Full Press Release Details
| Exhibit Number | ||
| 99.1 |
| Investor Contact: | Thomas J. Aaron | |
| Executive Vice President | ||
| and Chief Financial Officer | ||
| (615) 465-7000 |
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES
THIRD QUARTER 2017 RESULTS WITH NET OPERATING REVENUES OF $3.666 BILLION
FRANKLIN, Tenn. (November 1, 2017) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results
for the three and nine months ended September 30, 2017.
The following highlights the financial and operating results for the three
months ended September 30, 2017, that are further discussed below:
Financial and statistical data for 2017 and 2016 include the following in operating results through the effective date of each respective
CYH Announces Third Quarter 2017 Results
Net operating revenues for the three months ended September 30, 2017, totaled
$3.666 billion, a 16.3 percent decrease, compared with $4.380 billion for the same period in 2016. Loss from continuing operations attributable to Community Health Systems, Inc. common stockholders was $(108) million, or $(0.96) per
share (diluted), for the three months ended September 30, 2017, compared with $(77) million, or $(0.69) per share (diluted), for the same period in 2016. During the three months ended September 30, 2017, the Company recorded a non-cash expense totaling $33 million related to impairment charges to reduce the value of long-lived assets at hospitals that the Company has identified for sale. The impairment charges do not have an impact
on the calculation of the Company s financial covenants under the Company s Credit Facility.
The results for the three months
ended September 30, 2017, included a loss of $(0.19) per share (diluted) related to impairment and (gain) loss on sale of businesses, loss of $(0.02) per share (diluted) from early extinguishment of debt, loss of $(0.01) per share (diluted)
related to government and other legal settlements and related costs, and loss of $(0.01) per share (diluted) related to employee termination benefits and other restructuring charges. These expenses were partially offset by income of $0.04 per share
(diluted) related to fair value adjustments on the CVR agreement liability accounted for at fair value related to the HMA legal proceedings, and related legal expenses. Excluding these items, loss from continuing operations was $(0.77) per share
Net loss attributable to Community Health Systems, Inc. common stockholders was $(110) million, or $(0.98) per share (diluted)
for the three months ended September 30, 2017, compared with $(79) million, or $(0.71) per share (diluted) for the same period in 2016. Discontinued operations for the three months ended September 30, 2017, consisted of $(0.01) per share
(diluted) of losses from operations of entities sold or held for sale and $(0.01) per share (diluted) for impairment of hospitals sold or held for sale, for a total after-tax loss of approximately $(2)
million. Weighted-average shares outstanding (diluted) were 112 million for the three months ended September 30, 2017, and 111 million for the three months ended September 30, 2016. Adjusted EBITDA for the three months ended
September 30, 2017, was $331 million compared with $465 million for the same period in 2016, representing a 28.8 percent decrease.
The consolidated operating results for the three months ended September 30, 2017, reflect a 14.8 percent decrease in total
admissions, and a 15.5 percent decrease in total adjusted admissions, compared with the same period in 2016. On a same-store basis, both admissions and adjusted admissions decreased 2.3 percent during the three months ended
September 30, 2017, compared with the same period in 2016. On a same-store basis, net operating revenues decreased 1.5 percent during the three months ended September 30, 2017, compared with the same period in 2016.
Net operating revenues for the nine months ended September 30, 2017, totaled $12.295 billion, a 12.0 percent decrease, compared
with $13.969 billion for the same period in 2016. Loss from continuing operations attributable to Community Health Systems, Inc. common stockholders was $(436) million, or $(3.91) per share (diluted), for the nine months ended
September 30, 2017, compared with $(1.495) billion, or $(13.50) per share (diluted), for the same period in 2016. During the nine months ended September 30, 2017, the Company recorded a non-cash
expense totaling $363 million related to impairment charges to reduce the value of long-lived assets, primarily allocated goodwill, at hospitals that the Company has identified for sale. The impairment charges do not have an impact on
the calculation of the Company s financial covenants under the Company s Credit Facility.
