Tenet Healthcare (THC) 9 Feb 232022 Q4 Earnings call transcript

Good morning. Welcome to Tenet Healthcare's Fourth Quarter 2022 Earnings Conference Call. After the speaker remarks, there will be a question-and-answer session for industry analysts. [Operator Instructions]

I'll now turn the call over to your host, Mr. of President Vice McDowell, Investor Relations. Will Mr. may you begin. McDowell

for for Good President I call. results, and as join of quarter a Tenet's you financial morning, thank joining outlook. us you am have of Relations. well pleased today's discussion XXXX We're of fourth everyone, Investor to a discussion Will our as McDowell, Vice

Vice Tenet Officer; and Executive Saum Sutaria, senior management Chief Officer. participating Financial in Cancelmi, today's President Executive call Chief will be Dr. and Dan

has morning been section this a includes Investor tenethealth.com. presentation, which to webcast Relations posted Our of slide the website our

Investors obligation made recent note call risk subsequent other our represents Listeners advised XX-K currently and is the to as this to forward-looking of are based statement no today's differ most expectations on today that the available and filings well update the slide certain and forward-looking as any could statements statements Actual results our Form Tenet plans based during should are information. in on take Exchange discussion in Commission. materially. presentation, management's under Securities and with discussed information. factors cautionary

that, the call over to With I'll Saum. turn

to for all Thank us off, thank the I the health care. into To to you ahead inspired everyone. physicians continue to find be forge of chosen patients' and and commitment meet kick by our people XXXX. and and to want Will, Three years attention I good their who caregivers calling our their throughout morning, needs pandemic, in have I

Roger with transition been a the to in out moment personal acting technology, of advancing remaining opportunities three own this a than have his to Conifer their has of improve footprint a goals. came acknowledge operations AR upon Roger Conifer's the our and spun of part I Conifer year. rather leader global company. Tenet who Second, independent point solutions, to selfless announced to CEO to to take leaders retirements XXXX, planning become a want Davis

always remember will role we in that the as a model his For leadership company.

be is with a rock his and health years has he devoted to Johnston option for additional to Andy ingrained us. cultivated three way operating them organization company USPI's of XX the the hallmark the the has over because a with Brodnax treated a jointly beyond lead ambulatory I Brett field. return a so gaining year. in transition us but over Brett's of of that selected and he in them never pioneer And today's remain He as fabric not generously The has USPI, relationships is system desire experience partners has into offered this surgery after XXXX USPI. more will doctors the USPI. and time full and I to his, he for the of outside pleased could will building strong with He additional star success

the oriented in built approaching and and CFO. Tenet, Dan a to all with in thanks transitions instrumental no role years integrity demonstrating model a organization of and members, to I'm he's a in Dan five home three career for relentlessly aspect different that In be entire help took his to ascended he's starting onboard on value office, a last Tenet. his as problems Cancelmi stable leadership a are creates At to our works is leaders for his XX represents career. the our to highest our every field the known fresh of to of every years been solution in In model championed company his building to perspective in face. the be perspective his he these a dedication he company's step, of succeeding every brought new and the CFO turnaround few handoffs you. we've adapt collaborative last at should for we years, efforts, shareholders. our He Dan the take team grateful the and ability our as CFO hospital and

to net billion operating recorded translates XXXX XX.X% With into turn of results. We adjusted margin. In which that, consolidated cost finished of businesses, XXXX, consistent set our of the and management. an slightly billion, fourth driven EBITDA results let's adjusted and we $XX.X $X.XX attractive expectations EBITDA in quarter by three or the we year stronger strong our all the and delivered for with volumes above excellent revenues

USPI billion EBITDA, in strong XX.X%. year, $X.XXX the delivered For with margins at

of as growth we've range was our in expectations. in long-term our performance discussed, same-facility Importantly, below was top revenues X% X.X% line and in same-store not of X% quarter-to-quarter in EBITDA the consistent USPI goal the to growth XXXX, had But growth. XXXX

