Full Press Release Details
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES FOURTH QUARTER
AND YEAR ENDED DECEMBER 31, 2022 RESULTS AND 2023 GUIDANCE
FRANKLIN, Tenn. (February 15, 2023) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating
results for the three months and year ended December 31, 2022.
The following highlights the financial and operating results for the
three months ended December 31, 2022.
Commenting on the results, Tim L. Hingtgen, chief executive
officer of Community Health Systems, Inc., said, We were pleased with our progress during the final quarter of the year, including solid volume growth in admissions, adjusted admissions and surgeries. We also significantly reduced contract
labor from its peak in early 2022, while improving overall employee recruitment and retention levels. I am grateful to our healthcare system leaders, clinicians, caregivers and support teams for their unwavering commitment to advance patient care
and achieve operational improvements in 2022. Looking forward, we are optimistic about our opportunities in 2023.
Net operating revenues for the three months ended December 31, 2022, totaled $3.142 billion, a
2.8 percent decrease compared to $3.233 billion for the same period in 2021. On a same-store basis, net operating revenues decreased 1.3 percent for the three months ended December 31, 2022, compared to the same period in
2021. Net operating revenues for the three months ended December 31, 2022, reflect a 1.9 percent increase in admissions and a 5.2 percent increase in adjusted admissions, compared to the same period in 2021. On a same-store basis,
admissions increased 4.4 percent and adjusted admissions increased 8.2 percent for the three months ended December 31, 2022, compared to the same period in 2021.
CYH Announces Fourth Quarter and Year-End 2022 Results
Net income attributable to Community Health Systems, Inc. stockholders was $414 million,
or $3.18 per share (diluted), for the three months ended December 31, 2022, compared to $178 million, or $1.34 per share (diluted), for the same period in 2021. Excluding the adjusting items as presented in the table in footnote
(e) on page 16, net income attributable to Community Health Systems, Inc. stockholders was $1.50 per share (diluted) for the three months ended December 31, 2022, compared to $1.15 per share (diluted) for the same period in 2021. Pandemic
relief funds, as more specifically described below, had a positive impact on net income attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $2 million, or $0.01 on a per share
(diluted) basis, for the three months ended December 31, 2022, and $30 million, or $0.22 on a per share (diluted) basis, for the same period in 2021.
Adjusted EBITDA for the three months ended December 31, 2022, was $404 million compared to $540 million for the same period in
2021. Pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $2 million and $46 million for the three months ended December 31, 2022 and 2021, respectively.
The increase in net income attributable to Community Health Systems, Inc. stockholders for the three months ended December 31, 2022,
compared to the same period in 2021, was due primarily to the impact of certain non-operating items, including gains from early extinguishment of debt and the CoreTrust transaction, as further discussed below,
as well as a higher benefit from income taxes. The decrease in Adjusted EBITDA for the three months ended December 31, 2022, compared to the same period in 2021, is primarily due to lower acuity of inpatient admissions and unfavorable changes
in payor mix, as well as the reduction in pandemic relief funds recognized and continued expense pressures including increased salaries and benefits expense driven by wage inflation. In addition, expense from contract labor was lower than the prior
year period and the prior quarter.
Year Ended December 31, 2022
Net operating revenues for the year ended December 31, 2022, totaled $12.211 billion, a 1.3 percent decrease
compared to $12.368 billion for the same period in 2021. On a same-store basis, net operating revenues decreased 0.2 percent for the year ended December 31, 2022, compared to the same period in 2021. Net operating revenues for the
year ended December 31, 2022, reflect a 1.7 percent decrease in admissions and a 2.6 percent increase in adjusted admissions, compared to the same period in 2021. On a same-store basis, admissions increased 0.5 percent and
adjusted admissions increased 5.0 percent for the year ended December 31, 2022, compared to the same period in 2021.
attributable to Community Health Systems, Inc. stockholders was $46 million, or $0.35 per share (diluted), for the year ended December 31, 2022, compared to $230 million, or $1.76 per share (diluted), for the same period in 2021.
Excluding the adjusting items as presented in the table in footnote (e) on page 16, net loss attributable to Community Health Systems, Inc. stockholders was $(1.38) per share (diluted) for the year ended December 31, 2022, compared to net
income of $2.45 per share (diluted) for the same period in 2021. Pandemic relief funds, as more specifically described below, had a positive impact on net income attributable to Community Health Systems, Inc. stockholders (both on a consolidated and
adjusted basis) of approximately $133 million, or $1.02 on a per share (diluted) basis, for the year ended December 31, 2022, and of approximately $107 million, or $0.82 on a per share (diluted) basis, for the same period in 2021.
Adjusted EBITDA for the year ended December 31, 2022, was $1.466 billion compared to $1.969 billion for the same period in
2021. Pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $173 million and $148 million for the years ended December 31, 2022 and 2021, respectively.
CYH Announces Fourth Quarter and Year-End 2022 Results
The decrease in net income attributable to Community Health Systems, Inc. stockholders and
Adjusted EBITDA for the year ended December 31, 2022, compared to the same period in 2021, are primarily due to a decline in net operating revenues as a result of lower overall acuity of services (including lower acuity of inpatient
admissions), unfavorable changes in payor mix and fewer inpatient admissions, which was partially offset by the increase in outpatient visits and surgeries and improved reimbursement rates. The decrease in net income attributable to Community Health
Systems, Inc. stockholders was partially offset by the impact of certain non-operating items during the year ended December 31, 2022, including gains from early extinguishment of debt and completion of
the CoreTrust transaction, as further discussed below. In addition, increased salaries and benefits expense driven by wage inflation and higher costs for contract labor resulted in increased operating expenses during the year ended December 31,
2022, compared to the prior year period.
