As currently leverage borrowing XXXX, times debt our our Also approximately to capacity about $X

Let me to for now outlook this turn our year.

of our XXXX for are billion at the we outlook EBITDA mentioned, our range. adjusted Saum of As reiterating midpoint $X.XXX

are We impact From cash continue target with to we a of deferred repayment, as excluding free of year. guidance, the the and pandemic. year, related guidance and cash to re-evaluate through move generation pleased $X,XXX continue at the the advances of uncertainties flow there our of flow start but it's our perspective, the We'll strong early the another we to to our payroll midpoint year billion taxes. Medicare are

Our generation drive cash we improved as to our has past to innovation. and growth strong cash the support expect continue flow several over continue to flows reinvest to and years, we substantially business even

capital opportunities. on As provide shareholders. center to repurchases opportunities with we've to and the the Q&A. investment grow our conditions debt mentioned further refinance in previously, retire we're benefit Operator? us financial begin effectively other enhance that, to these to ready flexibility depending of growth share capital surgery for or We possibly our cash and deploy And flows and opportunities, XXXX significant evaluating hospital continue with business, plan beyond, market evaluate to allocating

Operator

from [Operator Research. first question Nephron with instructions] proceed your Raskin Our question. Please with comes Josh

Josh Raskin

Hi, thanks.

look based based to place, So strategy at a all think of the value good sort other some care heard even of assets I past. to But continues for morning. these is care. ideas? your in risk-based there insurers, the or acute market focused and of and commentary of risk the sort Is in in Tenet more Vanguard now so test around I markets arrangements Tenet know broadly Tenet care, really ACO-like entities, and more targeted more I use had legacy so value-based health and footprint as to some more

Saum Sutaria

did and in particular. Josh to Hey, refer related care care yeah, it's I Saum value-based comments to in my manage

site we explain A I to. only course, the first in me for surprisingly, what referring of utilization in that's most is embrace many optimization. hospitals, strategy Not in care let the care of primary our outpatient and of and very of of efficient performing was site lower value-based in us value-based service not cases So care, costs incurred of but because course, cost primary of that a environment. lower the for the opportunity And the USPIs us care value-based are high a care cost -- enormous entirety nationwide. in is strategy that outpatient-based surgeries procedures care

based integrated with to that We from active those addition in exist. the larger, risk in the selectively one have that is balanced In have not to of Medicare us. participate accountable we we space. payers, markets, markets that, it's advantage more organizations entity and do risk where a are certain arrangements transfer on care entirely But risk

Josh Raskin

Perfect. Thank you.

Operator

Our next comes with Research. question your Wolfe Lake proceed Please with Justin from question.

Justin Lake

Thanks. the care moderate, to What as and you of see couple specifically. inflation managed as the and especially new Wanted to quarter, ask environment mentioned through went you Good a labor morning. then, contracts. started about COVID you did

are One market managed today. pressures rates that we've how I of around inflationary reflect in out questions, the some out your of there think, and big gotten might is to increase to care start the contract, the

newer could might versus you been that. what few -- last signing changed how those those reflect over have maybe tell years how contracts us to the Thanks. you've So

Saum Sutaria

Hey, the thanks Justin, questions. for

of moderate labor pretty The end utilization much premium didn't that on -- Let of driver the to focus Omicron improving productivity after of in contract really and I'll me of goal address costs Omicron that during then dropped management length question. pass labor discipline, precipitously a The January. a the managed month bit, of in as market operating our moderate primary cases labor the particular, continued stay and performance the the care day-to-day month, as the didn't to on quarter labor our little management, costs. was much Dan

driven more that few over operating past again, our performance quarters described utilizing SWB the by we've occur. the that platform volume our really total the recovery keep as were to costs So check was in

Dan Cancelmi

very it obviously And Justin, as Texas negotiations. able collaborative describe very it's into to would were a We new with were Cross contracts that and process satisfied I we enter Aetna, Blue Dan. of

providers inflation, concluded country of negotiating when signed parties. multi-year a about obviously all for number these consideration contracts and as Aetna we're new and we very we're and to the into pleased facilities those of inflation with contracts. And are Saum and in of point take his covers agreements remarks both mentioned have our expectations Your across years, always

Justin Lake

Right. Thanks.

