Full Press Release Details
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES
FIRST QUARTER 2019 RESULTS
FRANKLIN, Tenn. (April 30,
2019) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results for the three months ended March 31, 2019.
The following highlights the financial and operating results for the three months ended March 31, 2019.
Net operating revenues for the three months ended
March 31, 2019, totaled $3.376 billion, an 8.5 percent decrease, compared with $3.689 billion for the same period in 2018.
Net loss attributable to Community Health Systems, Inc. common stockholders was $(118) million, or $(1.04) per share (diluted), for the three
months ended March 31, 2019, compared with $(25) million, or $(0.22) per share (diluted), for the same period in 2018. Excluding the adjusting items as presented in the table in footnote (e) on page 12, net loss attributable to Community
Health Systems, Inc. common stockholders was $(0.53) per share (diluted), for the three months ended March 31, 2019, compared with net income of $0.13 per share (diluted) for the same period in 2018. Weighted-average shares outstanding
(diluted) were 113 million for the three months ended March 31, 2019, and 112 million for the three months ended March 31, 2018.
Adjusted EBITDA for the three months ended March 31, 2019, was $391 million compared with $440 million for the same period in
2018, representing an 11.1 percent decrease.
The consolidated operating results for the three months ended March 31, 2019,
reflect a 13.4 percent decrease in total admissions, and a 12.8 percent decrease in total adjusted admissions, compared with the same period in 2018. On a same-store basis, admissions decreased 0.1 percent and adjusted admissions
increased 0.8 percent for the three months ended March 31, 2019, compared with the same period in 2018. On a same-store basis, net operating revenues increased 3.1 percent for the three months ended March 31, 2019, compared with
the same period in 2018.
CYH Announces First Quarter 2019 Results
Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community
Health Systems, Inc., said, We continued to see incremental improvements in same-store net revenue and volume across our key markets in the first quarter of 2019, as well as a strengthening of our overall portfolio as additional divestitures
have occurred. We believe our recent investments, including physician recruitment, employment and alignment strategies, and the development of new access points, will drive continued improvement in our performance moving forward. We remain focused
on all aspects of operational excellence, with a high priority on the efficient use of our resources, diligent efforts to continuously improve processes and results, and consistent execution of our growth initiatives. Finally, we remain committed to
continuing to provide high-quality, safe care across our continuum of services.
The Company completed seven hospital divestitures
during the three months ended March 31, 2019 (including two divestitures that preliminarily closed on December 31, 2018). In addition, the Company has entered into a definitive agreement to sell one additional hospital, which divestiture
has 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 divestiture 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 months ended March 31, 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 three months ended March 31, 2019.
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, and
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.
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 earnings release presents adjusted net (loss) income attributable to Community Health Systems, Inc. common stockholders per
share (diluted), a non-GAAP financial measure, to reflect the impact on net (loss) income 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) income 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.
CYH Announces First Quarter 2019 Results
Included on pages 13, 14, 15 and 16 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 106 affiliated hospitals in 18 states with an aggregate of approximately 17,000
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 Wednesday, May 1, 2019, at 10:00 a.m. Central, 11:00 a.m. Eastern, to
review financial and operating results for the first quarter ended March 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 First Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)
(In millions, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net operating revenues | $ | 3,376 | $ | 3,689 | ||||
| Net loss (f), (g) | (101 | ) | (6 | ) | ||||
| Net loss attributable to Community Health Systems, Inc. stockholders | (118 | ) | (25 | ) | ||||
| Adjusted EBITDA (c) | 391 | 440 | ||||||
| Net cash provided by operating activities | 133 | 106 | ||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Basic (f), (g) | $ | (1.04 | ) | $ | (0.22 | ) | ||
| Diluted (e), (f), (g) | (1.04 | ) | (0.22 | ) | ||||
| Weighted-average number of shares outstanding (d): | ||||||||
| Basic | 113 | 112 | ||||||
| Diluted | 113 | 112 |
footnotes, see pages 10, 11 and 12.