We the see pre-pandemic. to pleased seasonality quarter that growth returned are volumes to positive the that typical same-store fourth December strong of we used and

centers novo in under de and the engine of portfolio M&A we addition highlighted to with partnership USPI's acquisition XX to an M&A our the industry-leading continues development, This XXXX, United through Tenet added be differentiator. facilities SCD XX Group. to centers. the the In our was umbrella by in Urology

nearly Turning of in operating adjusted generated challenging segment. during XXXX hospital $X.X to environment. EBITDA billion a our We

a attack, continued navigated operators pressures. as Our well cybersecurity COVID-related as

metrics almost saw December improvement ulcers. our X.X% expense SW&B XX% in consolidated by labor peak meaningful and the infections with We quality a that clinical and in contract had Importantly, our XX%, we we below and MRSA contract exiting labor as in reduction of safety year reduced saw such expense. a both September pressure hospital-acquired in patient by

critical adjust as We are for management system our confident labor continue in needs. we'll and patient to needed

with we workforce year, pay benefits. past incremental in and our bonus invested programs the increased have Over also

retention nurse Retention and hires compared over RN has the of in to prior recruitment as four the continue fourth quarters. dividends, with up nurse XXXX efforts to In XXXX. turnover our XX%, pay by Importantly, well. improved improved the average quarter,

we Conifer's another our in XX%. for opportunities commercial pipeline with XX%. that reflecting remained initiatives. year, and nearly had have point solution remains margins strong sales both Conifer made of growth at capabilities customer of robust, third-party EBITDA Finally, integrated revenue the investments Adjusted strong

Let's transition to guidance. XXXX

billion, We rate basis. EBITDA XXXX midpoint represents are to attractive year of normalized billion which the an $X.XX X.X% $X.XX a on at projecting growth full adjusted of

in our normalized based USPI ambulatory adjusted from accretion second M&A industry-leading and transaction business, of midpoint growth guidance, at the strong SCD novo expectation continued upon anticipate EBITDA from of revenues, growth our XX% contributions de of First, initiatives. further X% our we surgery same-facility at our to in X% the and

a healthy organic reflects rate growth year. for EBITDA guidance Our this X%

ramp-up address year. the is our transaction second SCD Let approximately growth to in second characterize direct in that by same-facility way one me depth. SCD are behind the expected most transaction The more we

first mature consolidate in and into transaction, and acquired we SCD the achieved unlike where synergies Recall, XXX% deliver centers centers. buy-ups those to

assets, original that in including some were The had early time on planned We and XXXX. openings center happen had transaction range development. a in line second not of our that buy-ups many broad did

not make to Since have agenda completed six prior multiples has progress at The stalled. we buy-ups more from QX buy-ups. unchanged

opened majority centers, the year. seven de open remaining We the the to this on novo with track of have

pre-synergies. of Collectively, transactions acquired the average SCD an centers, XX% of XX margins under XXX for multiple deliver which times approximately a were and total have

a procedural Turning sustained to an services into as continued The same-facility acts setting of business. migration for and our growth. far-reaching tailwind ambulatory

as net XXXX business higher our same risen from at revenue by recovered And case testament cases. XX.X%, XXXX, of pre-pandemic ongoing has a to to time facility per has addition the volumes. the acuity to Looking our back same

We attractive are in growth beyond. also XXXX positioned to and drive

Let's and given our volumes into further bridge QX unpack same-facility XXXX that our XXXX we how guidance.

over population XXXX, grew First, same-facility basis, prior our year. active in as a physician a on foundational element,

Those Second, the impact causing the of and are current about in repaired year. facility X.X%. Ian closures during Hurricane operational facilities was quarter the now fourth

Finally, certain acuity higher in in are lower investment still and reductions ongoing. acuity services services

X.X%. QX growth by impacted approximately in example, this For same-facility XXXX,

to service opportunities into the line We seek continue for will enhancements acuity future.

grew highest noteworthy cases, one sub-service ASC XXXX. that by XXXX is orthopedic our to relative It total facility same XX.X% in the as acuity of lines, joint

we For these in our in same-facility X% have to strategy of guidance reasons, X% with and XXXX. are we comfortable returning to our growth conviction

other to represents Tenet USPI M&A engine, shareholders. turn which value driver our Let's for the critical

driven estimated at do end year we For same valuations our attractive post-synergy below vintage And and multiples two. to times. by many for the consistently centers X of latest XXXX acquisitions our is years have to the acquired

in $XXX year to We robust of M&A ambulatory investment. support intend invest each pipeline that and to have a level million approximately

development We active in be and continue separately USPI construction pipelines. our partnership to team from the SCD our of centers originating from new

our have cash enhance currently post-synergy for centers XX active of to Adding or the and margins, under construction. We that syndication strong investments, are cash centers use best multiples, flow. free tenants remains in attractive with

with increased our across leading System, announced Health in health strategic United access States, recently in Providence new and Western a care development innovator markets. new We ambulatory services that will expand agreement the partnership a

to XX in to two this We next will expand expect relationship centers the XX years.

