THC - Earnings call transcript Q2 2022 | Tenet Healthcare Corporation

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Operator

Greetings and welcome to the Tenet Healthcare Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host, Mr. of President Vice McDowell, Investor Relations. Will sir. you Thank

You may begin.

Will McDowell

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

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

Saum Sutaria

Will you, thank and Alright, good everybody. morning,

billion above Volumes results of deliver consistent our levels. net challenging XXXX This convinced pre-pandemic the declines. We enterprise cyber of consistently services Act pre-pandemic upon million. we of We for market USPI approximately disclosed excluding quarter, EBITDA previously $XXX strong continued with levels when revenues XX%, prevalence CARES based delivered the surgery recover attack. COVID disciplined demand operating were consolidated that will remain grants. once to ambulatory growth EBITDA pleased through $X.X and again our management a are and generated impressive

labor, as overall complicated the to and labor despite net the in very from of contract we environment. percentage challenging in performed On rates SWB well and a hospitals year. Our reduction a managed modest prior revenue utilization, environment a

but approximately cyber added successfully pandemic. full and a we insurance to We’ve QX. this as from the speed slow pressure earnings this had negotiated volumes employees resolving this companies. quickly an incident unfavorable insist possible. clearly have and appropriate April during and in XX at Unfortunately, claim are resulted on payment to collaboration agreements uninterrupted of we COVID practices, resolution while the heart the as and cost continue California on nurses focusing this our the contract high new the the will represent California challenges, have on that runs back with partnerships ratify strategy our volumes midst agreement of in a year acuity the includes the employ quickly. Nurses its cycle. at three patient we new We The to with pleased on to attack in to the of unions building of a onset filed million these in wave to of on our are In maintain to management Disruptions Association hospitals. EBITDA We May. coming that approximately insurance eight resolution care our the $XXX support appreciate disciplined the our as adjusted since and reasonable significant estimate impact is continue our We committed driving

Importantly, this impact. should be one-time attack considered

operations. rebuilt restored we been network have and systems have Our

and was we April cardiovascular, in strong June, spine. acuity discuss that saw May including which in significant volumes relative and monthly we typically growth patient believe it that As important about results, service neonatal such do year. the note to second June optimism of saw recovery creates high individual half and to is the we we not acuity

and hospital-adjusted Conifer grant at delivered and visits surgical our outpatient were June, income to in and significantly XX.X%. improvement in improved saw growth also EBITDA, margins outpatient revenue compared May. We excluding mid-single-digit surgical and strong admissions, April visits

important our to These margins basis. and our focus an center. continue ongoing of on We multi-shore recruitment sustainable component expand our global on adding a in work are activities scale business

efforts We continue point in and have a for to our and seen revitalize clients. increase solutions with our opportunities sales significant new existing

In fact, last than have that new opportunities in clients pursuing with we the doubled more are year.

will performance. In to services ambulatory cycle point extend enhance solution revenue addition, further USPI to Conifer

our in our in $X.XXX competitively hospital segment. can for the I reflective more billion. would segments, diversification the performance and Conifer in the ambulatory you continuing relatively EBITDA contract insulated this XXXX results guidance exposure, enterprise of as of year We management believe outlook as which and is to businesses. once attractive of surgery see, As our again of on discussing to year-to-date well reiterating balance the the $X.XXX minutes deliver USPI and as our across we full confidence are our we a adjusted range labor are detail. are each business disciplined Based few our to year, spend from an like billion

this the USPI’s acquiring to Scott does XX & in White’s our for esteemed Baylor we accelerate shares We which million area now position equity our not Fort the end the voting partner over investments market quarter. approximately at collaboration of in impact continues USPI second Dallas own after high unabated. Our Worth $XXX in enjoyed transaction growth work years. XXX% for of have This with

health to deliver the of that and operational largest USPI grow. planning, our are that facility Our for country excellence preferred JVs with partner strategic one operating the as the advantages remains is physicians scale-based joint unmatched. work surgical Baylor market-level together will venture continue teams to in and systems both

to share. by leader surgical We approximately our ambulatory space are We the XXX see ASPs fragmented to have and XXX of with in the market end of X% in runway place significant the expansion towards XXXX. expect highly footprint

urology the XX for consistent ASC expect country. the roughly well-established few EBITDA Urology first which United at with We these team transaction with constantly million years. as largest one $XXX it the scale. an we in their growth our the in new physician historical United looking capable from The highly Colorado practices less independence Urology PE is our practice key number closed ownership we is investment below than help while is doing within Group. markets larger to new are and are Maryland, in ASCs MSOs recent like ASCs with development multiple five recently CI unlock dedicated acquire drive adds is Our partner. the identifying collaborations, such to opportunities maintaining of one growing independent of the physicians of announcement a place their physician an we in growth practice and we centers Arizona. deal times where groups UUG VACand Through Partnering and have independent strategy. platforms diversification strategic a in partnerships remains but of important and

a operational synergies makes us attractive excellence deliver to ability and Our very operator.