CYH Announces Third Quarter 2017 Results
The results for the nine months ended September 30, 2017, included a loss of $(2.87) per
share (diluted) related to impairment and (gain) loss on sale of businesses, loss of $(0.20) per share (diluted) from early extinguishment of debt, loss of $(0.03) per share (diluted) related to employee termination benefits and other restructuring
charges, and loss of $(0.05) per share (diluted) related to expense from fair value adjustments on the CVR agreement liability accounted for at fair value related to the HMA legal proceedings, and related legal expenses. These expenses were
partially offset by income of $0.19 per share (diluted) related to government and other legal settlements, net of related legal expenses, primarily as a result of the previously announced settlement of the shareholder derivative action in January
2017. Excluding these items, loss from continuing operations was $(0.95) per share (diluted).
Net loss attributable to Community Health
Systems, Inc. common stockholders was $(446) million, or $(3.99) per share (diluted) for the nine months ended September 30, 2017, compared with $(1.500) billion, or $(13.55) per share (diluted) for the same period in 2016. Discontinued
operations for the nine months ended September 30, 2017, consisted of $(0.03) per share (diluted) of losses from operations of entities sold or held for sale and $(0.05) per share (diluted) for impairment of hospitals sold or held for sale, for
a total after-tax loss of approximately $(10) million. Weighted-average shares outstanding (diluted) were 112 million for the nine months ended September 30, 2017, and 111 million for the nine
months ended September 30, 2016. Adjusted EBITDA for the nine months ended September 30, 2017, was $1.294 billion compared with $1.661 billion for the same period in 2016, representing a 22.1 percent decrease.
The consolidated operating results for the nine months ended September 30, 2017, reflect a 12.3 percent decrease in total
admissions, and a 13.0 percent decrease in total adjusted admissions, compared with the same period in 2016. On a same-store basis, both admissions and adjusted admissions decreased 1.9 percent during the nine months ended
September 30, 2017, compared with the same period in 2016. On a same-store basis, net operating revenues decreased 0.3 percent during the nine months ended September 30, 2017, compared with the same period in 2016.
Impact of Hurricanes Harvey and Irma on Operating Results
During August and September 2017, the Company s facilities in Victoria, Texas, experienced an interruption in business and incurred
additional costs as a direct result of the landfall of Hurricane Harvey. Also during September 2017, due to the broad regional impact of Hurricane Irma, many of the Company s hospital operations in the state of Florida and at one of its
hospitals in the state of Georgia experienced a disruption, with the most significant impact on hospital operations in Key West and Punta Gorda, Florida. The Company currently estimates that these hurricanes resulted in a loss of net operating
revenues together with incremental expenses directly related to hurricane response efforts of approximately $40 million in the aggregate during the three months ended September 30, 2017. The impact on net operating revenues is the direct
result of the evacuations and population disruption prior to the hurricanes, as well as during the aftermath and recovery efforts in the communities affected by the hurricanes. This estimated impact is prior to any insurance recoveries which the
Company may receive.
Due to the timing of these extreme weather events, the above estimate of the associated impact of these hurricanes
may be updated in the future as the Company continues its clean-up and remediation efforts and accumulates information necessary to assess the fourth quarter impact of these hurricanes and provide loss-related
data to the Company s insurance carriers for property losses and business interruption coverage. Because of the required accounting for such insurance recoveries as gain contingencies, the timing and amount of such insurance proceeds will not
be recognized until future periods when any such gains are realized. Future property losses or impairment charges on its long-lived assets may be recorded based on a final assessment of damage and estimated impact on future cash flows for the
The Company completed its divestiture of six hospitals on October 1, 2017, and two hospitals on November 1,
2017, bringing its total completed divestitures during 2017 to the previously announced 30 hospitals that had been subject to definitive agreements. In addition to the previously announced divestiture of 30 hospitals, the Company continues to
receive interest from acquirers for certain of its hospitals. The Company is pursuing these interests for sale transactions involving hospitals with a combined total of at least $2.0 billion in annual net operating revenues and combined mid-single digit Adjusted EBITDA margins.