Operator

with Suisse. comes Our from proceed question. next your question A.J. Credit Please Rice with

A.J. Rice

just being overall the the of toward sense the guess. backlog COVID in Hi a some sounds least us alternatively, then like, better a Can prepared about try volumes, get perceived, understand year? the and about know than I need surgery for of trends quarter? volumes. business and further glide might quarter, and step remark, to how -- your develop looks a January path the given some your what admissions off, some there's hit to volume volumes once everybody. volumes but being Or in trajectory you talking visits the of dynamics of eased the in and in to the there, quarter, you strong quarter what I pre at you're step a maintain you rest saw pandemic. overall the of and area, the in on making as that quarter, exited from both surgery you first end of saw you I slides, up you perspective to you are what outpatient the is you surgical do saw give the targets you're of in it March February fourth like comments how you which versus back your show in and

Saum Sutaria

over month improvement the both segment our over month and USPI for the and the to hospital pleased reiterate, we performance. in thanks A.J., in were I'll Hey, segment, question month

to both were, to procedure-based emergent mostly the with in surgeries environment. surgeries and and surgeries USPI our and that acuity obviously to care. focus and long-term pleased high consistent grow is continue see month improve acuity elective strategy each related in environment Our on elective We

about of terms feel the the been would pleased USPI it's recovered in the of So we're recover cases particularly quarter. say move exiting I'm in fastest volume. continue way we to forward. how I to those ability rapidly surges good COVID their surgical prior at and the case really

correlated strategic would volume high to and visits where department that highlight We recovery terms of particular a I through as the also emergency Omicron more standpoint, saw the rather were were acuity down. locked opposed quarter, lines the down we from that but environment have disappearing, was once the which cases lagging less in those the service than in again, our more continued as locked were abate, locked to has improved. to And states, the down to which less state recovery

Dan Cancelmi

we've I'm we quarter and little our very were just mentioned, overall Saum pleased a quick, one more real ever of compared in cancellation considering seen had on growth X% XX.X% to QX sorry, the at cancellation of Dan to in XXXX. color rates bit and in January year-over-year rated in we highest XX.X% see as XX.X% especially cases, USPI, obviously the

volume to when course have we and growth the volumes with with pre-pandemic our XXX% because to at the X% think our believe we portfolio Volume levels, acuity addition That said, XXXX So service of be continue to at year for normalizing really levels full of to new and just to continue going across levels line our will levels expansion the activities increase we volume returned XXXX. year. as across year X% the pre-pandemic think on well. forward, we guidance a physicians consist portfolio, the our of this about volumes focus of will compared

Saum Sutaria

quarter. improved we improving earnings thing to through other only add volumes is addition through the in we I'd AJ, And move move as the quarter, the as

A.J. Rice

mix? your the percentage that COVID and That coming volume to that with was back commercial or going a the Was you're volume was here the year? more point ask, improved year talking January more the that helping that's is in to Right. the quarter I commercial is about surgeries

Saum Sutaria

bit It's both. of a little

been been Medicaid line that well commercial include I'd solid, program. see well. they've But the to But back does volumes to so also item of as the to volumes recovered based have -- pre-pandemic that really get nice but We're to continue manage trends been say. does not have pandemic. that's have the stronger as throughout Texas As -- the are beginning to money those structure no, on Medicare routed levels, strengthen

Operator

Jamie question. Our next with comes proceed Goldman your Perse question from Please Sachs. with

Jamie Perse

on any just a morning for guidance on Saum, on. you good you're to are wanted bit that prudent, have factors longer more that get being all you previously thought are maybe given guys. anticipated update you that dynamics point, the yourself leaving than in persistent whether were touched room, information have confidence pressures, bit for before this little you you a behind labor I just comment going to the there's more areas a or that's sense that where particular a approach your some guidance. the recovery bit at little more more Hey, looking might lasting trajectory? What just having to being if

