Tenet explores strategic options, including sale: 9 things to know

Shares of Tenet Healthcare surged 14 percent Wednesday shortly after The Wall Street Journal reported the Dallas-based hospital operator hired banking advisors to evaluate strategic options, including a sale of the company.

After two board members abruptly quit Tenet's governing body over "irreconcilable differences" in mid-August, they made it known their employer and Tenet's largest stakeholder — Glenview Capital Management — "may evaluate other avenues to be a constructive owner of Tenet" on or after Sept. 1. News of meetings involving banking advisors appears to be the latest progression of that assurance.

Here are nine things to know about the most recent development for the 77-hospital chain.

1. Tenet is in the early phases of work with the advisors, who were brought on to explore a number of strategic options, including the sale of assets, divisions or the entire company. The Wall Street Journal report, which broke the news, is based on accounts from "people familiar with the matter." Tenet stock shot up after hours, when the WSJ ran the story.

2. Last week, in a presentation he made at the Baird 2017 Global Healthcare Conference, Tenet CEO Trevor Fetter shared plans to divest eight hospitals in four U.S. markets as well as nine facilities in the United Kingdom. Those eight U.S. hospitals include two in Philadelphia: Hahnemann University Hospital and St. Christopher's Hospital for Children, the sale of which Becker's Hospital Review reported separately.

3. At the Wells Fargo Health Care conference, also last week, Mr. Fetter discussed continuing to divest facilities, but did not mention the possibility of a company sale during his appearance, according to CNBC.

4. Mr. Fetter, 57, is on his way out after leading the company since 2003. As reported August 31, he will step down by March 15, 2018, or when the company appoints a successor, whichever occurs first. Tenet has already begun the executive search.

5. Tenet made two other corporate changes when announcing Mr. Fetter's departure: a "refreshment" of its board and a poison pill designed to protect $1.7 billion in net operating loss carryforwards.

6. Tenet began the refreshment process for its board with the appointment of a new executive chairman: Ronald A. Rittenmeyer, who previously served as independent lead director. Tenet did not specify how many board members will be affected by the refreshment process, though it "expects to further enhance the board's expertise in areas directly relevant to the company's business."

7. Under the poison pill, if any person or entity acquires 4.9 percent or more of Tenet stock, all holders of rights issued under the plan are entitled to acquire shares of common stock with a 50 percent discount. The plan is scheduled to expire after Tenet's 2018 annual meeting of stockholders.

8. The company is under pressure from its largest shareholder, Glenview Capital Management. When two Tenet board members, both employed by Glenview, resigned over what they described as "irreconcilable differences," they made it known that Glenview would possibly "evaluate other avenues" to be a constructive owner of Tenet on or after Sept. 1.

9. Tenet's debt load has tripled in five years to $15 billion. The company includes 77 hospitals and 130,000 employees. The company ended the second quarter of this year with a net loss of $56 million, compared to a net loss of $44 million in the same period of the year prior.

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