CYH Announces First 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 March 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| Amount | % of Net Operating Revenues | Amount | % of Net Operating Revenues | |||||||||||||
| Net operating revenues | $ | 3,376 | 100.0 % | $ | 3,689 | 100.0 % | ||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 1,542 | 45.7 % | 1,648 | 44.7 % | ||||||||||||
| Supplies | 558 | 16.5 % | 616 | 16.7 % | ||||||||||||
| Other operating expenses | 811 | 24.1 % | 911 | 24.7 % | ||||||||||||
| Government and other legal settlements and related costs (g) | 5 | 0.1 % | 5 | 0.1 % | ||||||||||||
| Electronic health records incentive reimbursement | % | (1 | ) | % | ||||||||||||
| Lease cost and rent | 80 | 2.4 % | 89 | 2.4 % | ||||||||||||
| Depreciation and amortization | 153 | 4.5 % | 181 | 4.9 % | ||||||||||||
| Impairment and (gain) loss on sale of businesses, net (f) | 38 | 1.1 % | 28 | 0.8 % | ||||||||||||
| Total operating costs and expenses | 3,187 | 94.4 % | 3,477 | 94.3 % | ||||||||||||
| Income from operations (f), (g) | 189 | 5.6 % | 212 | 5.7 % | ||||||||||||
| Interest expense, net | 257 | 7.6 % | 228 | 6.2 % | ||||||||||||
| Loss from early extinguishment of debt | 31 | 0.9 % | 4 | 0.1 % | ||||||||||||
| Equity in earnings of unconsolidated affiliates | (5 | ) | (0.1)% | (7 | ) | (0.2)% | ||||||||||
| Loss before income taxes | (94 | ) | (2.8)% | (13 | ) | (0.4)% | ||||||||||
| Provision for (benefit from) income taxes | 7 | 0.2 % | (7 | ) | (0.2)% | |||||||||||
| Net loss (f), (g) | (101 | ) | (3.0)% | (6 | ) | (0.2)% | ||||||||||
| Less: Net income attributable to noncontrolling interests | 17 | 0.5 % | 19 | 0.5% | ||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (118 | ) | (3.5)% | $ | (25 | ) | (0.7)% | ||||||||
| Loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Basic (f), (g) | $ | (1.04 | ) | $ | (0.22 | ) | ||||||||||
| Diluted (e), (f), (g) | $ | (1.04 | ) | $ | (0.22 | ) | ||||||||||
| Weighted-average number of shares outstanding (d): | ||||||||||||||||
| Basic | 113 | 112 | ||||||||||||||
| Diluted | 113 | 112 |
footnotes, see pages 10, 11 and 12.
CYH Announces First Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net loss | $ | (101 | ) | $ | (6 | ) | ||
| Other comprehensive (loss) income, net of income taxes: | ||||||||
| Net change in fair value of interest rate swaps, net of tax | (2 | ) | 18 | |||||
| Net change in fair value of available-for-sale securities, net of tax | 2 | (2 | ) | |||||
| Amortization and recognition of unrecognized pension cost components, net of tax | 1 | |||||||
| Other comprehensive income | 17 | |||||||
| Comprehensive (loss) income | (101 | ) | 11 | |||||
| Less: Comprehensive income attributable to noncontrolling interests | 17 | 19 | ||||||
| Comprehensive loss attributable to Community Health Systems, Inc. stockholders | $ | (118 | ) | $ | (8 | ) |
footnotes, see pages 10, 11 and 12.