Saum Sutaria

as around dominated I assumptions I how COVID be as to quarter Jamie. we primary environment by here ago, in after and the end tell disappearing and appreciate guidance. all what we the with sat to goes the the to We Omicron. driver, the year transparent guidance possible. at that XXXX I surprisingly question. and the again, thanks place to making Delta surge said was Yeah, could that the update this approach would will the the exactly holidays, a is recognize and we And, point. straightforward you talking the and in around And COVID And need some then from the outperformance back Look, about that, vaccines best approach recognize around of be

would've response down, where bit course we we labor keep lie watching we our to what only area outta seem the already. is are variants the have quarter. which the discipline, materially globe I that quarter. in circulating have the obviously as yeah, the QX are heads and this operate around normalized we think improving, noted with So, that may of are first ahead, But be today. to there operating that our relative which is we second and more quarter, prudence is have to that rates a this more we market and by that other demonstrated discipline about I this Again, given the think carefully transparency contract just expected The coming same in until guidance I to update see of end said, labor

Operator

next Deutsche Pito comes proceed Chickering your question with Our Bank. from with Please question.

Pito Chickering

dig understand side good on Thanks my guess diagnostic I the was ASE morning urgent care quarter you're your guys. Hey, for quarter business, what the the the the we on ASE versus and first assuming do you on care the taking extra rate the those volumes, baseline few and growth of to volumes [ph] XXXX for how versus can just for questions ones in 'XX, then remind expectations, A what came of A.J.'s and did how in us assumptions? business, and questions. looking EBITDA imaging at the first revenue can business much so

Dan Cancelmi

second hospital quarter in were reminder, year it's the urgent care care the and a sold the Pito, In in in last terms under the urgent imaging associated the revenues the quarter as business in of as of We that first to second well. the those USPI subsequently ours Hey, business as numbers business the Dan. well year, with first last quarter as USPI umbrella last the centers year. ultimately we the the in was quarter transferred

million in with those them. over associated last revenue total, quarter of year first businesses two had in the So $XX

year that aren't year's 'XX's in obviously last QX in, numbers that's first So this quarter.

Pito Chickering

sort you guess, the XXXX for quarter first I center, much? how where of, you your so surge did with to on volumes Thanks AJ's guidance then ASC exit do then assuming in kind for in question quarter did that and volumes, of and that? versus expectations And what were the

Ron Rittenmeyer

strong. about we Pito, as Saum, buyouts, is is the of buyouts the year as buyouts Yeah. Hey, and is related complete we number multiples pipeline the confident we than the interest performing we in announce mentioned and remain ASC We large already physician when planned with to in achieving a importantly, the have transaction. three the look, completed a facilities the portfolio to communicated QX significant of portfolio and

Saum Sutaria

assuming case is quarter. surgical Obviously lot better a that entire to for we're the X% growth the first in X%. year, Pito, year And we this the did

Operator

proceed question with America. comes Kevin Bank next Fischbeck Please your with Our of from question.

Kevin Fischbeck

Great. Thanks.

wanted as labor, much said as down guess And think as happen confident you to to on so contract labor thought. that Why but that you that I where as trajectory would not down by Just as as I thought I for was and down get yearend to point March, still as you now originally XX% it were are far. what between that and up follow it you in guess, come much has making yearend think that you go? far that to you thought hasn't

Saum Sutaria

Saum Yeah. Hey it's I'll and and then I'll start pass to Dan.

markets into working. so labor reason these more things in hiring why settle isn't is involved, those nurse market months, that of start normalizing supply terms about thought rates. this a where which of we which a or placements the will reduce XX down may to Again, that will contract is market cycle the labor contract assignments the on some will are would've of situation the down have the be of demand, and way more to that would've we've travel, the more to I more hard past over to allow then relative in nursing just down, see hoped faster. together contract One that even we that quickly? labor permanent week exactly think XX to contracts about come and rates it the and is be contract coming four for incentive speculate to I the think linked labor rates thing help the nurses The come local it seems before off labor five it's contract moderation we when

Dan Cancelmi

And is Kevin Dan. this

surge to just contract the year, contract to running, we'd percent of we What and moderation. quarter in entire X% last the It's the year, through a have the typically for say to rest X% labor move we to to for you X% like X% it pandemic, see, was labor, around about, see range percent X% X% our the numbers year some SWB. couple Well, did just, SWB them, as a from was in we costs was a due saw our of X%, before quarter first listen, as the consolidated most Omicron. Just the more the as of of obviously of

Kevin Fischbeck

your guys a delay about up where out view I your settling want you rate a haven't ultimately sign of they end higher just at this isn't in there. confirm out just a to changed labor in view settled getting that might

Dan Cancelmi

No, not at point. this No.

