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CYH Announces Fourth Quarter 2014 Results

Key Takeaway: Investor Contact: W. Larry Cash President of Financial Services and Chief Financial Officer (615) 465-7000 COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES FOURTH QUARTER 2014 RESULTS WITH NET OPERATING REVENUES OF $4.918 BILLION FRANKLIN, Tenn. (February 19, 2015) Community He

Full Press Release Details

Investor Contact: W. Larry Cash
President of Financial Services
and Chief Financial Officer
(615) 465-7000
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES
FOURTH QUARTER 2014 RESULTS WITH NET OPERATING REVENUES OF $4.918 BILLION
FRANKLIN, Tenn. (February 19, 2015) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating
results for the three months and year ended December 31, 2014.
Financial and statistical data reported in this earnings release
includes Health Management Associates, Inc. s ( HMA ) operating results from January 27, 2014, the date the Company completed its acquisition of HMA. Prior period consolidated results and statistical data reflect only the Company
and its subsidiaries for the period prior to the HMA acquisition. Same-store operating results and statistical data include comparable information for hospitals acquired as a result of the HMA acquisition for the months of February through December
Net operating revenues for the three months ended December 31, 2014, totaled $4.918 billion, a 54.1 percent increase
compared with $3.191 billion for the same period in 2013. Income from continuing operations attributable to Community Health Systems, Inc. common stockholders increased to $129 million, or $1.12 per share (diluted), for the three months ended
December 31, 2014, compared with income from continuing operations attributable to Community Health Systems, Inc. common stockholders of $38 million, or $0.40 per share (diluted), for the same period in 2013. The results for the three months
ended December 31, 2014, include $0.01 per share (diluted) related to acquisition and integration expenses from the acquisition of HMA; $0.15 per share (diluted) of expenses related to government legal settlements and related costs (other than
HMA legal proceedings underlying the contingent value rights, or CVR , agreement); and $0.09 per share (diluted) of expenses related to the impairment of long-lived assets at certain hospitals, with these expenses partially offset by
$0.14 per share (diluted) of income from fair value adjustments, net of legal expenses, related to HMA legal proceedings underlying the CVR agreement. Excluding these expenses, income from continuing operations was $1.23 per share (diluted). Net
income attributable to Community Health Systems, Inc. common stockholders was $0.87 per share (diluted) for the three months ended December 31, 2014, compared with net income of $0.30 per share (diluted) for the same period in 2013.
Discontinued operations for the three months ended December 31, 2014, consisted of $0.01 per share (diluted) of losses from operations of entities sold or held for sale, and $0.24 per share (diluted) of expenses related to the impairment of
long-lived assets held for sale for a total after-tax loss of approximately $29 million, or $0.25 per share (diluted). Weighted-average shares outstanding (diluted) were 115 million for the three months ended December 31, 2014, and
95 million for the three months ended December 31, 2013.
Adjusted EBITDA for the three months ended December 31, 2014, was
$785 million compared with $459 million for the same period in 2013, representing a 71.0 percent increase.
The consolidated operating
results for the three months ended December 31, 2014, reflect a 56.4 percent increase in total admissions, and a 58.2 percent increase in total adjusted admissions compared with the same period in 2013. On a same-store basis, admissions
decreased 0.2 percent while adjusted admissions increased 2.7 percent compared with the same period in 2013. On a same-store basis, net operating revenues increased 4.7 percent compared with the same period in 2013.