our of USPI best in is the among back, industry. examples Stepping care value-based

a platform, Our talent USPI setting. XX% preferred creates as and to generally scale business than our more and which draw unquestionably hospital is the to physicians systems in services. affordable deliver hospital from full both the our services range health partner, high-quality are XX% teams management of benefits. The for operating linkage services similar delivered to an superior expertise

hospital segment. our to Turning

labor EBITDA operating at offset be in expectation will to further X.X%, X% partially labor moderation by costs. normalized discipline a of driven admissions the costs, growth, the on XXXX. adjusted increases and basis growth of employed in continued this We We adjusted are anticipate expecting by X% for midpoint contract

adjusted ramp-up points of the Mill. than annually, The of continued year-over-year our and XXXX higher of market rate recovery because of EBITDA created growth hospital X% by our tailwinds I've and noted, long-term in core to is Fort the also for Massachusetts X% our forecast the

Our continues John approvals, $XXX.X expected to Tenet's conditions. Health multiple. transaction in completed be Center [ph] an purchase XX times the slightly Medical Muir a interest above in as subject for XXXX closing Regional agreement regulatory and Ana This is reached Santa portfolio we for to transformation customary and million to XX%, also recently

by changes EBITDA XX% on growth a realize Conifer client efficiencies basis and XXXX, continued and a for is for focus expecting sales on operations. of our automation in driven hospital Finally, adjusted offshoring contract in Tenet’s divestitures, terms and greater to new activities, normalized

environment. All guidance respectful to billion year XXXX represents is current also in, of operating $X.XX an continued $X.XX billion, target of recovery that our of challenges attractive the the full

future. of investing Our has focused management business the accelerating hallmark are success, and our a efficiencies and for across segments, and our been on discipline we

review with a detailed will that, more results. Dan now our financial And of provide

by levels which of all of gives strong same-store in our XXXX. businesses, volume same-store we and growth driven business, the with momentum of We the morning, Thanks, income, the grand three midpoint fourth quarter guidance EBITDA with good adjusted or above at in we excluding pleased coming very ranges, Saum. how our contract And all us renewed hospital for begin were everyone. quarter, admissions exiting for adjusted our finished growth year, lower USPI, labor as of

adjusted million In consolidated the of which income. million, grant quarter, we included generated $XX of EBITDA $XXX

in performance Our of reflected management costs. strength volumes labor and improved

Additionally, were service our acuity supported lines. by on results focus continued high

a key income and EBITDA quarter with Now strong delivered be results. beginning XX.X% I'd last to continues of excluding USPI's our grew EBITDA segments, items grant highlight for at strong each like year fourth to USPI, operating to XX.X%. compared very few which its margin adjusted

Surgical surgical case and case delivered X.X% XX volumes a Also higher solid per points were XXX% increase XXXX basis. pre-pandemic fourth on levels. a basis USPI cases quarter XXXX same-facility were of than in revenue

full revenue per growth the X.X%. X% volume net case growth year, For of and USPI of produced case

pleased be flow and generated We margins strong ambulatory by business. continue to our cash with the

and the acute admissions Fourth fourth care hospital XX over increased same-hospital X.X% our inpatient while X.X%. total adjusted quarter admissions non-COVID points, admissions XXXX inpatient business. to Turning quarter increased of same-hospital basis increased

with continues consolidated management labor and cost the at momentum contract On despite pressures, providing we into move X.X% December basis, consolidated we contract temporary costs. be a effective, labor SWMB exited Our our XXXX. staffing year the very us as to of specialty

of Total XX severe as the year. the more admission pressures X.X% these managed despite per costs to adjusted were the were XXXX, this adjusted fourth than hospital quarter quarter well a XXXX on lower of in basis admission basis. points up SWMB were costs costs quarter, labor fourth only per compared

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

at has XXXX. since XXXX X% grown a CMI Our CAGR

Turning EBITDA quarter. Conifer to again a quarter Conifer, of EBITDA produced strong fourth about of which XX%. $XX with a delivered margin solid million

XX%. top the clients of from Conifer revenue increased year, growth For resumed external revenue and X% about line

Next, flow, let's balance and structure. review sheet capital cash our

$X.X $XXX the year, generated borrowings the cash facility. million $XXX under hand million on free of our and of end of of of we credit no As line had outstanding billion We deferred to cash flow the deferred Medicare pandemic were the year for in related $X.XXX $X before or the about repayment received that or XXXX. billion billion advances taxes of payroll and of

have All advances and been these now deferred of taxes repaid.

million million. for quarter, our of X.X stock the XXX we During fourth approximately shares repurchased

Our December with year-end EBITDA, consistent leverage X.X times XXXX. ratio XX was

we capacity of $X.X reminder, debt needed. As secured approximately until maturities of available, and a significant quarter billion have if have the third XXXX no debt borrowing

