Tenet Healthcare (THC) Barclays 27th Annual Global Healthcare Conference summary

Policy and regulatory environment

• Medicaid reform is a central issue, with significant political resistance to cuts, especially among Trump voters and key demographics.

• Legislators are likely to focus on work requirements and tightening enrollment standards rather than broad cuts.

• Site-neutral payment reform poses less risk to the business due to its freestanding ASC model and limited physician employment.

• Tariff risks are mitigated by fixed pricing and capped escalators in supply contracts, with 70% of supplies already contracted for the year.

• ACA exchange growth is strong, especially in red states, and polling data is being used to advocate for continued subsidies.

Business strategy and operational focus

• Expense management and capacity expansion are key pivots in response to policy changes, with flexibility demonstrated during COVID.

• Focus is on high-margin, high-acuity service lines, especially in USPI, with less emphasis on low-acuity procedures.

• Capital deployment prioritizes USPI, M&A, and high-acuity hospital investments, with increased share repurchases due to strong free cash flow.

• Hospital portfolio has been streamlined to under 50, focusing on attractive, high-reputation facilities.

• Integration of recent acquisitions is ahead of expectations, with a healthy pipeline for future growth.

Financial performance and guidance

• USPI guidance now focuses on same-facility revenue growth of 3%-6%, reflecting a shift to higher-acuity procedures.

• Long-term growth algorithm remains 2%-3% volume and 2%-3% same-store pricing, but revenue is a better metric due to variability.

• Free cash flow after NCI is strong at $1.2 billion, supporting all capital allocation priorities without impacting leverage.

• Share repurchase is a near-term priority given current valuation.