Net operating revenues for the year ended December 31, 2014, totaled $18.639 billion, a 45.4 percent increase compared with $12.819
billion for the same period in 2013. Income from continuing operations attributable to Community Health Systems, Inc. common stockholders decreased to $149 million, or $1.32 per share (diluted), for the
CYH Announces Fourth Quarter 2014 Results
year ended December 31, 2014, compared with income from continuing operations attributable to Community Health Systems, Inc. common stockholders of $166 million, or $1.77 per share
(diluted), for the same period in 2013. The results for the year ended December 31, 2014, include $0.38 per share (diluted) related to acquisition and integration expenses from the acquisition of HMA; $0.57 per share (diluted) of expenses
related to government legal settlements and related costs (other than HMA legal proceedings underlying the CVR agreement); $0.40 per share (diluted) of expenses related to the loss from early extinguishment of debt; $0.22 per share (diluted) of
expenses related to the impairment of long-lived assets; and $0.42 per share (diluted) of expenses related to accelerating amortization on software to be abandoned, with these expenses partially offset by $0.03 per share (diluted) of income from
fair value adjustments, net of legal expenses, related to HMA legal proceedings underlying the CVR agreement. Excluding these expenses, income from continuing operations was $3.29 per share (diluted). Net income attributable to Community Health
Systems, Inc. common stockholders was $0.82 per share (diluted) for the year ended December 31, 2014, compared with net income of $1.51 per share (diluted) for the same period in 2013. Discontinued operations for the year ended
December 31, 2014, consisted of 0.07 per share (diluted) of losses from operations of entities sold or held for sale and approximately $0.44 per share (diluted) of expenses related to the impairment of long-lived assets held for sale, for
a total after-tax loss of approximately $57 million, or $0.51 per share (diluted). Weighted-average shares outstanding (diluted) were 113 million for the year ended December 31, 2014, and 94 million for the year ended
Adjusted EBITDA for the year ended December 31, 2014, was $2.777 billion compared with $1.860 billion for
the same period in 2013, representing a 49.3 percent increase.
The consolidated operating results for the year ended December 31,
2014, reflect a 43.7 percent increase in total admissions and a 47.3 percent increase in total adjusted admissions compared with the same period in 2013. On a same-store basis, admissions decreased 4.2 percent while adjusted admissions decreased 0.9
percent compared with the same period in 2013. On a same-store basis, net operating revenues increased 1.2 percent compared with the same period in 2013.
Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt, impairment of long-lived
assets, net income attributable to noncontrolling interests, acquisition and integration expenses from the acquisition of HMA, expenses related to government legal settlements and related costs (other than HMA legal proceedings underlying the CVR
agreement), and income from fair value adjustments, net of legal expenses, related to the HMA legal proceedings underlying the CVR agreement. Adjusted EBITDA as set forth herein is calculated in the same manner for the applicable 2014 and 2013
periods as ADJUSTED EBITDA in the Company s preliminary release issued on January 20, 2015. For information regarding why the Company believes Adjusted EBITDA presents useful information to investors, and for a reconciliation of Adjusted
EBITDA to net cash provided by operating activities, see footnote (f) to the Financial Highlights, Financial Statements and Selected Operating Data below.
Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, We are pleased
with our overall operating performance, capping off an exceptional year for the Company following the acquisition of HMA at the beginning of 2014. Since that time, we have worked hard to assimilate these additional hospitals, and we have made
considerable progress in achieving our targeted operating synergies. We are pleased with the incremental improvement in operating revenues across our hospital network. We are also encouraged by more favorable volume trends, partly driven by a more
severe flu season during the fourth quarter, and we will continue to focus on initiatives to improve our overall admissions.
CYH Announces Fourth Quarter 2014 Results
Overall, we delivered a solid performance for 2014, reflecting consistent execution of
our proven operating strategy in our expanded hospital network. Community Health Systems has continued to demonstrate success in a dynamic and challenging healthcare environment. The Affordable Care Act has been a watershed event for healthcare
providers with greater access to essential health services, and we expect to realize additional benefits from proposed policy initiatives to cover the uninsured in more of our hospital markets. We continue to execute on the fundamental aspects of
our business strategy, recruiting qualified physicians, managing our costs, investing in technology, and, above all, focusing on the safety and quality of care in our hospitals. As we look ahead to 2015, we will pursue this same strategy to deliver
value to both our shareholders and the communities we serve, Smith concluded.