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

Let me year. now this outlook to our turn for

Our in billion. billion the year projected is consolidated to EBITDA the of $X.XXX adjusted for $X.XXX range

have previously, we discussed are comparison our XXXX are of presentation. of impact As items number there results X outlook, outlined to our investor a the XXXX of on our that slide which

summarize them. me Let

levels by we discuss investments lines. lower X% rate ambulatory for efficiencies, after negotiated EBITDA over shortly. contract hospital XXXX, higher approximately organic items anticipated and continuing be cost hospital organic midpoint is driven First, and of consolidated growth The growth of volumes in are other assuming the I'll that and service commercial labor increases at acuity stronger normalizing various to

Second, EBITDA about additional XX%, activities, EBITDA about is growth. will of which we related This for and to to million USPI. anticipate X% of normalized acquisition earnings drive $XX $XX in USPI's anticipated the with growth million approximately of growth USPI result growth organic development coupled is organic

million Third, and our additional guidance. No matter on million our the the estimated for assumed of about last received anticipate this in we attack been hospitals insurance EBITDA XXXX year-over-year earnings year attack to $XXX we this growth year. of other an to from due have the cyber related proceeds proceeds that of impact $XX

we call. also items other There earnings last XXXX impacting on of our third compared quarter EBITDA which to year, guidance many previewed several our are

First, to we in recognized XXXX, income the $XXX million of grant related pandemic.

year. noteworthy Our amount any guidance, grants for of XXXX, this does assume not

realized gains Second, on of completed we million in asset sales $XXX XXXX.

recognized the Texas supplemental we related when Next, program funding last year that million to approved. Medicaid $XX there was XXXX revenue, of early was

issue million this that reductions that at ACA XXXB total the revenue pandemic, detailed the are various year almost and are the reimbursement the slide. there substantially outpatient Also, to changes $XXX for related of bottom the

of reduction contract to month our Finally, million in $XX $XX the Ramon our million Miami in related certain a of facility XXXX the our announced this to divestiture Conifer's we EBITDA, year, that of last sale Iowa guidance sale EBITDA and reduction due assumes transition Hospitals CHI's expirations San a former due planned facilities. to and

X.X%. our of consolidated assumptions items, these represents our for outlook outlook. year-over-year additional to adjusting After normalized growth XXXX related EBITDA A few

admissions down We X%. projected X% X% per admissions X% case X%. revenue USPI's increased to are XXXX same-hospital is X% and projected to cases net increased X% to surgical adjusted USPI to and to admissions from XXXX assuming X% COVID to of also increase are increase X% same-facility approximately X% in

corresponding commercially contract between the are want our a we of our consolidated I assumption is on hospital contract year EBITDA $XX to EBITDA. and for and The reasonable revenues, its This basis Another result revising the has impact anticipated that $XX is under services margins. to rates scope increase this revenue million segment to million cycle an Conifer mention and reduction to net revised EBITDA be no hospitals. in or approximately continues Conifer in

year would midpoint XXXX first expect approximately XXXX consolidated adjusted of the EBITDA the year to our XX% guidance. And we we quarter million quarter our EBITDA EBITDA full anticipate of be Finally, $XXX will the at at that range. midpoint in USPI's be this first USPI

a to Turning target strong to cash generation. our of XXXX. free cash continue flow flows year another for From cash perspective, flow we

in this and us to $XXX midpoint, profitability compared interests. flow anticipated of million $XXX payments due several in which in as We billion be does improved past to cash midpoint. of tax the year NOL years. free the to $XXX tax will We million anticipate non-controlling of result at of flow fully a free at This operations million this estimated midpoint payments fund an approximately carryforwards $X.XXX $X.XXX XXXX result to cash nearly of income cash expenditures used increase utilizing our cash are flow our the billion will part over incorporate our range from capital expecting at the of

our point or does reflect guidance to that XXXX debt want repurchases out of for not capital the do repayment. use share deployment any I

say It's capital any items. for However, our this to XXXX these have or just in share is that repurchases not not that retirement debt won't reflected deploy guidance. we we

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

have priorities As our changed. a not capital reminder, deployment

capital evaluate service the acuity retire including on refinance annually grow approximately First, $XXX hospital third, our enhance allocating depending offerings; share center opportunities, focus market second, opportunities. growth debt; and finally, and to surgery of we on further higher million plan continued business; investment continue to and/or to conditions other repurchases our USPI opportunities to

that, Q&A. with And Operator? the begin ready we're to

you. Thank

question-and-answer We a proceed session. conducting with question comes [Operator Kevin first Bank will from be of Instructions] now Our Please with Fischbeck your question. America.

normalizing? And you de in the much the this on love I of for be improvement bit have as part first I Thanks. Thanks. and on in happened the Great. and there. side postmortem do around novo in you're went little do What second doing year that all the improvement differently going XXXX to the what on behind that the would on equation how is expectations a deals then? -- year? wrong anything the appreciate developments? just visibility why there visibility But of on you more do future color USPI a Why color you transaction, have or you're

Hey, it’s Saum.