CYH Announces Third Quarter 2017 Results
Adjusted EBITDA, a non-GAAP financial measure, is
EBITDA adjusted to add back net income attributable to noncontrolling interests and to exclude the effect of discontinued operations, loss from early extinguishment of debt, impairment and (gain) loss on sale of businesses, gain on sale of
investments in unconsolidated affiliates, expense incurred related to the spin-off of QHC, 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, expenses related to employee termination benefits and other restructuring charges, and (income) expense from fair value adjustments on the CVR agreement liability
accounted for at fair value related to the HMA legal proceedings, and related legal expenses. For information regarding why the Company believes Adjusted EBITDA presents useful information to investors, and for a reconciliation of Adjusted EBITDA to
net income attributable to Community Health Systems, Inc. stockholders, see footnote (e) 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, Numerous
factors affected our operating and financial results in the third quarter, including lower volumes, divestiture activity and extreme weather events. Hurricanes Harvey and Irma directly impacted operations at a significant number of our hospitals,
forcing evacuations at some facilities and requiring others to take extraordinary measures to remain operational during these storms. We are proud of the incredible effort and compassionate response of our hospital teams who worked to keep patients
safe, helped enable first responders in their rescue missions, and provided immediate relief in the aftermath of the hurricanes. Our company and hospitals continue to provide recovery support for their communities and for those employees who
suffered personal losses as a result of the storms. In times like these, we are reminded of the courage and resilience of our caregivers and how important all hospitals are to the communities they serve.
Smith added, Looking forward, we remain focused on strategic initiatives that we believe will yield positive results in the future.
We ve made substantial progress in our portfolio rationalization initiative with 30 hospital divestitures now complete. Our goal is to emerge from this process with a sustainable group of hospitals that are positioned for long-term success and
Included on pages 18, 19, 20 and 21 of this press release are tables setting forth the Company s 2017 annual earnings
guidance. The updated 2017 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 divestitures that the Company
has completed in 2017.
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 127 affiliated hospitals in 20 states with an aggregate of approximately 21,000 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 Thursday, November 2, 2017, at 10:00 a.m. Central, 11:00 a.m. Eastern, to
review financial and operating results for the third quarter ended September 30, 2017. 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 2, 2017. 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 Third Quarter 2017 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)(c)(d)
(In millions, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net operating revenues | $ | 3,666 | $ | 4,380 | $ | 12,295 | $ | 13,969 | ||||||||
| Loss from continuing operations (f), (i), (j), (k) | (88 | ) | (54 | ) | (380 | ) | (1,422 | ) | ||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | (110 | ) | (79 | ) | (446 | ) | (1,500 | ) | ||||||||
| Adjusted EBITDA (e) | 331 | 465 | 1,294 | 1,661 | ||||||||||||
| Net cash provided by operating activities | 114 | 178 | 617 | 810 | ||||||||||||
| Basic loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (i), (j), (k) | $ | (0.96 | ) | $ | (0.69 | ) | $ | (3.91 | ) | $ | (13.50 | ) | ||||
| Discontinued operations | (0.02 | ) | (0.02 | ) | (0.08 | ) | (0.05 | ) | ||||||||
| Net loss | $ | (0.98 | ) | $ | (0.71 | ) | $ | (3.99 | ) | $ | (13.55 | ) | ||||
| Diluted loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (h), (i), (j), (k) | $ | (0.96 | ) | $ | (0.69 | ) | $ | (3.91 | ) | $ | (13.50 | ) | ||||
| Discontinued operations | (0.02 | ) | (0.02 | ) | (0.08 | ) | (0.05 | ) | ||||||||
| Net loss (h) | $ | (0.98 | ) | $ | (0.71 | ) | $ | (3.99 | ) | $ | (13.55 | ) | ||||
| Weighted-average number of shares outstanding (g): | ||||||||||||||||
| Basic | 112 | 111 | 112 | 111 | ||||||||||||
| Diluted | 112 | 111 | 112 | 111 |
footnotes, see pages 13, 14, 15, 16 and 17.
