Tenet Healthcare has minimal near-term debt, plans continued growth and share count reduction

By Lisa Kerner

Charlotte, N.C., Jan. 10 - Tenet Healthcare Corp. extended its debt maturities to "create additional financial flexibility" and has "minimal near-term maturities," said chief executive officer Trevor Fetter at the 31st Annual J.P. Morgan Healthcare Conference in San Francisco on Thursday.

"With the exception of $474 million in debt that comes due in 2015, we have no meaningful debt maturities within the next five years," Fetter said.

The company reported leverage of four times as of Sept. 30 and its debt had an average weighted maturity of 6.9 years at year end.

"The call dates of some sizeable debt issues occur around the middle of next year," said Fetter.

If rates remain near current levels, Fetter said the call options give Tenet the opportunity to refinance about a third of the debt at significant savings.

These potential refinancing opportunities could have a "material positive impact on free cash flow," according to Fetter.

"For nine years we have achieved uninterrupted growth in EBITDA at a compounded annual growth rate of 15%," Fetter said, adding that the rate is expected to continue.

There are "abundant" acquisition opportunities with the potential to strengthen all three of Tenet's business lines.

"While our primary growth engine is not dependent on acquisitions, we continue to look for great acquisition opportunities and it's likely that contribution from acquisitions will enhance our growth rate over the next few years," said Fetter.

In the last seven quarters, Tenet has reduced the number of outstanding shares by about 25%.

The Dallas-based health care services company's aggressive program to shrink its common share count is expected to reduce the common share count by one third, noted Fetter.

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