Just real quickly on that.

much, were much stages the back literally I breaking of about that again, of ramp-up. -- purchased, that I the development types this made them a were And in some to of range just centers ground. of wide which of goes commentary think it many goes we earlier

physician impact look getting infrastructure buy-ups. and right would equipment from that issues the with ramp-up that when centers faced on centers, you and potential to in running And couple of the for of ramping those COVID timing disruption supply slowing the being chain practices at slowed some the centers so we you with opened time,

a bit things level that entered way. all not the of you as just set figured, we're mean at played didn't a look that those we out we put easier year clear. that fine. center I feel doing mature, ones great it assets of that that's why perfect But And had noted the performance still assumptions I more on asset the that it's just we of when lot just into a kind of they're of but just together, a great were expecting expectations a on storm disruption all play just a set It's portfolio. be and the to about behind of

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

Hey. side. if you I duration? reimbursement, the three wondering spend rate a what's in just are you'll morning, update on commercial the in What on renegotiating And that contracts? of next years, contract for guys. Good could give of to see the particularly terms was kind in the visibility you what getting you over success two guidance minute does

Jamie, in this of on for provisions good a and plans and about a we perspective, XX% our Blues. contracting hospitals, believe it's in from fully contracts the health for and facilities terms negotiated Hey physicians year of contracted the on statewide the our basis the national very facilities, national terms with Saum. essentially basis negotiate USPI all Good is plan a morning. a We we're position where

feel very where good we're at. we So

about we aspects X% we get we've And I inflationary think asked on We about a conversations talk about environment, are X% making the discussing terms progress inflationary of too. typically more range, been We are. We've, been given some the negotiations. the and rate percentage to in recent lot absolutely increases that in and increases. obviously, having

So contracting good where we're we at feel perspective. a from really

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

the of on about up XX% Thanks. all Good year. think I'm Dan the morning. for in measuring looks for the I USPI. another that year first said, correctly the to appreciate it's EBITDA XX% if wanted like question versus ask X% quarter that detail. I year-over-year, I

due driver the what's to to think And faster get that? the do looks than then is it's What buy-ups. year-over-year drive on faster it's significant just materially So you year ramp it lot a you NCI through to than walk Thanks. the assume, going up EBITDA. of that? through at growing the Can driving least quickly I to XX%? like partially

Dan. Hi, Justin, it's

address second the – hit about the the Let me one, me NCI. point let

to Our a on of is NCI this with when anticipated expense assumption a year, sort prior for for XX% roughly which NCI. It's is consistent XXXX year, flow-through you look at the it years. EBITDA refer it minus as we – basis roughly XX%. like

So between the consistent flow-through is year. really the

year-to-year. – too. are There You're is is an impact flow-through have that completed obviously, buy-ups consistent can in as the some right. aggregate But very from

USPI the we feel first a USPI, obviously Keep this fourth quarter where the on our terms million is set guidance $XXX USPI quarter and the point as in first for typically of XX%. our so moves quarter consolidated we midpoint at your comfortable at through laid basis being In with year point. we've seasonally quarter, assumptions the strongest about out mind,

Okay. And say a seasonality to Thanks. the for right so the the the XX%? it's impacted but basis get up quarter, would through year. in drives that if year year-over-year what my just be the X% the wouldn't I first ramp But then on XX% to

the for Yeah. move a the guidance growth. Again, where first bit as comfortable various we around good as full percentage Obviously, we we year. factors. again, feel with the – on But can we set well quarter depending with feel

Thanks.

proceed Hynes question. from Please Our next your question Ann with is with Mizuho.

growth surgery Hi. just revenue to focus of organic center morning. on Thank X%. Good I you. want

the you're of much target Thanks. inning to of that that year? acuity what being – and you will to that company's doing Can to things into XXXX? ability would anything is And that You headwind the there next me X.X% services. you and call other reduction a back that Is else lower did get How be tell are think growth is you in on mid-single-digit it also detail achieve give in maybe impacting some growth? that the backing be it, X% to process? currently

Saum. it's Hi,

all, of profitability characterize headwind consider a we of it's from net time And lower it so sense those growth, acuity which really some services. end I we're it case trying counts but the the a I it that First headwind about and case focus growth do not to we're on you're to mean, in don't really in trying is revenue than end we're over to do that higher-end to in time the build what just the what to only grow. you right some is the the find counts enhance over setting, respects and anyway. and going lower really, migrate more talking of services that ASC way.