for partnerships have that We some not mentioned. we quarter, who signed including Health span a investment. in robust an the intend of in years. to level foster to of I acquired many each systems since LOI UUG past already and more or System continue All support with example pipeline JV M&A the deal comfortably also we with One million $XXX than on is recently successful our ambulatory have strategic expand health been relationships We the seven such which partners XXXX. we relationship facilities year invest build that to with opened to Provident

under currently in we pipelines. the to from We The business. business highly continue hospital construction. construction what the originating our We centers in see active partnership business or separately capital-efficient in team and fraction our surgery capital FCD centers needs are new are XX is model from have with be of that USPI that syndication ambulatory development active of a about

As capabilities, we growth we to ambulatory in for free continue enterprise. to flow drive scale expect substantial the cash our

strong to I’d time, guidance during adjusted and to months challenging to outpatient from maintained diversification value and operating building that discuss At over year Before business Three we Whether leave results our free a we we and significant tough a you QX a for saw I a reported in through disruption our the results pass we EBITDA favorable more in cases. COVID call or execution. flow. commitment for cash that thoughts. environment, inpatient detail, like full are a to stakeholders ago, few with are Dan disciplined

obstacles, the fall in During for price EBITDA the quarter, full stock COVID-related and unplanned by our third, second has due flow attack. operating than results and these delivered for team adjusted continue and guidance cyber again free a April staffing witnessed cash utilization to see more partially staff to our have we maintained and Despite experienced year. solid May disruption

improving in data-driven it we while labor healthcare financial strong continuing but execution we’ve is Our our underlie find the On resources platform portfolio successfully created. these support results, is affordability. cost challenging same to generate labor, operating quality that are well. and the faces strong now, environment are time value elevated, in for at using we remain efficiencies payers are that mix driving Right contract everyone and results. services It operating managing for but the we same patients, executing

of insulated reiterate, EBITDA represent about are from USPI our Importantly, and which adjusted both issues. and relatively half Conifer, these to

the where growth stock, and own As company now you’ve best which shareholders ahead. runway we with a XXX% very the voting our heard, compelling our we of we move of about are in USPI’s is bullish are We given a USPI. interest believe

EBITDA are hospital-only believe I’ll very our we attractive strong be results. details XX% we continues well with XXXX it material would as on ongoing EBITDA but diversification you. $X.XXX of the reaffirming appropriate. guidance for now an now, Tenet towards given segment. USPI, investors surely and us progress more believe And financial management our premium and We USPI the that, hospital to Dan, of We the full coming adjusted range to provide from $X.XXX Dan the for in a year to Even the Conifer, will present billion. to conditions billion as company’s fair the valuation pass opportunity as business

Dan Cancelmi

morning, everyone. Thanks Saum, and good

our was million, acuity patient of SW&B supported consolidated start the consolidated second results despite a and strong incident. All cyber generated We facing. impact very wage industry reiterate To continuing points of of $XXX despite the severe We percentage lower our of the results in our XX labor by inflationary segments as financial adjusted cyber labor the Slide last are performed that adverse were despite produced guidance resilient control. three Let's as Saum attack, and across the range the X. a mentioned, high continued quarter effective cost year what pressures than above as revenue as security were challenging were pressures the well on well labor cost our providers basis of midpoint the availability business our environment. management and

that were guidance that included items large second Our two not in quarter each other. included EBITDA essentially offset our

approximately patient This the EBITDA item includes to and the million first previously impact in June is cyber The $XXX announced business volumes incident. impact an interruption the our lost incurred incident. adverse the in adjusted from that remediate revenues business and cost to due to incremental hospital we

claims we these filed through losses Importantly, insurance have and coverage. ample we have

While of receive the year. we recover any not we in to proceeds quarter. second guidance in insurance of the insurance the proceeds We XXXX did have million future, half proceeds our $X in in expect the included back

We and record in will earnings a manner. have sufficient we that when proceeds disclose and coverage in transparent received

essentially in our items large offset income guidance earned these of that other. not the was Again, quarter. quarter anticipated grant we other each item in million two $XX The second

to our to deliver XX%. to were like income results. its to And margin team. quarter with for few which XX% EBITDA last highlight continues USPI’s pre-pandemic at by continues USPI, the and Now XXXX grew USPI continued compared operating cases key levels I’d grant beginning XXX% EBITDA about very strong of reflecting a be surgical each segments excluding performance items year’s second of strong strong

our business, that the operating solid hospitals and despite the quarter hospital another faced. environment the we incident cyber delivered to Turning difficult

the the to quarter this quarter, Our basis, approximately our cost. first consolidated costs contract of be from a especially of X% consolidated adjusted Again admissions. our about and patient did were provide to The in on of staffing effective were year. despite contract temporary which labor X% decline labor historically in create contributing a reference volumes the SW&B was X% management to last pandemic very X.X% range. a in hospital down cyber contract the X.X% before X.X% in security On frame continues in pressure the pressures, cost to labor year the incident

