Good day, everyone and welcome to the Fourth Quarter 2015 Tenet Healthcare Earnings Conference Call. My name is Dana, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. The slides referred to in today's call are posted on the company's website. Please note the cautionary statement on the forward-looking information included in the slides. I will now turn the call over to Trevor Fetter, Tenet's Chairman and Chief Executive Officer. Mr. Fetter, you may begin Trevor Fetter - Chairman, President & Chief Executive Officer: Great. Thank you, operator, and good morning, everyone. Let me start by saying that we achieved what we set out to accomplish in 2015. We hit our outlook for the year. We significantly improved our cash flow position. We made substantial progress on the plan to improve our hospital portfolio. We expanded our higher-margin businesses, and we became an even stronger partner to not-for-profit health systems opening up new avenues for growth. With that overview, there are a few topics I'd like to review on today's call. I'll begin with our financial and strategic highlights for the quarter and the year. Further to the discussion we had on last quarter's call, I'll offer my current perspective on our capital allocation priorities. And finally, I'll provide a high-level summary of our outlook for 2016 and the next few years. As you can see on slide three, we drove strong financial results in 2015, including adjusted EBITDA of $2.276 billion. This is a 17% improvement over the prior year. Despite a challenging operating environment, fourth quarter adjusted EBITDA was right at the midpoint of our outlook at $613 million. In fact, adjusted EBITDA was within or above our outlook range in every…

Thank you, Trevor, and good morning, everyone. I'd like to start with a high-level summary of our financial results for the quarter and the year. We produced fourth quarter adjusted EBITDA at the midpoint of our outlook range, capping off another strong year for Tenet, in which we grew EBITDA by 17%. We enhanced our cash flow performance in 2015 and are positioned for additional improvement in adjusted free cash flow in 2016 and 2017. We continued to benefit from our strategies to grow higher acuity admissions. And while softer demand for low-acuity services challenged volume growth during the quarter, we were still able to deliver results at the midpoint of our outlook. We generated solid growth in our hospital-based outpatient centers, and our ambulatory segment had an excellent quarter. Conifer achieved its outlook for the quarter and grew adjusted EBITDA by 30% for the year. Finally, we continue to demonstrate disciplined cost control and believe our diligent expense management will enable us to realize further savings in 2016. With that overview, I'll now provide some additional color on our results. We produced adjusted EBITDA of $613 million in the quarter. When comparing our performance to the prior year, I'd like to remind you of the impact of the timing of the 2014 California Provider Fee revenues. As you may recall, CMS approved the program in the fourth quarter of 2014, so we recorded the entire full-year benefit of $165 million in that one quarter alone. This compares to $49 million of California Provider Fee revenue that we recorded in the fourth quarter of 2015. Once you normalize for those timing differences, adjusted EBITDA improved by 17.4%. As you can see on slide five, we grew adjusted admissions by 0.3% during the quarter, and same-hospital admissions declined 1.8%. While volume…

Thank you, sir. And we'll go first to A.J. Rice with UBS.

Hello, everybody. First of all, I appreciate all the restructuring you've done. I think, Trevor, you made the comment that now you're in a top position in 21 of the 30 markets. Is sort of this it on the restructuring or are there further opportunities you're pursuing and will they be such that they create some debt repayment or cash flow enhancing opportunities if you do pursue? Trevor Fetter - Chairman, President & Chief Executive Officer: Good question, A.J. Let me ask Keith to comment on that if there is more work that we're undertaking.

A.J., there's a few other markets that would be among those nine markets where we're not one or two that we are looking at and continue to work through. Some of those will take some time to get done, but we think we still have some opportunities there that can generate some additional capital.

Okay. And then maybe just on the Georgia situation. So that's $500 million in proceeds. Can you tell us a little bit about your intention there and is – that's been delayed a little bit. Is the litigation, because I think it relates to some of those facilities, is that holding up or is that totally separate from what's going on in terms of trying to close those transactions?

No. The litigation is really separate from closing the transactions. That's not holding it up. It just – it takes a little – it'll take a little time. We still are hopeful that we'll be able to close that by the end of the first quarter. Trevor Fetter - Chairman, President & Chief Executive Officer: And I think you said the proceeds were $500 million, they are $575 million.

Right. Right. And will that be going to – are those earmarked at this point? Trevor Fetter - Chairman, President & Chief Executive Officer: No.

