Full Press Release Details
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES FOURTH QUARTER
AND YEAR ENDED DECEMBER 31, 2019 RESULTS AND 2020 GUIDANCE
FRANKLIN, Tenn. (February 19, 2020) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results
for the three months and year ended December 31, 2019.
The following highlights the financial and operating results for the three
months ended December 31, 2019.
Net operating revenues for the three months ended
December 31, 2019, totaled $3.286 billion, a 4.8 percent decrease, compared with $3.453 billion for the same period in 2018.
Net loss attributable to Community Health Systems, Inc. common stockholders was $(373) million, or $(3.27) per share (diluted), for the three
months ended December 31, 2019, compared with $(328) million, or $(2.91) per share (diluted), for the same period in 2018. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net income attributable to
Community Health Systems, Inc. common stockholders was $0.40 per share (diluted), for the three months ended December 31, 2019, compared to net loss of $(0.42) per share (diluted) for the same period in 2018. Weighted-average shares outstanding
(diluted) were 114 million for the three months ended December 31, 2019, and 113 million for the three months ended December 31, 2018.
Adjusted EBITDA for the three months ended December 31, 2019, was $447 million compared with $419 million for the same period
in 2018, representing a 6.7 percent increase.
The consolidated operating results for the three months ended December 31, 2019,
reflect a 9.9 percent decrease in admissions and an 8.6 percent decrease in adjusted admissions, compared with the same period in 2018. On a same-store basis, admissions increased 0.1 percent and adjusted admissions increased
1.8 percent for the three months ended December 31, 2019, compared with the same period in 2018. On a same-store basis, net operating revenues increased 3.7 percent for the three months ended December 31, 2019, compared with the
same period in 2018.
CYH Announces Fourth Quarter and Year-End 2019 Results
Net operating revenues for the year ended December 31, 2019, totaled
$13.210 billion, a 6.7 percent decrease, compared with $14.155 billion for the same period in 2018.
attributable to Community Health Systems, Inc. common stockholders was $(675) million, or $(5.93) per share (diluted), for the year ended December 31, 2019, compared with $(788) million, or $(6.99) per share (diluted), for the same period in
2018. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. common stockholders was $(0.89) per share (diluted), for the year ended December 31, 2019,
compared with $(1.94) per share (diluted) for the same period in 2018. Weighted-average shares outstanding (diluted) were 114 million for the year ended December 31, 2019, and 113 million for the year ended December 31, 2018.
Adjusted EBITDA for the year ended December 31, 2019, was $1.628 billion compared with $1.642 billion for the same period
in 2018, representing a 0.9 percent decrease.
The consolidated operating results for the year ended December 31, 2019, reflect
an 11.1 percent decrease in admissions and a 10.6 percent decrease in adjusted admissions, compared with the same period in 2018. On a same-store basis, admissions increased 1.3 percent and adjusted admissions increased
2.2 percent for the year ended December 31, 2019, compared with the same period in 2018. On a same-store basis, net operating revenues increased 4.2 percent for the year ended December 31, 2019, compared with the same period in
Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, We
concluded 2019 with a strong finish to the year. Our successful divestiture program, along with strategic growth initiatives in our core portfolio of markets, has driven better results, including improved same-store volume and net revenue growth in
2019. As we enter 2020, we expect to deliver incremental growth, driven by a combination of continued same-store net revenue performance and execution across our strategic margin improvement programs.
The Company completed 12 hospital divestitures during the year ended December 31, 2019 (including two divestitures that closed on
January 1, 2019, in respect of which the Company received proceeds at a preliminary closing on December 31, 2018). On January 1, 2020, the Company completed the divestiture of three additional hospitals (in respect of which the
Company received proceeds at a preliminary closing on December 31, 2019). On January 30, 2020, the Company entered into definitive agreements to sell two additional hospitals, which divestitures have not yet been completed. The Company
intends to continue its portfolio rationalization strategy through at least mid-2020 and is pursuing additional interests for sale transactions, which are currently in various stages of negotiation with
potential buyers. There can be no assurance that these potential divestitures (or the potential divestitures subject to definitive agreements) will be completed, or if they are completed, the ultimate timing of the completion of these divestitures.
The Company continues to receive interest from potential acquirers for certain of its hospitals.