Included on pages 15, 16, 17 and 18 of this press
release are tables setting forth the Company s 2015 annual earnings guidance. The 2015 guidance is based on the Company s historical operating performance, current trends and other assumptions that the Company believes are reasonable at
Community Health Systems, Inc. is one of the largest publicly-traded hospital companies in the United States and a leading
operator of general acute care hospitals in communities across the country. Through its subsidiaries, the Company currently owns, leases or operates 205 affiliated hospitals in 29 states with an aggregate of approximately 31,000 licensed beds. The
Company s headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol CYH. More information about the Company can
be found on its website at www.chs.net.
Community Health Systems, Inc. will hold a conference call on Friday, February 20,
2015, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the three months and year ended December 31, 2014. Investors will have the opportunity to listen to a live internet broadcast of the conference call
by clicking on the Investor Relations link of the Company s website at www.chs.net. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For
those who cannot listen to the live broadcast, a replay will be available shortly after the call and will continue to be available through March 20, 2015. Copies of the Company s Current Report on Form 8-K (including this press
release) and conference call slide show will be available on the Company s website at www.chs.net.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)(c)(d)(e)
(In millions, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Net operating revenues $ 4,918 $ 3,191 $ 18,639 $ 12,819
Adjusted EBITDA (f) 785 459 2,777 1,860
Income from continuing operations (g), (h), (k) 165 62 260 242
Net income attributable to Community Health Systems, Inc. stockholders 100 28 92 141
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k) $ 1.13 $ 0.41 $ 1.33 $ 1.80
Discontinued operations (0.26 ) (0.10 ) (0.51 ) (0.27 )
Net income $ 0.88 $ 0.30 $ 0.82 $ 1.52
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k), (l) $ 1.12 $ 0.40 $ 1.32 $ 1.77
Discontinued operations (0.25 ) (0.10 ) (0.51 ) (0.27 )
Net income (l) $ 0.87 $ 0.30 $ 0.82 $ 1.51
Weighted-average number of shares outstanding (i):
Basic 114 93 112 93
Diluted 115 95 113 94
Net cash provided by operating activities $ 976 $ 648 $ 1,615 $ 1,089
footnotes, see pages 12, 13 and 14.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (a)(b)(c)(d)(e)
(In millions, except per share amounts)
Three Months Ended December 31,
2014 2013
Amount % of Net Operating Revenues Amount % of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts) $ 5,641 $ 3,691
Provision for bad debts 723 500
Net operating revenues 4,918 100.0 % 3,191 100.0 %
Operating costs and expenses:
Salaries and benefits 2,221 45.2 % 1,517 47.5 %
Supplies 764 15.5 % 508 15.9 %
Other operating expenses 1,073 21.9 % 706 22.1 %
Government settlement and related costs (o) 24 0.5 % 4 0.1 %
Electronic health records incentive reimbursement (g) (47 ) (1.0 )% (54 ) (1.7 )%
Rent 115 2.3 % 70 2.2 %
Depreciation and amortization 291 5.9 % 197 6.2 %
Total operating costs and expenses 4,441 90.3 % 2,948 92.3 %
Income from operations (g), (h) 477 9.7 % 243 7.7 %
Interest expense, net 244 5.0 % 149 4.7 %
Equity in earnings of unconsolidated affiliates (14 ) (0.3 )% (6 ) (0.2 )%
Impairment of long-lived assets (k) 17 0.3 % 12 0.4 %