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

them pleased to facilities, prior of providers. all United with our XXXX national our index multi-year pandemic. And we XXXX higher other an than that covering hospitals, we Our year-to-date with to case reached announce contract mix about agreement to XX% is are physicians and through the extend Healthcare recently ambulatory

delivered produced grew Let’s from and produce importantly, quarter. strong EBITDA a to X% now margin And to turn year. of Conifer XX%. which nice last also XX% Conifer, revenue external over Conifer revenue growth clients of about continued

to move slide our structure and sheet and items. flow, now Let’s balance review cash XX capital

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

years of As line. quarter, we in We before of free the two Medicare million ago. cash quarter flow of and of outstanding advances borrowings the under that the million pandemic-related repayment the had on $X,XXX cash end hand approximately generated our received of $XXX no we the

having stock held it’s the the for This about the Baylor will us the X% paid out remember represents million the we basis. acquired $XXX million. XXX% be we on in of monthly important $XX interest-free do interest White next business value. value want over & own remaining an with to by previously was enterprise point million that equity $XXX I payments to of the three voting amount USPI’s years pointed not Scott our out release, by As that now of

high We this believe interest we have performing increase and are pleased value this as our the really increased to opportunities. strategies of the in now than X% in given rather ownership future growth USPI’s significantly asset would

are in NCI result increase As our this expected this will related elimination earnings X% stop about earnings or transaction, quarter. to the to the expense USPI of going a third $XX Accordingly, non-controlling of a as result we annual more million of beginning recording forward interest expense.

As $X.XX next previously debt XXX due we was we the billion in were issue billion of maturities secured due significant still of borrowing in two debt if retire discussed billion as early we have quarter, had second X.XX%. debt able needed. no capacity available We XXXX rate July an to of proceeds notes used $X the of for year about that interest until that now next years have $X we and XXXX secured to

to the As a under think leverage quarter on about of the result and ratio times. focus the you end was of back our XXXX, if X and our X at continued significant was when deleveraging, leverage growth little ratio improvement

have financial maturities We to over support balance which or past years pushed our out the our gives us several ample initiatives. strengthened sheet and flexibility retired growth

year. turn to now me Let this our outlook for

not million As mentioned the Saum adjusted incident. at midpoint from back of reaffirming the And outlook mentioned, proceeds our half EBITDA the recovery for we the year in range. of as cyber of $X,XXX are again, assumed guidance I the any of before, we have insurance our

management to and interruptions volumes impact assumptions we We COVID we business, of hospital generation margin release reflecting to the well From primarily continuing various the billion incident, and year provided excluding $X.X the also cost. and revenues. of continued volume assumptions the the as cash of and guidance in a of repayment for advances hospital impact prevalence, perspective, the and for labor the another the due cash approach our the free cyber namely patient incremental capacity our on admissions admissions, payroll Medicare strong our lowered flow updated as about inpatient in midpoint deferred of business taxes. flow disciplined adjusted In target the volumes depending from at

has continue years past plans. substantially executing cash to improved generation several flow Our while growth cash free we on flows expect and our to free over strong the drive

deploy benefit flexibility As to capital before, our cash of for these flows financial with we’ve talked us significant the provide about effectively shareholders.

have priorities changed. deployment capital Our not

Operator? $XXX a opportunities to second, the enhance allocating and to continued growth that, the share on refinance our further hospital Q&A. USPI investment begin including capital And depending First, surgery million next to evaluating higher market at opportunities third, retire business; of annually program plan debt; our year and to focus offerings; continue possibly conditions debt are center finally, service grow we acuity we or on least other ready repurchase to and beyond opportunities. with evaluate

Operator

proceed question [Operator of question. line your Credit comes Suisse. from A.J. Our Rice with Please with Instructions] first the

A.J. Rice

congratulations for next to and year. through tough am and everybody – year I ask well. about navigating the Hi, back half the going environment We puts for – the of takes pretty on you a

of midpoint quarter, I you like particularly something things million at and would it’s about for quarter think seasonal $XXX would will which third implied the that quarter as mainly other period? and that quarter sequentially Your a $XXX EBITDA be your you that second comfort for like up. of there million out half with think and from to the down guidance EBITDA are ago puts Is fourth that in be the sitting but this will year for return the in give be both then guidance takes something step call are period the are a fourth back that the and patterns, where for you year you the