Okay. You won't say – any comment about whether debt, particularly the debt paydown or whether share repurchase or what – hold it for working capital needs or any thoughts? Trevor Fetter - Chairman, President & Chief Executive Officer: No, I think I laid out in my prepared remarks sort of a comprehensive view about the use of sources of capital and cash flow, whether it's from operations or from transactional activity. And I think it was a balanced approach that I described involving investments, retiring high-cost debt, repurchasing shares. We have announced already last year the share repurchase program that was to be funded by proceeds from divestures. And so, I think that's about as specific as we'll be today.

And we'll take our next question from Whit Mayo with Robert Baird. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hey. Thanks. Maybe just ask that question a different way. The first quarter typically can be a fairly soft cash flow quarter. So can you help us think through the sources and uses of capital over the next quarter or two to fund the obligations, all the working capital, the put call? That would be helpful. Trevor Fetter - Chairman, President & Chief Executive Officer: Sure. Dan will take care of that.

Good morning, Whit. How are you? Certainly, when we complete the Atlanta transaction, that'll be a source of cash proceeds as we move through the year and continue to grow our cash flow generation. That certainly will be a source of cash flows to fund our business, as well as obviously we have our $1 billion line of credit as well, as well as from some of the transactions that we completed, we'll continue to realize some proceeds as some of those working capital amounts wind down and we collect some of the receivables. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Okay. And maybe just update us on your current self-pay and balance after collection rates, whether or not there's been any material change in those numbers.

There really hasn't, Whit. We go through each quarter, we do a number of different analyses, including an 18-month lookback where we look at receivables and then we look at ultimate collections on those receivables. And then in addition to other analyses we perform, we monitor collection trends on more recent receivables to see if they're tracking consistently with our historical experience. And I would tell you that our quarterly adjustments related to updating our collection rates are typically insignificant. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Okay. Thanks a lot.

And we'll take our next question from Josh Raskin with Barclays.

Thanks. Good morning. Just sort of touching back on the hospital sales and obviously the pending one in Atlanta, I'm just curious, was there a specific catalyst, some sort of opportunity that presented itself in the market or was this more around thoughts around cash needs as you came into 2016? Should we think about this as – and I appreciate the comments you made, Keith – but should we think about this as part of the annual strategy now or was this just sort of opportunistic?

Well, when we set out to look at different markets, we felt like there was an opportunity in that market based on other consolidation activities for us to be a participant. As we looked through it, we felt that the best option for us was actually to exit the market versus stay in the market in a relationship versus in contrast to Dallas where we were small, also we did a joint venture with Baylor Scott & White. The markets move at different times around the country. And as those change, as we look at our portfolio and continue to hone the portfolio, we'll take the opportunities that the markets offer us, where it's appropriate. At the same time, we continue to invest in our real strong markets and continue to grow those as well.

Okay. And then just on the ASCs, it looked like there was a little bit movement between equity method and consolidated. I don't know if there was a change in ownership structure there. And then I guess within the operations of the ASC, are you guys seeing impact from CCJRs or bundling at this point? Just trying to figure out why such strong organic growth. Trevor Fetter - Chairman, President & Chief Executive Officer: Dan, why don't you take that, the accounting part of the question first? And then Bill Wilcox is here with us and can comment on the operations question.

Yes. Whit, there were some transactions; we made some additional investments that resulted in us consolidating certain centers that were previously accounted for on the equity method where you just pick up your share of the earnings, but there was transactions that did occur in the fourth quarter. And as a result when you do that, when you buy up and have a majority interest position, you then begin to consolidate full revenues and expenses. William H. Wilcox - Chief Executive Officer & Director, United Surgical Partners International, Inc.: This is Bill Wilcox. On the specific question regarding CJR and BPCI, that's a very modest part of what we're doing. As you probably noted, the CJR is inpatient only as is the BPCI, so we only have four of our hospitals participating in that. There are 26 pending hospitals that are participating in that. Our early participation in BPCI, which we're doing through our physicians, has primarily been just so we can understand the model and how that works. On a perhaps a more global response to your question, we continue to have some environmental tailwinds that are impacting us, that side of service migration from inpatient to outpatient and outpatient to ASE (38:24) continues to be favorable for us. That patient consumerism increase, which is a result of changes in health plans to higher deductibles, increasing payer steerage particularly on some of the lower complexity cases, helped us in the fourth quarter. And then, as those come into play, our business becomes much more cyclical, and we now have about a third of our earnings in the last quarter of the year. Is that a good enough answer to your question?

Yeah, that's perfect, Bill. Thank you. Yeah.

And we'll take our next question from Sheryl Skolnick with Mizuho Securities USA.

Good morning, gentlemen, and thank you. It was a tough year and I must say despite what the stock is doing, I know you work really hard and you really do a good job and thank you for... Trevor Fetter - Chairman, President & Chief Executive Officer: Thank you, Sheryl. Could you just speak up a little bit, we're having a little trouble hearing you.