Income from continuing operations before income taxes 230 4.7 % 88 2.8 %
Provision for income taxes 65 1.4 % 26 0.7 %
Income from continuing operations (g), (h), (k) 165 3.3 % 62 2.1 %
Discontinued operations, net of taxes:
Loss from operations of entities sold or held for sale (2 ) (5 ) (0.2 )%
Impairment of hospitals held for sale (27 ) (0.6 )% (5 ) (0.2 )%
Loss from discontinued operations, net of taxes (29 ) (0.6 )% (10 ) (0.4 )%
Net income 136 2.7 % 52 1.7 %
Less: Net income attributable to noncontrolling interests 36 0.7 % 24 0.8 %
Net income attributable to Community Health Systems, Inc. stockholders $ 100 2.0 % $ 28 0.9 %
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k) $ 1.13 $ 0.41
Discontinued operations (0.26 ) (0.10 )
Net income $ 0.88 $ 0.30
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders:
Continuing operations (g), (h), (k), (l) $ 1.12 $ 0.40
Discontinued operations (0.25 ) (0.10 )
Net income (l) $ 0.87 $ 0.30
Weighted-average number of shares outstanding (i):
Basic 114 93
Diluted 115 95
footnotes, see pages 12, 13 and 14.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (a)(b)(c)(d)(e)
(In millions, except per share amounts)
Year Ended December 31,
2014 2013
Amount % of Net Operating Revenues Amount % of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts) $ 21,561 $ 14,853
Provision for bad debts 2,922 2,034
Net operating revenues 18,639 100.0 % 12,819 100.0 %
Operating costs and expenses:
Salaries and benefits 8,618 46.2 % 6,107 47.6 %
Supplies 2,862 15.4 % 1,975 15.4 %
Other operating expenses 4,322 23.3 % 2,818 22.0 %
Government settlement and related costs (o) 101 0.5 % 102 0.8 %
Electronic health records incentive reimbursement (g) (259 ) (1.4 )% (162 ) (1.3 )%
Rent 434 2.3 % 279 2.2 %
Depreciation and amortization 1,106 5.9 % 771 6.0 %
Amortization of software to be abandoned (k) 75 0.4 %
Total operating costs and expenses 17,259 92.6 % 11,890 92.7 %
Income from operations (g), (h), (k) 1,380 7.4 % 929 7.3 %
Interest expense, net 972 5.3 % 613 4.8 %
Loss from early extinguishment of debt 73 0.4 % 1
Equity in earnings of unconsolidated affiliates (48 ) (0.3 )% (43 ) (0.3 )%
Impairment of long-lived assets (k) 41 0.2 % 12 0.1 %
Income from continuing operations before income taxes 342 1.8 % 346 2.7 %
Provision for income taxes 82 0.4 % 104 0.8 %
Income from continuing operations (g), (h), (k) 260 1.4 % 242 1.9 %
Discontinued operations, net of taxes:
Loss from operations of entities sold or held for sale (7 ) (21 ) (0.2 )%
Impairment of hospitals held for sale (50 ) (0.3 )% (4 )
Loss from discontinued operations, net of taxes (57 ) (0.3 )% (25 ) (0.2 )%
Net income 203 1.1 % 217 1.7 %
Less: Net income attributable to noncontrolling interests 111 0.6 % 76 0.6 %
Net income attributable to Community Health Systems, Inc. stockholders $ 92 0.5 % $ 141 1.1 %
Basic (loss) earnings per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k) $ 1.33 $ 1.80
Discontinued operations (0.51 ) (0.27 )
Net income $ 0.82 $ 1.52
Diluted (loss) earnings per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k), (l) $ 1.32 $ 1.77
Discontinued operations (0.51 ) (0.27 )
Net income (l) $ 0.82 $ 1.51
Weighted-average number of shares outstanding (i):
Basic 112 93
Diluted 113 94
footnotes, see pages 12, 13 and 14.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (c)
Three Months Ended December 31, Year Ended December 31,
2014 2013 2014 2013
Net income $ 136 $ 52 $ 203 $ 217
Other comprehensive income (loss), net of income taxes:
Net change in fair value of interest rate swaps, net of tax (7 ) 13 13 60