CYH Announces Third Quarter 2017 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)(c)(d)
(In millions, except per share amounts)
| Three Months Ended September 30, | ||||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Amount | % of Net Operating Revenues | Amount | % of Net Operating Revenues | |||||||||||||
| Operating revenues (net of contractual allowances and discounts) | $ | 4,333 | $ | 5,084 | ||||||||||||
| Provision for bad debts | 667 | 704 | ||||||||||||||
| Net operating revenues | 3,666 | 100.0 | % | 4,380 | 100.0 | % | ||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 1,724 | 47.0 | % | 2,067 | 47.2 | % | ||||||||||
| Supplies | 610 | 16.6 | % | 723 | 16.5 | % | ||||||||||
| Other operating expenses | 911 | 24.9 | % | 1,026 | 23.4 | % | ||||||||||
| Government and other legal settlements and related costs (j) | 1 | % | 10 | 0.2 | % | |||||||||||
| Electronic health records incentive reimbursement | (2) | % | (5) | (0.1) | % | |||||||||||
| Rent | 93 | 2.5 | % | 109 | 2.5 | % | ||||||||||
| Depreciation and amortization | 206 | 5.6 | % | 265 | 6.1 | % | ||||||||||
| Impairment and (gain) loss on sale of businesses, net (i) | 33 | 0.9 | % | 39 | 0.9 | % | ||||||||||
| Total operating costs and expenses | 3,576 | 97.5 | % | 4,234 | 96.7 | % | ||||||||||
| Income from operations (f), (i), (j) | 90 | 2.5 | % | 146 | 3.3 | % | ||||||||||
| Interest expense, net | 238 | 6.5 | % | 233 | 5.3 | % | ||||||||||
| Loss from early extinguishment of debt | 4 | 0.1 | % | % | ||||||||||||
| Equity in earnings of unconsolidated affiliates | (5) | (0.1) | % | (4) | (0.1) | % | ||||||||||
| Loss from continuing operations before income taxes | (147) | (4.0) | % | (83) | (1.9) | % | ||||||||||
| Benefit from income taxes | (59) | (1.6) | % | (29) | (0.7) | % | ||||||||||
| Loss from continuing operations (f), (i), (j) | (88) | (2.4) | % | (54) | (1.2) | % | ||||||||||
| Discontinued operations, net of taxes: | ||||||||||||||||
| Loss from operations of entities sold or held for sale | (1) | % | (2) | % | ||||||||||||
| Impairment of hospitals sold or held for sale | (1) | % | % | |||||||||||||
| Loss from discontinued operations, net of taxes | (2) | (0.1) | % | (2) | % | |||||||||||
| Net loss | (90) | (2.5) | % | (56) | (1.2) | % | ||||||||||
| Less: Net income attributable to noncontrolling interests | 20 | 0.5 | % | 23 | 0.6 | % | ||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (110) | (3.0) | % | $ | (79) | (1.8) | % | ||||||||
| Basic loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (i), (j) | $ | (0.96) | $ | (0.69) | ||||||||||||
| Discontinued operations | (0.02) | (0.02) | ||||||||||||||
| Net loss | $ | (0.98) | $ | (0.71) | ||||||||||||
| Diluted loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (h), (i), (j) | $ | (0.96) | $ | (0.69) | ||||||||||||
| Discontinued operations | (0.02) | (0.02) | ||||||||||||||
| Net loss (h) | $ | (0.98) | $ | (0.71) | ||||||||||||
| Weighted-average number of shares outstanding (g): | ||||||||||||||||
| Basic | 112 | 111 | ||||||||||||||
| Diluted | 112 | 111 |
footnotes, see pages 13, 14, 15, 16 and 17.
CYH Announces Third Quarter 2017 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)(c)(d)
(In millions, except per share amounts)