Oh, I'm so sorry. I was trying not to shout at you for a change. So here's my question. As we now look at the hospital business, you've reorganized the portfolio. You've reached meaningful market share position, one or two in the majority of your markets. And your EBITDA growth projection of in the neighborhood of 5%-ish or so, it seems reasonable. But I'm curious as to when you would anticipate, or if you would anticipate, getting margin improvement from that market share, from any scale economies you might be able to deliver, that might perhaps make that EBITDA growth either more visible or perhaps a little conservative? Trevor Fetter - Chairman, President & Chief Executive Officer: That's a very good question. So let me start – I'm going to start and I'll hand it off to Dan and to Britt Reynolds. Keep in mind a couple of things. Many of the hospitals that are part of our portfolio today are still relatively immature in either our portfolio or historically the portfolio of Vanguard. As you know, the historic Tenet portfolio was much more static for a very long time, and I referenced in my remarks the track record of nine consecutive years of earnings growth and margin growth, margin expansion, and that was really a primarily hospital-centric company portfolio. So those techniques of cost management, revenue management and investments for volume growth are still very much in evidence, but they have different levels of maturity in different parts of the portfolio. I also mentioned the sort of rapid transactional activity that we undertook just in the last year. Much of that was within the hospital portfolio. It was sort of overshadowed by the USPI transaction, but still there was quite a lot of moving parts within the hospital portfolio. So, what I was really suggesting there is that, once again, you should expect us as we have a more static portfolio, at least on the acquisition side, that we can resume, again, demonstrating that – the techniques that lead to those improvements in earnings and in margin that we demonstrated over a course of a decade earlier. I think what I'd like Dan to comment on is some specifics around the cost management because in an environment, as you point out, with a challenging environment for the industry last year, there were quite a lot of worries among investors about cost controls, whether it was around labor or pharmaceuticals or other topics. Our cost controls were actually very good.

They really were. And we believe there's still a long runway to continue to generate further cost efficiencies in our various hospital businesses. In addition to not only recent acquisitions like Vanguard and Tucson and Birmingham, but even in the legacy Tenet facilities, there's – we're implementing a number of different things, so let me talk about a few of them. So when you think about labor, we've been demonstrating very good labor management cost. However, there is still further room for opportunity as we continue to standardize our pay practices, as we roll out enhanced and standardized staffing standards across our entire portfolio. We've done a pretty good job managing down premium pay or contract labor type of spend, but there's still more room for opportunities as we evaluate our mix of fixed staffing versus variable staffing standards, developing market labor pools where resources can be shared across certain markets. There is a number of different areas. One line on our income statement, other operating expenses, there's a lot of opportunities there and with disparate vendors related to some of the acquisitions where we've begun to consolidate vendors and leverage our broader scale to achieve improved pricing as well as service-level benchmarks and standards that the vendors need to achieve and to create additional other operating expense efficiencies. We've been talking about over the past several quarters, we're in-sourcing our purchasing functions and transitioning – we just transitioned to our new group purchasing arrangement with HPG. There's a lot of opportunities there to continue to create, identify and achieve spend savings there as well. So, there's a lot – there's still a long ways to go in terms of us continuing to drive margin improvement on the hospital side. Now, on the product line perspective, so we've been doing – we've been very focused on the higher margin services. We still have a lot of work left to do there. So, let me turn it over to Britt to talk about that.

Sure. Good morning, Sheryl. As Dan said, obviously we have dissected each component of the expense management and have teams all over that. But I'd like to address the strategic side of the equation. As you know, as we round out our hospitals in conjunction with my colleagues at USPI on the urgent care and the ambulatory segment, we're really getting patient in the right level of care, and oftentimes that's at a higher margin in aggregate in the ASCs or in the urgent care centers. We have also really focused, as you know, over the last several years on high-acuity inpatient, mostly surgically-oriented care, and in the prepared remarks as well as we've said in previous quarters, those are really, really maturing, and specifically neurosurgery, cardiology, orthopedics including joint, spines, all areas of work there, really developing out, some oncology services, bariatric. So, we're seeing that high-acuity service line, which carries with it a much better revenue per case, we're seeing better mix within that, and then obviously with expense controls, you're going to get a higher margin on the core business. And then we're also expanding into some other higher-margin services that we don't – we haven't spoken a lot about because we're in the early stages, but we have a lot of excitement about, and that's in select behavioral health build out and placement and maturing our rehab services as a continuation of these higher acuity service lines. The last point I would make is, we've been really successful in recruiting some key, key high-name, regionally recognized physicians in many, many markets that add to the great physicians we have there, and we're seeing a lot, a lot of excitement around those physicians and services.

