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Tenet pays down $250 million debt, further leverage reduction planned
By Devika Patel
Knoxville, Tenn., Nov. 7 – Tenet Healthcare Corp. plans to keep paying down debt after repaying $250 million of debt in September.
The company has board authorization to repay a further $150 million of debt but management believes Tenet will mostly achieve deleveraging through EBITDA growth.
“We continue to believe that we can reduce our leverage,” chief financial officer Daniel Cancelmi said on the company’s third quarter earnings conference call on Tuesday.
“Our expectation is that EBITDA growth will be the primary source of de-levering and we also expect to pay down debt over time.
“In September, we repaid $250 million of debt, which reduces annual cash interest payments by $20 million and we have board authorization to retire another $150 million of debt through open-market repurchases and we will continue to evaluate additional opportunities to reduce leverage,” Cancelmi said.
The company’s top executive echoed Cancelmi’s comments.
“We are also very cognizant of our high debt level and are committing to reducing it in a systematic way,” executive chairman and chief executive officer Ronald A. Rittenmeyer said on the call.
At Sept. 30, Tenet’s ratio of net debt to trailing 12-month EBITDA was 6.4x.
Cash and cash equivalents were approximately $429 million at Sept. 30, compared to $475 million at June 30.
Adjusted free cash flow was $308 million in the first nine months of 2017, a $60 million decrease when compared to $368 million in the first nine months of 2016.
Adjusted EBITDA was $507 million in the third quarter of 2017 compared to $582 million in the third quarter of 2016.
On Aug. 11, Tenet said it called for redemption all $250 million of its outstanding 8% senior notes due 2020.
The notes were redeemed on Sept. 11 at 101.333 plus accrued interest to the redemption date.
Tenet is a Dallas-based owner and operator of acute care hospitals, ambulatory surgery centers, diagnostic imaging centers and related healthcare facilities.
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