Dan Cancelmi

Hey, A.J. me address that. Dan, it’s let

the the in back In business. anticipate not the terms the is in year, we about unusual seasonality which points guidance in the half quarter your do of some of third

deductibles the So, as the as thinking the end earnings not only to by about but the about quarter of stronger, that and forward when procedures move fourth are fourth quarter, QX many for $XXX feel in try importantly for hospitals more to comfortable year. historically, much sequentially meet USPI’s you seasonally we QX million, is get moving to Then the business you estimate. the their people with of

as side ramp a anticipating from QX strong USPI are on the we So, QX well. to

A.J. Rice

the that year-over-year quarter FCD, And needle has that thinking much you about particular? fourth in that for – moved is Okay.

Dan Cancelmi

that’s growth. December the last Absolutely. Absolutely, part that year-over-year transaction, from – transaction also the we completed FCD of

A.J. Rice

lot. Okay. a Alright. Thanks

Operator

Thank you.

with with Please the question Our Mayo your proceed comes SVB Whit Securities. line from next of question.

Whit Mayo

of in changes just the maybe to and helpful. on or would the the you elaborate and referencing past guys have of are Brett efficiency and that just the more color for making extension edge of I am Can you are these doing? more alluded you lot be is Any May be to what a maybe productivity on specificity even lot more program? investments Saum or an USPI that you of a the that? little call initiatives. this bit Anything thanks. just Hey, Are maybe in specifically the

Saum Sutaria

you if don’t I why further needed? Brett, that can take and comment

Brett Brodnax

an edge mean, is program. I is refine Yeah, Yeah, edge continue and our philosophy ongoing it our think hey, Whit, to this to us effort Brett. for I

So we’ve that program the XX build that years to certainly was founded continued and since philosophy ago. company

So, I of continue in edge a all, learn that more facilities we enhance better as at period facilities but good process it of and time our don’t terms as think it’s to a and change overall drive continue a a and just over against strategy to benchmark we way. of refinement performance

Whit Mayo

Thanks. Okay.

Operator

Thank you.

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

Justin Lake

numbers of questions Couple Thanks. you. to

First, contracting of to contracting to XXXX in on you revenue? side, little but on in that can point, you mentioned a issue the am the IT the color $XXX to previously. on terms us seeing turns impacts revenue see specific lost terms more you rate sized the cost And million for increases would give commercial commercial want you United margin relative and you then contract, are us of data you how it sure a what and and not that I give how

going three look the to versus and – us maybe last going years? last contracts to of like two years give are think three Thanks. renewals look XXXX to like So you two those to is what

Dan Cancelmi

Good morning. it’s Justin, Hey Dan.

as EBITDA impact pointed about million In quarter. the the to terms we’ve on incident, out the $XXX cyber approximate was the in impact of

number But the cost out to as of incurred, each cost that between terms specific break lost lost haven’t would that revenues, majority but, lost incur revenues did to the well of down for of those. incremental vast million I you a remediate volumes, incremental we it. $XXX In yes, put tell we relates and

Saum Sutaria

lot terms were would of care terms and extend contract. say, our to get not in your of specific obviously, the we to managed terms obviously we point, not multi-year into from to contract with rate there happening. see into are pleased about, related going X%. in X% contract – we cover that is I or going But And United But, We to gives we a you listen, into plans believe hey, questions get we to the CPI visibility get don’t us just guys increases the entered our long-term up pricing. of

the escalators We in have contract.

with We terms arrangement. the are of the pleased

that’s is something next In it’s year, mind plans terms beyond, will we specifics. think X% we we terms. going obviously rate increases of we’ve having have negotiating do of about talked environment But overall – take see be what into obviously, conversation are to and rates going is, X%, the into comment the X%, range. with we every to we past all where of are I type really Overall, in when consideration on we about that top inflation, and am

Operator

you. Thank

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

Pito Chickering

this guys. am angle. from a a morning security to Good noise for the different USPI. due bit follow-up COVID quarter question Hey. on cyber from hospitals of of and and noise a just I There to lot A.J’s with going is

in July much that guidance, on us the you was and coming what sort walk revenue revenues the and around us how more the from security trending how of that back trends around is guidance commentary the feel any year? gives And versus give can you a to reduction versus then quarter of in the third you provide in free little cyber saw confidence June sort of of detail June. you So reducing through half of for