Kevin Fischbeck

Thanks. Great. Right.

Operator

Our with your Citi. with Jason comes from next Please question proceed question. Cassorla

Jason Cassorla

then there, hospital Thanks. morning 'XX, and expectation the you're with think margin XXXX. But pressures in you progression of opportunity these that beyond the about to labor There's segment just I the longer that we was term pieces I hospital through be for just segment on number hoping the rest cost guys. And maybe of follow help we backdrop that'd if Great. specifically Thanks. many for in and up the cost could performance. Good you inflationary guess continued contract and now the a we as move moving very a commentary between have management helpful. discussing should any lap the cost how of as XXXX margin

Dan Cancelmi

we we manage Hey, all of were business three Jason, costs our were how units. quarter in with pleased in it's the Dan. we Obviously, very

improved difficult as just attribute percentage despite a revenue labor my effectively Brett we're managing margins spend As flat medical even exclude very of sale a $XX and our to the our operators SWB and that's year team on well fair obviously million remarks, the it's labor office and think environment year, this buildings, gain improvement. our Listen, I I optimistic some our we're much to team. the more significantly if to to say have year, you were about over mentioned as costs and margin Conifer drive as of his and in -- so ability

improvement. to for on that's our opportunities to hospital focus As recover manage business the our the obviously volumes whether ability margin there's there acuity ambulatory higher or continue optimistic in that and and business effectively costs we're further lines, service

Operator

question Leerink. comes Whit from with your Mayo proceed next Please Our question. SVB with

Whit Mayo

and at pricing good I thanks. in of there growth timing bit way programs. little distorted to composite sort a off admission quarter that's number? revenue head Is a of admission, adjusted wrap around looking per Dan, a but have based revenue Hey, a to hospital of better Medicaid adjusted a a these it's X% the clean and of number kind good our think the number, some the underlying, just supplemental understanding of pricing normalized like the

Dan Cancelmi

think been contracting a growth acuity adjusted mission of driven about on probably, probably, well as service our is and as area higher focus in per of how managed we've per is it had admission. somewhat one some basis just care an in on revenue is, lines. have would to about strategy talking by in quarter we last Hey, well, Medicaid yeah But that adjusted net on impact our so through thing, first of mind, as certainly I coming terms type but our revenue our keep the money of X% year's money did

Whit Mayo

Okay. That's helpful.

level just quick Just curious, of the you're the like Thanks. three, within you visits, on, the two, seeing happened what quarter or in four, squeeze looking pockets just weakness? one, ED strength return where maybe five, comment can sort one at of one,

Saum Sutaria

Whit. Hey, is quote higher acuity, Saum. elastic, the right. Yeah. ER is volume Obviously, less It's

the We when those even of the the came And a surgeries, through so go hospital Omicron was and that's quarter there that out in but you that the emergency mostly, through that were slower bit department as kind case. little slow in track particular of surge. admissions

markets, with those emergency volume down I up, mean seen I and economy, recovered kind that department in more we've over which the and in think half overall quickly more even up healthcare slowly, are quickly, of the consistent opened ER were economy, more locked opened and not a volume. acuity year what lower past including recovering

Operator

comes with next question proceed Our Ransom instructions] James. [Operator with your Please Raymond John question. from

John Ransom

then Medicaid are level what's on Texas that that month? the And you. accrual go-forward September of The a there. payments basically now, of to just -- how for was the rest Hey, Thank year? basis the a you per accrued

