(Reuters) - Tenet Healthcare Corp (THC.N) on Tuesday said it is putting its Conifer unit up for sale and plans to cut $100 million more in costs, as its new chief executive works to slash its heavy debt load.
Ronald Rittenmeyer became interim CEO of the hospital operator in October after Trevor Fetter stepped down under investor pressure. Glenview Capital Management, the company’s largest shareholder, has been agitating for changes at the company since August, citing irreconcilable differences over strategy.
Tenet said it hired investment bank Goldman Sachs to advise on the sale process for Conifer, which provides financial and debt collection services as well as technology to hospitals and healthcare companies. It said the process may not result in a sale of the business, but it will make a decision during the first half of 2018.
The unit had earnings before interest, taxes, depreciation and amortization (EBITDA) of $277 million in 2016, which was about 11 percent of Tenet’s total EBITDA.
But growth has flagged at Conifer this year, with lower-than-expected sales and slightly declining earnings through the first nine months.
Tenet has a market capitalization of around $1.5 billion and nearly $15 billion of debt. It is selling off hospitals, cutting costs and shaking up management as it tries to boost margins in its hospital segment and appease Glenview, which holds almost 18 percent of its shares.
The company did not say how it plans to cut the additional $100 million in costs.
In October, Tenet said it would lay off about 1,300 employees to cut cost by $150 million annually. It now says it expects to reduce costs by about $250 million a year by the end of 2018.
Tenet also said on Tuesday it expects 2018 adjusted profit per share of $1.07 to $1.36.
Analysts on average were expecting $1.27 per share, according to Thomson Reuters I/B/E/S.
The company also forecast net operating revenue of $17.80 billion to $18.20 billion, missing analysts’ estimates of $18.90 billion.
Tenet shares were up nearly 3 percent at $15.18 in midday trading.
Reporting by Divya Grover in Bengaluru; Editing by Meredith Mazzilli