actually So I'd look we're for we opportunities. I to reiterate -- continue going to those mean,

the say expect I item future, XXXX them into or why saw out called sometime the of your a what which for other one. migrations year's the of other a impact the initiatives of that as with are those the good they And inning reasons USPI some expect won't reductions but in think to -- to question XXXX, we that at the well is that we strategic this not to in transitions, we the guidance XXXX. is and bridging of particular slow, of That's we from opportunities I one guidance in for year feel slow look Now is we in as that comfortable in type as that the

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

USPI. might detail pivot Thanks over to Hi, on I the all labor. for everybody.

throughout outlook, about little different If experience permanent other And for a whatever into basis you're that thinking of contract SWB. that in peers. would tailwind you are spent that labor? in out of incorporated with know of any saying that on be? or How pattern total into if the And I some a labor it you're good on for was you be you labor taking you contract XXXX case a you're with in X% December think represent need of XXXX or of would in XXXX? you're label run then that you will was finally versus what guidance that than have your your much rate sort it then Is the holding contract number gross XXXX where the public X%

Hi, Good A.J. morning. It's Dan.

SWB at contract terms move each X.X%. month. percent December peaked declined In as we quarter the labor it labor exited of September. of through in And as contract a - we And with sequentially

some we labor year, spend, contract have what employed extent move this assumed into really in moderation obviously, As the possible labor of focused year on because employment with we're further colleagues. we contract this I replacing greatest net full-time to our mean is costs

We're been obviously, And we we've – continue focused that year. to we do so now. this on going through to as move

our And some we built moderation year. in into have aggregate so, yes, this contract labor guidance

side some what the permanent it net-net you So is doing you're -- on have in there?

it by costs, about when of obviously in right? Yes. We've employees replaced be some we employed with taken the labor will into reduction consideration obviously investment our contract the incremental think form

right. a All lot. Thanks Okay.

is next from John proceed Our James. with question Raymond Please Ransom your question. with

Hi.

versus think terms do Just issue. cyber of this we year a the guide organic little good a about How about confused that growth? year last to in

it's John, Dan. Hey

we've we EBITDA, guidance did year. receive of million additional proceeds any But is in reflected million the of in January $XXX our not and proceeds and approximately insurance our terms in sized this we that in year. obviously, So, that guidance have insurance this $XX reflected

carriers, we consideration we volume, year. insurance have impact working not And volume. Obviously, in that assumed proceeds. an impact for that on terms we of built took but into did with on it our when obviously any assumptions the this Obviously, have we're volume the additional

remind year Just from me what was insurance? the you that collected last total

that we of impact that's part the -- number. -- net in million the $XX P&L. that about on was offset $XXX Total that net terms million But rolled into

see. I

year. words a So, about the if we clear $XX good to other just think it's million growth this organic in help guide be about

view the was proceeds and $XXX consideration Again slide. on that received. some what cyber we an we the into million. it the put estimate that as insurance we no, Well, of That's estimate it took

much. was That's got you. I Thanks so I right. confused. Okay. All what

Research. Please Nephron proceed Our Raskin next question. with question with is from Josh your

thanks. Hi,

Just a clarification. first

were billion. I baseline you $X.XX about last talking $X.XX was EBITDA XXXX. it's guys in the And quarter about billion think for now that

So, I'm assumption? just curious baseline what changed the in

around question anything And and your real Saum then made build-out that with has was be changed the the of care past curious my ASC value-based in comment interested of portfolio respect I And move negotiations? couple years how in a are with volumes ways if sort USPI the your at level state the contracts with more the or ASCs? to Blues those to payers. of to looking that on I'd big And impacting is they national specifically

Dan. it's Josh Hey

of reductions address the in things. One, in compared million. through was couple of We the October to additional did third the on Let of we $XXX grant -- of what terms that $XX year recognize end about in there roughly of million. income million is the number the we quarter the quarter some ended call a with talked me funding $XXX

are down the didn't time is obviously, so the Medicaid, have the now know we be when public anticipated that -- at the FMAP also terms supplemental the we will some to health how additional the year. into visibility during funding emergency differences. when the Those But pandemic -- And visibility primary FMAP phased funding have the when expire. visibility FMAP clear of we of in XX% for add-on Medicare

