Tenet Healthcare looks at the potential sale of its Conifer division
Healthcare provider Tenet Healthcare is looking at the potential sale of its financial services division Conifer. The unit remains responsible for Tenet’s hospital and physician revenue cycle management and value-based care solutions.
The move will enable Tenet to reduce some of its long-term debt. The company has ramped up its cost reduction initiatives by $100mn, where it aims to achieve $250mn of annualised run-rate savings by the end of 2018.
The business has been in choppy waters since the summer, and has also recently announced plans to lay off over 1000 members of staff in order to reap further savings in the upcoming year. The departure of Chief Executive Trevor Fetter also had been a cause for uncertainty.
Goldman, Sachs & Co. LLC has been appointed as financial advisor and Kirkland & Ellis LLP as legal advisor in a potential sale. The company has also implemented a number of performance thresholds which management are to meet in order to obtain incentive compensation under Tenet’s Annual Incentive Plan.
“We are continuing to take aggressive actions to improve financial performance and returns for our shareholders by executing on our previously announced divestiture plans, accelerating growth, enhancing quality, eliminating unnecessary costs, improving margins and free cash flow, and lowering our leverage ratio,” explained Ronald A. Rittenmeyer, Executive Chairman and CEO.
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“I want to acknowledge the insights received from many shareholders, including Glenview Capital, which have been very helpful in our efforts to reposition Tenet.”
“We remain open to all options that can enhance shareholder value, and given that we have adequate liquidity to operate our business and no near-term debt obligations, we have the flexibility we need to achieve the best alternative for shareholders,” he continues.
“Conifer has great business lines with strong growth potential and robust free cash flow. As we initiate a process to explore a potential sale of Conifer, our objective is to maximise the value of Conifer for our shareholders and put Conifer in the best position to continue to provide quality service to its clients, including our own hospitals.”
Additionally, Tenet’s 2018 outlook has highlighted the prediction of organic revenue growth within its acute healthcare facilities and the potential to undergo a number of acquisitions to expand its service offerings.