DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE: THC) (the “Company”) today announced
that Chairman and CEO Trevor Fetter will step down from his roles as
director and chief executive officer at the earlier of March 15, 2018 or
when a successor is appointed. Current independent lead director Ronald
A. Rittenmeyer will become executive chairman effective immediately. In
that role, Mr. Rittenmeyer will serve as the senior-most executive at
the company. The Board has hired Russell Reynolds Associates to conduct
a search for a new Chief Executive Officer.
Additionally, Tenet has commenced a process to refresh the composition
of its Board. This process is intended to ensure that the Board has the
best mix of skills and experience to maximize the future value of the
Company. Through this process, the Company expects to further enhance
the Board’s expertise in areas directly relevant to the Company’s
business.
Mr. Rittenmeyer said: “The changes announced today will ensure Tenet
remains focused on providing high quality care to patients, innovating
in ways that meet the demands of today’s healthcare market, and driving
operational and financial performance in a manner that maximizes
shareholder value. The Board of Directors thanks Trevor for his
significant contributions to Tenet and appreciates his commitment to
remain with the Company during the transition period. During Trevor’s
tenure, Tenet has built a strong enterprise that is aligned with the
trends driving healthcare, and which provides multiple channels for
growth across the company’s Hospital, Ambulatory and Conifer segments.”
Mr. Rittenmeyer continued: “I look forward to working with the rest of
the Board to conduct a thorough search process that will identify a new
chief executive to guide Tenet into the future, and ensure that during
this period the Company stays on track with plans to drive operating
performance improvement, reduce leverage ratios, and provide quality
healthcare to the patients and communities we serve.”
Mr. Fetter said: “I would like to thank the Board of Tenet for their
confidence and support during my tenure. I am proud of what we
accomplished in transforming the Company, and strongly believe the
130,000 Tenet employees will continue focusing every day on advancing
the Company’s mission. I have no doubt that Tenet will be a leading
force in creating a better healthcare system and I look forward to
assisting during the transition.”
Shareholder Rights Plan
Tenet’s Board has approved a short-term shareholder rights plan,
effective today. The plan is intended to ensure that the Board can
protect all shareholder interests as it executes the leadership and
governance changes announced today and as it evaluates the best path
forward for the Company, and is intended to protect the Company’s
substantial tax net operating loss carryforwards (“NOLs”). The plan is
not intended to prevent any action that the Board determines to be in
the best interests of the Company.
At December 31, 2016, the company’s federal net operating loss
carryforwards were approximately $1.7 billion, prior to any taxable
gains or losses that occurred in 2017 including an approximate $500
million taxable gain on the sale of the company’s acute care hospitals
and related operations in Houston on July 31, 2017. At a 35% tax rate,
the $1.7 billion NOL can generate $600 million in cash tax savings. An
“ownership change,” under the tax code, could severely limit the
company’s ability to utilize its NOLs. An “ownership change” would occur
upon a 50 percentage point change in stock ownership over a three-year
period by shareholders owning in excess of 5% of the company.
Under the rights plan, if any person or entity acquires a position in
4.9% or more of the Company’s outstanding common stock, all holders of
rights issued under the plan (other than any triggering person) will be
entitled to acquire shares of common stock at a 50% discount, or the
Company may exchange each right held by such holders for one share of
common stock. Under the rights plan, any person or entity that currently
owns more than 4.9% of the Company’s outstanding common stock may
continue to own its shares of common stock but may not acquire a
position in any additional shares without triggering the rights plan.
The rights plan is scheduled to expire following the conclusion of the
Company’s 2018 annual meeting of stockholders. Following the Company’s
2018 annual meeting, the Board will further evaluate the ongoing need
for the rights plan at such time based on status of risk to the
Company’s NOLs. The rights plan may also be terminated prior to its
scheduled expiration.
Ronald A. Rittenmeyer, Executive Chairman
Mr. Rittenmeyer previously served as lead director at Tenet, and has
been a Tenet Board member since 2010. He previously served as chairman
of the board and chief executive officer of Millennium Health, a health
solutions company. He served as the chairman, president and chief
executive officer of Expert Global Solutions, Inc., a provider of
business process outsourcing services, from 2011 to 2014. From 2005 to
2008, Mr. Rittenmeyer held a number of senior management positions with
Electronic Data Systems Corporation (EDS), including chairman and chief
executive officer from 2007 to 2008, president from 2006 to 2008, chief
operating officer from 2005 to 2007 and executive vice president, global
service delivery from 2005 to 2006. Prior to that, Mr. Rittenmeyer held
leadership positions at a number of companies and in private equity.
Mr. Rittenmeyer currently serves on the board of directors of two other
public companies: American International Group, Inc. (AIG) and
QuintilesIMS. He is a director for privately held Avaya Inc. He serves
on the Executive Board of the Cox School of Business at Southern
Methodist University, the Foundation Board for the Church of Incarnation
in Dallas and was recently named to The National Association of
Corporate Directors’ (NACD) 2016 Directorship 100 list.
About Tenet Healthcare
Tenet Healthcare Corporation is a diversified healthcare services
company with nearly 130,000 employees united around a common mission: to
help people live happier, healthier lives. Through its subsidiaries,
partnerships and joint ventures, including United Surgical Partners
International, the company operates 77 general acute care hospitals, 21
short-stay surgical hospitals and over 460 outpatient centers in the
United States, as well as nine facilities in the United Kingdom. Tenet’s
Conifer Health Solutions subsidiary provides technology-enabled
performance improvement and health management solutions to hospitals,
health systems, integrated delivery networks, physician groups,
self-insured organizations and health plans. For more information,
please visit www.tenethealth.com.
The terms “THC”, “Tenet Healthcare Corporation”, “the company”, “we”,
“us” or “our” refer to Tenet Healthcare Corporation or one or more of
its subsidiaries or affiliates as applicable.
This release contains “forward-looking statements” - that is, statements
that relate to future, not past, events. In this context,
forward-looking statements often address our expected future business
and financial performance and financial condition, and often contain
words such as “expect,” “assume,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” or “will.” All statements related to the
operation or effects of the rights plan are also forward-looking
statements. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. Particular uncertainties that
could cause our actual results to be materially different than those
expressed in our forward-looking statements include, but are not limited
to, the factors disclosed under “Forward-Looking Statements” and “Risk
Factors” in our Form 10-K for the year ended December 31, 2016 and other
filings with the Securities and Exchange Commission.
