Recent Updates
Recently added Catalysts
CYH

CYH Announces Third 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 THIRD QUARTER 2014 RESULTS WITH NET OPERATING REVENUES OF $4.795 BILLION FRANKLIN, Tenn. (November 3, 2014) Community Heal

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
THIRD QUARTER 2014 RESULTS WITH NET OPERATING REVENUES OF $4.795 BILLION
FRANKLIN, Tenn. (November 3, 2014) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results
for the three and nine months ended September 30, 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 includes comparable information for hospitals acquired as a result of the HMA acquisition for the months of February through September 2014
Net operating revenues for the three months ended September 30, 2014, totaled $4.795 billion, a 51.1 percent increase
compared with $3.174 billion for the same period in 2013. Income from continuing operations attributable to Community Health Systems, Inc. common stockholders increased to $61 million, or $0.53 per share (diluted), for the three months ended
September 30, 2014, compared with income from continuing operations attributable to Community Health Systems, Inc. common stockholders of $10 million, or $0.11 per share (diluted), for the same period in 2013. The Company has reached an
agreement in principle with the Department of Justice to resolve its investigation into whether the Company s three New Mexico hospitals improperly submitted claims for federal funds through the state s Medicaid programs. Based on the
Company s negotiations, a reserve of $75 million has been recorded to settle the government s claims. The Company also incurred approximately $2 million in legal fees during the three months ended September 30, 2014, in negotiating
this settlement. The results for the three months ended September 30, 2014, include $0.02 per share (diluted) of expenses related to acquisition and integration expenses from the acquisition of HMA; $0.04 per share (diluted) of legal expenses
related to HMA legal proceedings underlying the contingent value rights ( CVR ) agreement; and $0.41 per share (diluted) of expenses related to the settlement of claims at the Company s New Mexico hospitals. Excluding these expenses,
income from continuing operations was $1.00 per share (diluted). Net income attributable to Community Health Systems, Inc. common stockholders was $0.54 per share (diluted) for the three months ended September 30, 2014, compared with net income
of $0.04 per share (diluted) for the same period in 2013. Discontinued operations for the three months ended September 30, 2014, consisted of income of $0.01 per share (diluted). Weighted-average shares outstanding (diluted) were
114 million for the three months ended September 30, 2014, and 94 million for the three months ended September 30, 2013.
Adjusted EBITDA for the three months ended September 30, 2014, was $663 million compared with $382 million for the same period in 2013,
representing a 73.6 percent increase. Excluding acquisition and integration expenses from the acquisition of HMA, legal expenses related to the HMA legal proceedings underlying the CVR agreement, and expenses related to the settlement of claims at
the Company s New Mexico hospitals, ADJUSTED EBITDA was $751 million for the three months ended September 30, 2014. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt, impairment
of long-lived assets and net income attributable to noncontrolling interests. The Company uses Adjusted EBITDA as a measure of liquidity. A reconciliation of Adjusted EBITDA to net cash provided by operating activities is included in the attached
CYH Announces Third Quarter 2014 Results
The consolidated operating results for the three months ended September 30, 2014,
reflect a 49.0 percent increase in total admissions, and a 53.2 percent increase in total adjusted admissions compared with the same period in 2013. On a same-store basis, admissions decreased 3.9 percent while adjusted admissions were flat compared
with the same period in 2013. On a same-store basis, net operating revenues increased 2.8 percent compared with the same period in 2013.
Net operating revenues for the nine months ended September 30, 2014, totaled $13.759 billion, a 42.9 percent increase compared with
$9.628 billion for the same period in 2013. Income from continuing operations attributable to Community Health Systems, Inc. common stockholders decreased to $18 million, or $0.16 per share (diluted), for the nine months ended September 30,
2014, compared with income from continuing operations attributable to Community Health Systems, Inc. common stockholders of $128 million, or $1.37 per share (diluted), for the same period in 2013. The results for the nine months ended
September 30, 2014, include $0.38 per share (diluted) of expenses related to acquisition and integration expenses from the acquisition of HMA; $0.12 per share (diluted) of legal expenses related to HMA legal proceedings underlying the CVR
agreement; $0.42 per share (diluted) of expenses related to settlement of claims at the Company s New Mexico hospitals; $0.40 per share (diluted) of expenses related to the loss from early extinguishment of debt; $0.14 per share (diluted) of
expenses related to the impairment of software costs taken out of service; and $0.42 per share (diluted) of expenses related to accelerating amortization on software to be abandoned. Excluding these expenses, income from continuing operations was
$2.04 per share (diluted). Net loss attributable to Community Health Systems, Inc. common stockholders was $(0.07) per share (diluted) for the nine months ended September 30, 2014, compared with net income of $1.21 per share (diluted) for the
same period in 2013. Discontinued operations for the nine months ended September 30, 2014, consisted of $(0.03) per share (diluted) of losses from operations of entities held for sale and approximately $(0.21) per share (diluted) of expenses
related to the impairment of long-lived assets held for sale, for a total after-tax loss of approximately $26 million, or $(0.24) per share (diluted). Weighted-average shares outstanding (diluted) were 112 million for the nine months ended
September 30, 2014, and 94 million for the nine months ended September 30, 2013.
