DALLAS--()--Tenet Healthcare Corporation (NYSE: THC) today confirmed it is engaged in preliminary discussions regarding a potential acquisition of Healthscope (HSP.AX), the second largest private hospital corporation in Australia. Tenet has a long-standing policy of not commenting on market rumors, including speculation on possible acquisitions. However, Tenet is deviating from that policy in this singular instance in response to recent volatility in the trading of its common stock.
Healthscope owns and operates 43 hospitals representing approximately 15 percent of Australia’s private hospital market. Healthscope also operates the country’s third largest pathology business. Healthscope had an EBITDA margin of approximately 13.8 percent in 2009, and 11.1 percent revenue growth.
Over forty percent of the Australian population is covered by private health insurance and private hospital expenditures are expected to realize a mid single digit real rate of growth for the foreseeable future.
In addition to having universal access to the health care, Australia has a strong and growing economy with a growing population and an increasing trend towards private health insurance coverage. Australia has a health care system in which private hospitals complement public (government-run) hospitals. Private hospitals generally serve patients who have chosen to purchase private insurance or pay for their hospital care directly, while public hospitals provide emergency care and treatment for patients without private insurance coverage.
Tenet’s U.S. business continues to perform well. The Company has confidence in its ability to grow earnings and cash flow in its domestic operations and believes its current 2010 Outlook for EBITDA and cash flow is conservative. Paying and commercial inpatient volume trends through May 31, 2010 remain favorable relative to the first quarter 2010, with May results improving relative to both April and March.
Tenet believes the acquisition, if consummated, will only be completed at a price which creates value for its shareholders. Tenet also believes the acquisition would improve Tenet’s payer mix, and enhance Tenet’s margins and growth rates both currently and for the long-term. The acquisition of Healthscope would advance Tenet’s position as a leading global hospital operator and provide opportunity for cross border sharing of knowledge and capabilities.
Tenet’s discussions with Healthscope are in the preliminary stages. Any acquisition transaction is subject to negotiation of economic and other terms, completion of due diligence, negotiation of terms of a definitive agreement and approvals of the Boards of Directors of both companies. There can be no assurances that any agreement will be reached or that a transaction will be completed. The Company will provide additional detail on its 2010 Outlook at the Goldman Sachs Investor Conference on June 15, 2010.
Tenet Healthcare Corporation is a health care services company whose subsidiaries and affiliates own and operate acute care hospitals, ambulatory surgery centers and diagnostic imaging centers. Tenet’s hospitals and related health care facilities are committed to providing high quality care to patients in the communities they serve. For more information, please visit www.tenethealth.com.
Some of the statements in this release may constitute forward-looking statements. Such statements are based on our current expectations and could be affected by numerous factors and are subject to various risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended Dec. 31, 2009, our quarterly reports on Form 10-Q and periodic reports on Form 8-K. Do not rely on any forward-looking statement, as we cannot predict or control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.