Yes, hey Saum. it's

exist is of this the alternative system the cost -- be value-based care efficiency attractive setting relative continues important site I can't care a I basis initiative, to I that the what services think ASC question, on higher of part care the that in because structure. site into strategically would the than don't continued of other a On setting of a acuity is the relative the in in your why cost stronger ambulatory a to to very hospital surgery second reason another differentiated around push described

yeah, attractive satisfaction so also high payers also that payers, only with the safety we to government do as work patient the not that And commercial and from do to do there see of and levels. to ability but it the we standpoint

this and as So things down path I ASCs. acuity time of higher continue think our over higher we than in innovating

be I ASC value-based will USPI viewed particular as care a business the think in in enterprise. real

Barclays. your with Our with next Please comes proceed from question Steven Valiquette question.

mean from the EBITDA I roughly, right XXXX. [indiscernible] we're [indiscernible] for details if like math I XXXX that it XX total margin around on the the doing XX%, then everyone. morning, and Thank. Great. is adjustment slide EBITDA Good for company seem guess [indiscernible]. the And for

least versus thinking that that else at we're we of And want are drive some EBITDA where that gross margin about anything out the just calling margin Thanks. to expansion confirm at for least of expansion could in determine view basis? XXXX on gradually [indiscernible] your point is [indiscernible] basis there that if level So XXXX? then right [indiscernible] are XXXX

you hearing time out. hard a having you were were we and Steve, cutting Hey,

consolidated look XX%. I think XXXX, a on it margins margins a normalized at call those about were And a in XXXX items. would When asking basis on XX.X% roughly basis. the you XXXX for be XXXX normalize normalized various you basis, we XX.X% the after on versus projections it in for

into through is XXXX there expansion be to will focus obviously our we to as and to the and So a ours of some year margin continue move margins beyond. continue expand and that's

really exactly contract improvement. the some this on a reflected I'm managing labor that assumed I heard we at The did down has in been move have as job in mentioned, those exited I we through contract saw good labor. guidance. year our as nice costs not year and But operators we X.X% sure moderation

that that having hopefully, addressed So time were you. hard your questions a we hearing

was now. really better Difficulty] But [Technical just that Yeah,

catching for up Will follow-up better probably We breaking entirely us you're word. you. with to other Steve, hear every can't We're kind really off-line. of

question. with your with proceed is question next Mayo Whit from Our Securities. Please SVB

might on ask that more in million what what $XXX actually And back your think $XXX USPI to Hey, get XXXX? have thanks. Maybe helpful. sorry the SCD you you this this. you plan for target, That But did million? to year? do Do in one be contribute about

follow-up. And just quick maybe then a

the at than of all guiding that does a And it odd the prepared you're USPI Looking bridge, the to and the strike this segments as me lot to. more generate comments encouraging year. bullish sound that growth maybe percent organic the lowest expect you

bit little number a right So X% why that maybe challenge the number? like the is on to you just

Dan. Whit, Hey, it's

we're In was million for basically generating approximately of in XXXX behind. in we prepared Saum XXXX. what his terms EBITDA of SCD, a as $XXX would And year for remarks, we mentioned said anticipate SCD

of it essentially think XXXX. as should terms of -- a We're in that you that. in for of behind terms year So

growth hospitals. growth new for our historically organic USPI's what outside is the organic as by that script Hospital, Charlotte. further the his we a of there's little bit facility we're well -- project be And higher than But our also supported being it's a -- improvement hospital growth, in as again as that In basis. is terms growth the to normalized of projecting on mentioned Saum X% in Massachusetts

Thank guys. Okay. you

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

XX complete the morning. your activity many provide assuming Thanks. think did XXXX? buy are start good Hi, the expectation you your guide in could SCD the I an And you SCD XXXX of you on second buy-ups what for II update plus in to year? Hoping transaction? How up in versus

it's Dan. Andrew, Hey,

we our In comfortable year built some assumptions visibility good have buy-ups. I for guidance terms them of we we buy-ups we say feel assumed -- have those would the have in into very with XXXX. and this into very that anticipated for

you And have do number that XXXX? the did you in

The entire roughly -- XX -- XX.

Okay, great. Thanks.

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

guys Thanks guys. number Can had nurse-to-patient questions think -- you the for some couple that ratio the just do the you about taking how for A office of you just side XXXX? hospital in quantify questions. Hey for XXXX. questions. back And of on

tracking how back the And the it's On around you and turnover your nurse expectations? XXXX? topic, can details same saw recruiting of in half quantify you any the versus

it's regulations one ICU, sure aggregated cetera They're in on report I'm Pito MedSurg, an in how others our have acuity. and on not and nurse-to-patient plan could Saum. ratio. ratio the depends states nurse-to-patient different heavily don't. and state-to-state reporting even it given on Forest et Telly, way describe We we differences the And don't don't [ph], Hey, really a some that.