Financial and statistical data for 2018
and 2019 presented in this press release includes the operating results of divested hospitals through the effective closing date of each respective divestiture. Same-store operating results exclude the results of a hospital acquired in 2019 and the
hospitals divested or closed in 2018 and 2019.
CYH Announces Fourth Quarter and Year-End 2019 Results
Information About Non-GAAP Financial Measures
This earnings release presents Adjusted EBITDA, a non-GAAP financial measure, which is EBITDA adjusted
to add back net income attributable to noncontrolling interests and to exclude the effect of discontinued operations, loss (gain) from early extinguishment of debt, impairment and loss on sale of businesses, expense incurred related to the sale of a
majority ownership interest in the Company s home care division, expense (income) related to government and other legal settlements and related costs, expense related to employee termination benefits and other restructuring charges, expense
(income) from settlement and fair value adjustments on the CVR agreement liability related to the HMA legal proceedings and related legal expenses, the overall impact of the change in estimate related to net patient revenue recorded in the fourth
quarter of 2017 resulting from the increase in contractual allowances and the provision for bad debts, the impact of changes in estimate to increase the professional liability claims accrual recorded during the second quarter of 2019 (which estimate
was further revised in the third quarter of 2019 based on updated actuarial analysis) with respect to claims incurred in 2016 and prior years and expense related to the valuation allowance recorded in the second quarter of 2019 to reserve the
outstanding balance of a promissory note received from the buyer in connection with the sale of two of the Company s hospitals in 2017, as well as income from a reduction of the valuation allowance on the outstanding balance of a promissory
note from the buyer of another hospital. For information regarding why the Company believes Adjusted EBITDA provides useful information to investors, and for a reconciliation of Adjusted EBITDA to net loss attributable to Community Health Systems,
Inc. stockholders, see footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below.
Additionally, this earnings release presents adjusted net income (loss) attributable to Community Health Systems, Inc. common stockholders per
share (diluted), a non-GAAP financial measure, to reflect the impact on net income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted) from the selected items used in
the calculation of Adjusted EBITDA. For information regarding why the Company believes this non-GAAP financial measure provides useful information to investors, and for a reconciliation of this non-GAAP financial measure to net income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted), see footnote (e) to the Financial Highlights, Financial Statements and
Selected Operating Data below.
Included on pages 16, 17, 18 and 19 of this press release are tables setting forth the Company s 2020
annual earnings guidance. The 2020 guidance is based on the Company s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time and reflects the impact of planned divestitures
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. The Company, through its subsidiaries, owns, leases or operates 99 affiliated hospitals in 17 states with an aggregate of approximately 16,000 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.
CYH Announces Fourth Quarter and Year-End 2019 Results
Community Health Systems, Inc. will hold a conference call on Thursday, February 20,
2020, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the fourth quarter and year ended December 31, 2019. 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 for approximately 30 days. Copies of this press release and conference call slide show, as well as the
Company s Current Report on Form 8-K (including this press release), will be available on the Company s website at www.chs.net.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)