Net change in fair value of available-for-sale securities, net of tax 2 (1 ) 2
Amortization and recognition of unrecognized pension cost components, net of tax (10 ) 13 (9 ) 16
Other comprehensive income (loss) (15 ) 25 4 78
Comprehensive income 121 77 207 295
Less: Comprehensive income attributable to noncontrolling interests 36 24 111 76
Comprehensive income attributable to Community Health Systems, Inc. stockholders $ 85 $ 53 $ 96 $ 219
footnotes, see pages 12, 13 and 14.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)(d)(j)
(Dollars in millions)
For the Three Months Ended December 31,
Consolidated Same-Store (1)
2014 2013 % Change 2014 2013 % Change
Number of hospitals (at end of period) 197 129 193 193
Licensed beds (at end of period) 30,137 19,632 29,154 29,499
Beds in service (at end of period) 27,000 16,850 26,242 26,743
Admissions 238,740 152,641 56.4 % 229,657 230,070 -0.2 %
Adjusted admissions 511,988 323,658 58.2 % 493,906 480,841 2.7 %
Patient days 1,046,254 676,168 1,004,207 1,016,927
Average length of stay (days) 4.4 4.4 4.4 4.4
Occupancy rate (average beds in service) 42.4 % 43.6 % 41.8 % 41.3 %
Net operating revenues $ 4,918 $ 3,191 54.1 % $ 4,795 $ 4,580 4.7 %
Net inpatient revenues as a % of net patient revenues before provision for bad debts 43.6 % 42.2 % 43.6 % 44.1 %
Net outpatient revenues as a % of net patient revenues before provision for bad debts 56.4 % 57.8 % 56.4 % 55.9 %
Income from operations (g), (h), (k) $ 477 $ 243 96.3 %
Income from operations as a % of net operating revenues 9.7 % 7.7 %
Depreciation and amortization $ 291 $ 197
Equity in earnings of unconsolidated affiliates $ (14 ) $ (6 )
Liquidity Data:
Adjusted EBITDA (f) $ 785 $ 459 71.0 %
Adjusted EBITDA as a % of net operating revenues 16.0 % 14.4 %
Net cash provided by operating activities $ 976 $ 648
Net cash provided by operating activities a % of net operating revenues 19.8 % 20.3 %
For footnotes, see pages 12, 13 and 14.
CYH Announces Fourth Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)(d)(j)
(Dollars in millions)
For the Year Ended December 31,
Consolidated Same-Store (1)
2014 2013 % Change 2014 2013 % Change
Number of hospitals (at end of period) 197 129 193 193
Licensed beds (at end of period) 30,137 19,632 29,154 29,499
Beds in service (at end of period) 27,000 16,850 26,242 26,743
Admissions 924,951 643,497 43.7 % 892,536 931,511 -4.2 %
Adjusted admissions 1,970,610 1,337,683 47.3 % 1,908,074 1,926,045 -0.9 %
Patient days 4,091,183 2,845,281 3,941,245 4,107,903
Average length of stay (days) 4.4 4.4 4.4 4.4
Occupancy rate (average beds in service) 43.8 % 46.4 % 43.2 % 43.6 %
Net operating revenues $ 18,639 $ 12,819 45.4 % $ 18,138 $ 17,929 1.2 %
Net inpatient revenues as a % of net patient revenues before provision for bad debts 43.9 % 44.0 % 43.8 % 45.4 %
Net outpatient revenues as a % of net patient revenues before provision for bad debts 56.1 % 56.0 % 56.2 % 54.6 %
Income from operations (g), (h), (k) $ 1,380 $ 929 48.5 %
Income from operations as a % of net operating revenues 7.4 % 7.3 %
Depreciation and amortization $ 1,181 $ 771
Equity in earnings of unconsolidated affiliates $ (48 ) $ (43 )
Liquidity Data:
Adjusted EBITDA (f) $ 2,777 $ 1,860 49.3 %
Adjusted EBITDA as a % of net operating revenues 14.9 % 14.5 %
Net cash provided by operating activities $ 1,615 $ 1,089
Net cash provided by operating activities a % of net operating revenues 8.7 % 8.5 %
For footnotes, see pages 12, 13 and 14.
Last updated: Feb 19, 2015