The tech very going clinical it mention and second well. been role part but We're and nurse, that's took very important important other appreciate on highlighting our your obviously you're it. focused of and I question, recruiting also I time it's the to

the those operating the many stabilization for also probably reductions surges attribute at to coming our hiring over desire which of I the a less of our down, could And important indicated, travel XXXX legitimately pace investments think, investments I've choosing that's pandemic other the As is nurses retention was rates which we've up them time, accelerating. same you to from a surges, made somewhat of the But the assignments. workforce, on employed importantly, for have come of XXXX the and out are turnover in made perspective. to the because at we've staff recurrent in environment, and continue on

I in things think environment of as help all stabilize And to those the XXXX. workforce

the As our labor Dan on to noted, that reliance to moderate make hope through we contract in further reductions year. and expect

that serve that, in very color important right environment, nursing have with and it schools. graduates one this long we agenda you, to look forward. a we us new So, as time, think time made a times, relationships in Those level our that over would I of I've in a now investments had than years, it's few XXXX. And that's the I seen last of bring on ability into our better lot couple helping. past ground well built we will I of the item on tell that piece is mentioned at over relationships a

Thanks, so Great. much.

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

views the think buyback just well. we set we views. things. philosophy as at thought or altogether? Just pay debt you maybe have ratio think Dan do But down back to that to all buybacks, on using clarify debt or maybe stock, curious you to want And to leverage some buy just clarify, your avoiding as your guys. or are announcement Thanks. point about these about the targets? right Where thinking thanks for is, from morning, as good deployment the Hey quarter color leverage last capital on on and your

Yes.

over five substantial or leverage, years. four obviously terms past of we've progress In the made

If we XXXX, down four important approximately to brought it you very back then. of and is were times focus Reducing times north since to leverage of six go a we obviously ours.

mean mean As going our what's our it flow free capital decisions, generation, cash all we to to to going consideration, mean leverage. to ultimately we margins, take to what's going to into what's it our make

So, future. in the we'll look continue for it's to top of leverage And mind reduce always. to opportunities

share mix the of remarks, four of priorities. well drive we'll I We for best as balance terms a balance share various and we retirement at look return repurchases. one investment have versus at capital well allocation repurchases, on is them, at as will debt look key we as obviously, in -- of -- In retirement mentioned as as conditions Debt opportunities my based market our shareholders. what and that where are have we think

you. Thank

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

outlook. On volume the

side it achieve the hospital the on if like So you targeting. looks growth you're

do the labor guess that in think view compared going could pressure the we and you'll be do for baseline. lines sense XXXX forward? you think to should might XXs real much that range not company how upper as if volume I much of you how I a that recovered? how opportunity, guess make the service eases you think be about the haven't I

you or Thanks. bit do the think think be on the continues do the USPI environment little growth that's be year, normalize? to to then pretty going a maybe as throughout consistent side, year And the throughout just the is you volume on to USPI ramping going maybe

start, it's happy Saum. to Yes. I'm

there's significant I volume So really on perspective, year Obviously, a really on that as it – side from from the hospital the the that COVID-related say be would at disruption activity. the depends be past we've three assumptions moved last year. But forecast. believe have think to can the reasons of this case that proven, lot hard years will that that this good to point in somewhat I a fact

in easy even down. disrupting less hospital on the with cases quicker out has and acuity. that winter on of the care during impact a It's Even acute had things stay short of and the been and saw lot COVID the to come our seeing treat amount surgical of And we're type importantly for in lower acuity much the it effect given other strategy, environment. us, we scheduling COVID

that's anyway, good overall. think I sign So just a

year service the et we prior bottoms-up, of I before we than took to initiatives, as the from is this of additions, lines, Look, through in terms with results our inconsistent mentioned, – a USPI, bridging We physician the expect we're really examination important. understand the cetera XXXX the year and coming XXXX in of more comprehensive our It's year. quarter-to-quarter portfolio. very guidance to consistency see set in into an time did to this the thoughtful,

there's And look, guidance the post-pandemic end is we would And more recovery of the if guidance a reason, for if obviously, upper deliver that. that. attractive, range on to a contemplates the love

that's towards. So we're what working

for USPI. great XX%, this roughly headwinds nice perspective take be is to in look is compared last And in Yes. the quarter. to in consideration the of of close into quarter, at year, you quarter of the that there's an it's for but even in fourth the year, I sequestration growth XXXB, there the of some year still quarter first still generated for is the earnings through USPI, XX% out, from related move you is will on add first pointed which when with the quarter growth last as to as just first first the the And just we strongest year to terms quarter year-over-year year obviously, some the EBITDA

Investor this follow-up reached Relations This is questions today's of the at questions. time. concludes for available the teleconference. have end Tenet We

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