Adjusted EBITDA for the nine months
ended September 30, 2014, was $1.826 billion compared with $1.297 billion for the same period in 2013, representing a 40.8 percent increase. Excluding acquisition and integration expenses from the acquisition of HMA, legal expenses related to
the HMA legal proceedings underlying the CVR agreement, and expenses related to the settlement of claims at the Company s New Mexico hospitals, ADJUSTED EBITDA was $1.992 billion for the nine months ended September 30, 2014.
The consolidated operating results for the nine months ended September 30, 2014, reflect a 40.2 percent increase in total admissions and
a 44.4 percent increase in total adjusted admissions compared with the same period in 2013. On a same-store basis, admissions decreased 5.5 percent while adjusted admissions decreased 2.1 percent compared with the same period in 2013. On a
same-store basis, net operating revenues decreased 0.2 percent compared with the same period in 2013.
Commenting on the results, Wayne T.
Smith, chairman and chief executive officer of Community Health Systems, Inc., said, We are pleased with our financial and operating performance for the third quarter of 2014. These results reflect consistent execution of our strategy with
measurable progress since the completion of the HMA acquisition. We have realized incremental benefits of the Affordable Care Act with a decline in uninsured admissions and a favorable shift in payor mix in the third quarter, and we expect this
We have made substantial progress during the year with respect to the HMA hospitals as we continue to identify
and realize additional operating synergies. We are confident in our ability to achieve our expected synergy targets for 2014, and we will look for further opportunities to improve our operating efficiencies in these acquired facilities. Overall, we
are pleased with the key trends that drive our business, especially our recent physician recruitment efforts, which we believe will further enhance the performance of our hospitals and support the communities we serve.
CYH Announces Third Quarter 2014 Results
Included on pages 15, 16, 17 and 18 of this press release are tables setting forth the
Company s updated 2014 annual earnings guidance. The 2014 guidance is based on the Company s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time, including with
respect to the HMA acquisition.
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 non-urban and mid-size markets throughout the country. Through its subsidiaries, the Company currently owns, leases or operates 207 hospitals in 29 states with an aggregate of
approximately 31,100 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 Tuesday, November 4, 2014, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the third quarter ended September 30, 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 December 4, 2014. 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 Third 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 Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Net operating revenues $ 4,795 $ 3,174 $ 13,759 $ 9,628
Adjusted EBITDA (f) 663 382 1,826 1,297
Income from continuing operations (g), (h), (k) 93 28 93 180
Net income (loss) attributable to Community Health Systems, Inc. stockholders 62 4 (8 ) 113
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k) $ 0.54 $ 0.11 $ 0.16 $ 1.39
Discontinued operations 0.01 (0.07 ) (0.24 ) (0.17 )
Net income (loss) $ 0.54 $ 0.04 $ (0.08 ) $ 1.22
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k), (l) $ 0.53 $ 0.11 $ 0.16 $ 1.37
Discontinued operations 0.01 (0.07 ) (0.24 ) (0.17 )
Net income (loss) (l) $ 0.54 $ 0.04 $ (0.07 ) $ 1.21
Weighted-average number of shares outstanding (i):
Basic 113 93 111 92
Diluted 114 94 112 94
Net cash provided by operating activities $ 126 $ 132 $ 639 $ 441
footnotes, see pages 12, 13 and 14.
