Tenet Healthcare Corporation

Good morning. Welcome to Tenet Healthcare's fourth quarter 2024 earnings conference call. After the speaker remarks, there will be a question and answer session for industry analysts. At that time, if you'd like to ask a question, please press star one on your telephone keypad. Tenet respectfully asks that analysts limit themselves to one question each. I'll now turn the call over to your host, Mr. Will McDowell, Vice President of Investor Relations. Mr. McDowell, you may begin.

Good morning, everyone, and thank you for joining today's call. I am Will McDowell, Vice President of Investor Relations. We're pleased to have you join us for a discussion of Tenet's fourth quarter 2024 results, as well as a discussion of our financial outlook. Tenet Senior Management participating in today's call will be Dr. Sam Satoria, Chairman and Chief Executive Officer, and Sun Park, Executive Vice President and Chief Financial Officer. Our webcast this morning includes a slide presentation, which has been posted to the Investor Relations section of our website tenanthealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent management's expectations based on currently available information. Actual results and plans could differ materially. Tenant is under no obligation to update any forward-looking statements based on subsequent information. Investors should take note of the cautionary statement slide included in today's presentation, as well as the risk factors discussed in our most recent Form 10-K, and other filings with the Securities and Exchange Commission. And with that, I'll turn the call over to Saul.

Thank you, Will, and good morning, everyone. We delivered outstanding performance in 2024, characterized by strong same-store revenue growth, disciplined operations, and effective capital deployment. In addition, the year was highlighted by portfolio transactions that have transformed our franchise to be well-positioned for long-term growth with strategic flexibility and a deleveraged balance sheet. We reported 2024 net operating revenues of $20.7 billion and consolidated adjusted EBITDA of $4 billion, which represents 13% growth over 2023. Full-year adjusted EBITDA margin of 19.3% improved over 200 basis points from prior year. Our fourth quarter results were above our expectations, driven by continued same-store revenue strength, high acuity growth, as well as effective cost management. Our disciplined approach has enabled us to consistently exceed our performance expectations each quarter this year, furthering our track record. I would note that our full year adjusted EBITDA ended the year over $600 million higher than the midpoint of our initial expectations, driven by strong growth and operational performance. USPI had a fantastic year in 2024. We generated $1.81 billion in adjusted EBITDA, which represents 17% growth over 2023, and adjusted EBITDA margins of 40%. Same facility revenues grew 7.8% in 2024, another year substantially above our long-term goals. High acuity volume growth was highlighted by total joint replacements in the ASCs, up 19% over prior year. Importantly, customer service levels in our centers remained quite high as we earned a 96.6 overall patient experience score in 2024. Turning to our hospital segment, despite the sale of 14 hospitals during the year, we generated $2.185 billion of adjusted EBITDA in 2024, which represents 9% growth over prior year. Same-store hospital admissions were up 4.7%, as we continue to open up capacity to respond to a strong utilization environment. Acuity and payer mix were strong throughout 2024 and drove a 4.6% increase in same-store revenue per adjusted admission over prior year. This was an important year for Tenet as we transformed our portfolio of businesses through multiple, high multiple sales of 14 hospitals and related operations, generating $5 billion in gross proceeds and enabling significant balance sheet deleveraging. In addition, we added nearly 70 ambulatory surgical centers to the portfolio in 2024, as we were very active in both M&A and de novo development. And finally, over the past two years, we have returned capital to shareholders via share repurchase, retiring approximately 14% of our outstanding shares for $1.12 billion since our repurchase program began in the fourth quarter of 2022. Going forward, we plan to be active repurchasers of our shares, particularly at our current valuation multiples. These actions have resulted in a portfolio of businesses that is more predictable, capital efficient, and able to operate in a variety of environments with better margins and ample free cash flow for the benefit of shareholders. In summary, we're very pleased with our team's performance in 2024, and we believe that we will carry this momentum into the new year. Turning to 2025 guidance, we are projecting full-year 2025 adjusted EBITDA of $3.975 to $4.175 billion, which is an attractive 7% growth rate at the midpoint on a normalized basis. We anticipate adjusted EBITDA growth at USPI of approximately 8.5% at the midpoint of our guidance for 2025 based on our expectation of 3% to 6% growth in same facility revenue fueled by ongoing strength in demand and acuity, continuing effective operational execution, and additional sites of care joining the portfolio. We intend to invest approximately $250 million each year towards M&A in the ambulatory space and the pipeline of opportunities remains strong. We anticipate adding 10 to 12 de novo centers in 2025. Our ability to consistently scale our platform to create additional low-cost sites of care for patients and physicians continues to pay dividends as it improves our overall growth, profitability, capital efficiency, and resiliency in this regulatory environment. Turning to our hospital segment, we are expecting adjusted EBITDA growth of approximately 5.7% on a normalized basis at the midpoint for 2025. This projected growth is expected to be driven by 2% to 3% adjusted admissions growth and the strong operating discipline that our team has now demonstrated for many years. The hospital segment's performance will be enhanced by strategic capital deployment, expanded service lines, and further contributions from the new Westover Hills facility, which opened in the third quarter of 2024. Additionally, as we have noted, we have expanded the relationships that Conifer has with acquirers of hospitals we've sold, and this should contribute to growth in 2025. Finally, we acknowledge that there is currently a great deal of focus on the impact of potential regulatory changes in our space. We have demonstrated an ability to perform well in a variety of operating environments and believe we are differentiated from our peer set as we navigate potential changes going forward. For example, our ASCs operate with freestanding ASC rates, which insulates that important part of our business from potential changes in site neutrality rules. In summary, we had an outstanding year in 2024 and believe that we are in a great position for another strong year in 2025. Our guidance reflects the opportunities before us and the momentum that we carry into the new year. Our established management team stands ready to execute our focus strategy and deliver value for patients, physician partners, and, in turn, shareholders. And with that, Son will now provide a more detailed review of our financial results. Son?