During the three months ended December 31, 2022, the Company extinguished approximately $378 million principal amount of notes
through a combination of open market and privately negotiated repurchases, resulting in the recognition of a pre-tax gain from early extinguishment of debt of approximately $180 million during the three
months ended December 31, 2022.
Pandemic Relief Funds
The Company received pandemic relief fund payments through various federal, state and local programs of approximately $1 million and
$54 million during the three months ended December 31, 2022 and 2021, respectively, and approximately $161 million and $58 million for the years ended December 31, 2022 and 2021, respectively. The Company recognized pandemic
relief funds eligible to be claimed as a reduction in operating costs and expenses of approximately $2 million and $46 million during the three months ended December 31, 2022 and 2021, respectively, and approximately $173 million
and $148 million for the years ended December 31, 2022 and 2021, respectively. Amounts recognized are denoted by the caption pandemic relief funds in the condensed consolidated statements of income. Pandemic relief funds that
have not yet been recognized as a reduction in operating costs and expenses or otherwise refunded to the U.S. Department of Health and Human Services or the various state and local agencies as of December 31, 2022, totaled approximately
$2 million and are reflected within accrued liabilities-other in the condensed consolidated balance sheet.
Certain of the Company s facilities in Florida experienced an interruption in their business and incurred additional costs as a direct
result of Hurricane Ian, which made landfall in late September 2022. The hurricane resulted in estimated incremental expenses directly related to hurricane response efforts of approximately $8 million on a
pre-tax basis during the three months ended December 31, 2022, and an estimated loss of net operating revenues together with incremental expenses directly related to hurricane response efforts of
approximately $18 million on a pre-tax basis during the year ended December 31, 2022. Amounts incurred during the three months ended December 31, 2022, relate to incremental expenses for the
repair of damaged buildings and related equipment, and are net of insurance proceeds received to-date totaling $2 million. Due to the timing of this event, it is expected that an immaterial amount of
incremental expenses will be incurred in the first half of 2023 for continued clean-up and remediation efforts. Likewise, additional insurance proceeds received by the Company related to this event, if any,
are expected to be immaterial.
During the three months ended December 31, 2022, the Company completed the closure of two facilities,
one as the result of not renewing the lease to operate the facility, which expired on December 31, 2022, and the other for which the closure was previously disclosed as being substantially complete as of September 30, 2022. The Company
completed the divestiture of one hospital on January 1, 2023, (in respect of which the Company received proceeds at a preliminary closing on December 30, 2022). Financial and statistical data for 2022 and 2021 presented in this press
release includes the operating results of divested or closed businesses for the periods prior to the consummation of the respective divestiture or closure.
CYH Announces Fourth Quarter and Year-End 2022 Results
Same-store operating results exclude businesses divested in 2021 and 2022, businesses closed in 2022 and one
de novo hospital that opened in 2022.
Effective October 1, 2022, HealthTrust Purchasing Group, L.P. ( HealthTrust ), a
group purchasing organization in which the Company is a noncontrolling partner, completed the sale of a majority interest in CoreTrust Holdings, LLC ( CoreTrust ) to a third party. Proceeds for the sale of interest in CoreTrust were
distributed to the members of HealthTrust, including the Company, at a preliminary closing on September 30, 2022. The Company received approximately $121 million in connection with such distribution. The Company recognized
$119 million of the proceeds into income during the three months ended December 31, 2022.
Non-GAAP Financial Measures
This press 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 loss (gain) from early extinguishment of debt, impairment and (gain) loss on sale
of businesses, gain on sale of equity interests in Macon Healthcare, LLC, expense related to government and other legal matters and related costs, expense incurred in the fourth quarter of 2020 related to the settlement of certain professional
liability claims for which the third-party insurers obligation to insure the Company against the underlying loss was being litigated along with income during the fourth quarter of 2021 associated with the settlement of such litigation for the
recovery of amounts covered by such third-party insurance policies, expense related to employee termination benefits and other restructuring charges, the impact of a change in estimate to increase the professional liability claims accrual recorded
during the fourth quarter of 2022 with respect to claims incurred in prior years related to divested locations, the gain on sale by HealthTrust of a majority interest in CoreTrust and expense from settlement and fair value adjustments on the
contingent value right agreement liability related to the Health Management Associates, Inc. ( HMA ) legal proceedings and related legal expenses. For information regarding why the Company believes Adjusted EBITDA provides useful
information to investors, and for a reconciliation of Adjusted EBITDA to net income attributable to Community Health Systems, Inc. stockholders, see footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data
below. Additionally, this press release presents adjusted net income (loss) attributable to Community Health Systems, Inc. stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact
on net income attributable to Community Health Systems, Inc. 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 attributable to Community
Health Systems, Inc. stockholders per share (diluted), see footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below.
The non-GAAP financial measures set forth above are not measurements of financial performance under
U.S. GAAP, and should not be considered in isolation or as a substitute for any financial measure calculated in accordance with U.S. GAAP. Additionally, the calculation of these non-GAAP financial measures may
not be comparable to similarly titled measures disclosed by other companies.
Included on pages 17, 18, 19, 20 and 21 of this press
release are tables setting forth the Company s 2023 annual earnings guidance. The 2023 guidance is based on the Company s historical operating performance, current trends and other assumptions that the Company believes are reasonable at
this time as more specifically discussed below.
Community Health Systems, Inc. is one of the nation s largest healthcare companies.
The Company s affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 45 distinct markets across 16 states. As of February 15, 2023, the Company s subsidiaries own or lease 79
affiliated hospitals with approximately 13,000 beds and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and
ambulatory surgery centers.
CYH Announces Fourth Quarter and Year-End 2022 Results
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, February 16, 2023, 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, 2022. 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