Hospital operator Tenet Healthcare Corp (NYSE:THC) saw shares ease in pre-market as it unveiled plans to explore the sale of its financial services unit Conifer and ramped up plans to cut costs.
The group told investors it had increased increased its previously announced cost reduction initiatives by US$100mln and now expects to achieve $250 million of annualized run-rate savings by the end of 2018.
The Conifer business provides technology and financial services to hospitals and health-care companies.
Tenet Announces Process to Explore a Potential Sale of Conifer, Provides Updates on Cost Reduction and Board Refreshment Initiatives, and Issues Outlook for 2018: DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE: THC) today announced… https://t.co/gXT7arstKS pic.twitter.com/1mM9zgmMCP
— Business Wire-Health (@BW_Health) 19 December 2017
In September this year, it emerged that the group had hired bankinbg advisors as part of a review of its options, including a possible sale of the company, after pressure from activist shareholder Glenview Capital Management, which has a 17.8% stake.
“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," Ronald A. Rittenmeyer, Tenet's executive chairman chief executive said on Tuesday.
Rittenmeyer added: “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.
"Conifer has great business lines with strong growth potential and robust free cash flow."
Top assist with the possible sale, Tenet has hired Goldman Sachs as its financial advisor and Kirkland & Ellis as its legal advisor.
Looking ahead for full year 2018, the firm is guiding for net operating revenues of between US17.8bn and US$18.2bn and net income from continuing operations of between US$65mln and US$70mln.