Full Press Release Details
| Investor Contact: | Thomas J. Aaron | |
| Executive Vice President | ||
| and Chief Financial Officer | ||
| (615) 465-7000 |
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES
THIRD QUARTER 2019 RESULTS
(October 29, 2019) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results for the three and nine months ended September 30, 2019.
The following highlights the financial and operating results for the three months ended September 30, 2019.
Net operating revenues for the three
months ended September 30, 2019, totaled $3.246 billion, a 5.9 percent decrease, compared with $3.451 billion for the same period in 2018.
Net loss attributable to Community Health Systems, Inc. common stockholders was $(17) million, or $(0.15) per share (diluted),
for the three months ended September 30, 2019, compared with $(325) million, or $(2.88) 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 $(0.29) per share (diluted), for the three months ended September 30, 2019, compared with $(1.64) per share (diluted) for the same period in 2018. Weighted-average shares
outstanding (diluted) were 114 million for the three months ended September 30, 2019, and 113 million for the three months ended September 30, 2018.
Adjusted EBITDA for the three months ended September 30, 2019, was $388 million compared with $372 million for
the same period in 2018, representing a 4.3 percent increase.
The consolidated operating results for the three
months ended September 30, 2019, reflect a 9.2 percent decrease in admissions, and an 8.4 percent decrease in adjusted admissions, compared with the same period in 2018. On a same-store basis, admissions increased 2.4 percent and
adjusted admissions increased 3.6 percent for the three months ended September 30, 2019, compared with the same period in 2018. On a same-store basis, net operating revenues increased 4.1 percent for the three months ended
September 30, 2019, compared with the same period in 2018.
CYH Announces Third Quarter 2019 Results
Net operating revenues for the nine months ended September 30, 2019,
totaled $9.925 billion, a 7.3 percent decrease, compared with $10.702 billion for the same period in 2018.
Net loss attributable to Community Health Systems, Inc. common stockholders was $(302) million, or $(2.66) per share
(diluted), for the nine months ended September 30, 2019, compared with $(460) million, or $(4.08) 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 $(1.29) per share (diluted), for the nine months ended September 30, 2019, compared with $(1.52) per share (diluted) for the same period in 2018. Weighted-average
shares outstanding (diluted) were 114 million for the nine months ended September 30, 2019, and 113 million for the nine months ended September 30, 2018.
Adjusted EBITDA for the nine months ended September 30, 2019, was $1.181 billion compared with $1.223 billion
for the same period in 2018, representing a 3.4 percent decrease.
The consolidated operating results for the nine
months ended September 30, 2019, reflect an 11.4 percent decrease in admissions, and an 11.2 percent decrease in adjusted admissions, compared with the same period in 2018. On a same-store basis, admissions increased 1.7 percent
and adjusted admissions increased 2.3 percent for the nine months ended September 30, 2019, compared with the same period in 2018. On a same-store basis, net operating revenues increased 4.3 percent for the nine months ended
September 30, 2019, compared with the same period in 2018.
Commenting on the results, Wayne T. Smith, chairman and
chief executive officer of Community Health Systems, Inc., said, We delivered a strong same-store performance across key metrics during the third quarter. Continued execution of our transfer program, Accountable Care Organizations, capital
investments, and strategic plans have driven these improved results. We believe these investments, along with recent divestitures and ongoing operating efficiency initiatives, have positioned the Company for continued improved performance. As we
move forward, we expect a good finish to this year and believe we are well-positioned to deliver a strong performance in 2020.
The Company completed 11 hospital divestitures during the nine months ended September 30, 2019 (including two
divestitures that preliminarily closed on December 31, 2018) and completed the divestiture of one additional hospital on October 1, 2019. In addition, the Company has entered into a definitive agreement to sell three additional hospitals,
which divestitures have not yet been completed. The Company intends to continue its portfolio rationalization strategy during the remainder of 2019 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 currently subject to a definitive agreement) 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 the three and nine months ended September 30, 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 the hospitals divested or closed in 2018 and during the nine months
ended September 30, 2019.
CYH Announces Third Quarter 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 (gain) 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 loss attributable to Community Health Systems, Inc. common
stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact on net 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 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 2019 updated annual earnings guidance. The 2019 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 in 2019.