CYH Announces First Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)
(Dollars in millions)
| Three Months Ended March 31, | ||||||||||||||||||||||||
| Consolidated | Same-Store | |||||||||||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||
| Number of hospitals (at end of period) | 106 | 127 | 106 | 106 | ||||||||||||||||||||
| Licensed beds (at end of period) | 16,956 | 21,051 | 16,956 | 17,044 | ||||||||||||||||||||
| Beds in service (at end of period) | 15,195 | 18,525 | 15,195 | 15,147 | ||||||||||||||||||||
| Admissions | 147,888 | 170,680 | -13.4 | % | 144,433 | 144,617 | -0.1 | % | ||||||||||||||||
| Adjusted admissions | 309,875 | 355,448 | -12.8 | % | 302,100 | 299,823 | 0.8 | % | ||||||||||||||||
| Patient days | 677,081 | 784,305 | 658,478 | 662,007 | ||||||||||||||||||||
| Average length of stay (days) | 4.6 | 4.6 | 4.6 | 4.6 | ||||||||||||||||||||
| Occupancy rate (average beds in service) | 48.0 | % | 46.9 | % | 48.2 | % | 48.6 | % | ||||||||||||||||
| Net operating revenues | $ | 3,376 | $ | 3,689 | -8.5 | % | $ | 3,306 | $ | 3,207 | 3.1 | % | ||||||||||||
| Net inpatient revenues as a % of net operating revenues | 48.7 | % | 49.2 | % | 48.7 | % | 49.0 | % | ||||||||||||||||
| Net outpatient revenues as a % of net operating revenues | 51.3 | % | 50.8 | % | 51.3 | % | 51.0 | % | ||||||||||||||||
| Income from operations (f), (g) | $ | 189 | $ | 212 | -10.8 | % | ||||||||||||||||||
| Income from operations as a % of net operating revenues | 5.6 | % | 5.7 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 153 | $ | 181 | ||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | (5 | ) | $ | (7 | ) | ||||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (118 | ) | $ | (25 | ) | 372.0 | % | ||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues | -3.5 | % | -0.7 | % | ||||||||||||||||||||
| Adjusted EBITDA (c) | $ | 391 | $ | 440 | -11.1 | % | ||||||||||||||||||
| Adjusted EBITDA as a % of net operating revenues | 11.6 | % | 11.9 | % | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 133 | $ | 106 | 25.5 | % |
footnotes, see pages 10, 11 and 12.
CYH Announces First Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except share data)
| March 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 277 | $ | 196 | ||||
| Patient accounts receivable | 2,360 | 2,352 | ||||||
| Supplies | 397 | 402 | ||||||
| Prepaid income taxes | 3 | 3 | ||||||
| Prepaid expenses and taxes | 197 | 196 | ||||||
| Other current assets | 361 | 400 | ||||||
| Total current assets | 3,595 | 3,549 | ||||||
| Property and equipment | 10,331 | 10,301 | ||||||
| Less accumulated depreciation and amortization | (4,245 | ) | (4,162 | ) | ||||
| Property and equipment, net | 6,086 | 6,139 | ||||||
| Goodwill | 4,553 | 4,559 | ||||||
| Deferred income taxes | 66 | 69 | ||||||
| Other assets, net (i) | 2,009 | 1,543 | ||||||
| Total assets | $ | 16,309 | $ | 15,859 | ||||
| LIABILITIES AND STOCKHOLDERS DEFICIT | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | 205 | $ | 204 | ||||
| Current operating lease liabilities (i) | 143 | |||||||
| Accounts payable | 863 | 887 | ||||||
| Accrued liabilities: | ||||||||
| Employee compensation | 628 | 627 | ||||||
| Accrued interest | 250 | 206 | ||||||
| Other | 419 | 468 | ||||||
| Total current liabilities | 2,508 | 2,392 | ||||||
| Long-term debt (h) | 13,385 | 13,392 | ||||||
| Deferred income taxes | 29 | 26 | ||||||
| Long-term operating lease liabilities (i) | 495 | |||||||
| Other long-term liabilities | 977 | 1,008 | ||||||
| Total liabilities | 17,394 | 16,818 | ||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 505 | 504 | ||||||
| STOCKHOLDERS DEFICIT | ||||||||
| Community Health Systems, Inc. stockholders deficit: | ||||||||
| Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued | ||||||||
| Common stock, $.01 par value per share, 300,000,000 shares authorized; 118,073,278 shares issued and outstanding at March 31, 2019, and 116,248,376 shares issued and outstanding at December 31, 2018 | 1 | 1 | ||||||
| Additional paid-in capital | 2,007 | 2,017 | ||||||
| Accumulated other comprehensive loss | (10 | ) | (10 | ) | ||||
| Accumulated deficit | (3,661 | ) | (3,543 | ) | ||||
| Total Community Health Systems, Inc. stockholders deficit | (1,663 | ) | (1,535 | ) | ||||
| Noncontrolling interests in equity of consolidated subsidiaries | 73 | 72 | ||||||
| Total stockholders deficit | (1,590 | ) | (1,463 | ) | ||||
| Total liabilities and stockholders deficit | $ | 16,309 | $ | 15,859 |
footnotes, see pages 10, 11 and 12.