Saum Sutaria

we substantial Well, we operations at all, business. normal got saw to back let cyber on when some our in have can material first reiterate, into all we to earnings saying what didn’t part of recovery event of hospital was first impacts I specifics. Pito, the on then me But start the the and of call, then The USPI. get Dan,

recovery base mentioned was them. that business, So effect is segment strong a Conifer. of a number drive hospital And I dimensions of on all primarily little a this the with that the bit virtually on

the And offices their importantly, finally, we we in are and of and improvement gives but of margin effect are that cost as sitting back opportunities the earnings shoring the I of quarter to think the a not we view bit cancellation that’s provide just ongoing the some this there, second a from downstream where at of the is get pre-pandemic quarter, us the from have growth expansion attack look risen, to a in COVID that that volume. has rates at I runway year. in off thing physician effects cyber of initiatives XXXX On that little from can one that second the a as strength whole see environment small initiatives, that said, throughput hospital lot of then half or part and Look, out so also perspective. the COVID beginning confidence expansion continue was, opportunities. good an activity levels so, of running And USPI, a we Conifer, the disruption effect. that’s roughly a And has two second end and is, thing to you increase segment the the of pleased are

in happy So, to area. the think effects seasonal see as the that are it the this strengthening showed Dan Obviously, the we demand for COVID get that actually is out, ramp. strength that critical business the fourth we quarter wave, I even really had we pointed through going as and in are

Dan Cancelmi

as hospital saw labor pointed in guide, revenue of strengthened the contract quarter And Pito, in revenue on couple QX updated also the during that, really business things out, and guide, the our the June terms the as of we and we in moderated. – confidence

believe and and continue to in the cyber to to obviously USPI. us So, gives you The that optimism grow. quarter to staff that’s marginal really a at about also out, things. sign that, saw whether half but down about and first certain volumes. so in One, second been we’ve we to it when incident pointed we year year, you the the that the that those the several when obviously guide certainly is as marginal half economically the for addition the positive part volume and of a going well cost relates fully of as more costs our sense guide big looking We quarter volumes those think the based managing it’s revenue back on trends back of and of think operations the how makes

revenue maintaining But we’ve we into our and taken obviously back our So half the that guidance. in through are overall that earnings the guidance year. consideration managing in of

Pito Chickering

Great. Thanks, so much.

Operator

you. Thank

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

Jason Cassorla

Thanks. Great.

perhaps So, alluded demand their an if seeing backdrop. the for just element pressure to if folks or this cancellations any wondering am on But income otherwise expectation high USPI. I inflation you are you continued for reprioritizing discretionary are spend given

color helpful. on commentary that a Just or be very would Thanks.

Saum Sutaria

in we We cancellation we see, to related mostly standpoint a that mix small impacts see a that the impacts would fundamental describe look that feel of – of I we type Yes, activity to some feel we good acuity preference the at I question. what and even comfortable is business. or COVID more are you demand tell procedures platform. within from seeing the we that in is that very it’s lower would the the carefully opposed consumer the the of shift a cases are as comfortable in background the demand with we within seeing

And so, are USPI in the obvious that that shifts at point, that and demand any more affecting I there are business is evidence this with don’t pleased today. see, fundamental that we

Dan Cancelmi

a recovery quarter, recover slower and good second alluded saw lower cases some we was it. were Hey, the you to that acuity would the and ENT a from also I natural actually the thing the of and such GI really to pandemic, as of Saum, add that In only so, and sign. ophthalmology

Jason Cassorla

Great. Thanks.

Operator

Thank you.

comes from Our Please Nephron of question. the next with Research. proceed with question your Josh Raskin line

Josh Raskin

Good Thanks. morning.

is am they’ve they levels willing they then, what normal travel do sort the are can it relative nurse a us maybe two rates they many of where got is exposed or maybe to your continues a that to are you tours workforce now been were a travel your to give right. sense as stabilizing seen past, have these think maybe years seeking a where base front, curious, ago? pre-pandemic? there elevated They’ve call where just we’ll labor at relative staff in And new sense On that of nurses nursing than not is you even you the or for ago hourly of year I them employed that do

Saum Sutaria

the Hey, overall grad anticipating in of this new rates in know Saum, having that than the past travel. both market been back of Tenet help an over challenge. of nurse opportunity the a pleased we're And formed and internal throughout we to recruiting see price nurse were those TRA, I stability. I this are school own and traveling environment bit been is, probably based or Agency out tremendous the lot discount points assignments, out our a us that the we rates what whether nurses nurses help traveling within Josh, terms to that normalize upon high. would – and use from in are even standpoint buffer towards the the recruiting a we a travel to to data this And the rates will that price new things. normal, they couple we terms now the data point to at - points create a feel the One longer-term somewhat a there of our points higher has of that's efforts that's as and you with that or in rates resource of nursing there. are the overall is so think somewhat. I earning the Resource norm traveling run with it's that that for come year staffing still putting as pre-pandemic, that relationships as it's are that desiring of a don't elasticity a impact but

time, in want. for they be where retention, manage in think least seek high another continuing creating I ensuring is an to or an at recruiting, important in at same career degree this their So, environment going agenda execution contract really to can And down. the nurses paths that for year they rates in two item the labor of

just are that you're – at our rates into in and that alongside point nurses in you to base for example with the simply grads, rates. rates. that less have base new looking of about have some think out would gotten would that is that details lower the haven't wage complication on new bringing tenure We the it's tenure I unit

think And those based we you of I between there. Dan, to managing we're that want balance wage if items. so our those hires upon don't the well those - very the add anything know - average