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 102 affiliated hospitals in 18 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 Third Quarter 2019 Results
Community Health Systems, Inc. will hold a conference call on Wednesday,
October 30, 2019, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the third quarter ended September 30, 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 Third Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)
(In millions, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net operating revenues | $ | 3,246 | $ | 3,451 | $ | 9,925 | $ | 10,702 | ||||||||
| Net income (loss) (f), (g) | 2 | (308 | ) | (244 | ) | (405 | ) | |||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | (17 | ) | (325 | ) | (302 | ) | (460 | ) | ||||||||
| Adjusted EBITDA (c) | 388 | 372 | 1,181 | 1,223 | ||||||||||||
| Net cash (used in) provided by operating activities | (74 | ) | 346 | 191 | 440 | |||||||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (0.15 | ) | $ | (2.88 | ) | $ | (2.66 | ) | $ | (4.08 | ) | ||||
| Diluted (e), (f), (g) | (0.15 | ) | (2.88 | ) | (2.66 | ) | (4.08 | ) | ||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | 114 | 113 | ||||||||||||
| Diluted | 114 | 113 | 114 | 113 |
For footnotes, see pages 13, 14 and 15.
CYH Announces Third Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)
(In millions, except per share amounts)
| Three Months Ended September 30, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| % of Net | % of Net | |||||||||||||||
| Operating | Operating | |||||||||||||||
| Amount | Revenues | Amount | Revenues | |||||||||||||
| Net operating revenues | $ | 3,246 | 100.0 % | $ | 3,451 | 100.0 % | ||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 1,469 | 45.3 % | 1,585 | 45.9 % | ||||||||||||
| Supplies | 526 | 16.2 % | 565 | 16.4 % | ||||||||||||
| Other operating expenses | 812 | 24.9 % | 858 | 24.9 % | ||||||||||||
| Government and other legal settlements and related costs (g) | 26 | 0.8 % | 2 | 0.1 % | ||||||||||||
| Electronic health records incentive reimbursement | - | - % | (1 | ) | - % | |||||||||||
| Lease cost and rent | 79 | 2.4 % | 83 | 2.4 % | ||||||||||||
| Depreciation and amortization | 151 | 4.7 % | 173 | 5.0 % | ||||||||||||
| Impairment and (gain) loss on sale of businesses, net (f) | (1 | ) | - % | 112 | 3.2 % | |||||||||||
| Total operating costs and expenses | 3,062 | 94.3 % | 3,377 | 97.9 % | ||||||||||||
| Income from operations (f), (g) | 184 | 5.7 % | 74 | 2.1 % | ||||||||||||
| Interest expense, net | 259 | 8.0 % | 256 | 7.3 % | ||||||||||||
| Loss from early extinguishment of debt | - | - % | 27 | 0.8 % | ||||||||||||
| Equity in earnings of unconsolidated affiliates | (3 | ) | (0.1) % | (5 | ) | (0.1) % | ||||||||||
| Loss before income taxes | (72 | ) | (2.2) % | (204 | ) | (5.9) % | ||||||||||
| (Benefit from) provision for income taxes | (74 | ) | (2.3) % | 104 | 3.0 % | |||||||||||
| Net income (loss) (f), (g) | 2 | 0.1 % | (308 | ) | (8.9) % | |||||||||||
| Less: Net income attributable to noncontrolling interests | 19 | 0.6 % | 17 | 0.5 % | ||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (17 | ) | (0.5) % | $ | (325 | ) | (9.4) % | ||||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (0.15 | ) | $ | (2.88 | ) | ||||||||||
| Diluted (e), (f), (g) | $ | (0.15 | ) | $ | (2.88 | ) | ||||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | ||||||||||||||
| Diluted | 114 | 113 |
For footnotes, see pages 13, 14 and 15.
CYH Announces Third Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)
(In millions, except per share amounts)
| Nine Months Ended September 30, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| % of Net | % of Net | |||||||||||||||
| Operating | Operating | |||||||||||||||
| Amount | Revenues | Amount | Revenues | |||||||||||||
| Net operating revenues | $ | 9,925 | 100.0 % | $ | 10,702 | 100.0 % | ||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 4,499 | 45.3 % | 4,850 | 45.3 % | ||||||||||||
| Supplies | 1,623 | 16.4 % | 1,773 | 16.6 % | ||||||||||||
| Other operating expenses | 2,516 | 25.3 % | 2,646 | 24.7 % | ||||||||||||
| Government and other legal settlements and related costs (g) | 35 | 0.4 % | 9 | 0.1 % | ||||||||||||
| Electronic health records incentive reimbursement | - | - % | (2 | ) | - % | |||||||||||
| Lease cost and rent | 240 | 2.4 % | 257 | 2.4 % | ||||||||||||
| Depreciation and amortization | 456 | 4.6 % | 531 | 5.0 % | ||||||||||||
| Impairment and (gain) loss on sale of businesses, net (f) | 70 | 0.7 % | 314 | 2.9 % | ||||||||||||
| Total operating costs and expenses | 9,439 | 95.1 % | 10,378 | 97.0 % | ||||||||||||
| Income from operations (f), (g) | 486 | 4.9 % | 324 | 3.0 % | ||||||||||||
| Interest expense, net | 782 | 7.9 % | 720 | 6.7 % | ||||||||||||
| Loss (gain) from early extinguishment of debt | 31 | 0.3 % | (32 | ) | (0.3) % | |||||||||||
| Equity in earnings of unconsolidated affiliates | (12 | ) | (0.1) % | (17 | ) | (0.2) % | ||||||||||
| Loss before income taxes | (315 | ) | (3.2) % | (347 | ) | (3.2) % | ||||||||||
| (Benefit from) provision for income taxes | (71 | ) | (0.7) % | 58 | 0.6 % | |||||||||||
| Net loss (f), (g) | (244 | ) | (2.5) % | (405 | ) | (3.8) % | ||||||||||
| Less: Net income attributable to noncontrolling interests | 58 | 0.5 % | 55 | 0.5 % | ||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (302 | ) | (3.0) % | $ | (460 | ) | (4.3) % | ||||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (2.66 | ) | $ | (4.08 | ) | ||||||||||
| Diluted (e), (f), (g) | $ | (2.66 | ) | $ | (4.08 | ) | ||||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 114 | 113 | ||||||||||||||
| Diluted | 114 | 113 |
For footnotes, see pages 13, 14 and 15.