And we'll take our next question from Kevin Fischbeck with Bank of America.

Great. Thanks. I didn't really hear anything about healthcare reform as far as 2016. It looks like 2016, the hospital business is going to grow in line with what the long-term average is adjusting for divestitures. How do you think about reform impacting the company in 2016?

Hey, Kevin, it's Dan. We're very optimistic as we move through the year. We're very well positioned from an exchange contracting perspective. We have solid contracting positions with the most affordable plans across essentially all of our markets. So, we think we're very well positioned to capture our fair share of that business. Florida and Texas are our two most robust exchange markets. So, we're going to continue to drive growth in the exchange business. We have not assumed any additional states expand Medicaid in 2016. But if you're thinking about from a modeling perspective, you might want to think about maybe roughly 1% EBITDA, that's sort of benchmark of what we think that will mean to us this year.

Okay. And then just the commentary on the cash flow I think was very helpful, but just really trying to dig into that a little bit more because if you talk about $200 million to $350 million of kind of adjusted free cash flow, then I guess after distribution to minority partners, I think that cash would be used to also do the $150 million to $200 million of ASC deals and I guess would also be used to buy back in whatever you're going to buy back in from Welsh Carson. After you do those two things, which it sounds like you kind of plan on doing every year for the next few years, how much kind of free cash flow do you have to actually use for debt pay down or share repurchase? Obviously, you're going to have cash divestitures coming in too. But just from a free cash flow basis, like how much on an ongoing basis is a way to think about 2016 cash flow so we can build a bridge to it growing in 2017 and beyond?

So, certainly the $575 million proceeds related to the Atlanta transaction will come through. We're going to continue to grow as we mentioned in our remarks, when we get past 2016, our capital spend is going to come down by about $150 million. So that's going to enhance our free cash flow generation and that doesn't include any additional cash flow that we'll produce in 2017 and beyond, continuing to grow our earnings, which obviously translates into additional cash as well. So, we feel good about where we've come. We still have more work to do certainly in terms of continuing to generate additional free cash flow. But I think that's how you should be thinking about. We're going to continue to grow our business. The ambulatory segment is a great cash flow generating business. That side of the business is going to continue to grow and so, that's how – when we think about our ability to continue to grow free cash flow, we're optimistic that we're going to be able to continue to drive incremental improvement.

And we'll take our next question from Andrew Schenker with Morgan Stanley. Andy Schenker - Morgan Stanley & Co. LLC: Great. Thanks. Good morning. Can you maybe talk a little bit more about the seasonality of the three separate businesses and how that's impacting the total company, given your 1Q guidance is down as a percentage of the full year, year-over-year, but maybe more in line with past years? Thank you.

Good morning, Andrew. It's Dan. As we think about the three businesses, in terms of how you should think about 2016, obviously, we put our guidance out there for the first quarter of $550 million to $600 million; we're going to continue to grow our earnings throughout the year. And let me give you a couple of things. So as Bill mentioned, the fourth quarter is very strong seasonally for the ambulatory businesses. So, you have to think about the earnings that will be in the fourth quarter of this year similar to last year, a very strong fourth quarter. So, you should anticipate that as well. In terms of some of the other businesses, such as the hospital business, as we continue to execute on our initiatives and whether it's executing on synergies related to transactions or efficiencies related to whether it's on the supply side, whether it's on the labor side, we'll continue to build on those and similar to how we have in the past several years, when we started off with Vanguard, we said our synergy range was $100 million and $200 million; we exited 2015 at our annual run rate of $200 million. The two recent transactions in Tucson and Birmingham, as we continue to integrate those operations into our business, you're going to see additional improvement there during this year and beyond because we won't capture all the synergies and operational improvements in year one. Andy Schenker - Morgan Stanley & Co. LLC: Okay. Thanks. And then going to the hospital segment here, your admissions guidance and adjusted admissions guidance implies a stepdown year-over-year. Obviously the first half of 2015 was stronger than second half. Can you talk about maybe the moving parts heading into the 2016 guidance on the volume front, how you think that's playing out and what some of the opportunities are that can drive you to the high end or above? Thank you.

We've essentially assumed that our inpatient volume will be essentially flat; the midpoint maybe up 1%. Adjusted admissions growth is going to be zero to 2% growth there. And so obviously, with the flu season being softer than last year or 2014, that certainly has had an impact. And again, building on our initiatives and focusing on growing our service lines, that's going to continue to generate additional growth as well, we believe.

And we'll take our next question from Gary Taylor with JPMorgan.