Dan Cancelmi

Texas be programs assume approved. it. the QX. monies guidance, Medicaid not we Hey, did the It was our John But Stan in in assume would we

we X. mentioned back funding assume thought then us we September that year, did call I million program the approved to our retroactive would and this guidance on was, $XX for previous earnings for our as the As about roughly program be last

include XXXX. the guidance were did recognize revenue our of not to in months four we that So able

period. So seven covered it's if month it you look at a $XX million,

So the annual funding on $XXX a million. a than go-forward basis, roughly a little less

Operator

Our question. your next question proceed comes from Brian Tanquilut with with Jefferies. Please

Brian Tanquilut

Brett. you, SCD of the any color with most you're us the can follow with to Thanks. that up questions, like now I backlog maybe, guess it's Hey, Brett, opportunities the asset are you on specialty, seeing in what you're then the us seeing are of Any a question, it, the terms whether can few progress a on purchasing that and ASC give good side, the growth give looks the labor just color you in morning you've where and of then quick synergy just on just for or remain, just months, full seeing how Hey guys. had by kind SCD. side, the or you terms

Saum Sutaria

Hey, Yeah. Brian.

a on in cases cases, MSK, So the ortho continue in yeah, of see we to just little around recovery bit recovery musculoskeletal strong spine. some

think XX% and as cases GI and in a the cases we particular ENT And ophthalmology lower complexity similar well. cases saw QX the cases for retina also year-over-year, of recovery was specifically, increased, I our in significant increased our increase year-over-year. some QX increased example, of interest pretty XX% in in

question, X% a compared coming some back second saw a QX lower was recover. and the by cases growth Brian? just more those that the we we saw the lower QX, bit about more some little we think when What, acuity time XXXX, come back of complexity lot complex really saw So of cases took was driven when in to to -- of cases your of

Brian Tanquilut

obviously a there's SCD side, the On lot on focus of that.

put You of and line good as same-store like margin are whole. number at, looking top a performance kind up performance a people and

then chain what finding SCD opportunities, color whether it's more are on you any can supply and synergy at the you maybe So you're give seeing or other items. operational

Saum Sutaria

Hey, Brian.

we on at our transaction. there all. very that based synergies, of announced estimates been talked terms we've comfortable so far a our when no surprises experience There's with about we we're In synergy

Ron Rittenmeyer

broadly. Brian end integration of I've XXXX, smoothly. integration of other going Yeah, that the more just facilities as of XXXX facilities. fashion only same the completed end The complete. the of no essentially SCD integration And is very first trench the the the thing to related at at operating tranche the they're is of add The was is complete legacy USPI

And news pleased the how the are milestones hit largely good is, prior is completed. really to of to both continue portfolio think being there been with any result due that's operating. on was facilities key of hasn't And transactions We and done the surprises. proud overall significant the a that I diligence

Operator

Our with Wells comes Please Baxter next with question from question. proceed Fargo. Stephen your

Stephen Baxter

thanks. thoughts on initial thoughts the a update to proposed Medicare Wanted ask your moving initial Hi, guess, obviously of parts. on role. the inpatient itself, and number there's I then

describing. some are One these, in there traded outlier about publicly payments higher the CMS of to benefit confusion is a actually seem XXXX, from whether the be hospital companies seeing that

you. as the in would to on be potential any helpful. thinking I then for And general, get So prospects Thank color approval we final. maybe the that you're guess, about how

Dan Cancelmi

Dan. it's Hey, Stephen,

of was was basket terms saw you roughly the announced for update, market Medicare adjustment that the X.X% as hospitals. In

offset the was items However, quite funding disproportionate a somewhat as namely increased there two that as which share other the threshold bit, well are surprising outlier was levels.

go net effect existing we're about a increase proposal the So roughly projecting all us is October X. X.X% in for what that into under would

others we be to working parties However, there the further that improvements appropriate if see environment given can that the any be we're to operating and in. with will

Operator

Hendrix proceed question. Our comes with from Markets. Please question Ben your RBC with next Capital

Ben Hendrix

give flat just measures also increasingly Thanks. the run difficult in neighbor this in labor that backdrop. going and which forward those extent Thanks. backdrop management a could helped if detail tailwind to measures just have SWB little you bit more in more or a labor specific wondering present cost Omicron, a on normalized you rate keep baseline