(In millions, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net operating revenues | $ | 3,286 | $ | 3,453 | $ | 13,210 | $ | 14,155 | ||||||||
| Net loss (f), (g) | (346 | ) | (299 | ) | (590 | ) | (704 | ) | ||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | (373 | ) | (328 | ) | (675 | ) | (788 | ) | ||||||||
| Adjusted EBITDA (c) | 447 | 419 | 1,628 | 1,642 | ||||||||||||
| Net cash provided by (used in) operating activities | 194 | (165 | ) | 385 | 274 | |||||||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (3.27 | ) | $ | (2.91 | ) | $ (5.93 | ) | $ (6.99 | ) | ||||||
| Diluted (e), (f), (g) | (3.27 | ) | (2.91 | ) | (5.93 | ) | (6.99 | ) | ||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | 114 | 113 | ||||||||||||
| Diluted | 114 | 113 | 114 | 113 |
footnotes, see pages 13, 14 and 15.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)
(In millions, except per share amounts)
| Three Months Ended December 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| Amount | % of Net Operating Revenues | Amount | % of Net Operating Revenues | |||||||||||||
| Net operating revenues | $ | 3,286 | 100.0 | % | $ | 3,453 | 100.0 | % | ||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 1,448 | 44.1 | % | 1,534 | 44.4 | % | ||||||||||
| Supplies | 528 | 16.1 | % | 582 | 16.9 | % | ||||||||||
| Other operating expenses | 787 | 23.9 | % | 849 | 24.6 | % | ||||||||||
| Government and other legal settlements and related costs (g) | 58 | 1.8 | % | 2 | 0.1 | % | ||||||||||
| Electronic health records incentive reimbursement | % | (2 | ) | (0.1 | )% | |||||||||||
| Lease cost and rent | 81 | 2.4 | % | 81 | 2.3 | % | ||||||||||
| Depreciation and amortization | 152 | 4.6 | % | 169 | 4.9 | % | ||||||||||
| Impairment and loss on sale of businesses, net (f) | 68 | 2.1 | % | 354 | 10.3 | % | ||||||||||
| Total operating costs and expenses | 3,122 | 95.0 | % | 3,569 | 103.4 | % | ||||||||||
| Income (loss) from operations (f), (g) | 164 | 5.0 | % | (116 | ) | (3.4 | )% | |||||||||
| Interest expense, net | 259 | 7.9 | % | 257 | 7.4 | % | ||||||||||
| Loss from early extinguishment of debt | 23 | 0.7 | % | 1 | % | |||||||||||
| Equity in earnings of unconsolidated affiliates | (3 | ) | (0.1 | )% | (5 | ) | (0.1 | )% | ||||||||
| Loss before income taxes | (115 | ) | (3.5 | )% | (369 | ) | (10.7 | )% | ||||||||
| Provision for (benefit from) income taxes | 231 | 7.0 | % | (70 | ) | (2.0 | )% | |||||||||
| Net loss (f), (g) | (346 | ) | (10.5 | )% | (299 | ) | (8.7 | )% | ||||||||
| Less: Net income attributable to noncontrolling interests | 27 | 0.9 | % | 29 | 0.8 | % | ||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (373 | ) | (11.4 | )% | $ | (328 | ) | (9.5 | )% | ||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders : | ||||||||||||||||
| Basic (f), (g) | $ | (3.27 | ) | $ | (2.91 | ) | ||||||||||
| Diluted (e), (f), (g) | $ | (3.27 | ) | $ | (2.91 | ) | ||||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | ||||||||||||||
| Diluted | 114 | 113 |
footnotes, see pages 13, 14 and 15.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)
(In millions, except per share amounts)
| Year Ended December 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| Amount | % of Net Operating Revenues | Amount | % of Net Operating Revenues | |||||||||||||
| Net operating revenues | $ | 13,210 | 100.0 | % | $ | 14,155 | 100.0 | % | ||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 5,947 | 45.0 | % | 6,384 | 45.1 | % | ||||||||||
| Supplies | 2,151 | 16.3 | % | 2,355 | 16.6 | % | ||||||||||
| Other operating expenses | 3,303 | 25.1 | % | 3,496 | 24.7 | % | ||||||||||
| Government and other legal settlements and related costs (g) | 93 | 0.7 | % | 11 | 0.1 | % | ||||||||||
| Electronic health records incentive reimbursement | (1 | ) | % | (4 | ) | % | ||||||||||
| Lease cost and rent | 321 | 2.4 | % | 337 | 2.4 | % | ||||||||||
| Depreciation and amortization | 608 | 4.6 | % | 700 | 4.9 | % | ||||||||||
| Impairment and loss on sale of businesses, net (f) | 138 | 1.0 | % | 668 | 4.7 | % | ||||||||||
| Total operating costs and expenses | 12,560 | 95.1 | % | 13,947 | 98.5 | % | ||||||||||
| Income from operations (f), (g) | 650 | 4.9 | % | 208 | 1.5 | % | ||||||||||