Dan Cancelmi

is been very we've the to side, which No, focus what that's think been and labor labor right one on right. of had full-time has focused terms direction. the high we that's in on strategies to contract I recruiting of are a in heading contract at benefit reduce spend least employees And of the on seeing the

Operator

Thank you.

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

Jamie Perse

or other side? guys and the side us are chips, any supply any you Hey, bottlenecks manage? basic these if categories are media USPI or to good contrast hospital And getting lot Can these of a on supplies. creating guys. morning like semi give dynamics We the or a others aid of things any sense hear either volume you shortages, changing about impacting of easier

Saum Sutaria

what specific for whether Obviously, things, supplier it's when significant it's have what had of is that's given other say that did others, there media cost Saum. impact like of Without or they I the environment, we acute that say hospitals are to chain that our Yes. area many additional contrast a participated question, that ensure not of would local a again, through we had, what various sitting is clinical things, I Jamie, made for patient other issue seen machine as in I are to items in putting but wouldn't suppliers to care. supply where manufacturers such period equipment directly certainly any been capital an that have we you've that we liquidity would cases disruption this and including manufacturers some we the in patient our not the shortages over shipments from have there But describe supply shortages, time. through with have describe in as certainly, sharing we see those. order any of helping been headlines still in well-oiled shortages and that major needs kind us. manage expense delays of I this and those working don't and necessarily there fully unit we become a other markets in chain by would in seen, have but

we've to that can into a area offsetting been narrowing improvements pushes work that based range you results that continued trends. in It's – pandemic you it's focus. environment our the been do supplies the is during quite continue multiyear other The in services. successful on purchase of have the the And this inflationary this in on suppliers including and of and line, to has see upon course, thing,

ongoing this much hospital efficiency is very agenda at USPI. and So, an business in the so

Jamie Perse

Okay. Thanks for color. the

Operator

Thank you.

the of line question Please next Ransom Our from proceed Raymond James. question. with John with comes your

John Ransom

fair years half say back a it's USPI volume standpoint. been The there. softer to have Hey four guidance, the from last

help maybe assumption also it's yet of for a on the the So, out I I'd of mix all what there in building the you could numbers. mean, sort accounts, is basis half shift same-store a be [Indiscernible] back not with volume curious your on up And year? consolidated by orthopedic you're

Just you. help would be those with Thank great. both,

Saum Sutaria

in the up think second I – your question were USPI's the and business. orthopedics John, in mix Alright, and were – I you questions guide half your think breaking throughout two that about particular

we of that obviously, tackle particular continue rates is in orthopedics, just the which largest So growth USPI very, the me first, outpatients. at a Orthopedics, very latter market important let see attractive to platform that USPI. provider and is in as within

we've Whit's in that undertaken largely the into in As USPI, and well management Brett described been labor chain embedded a and seeking at question, platform has data hospital new analytics the same supply energy in efficiencies of side. to both before leveraging kind the

at like the things based within So quarter yet finding both high on has we been haven't we talked business. efficiencies acuity types about of this margin USPI one is expansion the the that of orthopedics and are new additional

of that because Brett, orthopedics do efficiencies. bottom-line pretty we as cover good that or guys the perspective So, want to a the second ability Dan you from lot the platform and of that put to recover, the volumes feel half about guide? to

Brett Brodnax

Saum. that, Yes. Yes. Hey I'll this is John, address Brett.

less of second half, put – our the which in had in than had of of basis a just in half XXXX. $XXX guidance to Therefore, At suggests suggests for it context, EBITDA is midpoint, EBITDA half. a the our million XX% we percent that the second the So, the we in we million $XXX second on little XXXX. first half of saw

looks feel pretty considering first breakdown and half with between XXXX. percentage half we comfortable how So compared the the it to the second

John Ransom

so much. Thanks

Operator

you. Thank

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

Joanna Gajuk

Good today. filling morning. actually Joanna question. taking the for is you for This Thank Gajuk in Kevin

couple just follow-ups. So a of

labor contract versus mentioned expense you or decline So QX QX. labor in

you and or can QX percentages around questions mentioned So absolute a recruiting But us, us give labor QX? also, know trending, can of the give traction QX see there hour in permanent rates some temp seeing you versus there. I you where wages. per nursing in were flavor some And either you

be helpful, you give would can you. stat us any Thank turnover too. and on So recruiting

Saum Sutaria

to want know don't I if Dan, cover that? you

Dan Cancelmi

Yeah.