CYH Announces Third 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 September 30,
2014 2013
Amount % of Net Operating Revenues Amount % of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts) $ 5,563 $ 3,710
Provision for bad debts 768 536
Net operating revenues 4,795 100.0 % 3,174 100.0 %
Operating costs and expenses:
Salaries and benefits 2,191 45.7 % 1,514 47.7 %
Supplies 733 15.3 % 482 15.2 %
Other operating expenses 1,121 23.4 % 705 22.1 %
Government settlement and related costs (o) 77 1.6 % 98 3.1 %
Electronic health records incentive reimbursement (g) (88 ) (1.8 )% (65 ) (2.0 )%
Rent 110 2.3 % 70 2.2 %
Depreciation and amortization 280 5.8 % 193 6.1 %
Total operating costs and expenses 4,424 92.3 % 2,997 94.4 %
Income from operations (g), (h) 371 7.7 % 177 5.6 %
Interest expense, net 250 5.2 % 154 4.9 %
Equity in earnings of unconsolidated affiliates (12 ) (0.3 )% (12 ) (0.4 )%
Income from continuing operations before income taxes 133 2.8 % 35 1.1 %
Provision for income taxes 40 0.8 % 7 0.2 %
Income from continuing operations (g), (h) 93 2.0 % 28 0.9 %
Discontinued operations, net of taxes:
Income (loss) from operations of entities held for sale 1 (6 ) (0.2 )%
Income (loss) from discontinued operations, net of taxes 1 (6 ) (0.2 )%
Net income 94 2.0 % 22 0.7 %
Less: Net income attributable to noncontrolling interests 32 0.7 % 18 0.6 %
Net income attributable to Community Health Systems, Inc. stockholders $ 62 1.3 % $ 4 0.1 %
Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h) $ 0.54 $ 0.11
Discontinued operations 0.01 (0.07 )
Net income $ 0.54 $ 0.04
Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders:
Continuing operations (g), (h), (l) $ 0.53 $ 0.11
Discontinued operations 0.01 (0.07 )
Net income (l) $ 0.54 $ 0.04
Weighted-average number of shares outstanding (i):
Basic 113 93
Diluted 114 94
For footnotes, see pages
CYH Announces Third Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of (Loss) Income (a)(b)(c)(d)(e)
(In millions, except per share amounts)
Nine Months Ended September 30,
2014 2013
Amount % of Net Operating Revenues Amount % of Net Operating Revenues
Operating revenues (net of contractual allowances and discounts) $ 15,984 $ 11,161
Provision for bad debts 2,225 1,533
Net operating revenues 13,759 100.0 % 9,628 100.0 %
Operating costs and expenses:
Salaries and benefits 6,417 46.6 % 4,591 47.7 %
Supplies 2,104 15.3 % 1,468 15.2 %
Other operating expenses 3,262 23.7 % 2,110 21.9 %
Government settlement and related costs (o) 77 0.6 % 98 1.0 %
Electronic health records incentive reimbursement (g) (212 ) (1.5 )% (108 ) (1.1 )%
Rent 320 2.3 % 208 2.2 %
Depreciation and amortization 817 6.0 % 574 6.0 %
Amortization of software to be abandoned (k) 75 0.5 %
Total operating costs and expenses 12,860 93.5 % 8,941 92.9 %
Income from operations (g), (h), (k) 899 6.5 % 687 7.1 %
Interest expense, net 728 5.3 % 464 4.8 %
Loss from early extinguishment of debt 73 0.5 % 1
Equity in earnings of unconsolidated affiliates (35 ) (0.3 )% (36 ) (0.4 )%
Impairment of long-lived assets (k) 24 0.2 %
Income from continuing operations before income taxes 109 0.8 % 258 2.7 %
Provision for income taxes 16 0.1 % 78 0.8 %
Income from continuing operations (g), (h), (k) 93 0.7 % 180 1.9 %
Discontinued operations, net of taxes:
Loss from operations of entities held for sale (4 ) (15 ) (0.2 )%
Impairment of hospitals held for sale (22 ) (0.2 )%
Loss from discontinued operations, net of taxes (26 ) (0.2 )% (15 ) (0.2 )%
Net income 67 0.5 % 165 1.7 %
Less: Net income attributable to noncontrolling interests 75 0.5 % 52 0.5 %
Net (loss) income attributable to Community Health Systems, Inc. stockholders $ (8 ) $ 113 1.2 %
Basic (loss) earnings per share attributable to Community Health Systems, Inc. common stockholders:
Continuing operations (g), (h), (k) $ 0.16 $ 1.39
Discontinued operations (0.24 ) (0.17 )
Net income (loss) $ (0.08 ) $ 1.22
Diluted (loss) earnings per share attributable to Community Health Systems, Inc. common stockholders (n):
Continuing operations (g), (h), (k), (l) $ 0.16 $ 1.37