CYH Announces Third Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net income (loss) | $ | 2 | $ | (308 | ) | $ | (244 | ) | $ | (405 | ) | |||||
| Other comprehensive (loss) income, net of income taxes: | ||||||||||||||||
| Net change in fair value of interest rate swaps, net of tax | (1 | ) | 2 | (3 | ) | 26 | ||||||||||
| Net change in fair value of available-for-sale securities, net of tax | 1 | - | 5 | (2 | ) | |||||||||||
| Amortization and recognition of unrecognized pension cost components, net of tax | - | - | - | 1 | ||||||||||||
| Other comprehensive income | - | 2 | 2 | 25 | ||||||||||||
| Comprehensive income (loss) | 2 | (306 | ) | (242 | ) | (380 | ) | |||||||||
| Less: Comprehensive income attributable to noncontrolling interests | 19 | 17 | 58 | 55 | ||||||||||||
| Comprehensive loss attributable to Community Health Systems, Inc. stockholders | $ | (17 | ) | $ | (323 | ) | $ | (300 | ) | $ | (435 | ) |
For footnotes, see pages 13, 14 and 15.
CYH Announces Third Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)
(Dollars in millions)
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||
| Consolidated | Same-Store | |||||||||||||||||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||||||||
| Number of hospitals (at end of period) | 103 | 118 | 102 | 102 | ||||||||||||||||||||||||||
| Licensed beds (at end of period) | 16,332 | 19,684 | 16,151 | 16,265 | ||||||||||||||||||||||||||
| Beds in service (at end of period) | 14,537 | 17,294 | 14,462 | 14,380 | ||||||||||||||||||||||||||
| Admissions | 136,926 | 150,730 | -9.2% | 133,863 | 130,718 | 2.4% | ||||||||||||||||||||||||
| Adjusted admissions | 302,805 | 330,681 | -8.4% | 296,089 | 285,795 | 3.6% | ||||||||||||||||||||||||
| Patient days | 593,746 | 669,035 | 581,078 | 574,386 | ||||||||||||||||||||||||||
| Average length of stay (days) | 4.3 | 4.4 | 4.3 | 4.4 | ||||||||||||||||||||||||||
| Occupancy rate (average beds in service) | 43.4% | 41.7% | 43.7% | 43.4% | ||||||||||||||||||||||||||
| Net operating revenues | $ | 3,246 | $ | 3,451 | -5.9% | $ | 3,185 | $ | 3,061 | 4.1% | ||||||||||||||||||||
| Net inpatient revenues as a % of net operating revenues | 46.1% | 47.1% | 45.9% | 47.0% | ||||||||||||||||||||||||||
| Net outpatient revenues as a % of net operating revenues | 53.9% | 52.9% | 54.1% | 53.0% | ||||||||||||||||||||||||||
| Income from operations (f), (g) | $ | 184 | $ | 74 | 148.6% | |||||||||||||||||||||||||
| Income from operations as a % of net operating revenues | 5.7% | 2.1% | ||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 151 | $ | 173 | ||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | (3 | ) | $ | (5 | ) | ||||||||||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (17 | ) | $ | (325 | ) | 94.8% | |||||||||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues | -0.5% | -9.4% | ||||||||||||||||||||||||||||
| Adjusted EBITDA (c) | $ | 388 | $ | 372 | 4.3% | |||||||||||||||||||||||||
| Adjusted EBITDA as a % of net operating revenues | 12.0% | 10.8% | ||||||||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (74 | ) | $ | 346 | -121.4% |