Tenet Healthcare Corporation (NYSE:THC) Q4 2022 Earnings Call Transcript

Dan Cancelmi : Hi, Justin, it’s Dan. Let me address €“ let me hit the second one, the point about the NCI. Our NCI expense assumption for the year, when you look at it on a €“ we refer to it as sort of like a flow-through basis EBITDA minus NCI. It’s roughly 64% anticipated for this year, which is consistent with prior years. 2022 is roughly 65%. So the flow-through is really consistent between the year. You’re right. There is €“ obviously, as some buy-ups are completed that can have an impact too. But the flow-through in aggregate is very consistent from year-to-year. In terms of the first quarter, we obviously laid out our first quarter assumptions on a consolidated basis $775 million at the midpoint and your point about USPI being 22%. Keep in mind, as USPI moves through the year fourth quarter is typically seasonally the strongest quarter for USPI, so we feel comfortable with where we’ve set our guidance at this point.

Justin Lake: Okay. But the seasonality wouldn’t be impacted on a year-over-year basis then I would just say my right that it’s up 6% in the first quarter, but 11% for the year. And if so what drives the ramp through the year to get to the 11%? Thanks.

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

Justin Lake: Thanks.

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

Ann Hynes: Hi. Good morning. Thank you. I just want to focus on surgery center organic revenue growth of 3%. You did give some detail on the call backing into it, it would be 4.3% and 1% being the reduction of lower acuity services. Can you tell me what inning you are in that process? How much of a headwind to growth? Is that €“ will that be next year? And also is there anything else that you think is currently impacting the company’s ability to get back to that mid-single-digit growth target and maybe other things you’re doing to achieve that in 2023? Thanks.

Saum Sutaria -: Hi, it’s Saum. First of all, just so that we characterize it the right way. I don’t consider it a headwind to growth in the sense that what we’re really trying to do is enhance acuity and focus on not only net revenue growth, but over time profitability from those higher-end services. I mean, the case counts it’s a headwind to case counts in some respects more than it is what we’re trying to do and build and grow. And really, we’re talking about the lower end of really the lower end of services that you find in the ASC setting, which you’re going to migrate over some time anyway. So we actually — I mean, I’d reiterate we’re going to continue to look for those opportunities. Now I think your question of what inning are they in particular for USPI is a good one.

And the — one of the reasons that we feel comfortable with this year’s guidance is that the impact of the strategic and other initiatives as well as some of the reductions from those type of migrations that we saw in 2022, we expect to slow in 2023. That’s not to say that sometime in the year or in the future, we won’t look at other opportunities for transitions, but we expect them to slow, which is why I called that out as a bridging item into the 2023 guidance

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