Discontinued operations (0.24 ) (0.17 )
Net income (loss) (l) $ (0.07 ) $ 1.21
Weighted-average number of shares outstanding (i):
Basic 111 92
Diluted 112 94
For footnotes, see pages
CYH Announces Third Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (c)
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Net income $ 94 $ 22 $ 67 $ 165
Other comprehensive income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax 11 10 20 47
Net change in fair value of available-for-sale securities, net of tax (5 ) 1 (2 ) 3
Amortization and recognition of unrecognized pension cost components, net of tax 1 1 1 2
Other comprehensive income 7 12 19 52
Comprehensive income 101 34 86 217
Less: Comprehensive income attributable to noncontrolling interests 32 18 75 52
Comprehensive income attributable to Community Health Systems, Inc. stockholders $ 69 $ 16 $ 11 $ 165
For footnotes, see pages
CYH Announces Third Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)(d)(j)
(Dollars in millions)
For the Three Months Ended September 30,
Consolidated Same-Store (1)
2014 2013 % Change 2014 2013 % Change
Number of hospitals (at end of period) 196 129 194 194
Licensed beds (at end of period) 30,062 19,648 29,383 29,731
Beds in service (at end of period) 26,871 16,900 26,238 27,009
Admissions 236,258 158,516 49.0 % 228,396 237,731 -3.9 %
Adjusted admissions 514,148 335,582 53.2 % 498,576 498,520 0.0 %
Patient days 1,026,759 683,677 990,935 1,024,148
Average length of stay (days) 4.3 4.3 4.3 4.3
Occupancy rate (average beds in service) 41.9 % 44.1 % 41.4 % 41.2 %
Net operating revenues $ 4,795 $ 3,174 51.1 % $ 4,676 $ 4,548 2.8 %
Net inpatient revenues as a % of operating revenues before provision for bad debts 44.2 % 43.9 % 44.2 % 45.1 %
Net outpatient revenues as a % of operating revenues before provision for bad debts 55.8 % 56.1 % 55.8 % 54.9 %
Income from operations (g), (h) $ 371 $ 177 109.6 %
Income from operations as a % of net operating revenues 7.7 % 5.6 %
Depreciation and amortization $ 280 $ 193
Equity in earnings of unconsolidated affiliates $ (12 ) $ (12 )
Liquidity Data:
Adjusted EBITDA (f) $ 663 $ 382 73.6 %
Adjusted EBITDA as a % of net operating revenues 13.8 % 12.0 %
Net cash provided by operating activities $ 126 $ 132
Net cash provided by operating activities a % of net operating revenues 2.6 % 4.2 %
For footnotes, see pages 12, 13 and 14.
CYH Announces Third Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)(d)(j)
(Dollars in millions)
For the Nine Months Ended September 30,
Consolidated Same-Store (1)
2014 2013 % Change 2014 2013 % Change
Number of hospitals (at end of period) 196 129 194 194
Licensed beds (at end of period) 30,062 19,648 29,383 29,731
Beds in service (at end of period) 26,871 16,900 26,238 27,009
Admissions 688,407 490,856 40.2 % 665,075 703,871 -5.5 %
Adjusted admissions 1,463,507 1,013,635 44.4 % 1,419,025 1,449,127 -2.1 %
Patient days 3,054,410 2,169,113 2,946,519 3,101,378
Average length of stay (days) 4.4 4.4 4.4 4.4
Occupancy rate (average beds in service) 44.1 % 47.3 % 43.5 % 44.3 %
Net operating revenues $ 13,759 $ 9,628 42.9 % $ 13,381 $ 13,408 -0.2 %
Net inpatient revenues as a % of operating revenues before provision for bad debts 43.9 % 44.6 % 43.9 % 46.0 %
Net outpatient revenues as a % of operating revenues before provision for bad debts 56.1 % 55.4 % 56.1 % 54.0 %
Income from operations (g), (h), (k) $ 899 $ 687 30.9 %
Income from operations as a % of net operating revenues 6.5 % 7.1 %
Depreciation and amortization $ 892 $ 574
Equity in earnings of unconsolidated affiliates $ (35 ) $ (36 )
Liquidity Data:
Adjusted EBITDA (f) $ 1,826 $ 1,297 40.8 %
Adjusted EBITDA as a % of net operating revenues 13.3 % 13.5 %
Net cash provided by operating activities $ 639 $ 441
Net cash provided by operating activities a % of net operating revenues 4.6 % 4.6 %
For footnotes, see pages 12, 13 and 14.
CYH Announces Third Quarter 2014 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (b)
(In millions, except share data)
Last updated: Nov 3, 2014