– In terms Joanna, Dan. of it's

the in in we in put of there. close and the first were the moderation quarter terms did stats first to compared closer the the quarter to rates, and we contract We the second see quarter, X% some In out quarter. to second labor X%

X% saying was we only of we as but we anticipating – of are the we moderation. utilization back year, get that's year. to as obviously But think the nice some that were were so well. a the right additional rates obviously, heading rest we we where through the pandemic are we not as move in But last direction. to about where mix and are about probably we near end not the going And So, year, before anywhere improvement, and we'll see

out average are again, to least Saum all minutes specifics has for But into on from In get rates depends on in that the the of you rates, it overall – impact ago, tenure hiring the an terms terms employees. we're of perspective. pointed our again, not at clinician full-time the few as that going of an a

Joanna Gajuk

recruiting outside of the tracking But it's efforts in stats I of any in terms guess, terms where your rate, turnover of percentage-wise? and

Dan Cancelmi

Yeah.

specific We get going are not into turnover percentages. to

Joanna Gajuk

Okay. Thank so you much.

Operator

you. Thank

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

Ben Hendrix

then a is of you that X% where and that, of for MBU there years rule, update OPPS are that of Thanks. that then both five-year an push the on I a moving about I a period several MBU on so X% year? coming it to wondering how back hospital implications think get guys based the your MBU was we're up maybe to CMS lagging given and proposed year the OPPS kind update kind CPI, update move a to kind of initial last update was it thoughts and know CPI-based rate on I next of CPI-based the ago after is and hospital from to also, kind or thinking

Dan Cancelmi

Dan. it's Ben, Hey,

Let rate are increase the them adjustment some the that was we there alternative address you impact rate even when services, for and proposed further information disappointed. for the me proposed XXXB I rule that of that. flat. would anticipated provided rate almost And say that adjust that outpatient the is OPPS was the

working be to constituents rate sure in given proposed. obviously, And about being with are update environment. estimate inflationary after We the that's raised concerns that's we all the we right points XX disappointed current – annual at ours less the our and the increase million Ours XXXB levels. insufficient appropriate we're now, But are making appropriate of basis with adjustment, or the $X terms believe would be which increase.

and road, of changing out. the make We CMS predictions plays methodology moving this the off any we'll down In at see that where the terms point. can't

approximately proposed rates anticipate $XX the on that on based for based annual that EBITDA been rule. adjustment more the say, update we although would hospital of on attractive, USPI, an it's inflationary the proposed the Now basis that's I is insufficient on believe one and still that what's environment rate the we to going annual side, and million be on current thing forward the additional USPI side the would given current

Ben Hendrix

you. Thank

Operator

with Ann next Please Our question proceed from Instructions] [Operator you. line the comes Securities. Mizuho question. Thank of your with Hynes

Ann Hynes

from outpatient trends cyber down us segment, Hi, maybe much and how demand focus I and versus on environment? X% is in admission the much softer much maybe from is the tell weakness versus want care acute management Can capacity the just you good morning. how security just a X%. is from to in-patient how

Dan Cancelmi

Dan. it's Hey,

Let - components all me that. related those I'll you. to be It's of really with start three frank quite on

for pretty called other number cyber. pending of specific incident certainly we the impact released a similar litigation. lawsuits impact a But that disclosed that cyber the related volumes pending into say to not been big would in and get had side on the and We the I litigation. have to has filed necessarily specifics We There don't quarter.

again, well that about how Your half impact our as the took consideration an maintaining of are very And is back thought about that we and that's managing revenue on managing having we're as our aggregate assumptions. we when volume the into as again But that point business, the true year and through assumptions the our well for statistic. earnings. we

volumes Your the I having third be so think impact It's that's point but on other as side, fair. as side, on the well on there, on USPI the hospital side. an the hospital more about aggregate COVID obviously to continuing point,

quarter, So it's a those it's combination components all really in incident second the the had – large impact. of a of X cyber certainly, and

Ann Hynes

guess that more – can you're the do once just you them you lost gain can the about lines back? share or -- I which open on you you capacity do I to you relieved? think And you shutting the is, it describe And asking am is do is shortage capacity So, competitively, expect reason market management nursing down?