Hi, good morning. A couple questions. First, just thinking about the stepdown in CapEx guidance you outlined for 2017, I know you guys haven't given revenue guidance for 2017 but just kind of based on our model, it looks like that would represent maybe 4% of acute care revenues and over the last two decades I think we've seen hospitals run basically 6% revenue per CapEx. So one, does the stepdown imply something like 4% of hospital revenues in CapEx? And two, do you feel like that's a good competitive number just given the fact that some of the facilities are newer and you essentially over invested the last couple of years?

We do. When we think about our investment opportunities on the hospital side, we've obviously been investing in some larger projects. Those wind down essentially by the end of 2016, a little bit into 2017. But we've spent – obviously been spending a lot of time over the past several years analyzing our capital allocation, and we think capital expenditures coming down by $150 million will still allow us to be able to invest appropriately to grow our hospital business. Trevor Fetter - Chairman, President & Chief Executive Officer: And I think that CapEx is also a higher percentage of the hospital segment revenues. As you know, our other segments do not require so much capital as a percent of...

Yeah. I was kind of coming up with that might be 4% of hospital revenue, less than a couple percent in ASC and nothing in Conifer. It just looked like a lower hospital number. That's helpful. The other thing I didn't understand in the quarter was given the – on the ambulatory segment, 18% pro forma revenue growth, pro forma for USPI, USPI system-wide same-store revenue 12% and that only translating to a little less than 5% growth in EBITDA to THC, basically. Can you help me understand that?

Hey, Gary. This is Jason Cagle from USPI. How are you? I think the real answer to your question, if you go back to slide eight, it's 9% EBITDA less minority interest growth. I think the number you're getting to is the after Welsh Carlson minority interest answer and there's some tax noise in the calculation of the minority interest to Welsh Carlson. If you just look in that, the health of the business overall, the EBITDA less minority interest you ought to look at is that 8.9%.

And our last question today will come from John Ransom with Raymond James. John W. Ransom - Raymond James & Associates, Inc.: Hi, good morning. Could you just give a little more specifics? If we look at 1Q guidance and then we look at the full year, we're just not quite getting there. Is the answer as you mentioned before, just the disproportionate ASC fourth quarter numbers combined with some ASC EBITDA? Is there anything else missing in kind of bridging 1Q to the full year?

Good morning, John. It's Dan. Certainly, the seasonality of the ambulatory business is part of that growth as we move throughout the year, as well as some of the initiatives that we're executing on during this year in terms of driving performance improvement at the hospitals we acquired recently. The savings and efficiencies we'll gain from in-sourcing or purchasing functions and the new GPO arrangement with HPG, as well as there's some additional HIT incentive after the first quarter that we'll be able to recognize as well. John W. Ransom - Raymond James & Associates, Inc.: And one other thing real quickly. Maybe I should know this, but Conifer, as you divest these hospitals, is there any obligation on behalf of the parties that you sell to that they use Conifer? Does that represent revenue at risk down the road?

So, John, we have generally been, as part of the negotiations, negotiated either transition agreements for a few years, which gives us an opportunity or in the case, for example, St. Louis University. We have a new five-year contract. And now, it's obviously a non-tenant customer, an independent customer. So we, in some of the divestitures, we feel like more than – most of them will have an opportunity for Conifer to continue on for some period of time and maybe even indefinitely. John W. Ransom - Raymond James & Associates, Inc.: But perhaps North Carolina would be the one that – LifePoint buying that and they use Parallon, that would probably be the one we might think of as most at risk?

That one would be, we have a shorter-term agreement with them, but that's with Duke LifePoint, the JV, but we continue to hope to have longer-term services there. And Steve (58:50) can certainly comment on that, but also on a revenue basis kind of the smallest one we've done.

I'll just add, this is Steve (58:57). We talked to Duke LifePoint, obviously about that relationship and we obviously have to prove ourselves. And they've got, as you know, Parallon, as you just mentioned there as well. We think it's a great opportunity for us to show what we're capable of doing amongst the competition. So, (59:12) just has a short-term relationship we hope to turn into a long one. John W. Ransom - Raymond James & Associates, Inc.: And lastly, Atlanta's not going to do any – does Atlanta do any EBITDA in the first quarter to speak of? It looks like – I mean it's a big hospital system. What's the EBITDA that comes out after 1Q?

John, this is Dan. How you should think about Atlanta for the full year, there's not really anything significant or material amounts in for the full year. They're obviously a little bit in the first quarter. John W. Ransom - Raymond James & Associates, Inc.: Yeah.

And then as we move through the year, there will be some typical costs that sort of offset what would be there in Q1.

Thank you. And ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.