Saum Sutaria

to labor want a Saum. in is floor were Obviously, labor became not required deployment it pay very Hey, he the as our comment our helpful then this the Dan for ago, the hospital staff were utilize was and building somehow decisions have the has as a of not for which rates, it COVID-specific.. to of as by few high Yeah. complex is well been I'll hospital, operating years and analytics we briefly including may that capacity redeveloped available. that take very about with we by on anything utilization platform cost pass company, environment our add. COVID to structure strategies then platform quickly a intention Utilization that term. more which may labor lot that the -- foundation including wasn't floor This a the long contract for down with very, because other during been when of strategies and premium volume as retention and of you active know, to to

that to I In segment. hospital continue of kind manage discipline platform built short line with in intent appreciate bring ultimately, to of around normalize, the have the employ proactive this the continue stay the until we to our is look, begin because will back to capacity the and rates term, been So, to marginal to order of is some in very operate utilization that's we much yet incredibly length productivity, decisions online when question labor not the labor it and that a contract of strategies high. analytics complex SWB the cost management,

Operator

James question with proceed next question. Sarah is Barclays. Our from Please with your

Sarah James

you. Thank

bit EBITDA to was implies guidance more I XQ. your So make want and a front XQ some assumptions to expecting, and end I loaded the of understand little consensus sure transitioning

pressure? labor to you up that over the in you again trend are quarter? and in assuming you what talked month are and to on improvement cost you kind any XQ your on being guide continue the second volume in surgical X% assuming supply a utilization about expect And that to February, temp in improvement X%, Do for March. monthly month then through of So

Dan Cancelmi

it's Dan. Sarah, Hey,

of as we move year. year? other moderation moderation that expect Let try and there we through a would timing. as we assuming assuming further through haven't be by the that the but the me to Will COVID in it's move get move but pre-pandemic It's Yes, levels that, labor, question that. we surges we expect significant of are as year. contract in mind, becomes address said timing ultimately lemme question moderation assuming would just of the we're the the just we some through that, there's back our to do end The no that, we We not year.

In terms of…

Sarah James

Supply cost and surgical volume…

Dan Cancelmi

Well good obviously, particularly perspective, a volume USBI up to we're start the from side. surgical on a

keep point. we'll to X% quarter, second in a question? that X% we Is obviously assuming growth we're certainly at and there have anyone so that close guidance quarter outperformed this our question. the next We mentioned, Operator, reevaluate we'll first once evaluating I year. the As that and

Operator

with Our Please comes with Mok UBS. Andrew from your question. proceed next question

Andrew Mok

a about just follow up second of think you to Maybe quantify deal should the Can the of contribution revenue and question. SCD morning. good balance SCD in from inorganic the progression and Hi, Thanks. for the the how quarter, we the the SCD timing revenue year? synergies

Dan Cancelmi

our to or, related going not of of We're specific Hey, to to get or into Andrew, one group it's numbers Dan. the centers each centers.

SCD the million three centers of $XXX to Saum Brett we about once optimistic mentioned Ultimately EBITDA to those it, and centers, million are that As sticking this we're and well it'll very with $XXX and centers mentioned, they're estimating fully related ramped EBITDA the year once of ramped, have by the four. estimate roughly year is at going fully remain we year as that of approximately you synergies. integration we're the be beginning our the

and pleased is transaction also well. very So agreement and year five partnership with this a optimistic great very as development

Saum Sutaria

of SCD those expected we with ahead a XX. the it novo of transaction relates towards ahead end centers specifics, we're said at year de in partnership without probably or Dan, point, we're as already when do And -- of centers actually, beginning to that QX, into of the done, was at XX or the that Yeah. year getting to the plan we,

pleased SCD facilities, not of So, bringing number the potential as the with that partnership facilities very quality us of is only opportunities. but to

Operator

We today's concludes reached question-and-answer This the the of session. end teleconference. have

at your you we for disconnect You thank your this participation. lines and may time,

Tenet Healthcare (THC) 21 Apr 222022 Q1 Earnings call transcript