Saum Sutaria

by to consider. to just this, going and There you am get different around are I to hospital. give Let into few two me not make comments color things it's specifics, a

particular that. and continues to follow prioritizing only in The are trends to And market that, procedure-based we good those unabated. not is indicated, our in areas. first carefully that we forward but dimensions building on services and we about ensure areas share approach high those surgical very move as And I've feel the to very acuity very, maintaining our all

in has by marginal we strategy so the we the one very have progress that staff of that more way in significantly is difficult and nurse. And there in is is than is unit managing labor. cost additional is that that work, prioritized of just generation The capacity maintaining lot contract deliberate second management, building that been often capacity medical the in nature thing floor. terms of or given realized low excessive staffing is of cost very pandemic acuity about unabated hospital – the other a making to structure in early the and And the cost excessive kind of our every up not lot marginal the the volume acuity that the to care high to margin cost staff our continues needed access, it's this up of cost, thoughtful reality through open in marginal that of not in and sure about to a the just isn't revenue take a

rates ago fundamental a last Tenet operating the created we've really real-time place management that point system been important we and around of discipline all within put into this that of is, the that come more earlier, staff as and profitable decrease, on more particular we'll down in is and I in basis and Look, do built a made deliver labor point we'll ability to of up think about that that important and the operating the another the into this those side more realize model full-time hospital-by-hospital hiring about this contract in our years. have units the on built fundamentally and travelers over the four to this embedded is traction just on environment system assess so. volume decisions one few thing and is that's because the at open to real-time driving one that's analytics years it's thing As

a open will am And share how much so, think I about labor I sequentially carefully am in following the and it indicated about profitable. very to that not as rates market be capacity you when way to areas, in worried specific up but as

Operator

Thank you.

with James question. next Sarah from question with the of comes line Our Barclays. your Please proceed

Sarah James

year, think cost and are that can what given spread that get in pricing how was you so and And a and trend compressing pricing between pre-COVID then pressure help happening back we spread could hoping experiencing the you take you that about or the differs already next know this year. step about I you. that's environment or from of a if of spread us normal Thank a think sense you that year the XXXX unique expanding.

Dan Cancelmi

we is start The primary trends now difference in pressure the before Yes, the cost cost on Dan. on on I spend X% been this numbers the pushed would And the Hey, off by And let we biggest and labor me contract the labor Sarah, X% the again, year, of versus this X% where, in quarter. in - it's has pandemic the side, was called pricing environment that. say SW&B. to far. some first earlier our previously contract out

the pandemic. the about on But expense contract labor Now it's pressures quarter in come Listen second significantly off, other significant inflationary before which been to pressure. Sure. X%, inflationary has are is see, the to than good but the there still side? the higher most

with us looking development novo side M&A positions unique we insurance And are have it's I provide and what in so But not of Ambulatory we offering the it's, I on I pricing, there current plans every conversation that's the we're having with we across organization beneficial de partners. pleased very the because are just potential revenue positions mind would published. all X.X% said we obviously with of and competitive think so this that of would the of say, the been we and inflationary or earlier, into it's we a environment consideration. listen, for our working terms be. top I new In plans say potential are contracting at take like as continue businesses advantage, we been contracting believe, But side is to our again, sitting CPI very when yield, are on was the our

again, been the expense think, side issue labor. I has So, contract biggest the on the

Operator

Jefferies. [Operator line question. with your the proceed comes with Instructions] of Please you. from Thank Brian question Our next Tanquilut

Saum Sutaria

our question, last be this to And going is operator. Yeah.

Brian Tanquilut

in. squeezing some just for me terms us question on if the deceleration any to what your the are at the on the can in on sort thoughts of the USPI. color the a growth Curious you Brett, in case second intra-quarter we now of are just quarter you what Thanks in of trends quick give that recovery specific Yes. saw trend and and quarter? to ASP seeing maybe any that

Saum Sutaria

Saum. Hey Brian, it's

not this business any of on as going Dan are and to July into But the units comment We - indicated, on ahead, go quarter. but Brett.

Brett Brodnax

XX% as quarter. Yes, to I'll are an okay. over slightly back same-store XXXX rate year-over-year. ahead briefly as prior basis, plan year, this EBITDA of Hey with managed pre-COVID heard some activity. aren't the COVID We increased offices X.X%. for I net said, cancellation volume primarily simply touch Brian, as And and mentioned, a revenue think, a That our well kind the result of case grew but you Saum on physician was at XXX% was to just of levels. expenses and we Look, down, tracking still of volume per it elevated was on the

pretty overall. pleased the So we're quarter with

Saum Sutaria

thank questions day. the Well, We Okay. you, appreciate everyone. a have nice and

Operator

ladies Thank This today's and gentlemen. conference. you, concludes

Thank you may for your participation. disconnect lines. You now your

Tenet Healthcare (THC) 22 Jul 222022 Q2 Earnings call transcript