| Interest expense, net | 1,041 | 7.9 | % | 976 | 6.9 | % | ||||||||||
| Loss (gain) from early extinguishment of debt | 54 | 0.4 | % | (31 | ) | (0.2 | )% | |||||||||
| Equity in earnings of unconsolidated affiliates | (15 | ) | (0.1 | )% | (22 | ) | (0.2 | )% | ||||||||
| Loss before income taxes | (430 | ) | (3.3 | )% | (715 | ) | (5.0 | )% | ||||||||
| Provision for (benefit from) income taxes | 160 | 1.2 | % | (11 | ) | % | ||||||||||
| Net loss (f), (g) | (590 | ) | (4.5 | )% | (704 | ) | (5.0 | )% | ||||||||
| Less: Net income attributable to noncontrolling interests | 85 | 0.6 | % | 84 | 0.6 | % | ||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (675 | ) | (5.1 | )% | $ | (788 | ) | (5.6 | )% | ||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (5.93 | ) | $ | (6.99 | ) | ||||||||||
| Diluted (e), (f), (g) | $ | (5.93 | ) | $ | (6.99 | ) | ||||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | ||||||||||||||
| Diluted | 114 | 113 |
footnotes, see pages 13, 14 and 15.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net loss | $ | (346 | ) | $ | (299 | ) | $ | (590 | ) | $ | (704 | ) | ||||
| Other comprehensive (loss) income, net of income taxes: | ||||||||||||||||
| Net change in fair value of interest rate swaps, net of tax | (6 | ) | (3 | ) | 20 | |||||||||||
| Net change in fair value of available-for-sale debt securities, net of tax | (1 | ) | 1 | 4 | (2 | ) | ||||||||||
| Amortization and recognition of unrecognized pension cost components, net of tax | (2 | ) | (1 | ) | ||||||||||||
| Other comprehensive (loss) income | (1 | ) | (7 | ) | 1 | 17 | ||||||||||
| Comprehensive loss | (347 | ) | (306 | ) | (589 | ) | (687 | ) | ||||||||
| Less: Comprehensive income attributable to noncontrolling interests | 27 | 29 | 85 | 84 | ||||||||||||
| Comprehensive loss attributable to Community Health Systems, Inc. stockholders | $ | (374 | ) | $ | (335 | ) | $ | (674 | ) | $ | (771 | ) |
footnotes, see pages 13, 14 and 15.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)
(Dollars in millions)
| Three Months Ended December 31, | ||||||||||||||||||||||||
| Consolidated | Same-Store | |||||||||||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||
| Number of hospitals (at end of period) | 102 | 113 | 101 | 101 | ||||||||||||||||||||
| Licensed beds (at end of period) | 16,240 | 18,227 | 16,059 | 16,085 | ||||||||||||||||||||
| Beds in service (at end of period) | 14,442 | 16,297 | 14,367 | 14,324 | ||||||||||||||||||||
| Admissions | 133,745 | 148,402 | -9.9 | % | 133,295 | 133,188 | 0.1 | % | ||||||||||||||||
| Adjusted admissions | 292,919 | 320,447 | -8.6 | % | 291,577 | 286,418 | 1.8 | % | ||||||||||||||||
| Patient days | 581,696 | 664,848 | 579,930 | 593,089 | ||||||||||||||||||||
| Average length of stay (days) | 4.3 | 4.5 | 4.4 | 4.5 | ||||||||||||||||||||
| Occupancy rate (average beds in service) | 43.8 | % | 43.2 | % | 43.9 | % | 45.0 | % | ||||||||||||||||
| Net operating revenues | $ | 3,286 | $ | 3,453 | -4.8 | % | $ | 3,269 | $ | 3,152 | 3.7 | % | ||||||||||||
| Net inpatient revenues as a % of net operating revenues | 46.0 | % | 47.6 | % | 45.8 | % | 47.7 | % | ||||||||||||||||
| Net outpatient revenues as a % of net operating revenues | 54.0 | % | 52.4 | % | 54.2 | % | 52.3 | % | ||||||||||||||||
| Income (loss) from operations (f), (g) | $ | 164 | $ | (116 | ) | 241.4 | % | |||||||||||||||||
| Income (loss) from operations as a % of net operating revenues | 5.0 | % | -3.4 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 152 | $ | 169 | ||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | (3 | ) | $ | (5 | ) | ||||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (373 | ) | $ | (328 | ) | -13.7 | % | ||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues | -11.4 | % | -9.5 | % | ||||||||||||||||||||
| Adjusted EBITDA (c) | $ | 447 | $ | 419 | 6.7 | % | ||||||||||||||||||
| Adjusted EBITDA as a % of net operating revenues | 13.6 | % | 12.1 | % | ||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 194 | $ | (165 | ) | 217.6 | % |
footnotes, see pages 13, 14 and 15.
CYH Announces Fourth Quarter and Year-End 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)