CYH Announces First Quarter 2019 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (101 | ) | $ | (6 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 153 | 181 | ||||||
| Government and other legal settlements and related costs (g) | 5 | 5 | ||||||
| Stock-based compensation expense | 3 | 4 | ||||||
| Impairment and (gain) loss on sale of businesses, net (f) | 38 | 28 | ||||||
| Loss from early extinguishment of debt | 31 | 4 | ||||||
| Other non-cash expenses, net | 36 | 12 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | ||||||||
| Patient accounts receivable | (10 | ) | (66 | ) | ||||
| Supplies, prepaid expenses and other current assets | 14 | (21 | ) | |||||
| Accounts payable, accrued liabilities and income taxes | 23 | (33 | ) | |||||
| Other | (59 | ) | (2 | ) | ||||
| Net cash provided by operating activities | 133 | 106 | ||||||
| Cash flows from investing activities | ||||||||
| Acquisitions of facilities and other related businesses | (4 | ) | (8 | ) | ||||
| Purchases of property and equipment | (121 | ) | (170 | ) | ||||
| Proceeds from disposition of hospitals and other ancillary operations | 161 | 11 | ||||||
| Proceeds from sale of property and equipment | 3 | |||||||
| Purchases of available-for-sale securities and equity securities | (15 | ) | (19 | ) | ||||
| Proceeds from sales of available-for-sale securities and equity securities | 32 | 34 | ||||||
| Increase in other investments | (34 | ) | (28 | ) | ||||
| Net cash provided by (used in) investing activities | 19 | (177 | ) | |||||
| Cash flows from financing activities | ||||||||
| Repurchase of restricted stock shares for payroll tax withholding requirements | (1 | ) | (1 | ) | ||||
| Deferred financing costs and other debt-related costs | (25 | ) | (11 | ) | ||||
| Proceeds from noncontrolling investors in joint ventures | 1 | |||||||
| Redemption of noncontrolling investments in joint ventures | (1 | ) | (3 | ) | ||||
| Distributions to noncontrolling investors in joint ventures | (27 | ) | (23 | ) | ||||
| Borrowings under credit agreements | 12 | 10 | ||||||
| Issuance of long-term debt | 1,840 | |||||||
| Proceeds from ABL facility | 25 | 49 | ||||||
| Repayments of long-term indebtedness | (1,895 | ) | (89 | ) | ||||
| Net cash used in financing activities | (71 | ) | (68 | ) | ||||
| Net change in cash and cash equivalents | 81 | (139 | ) | |||||
| Cash and cash equivalents at beginning of period | 196 | 563 | ||||||
| Cash and cash equivalents at end of period | $ | 277 | $ | 424 |
footnotes, see pages 10, 11 and 12.
CYH Announces First Quarter 2019 Results
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net loss attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Net loss | $ | (101 | ) | $ | (6 | ) | ||
| Less: Income attributable to noncontrolling interests, net of taxes | 17 | 19 | ||||||
| Net loss attributable to Community Health Systems, Inc. common stockholders basic and diluted | $ | (118 | ) | $ | (25 | ) |
Adjusted EBITDA is not a measurement of financial
performance under U.S. GAAP. It should not be considered in isolation or as a substitute for net income, operating income, or any other performance measure calculated in accordance with U.S. GAAP. The items excluded from Adjusted EBITDA are
significant components in understanding and evaluating financial performance. The Company believes such adjustments are appropriate as the magnitude and frequency of such items can vary significantly and are not related to the assessment of normal
operating performance. Additionally, this calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
CYH Announces First Quarter 2019 Results
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data
The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net loss attributable to Community Health Systems,
Inc. stockholders as derived directly from the condensed consolidated financial statements (in millions):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (118 | ) | $ | (25 | ) | ||
| Adjustments: | ||||||||
| Provison for (benefit from) income taxes | 7 | (7 | ) | |||||
| Depreciation and amortization | 153 | 181 | ||||||
| Net income attributable to noncontrolling interests | 17 | 19 | ||||||
| Interest expense, net | 257 | 228 | ||||||
| Loss from early extinguishment of debt | 31 | 4 | ||||||
| Impairment and (gain) loss on sale of businesses, net | 38 | 28 | ||||||
| Expense from government and other legal settlements and related costs | 5 | 5 | ||||||
| Expense from settlement and fair value adjustments and legal expenses related to cases covered by the CVR | 1 | 5 | ||||||
| Expense related to employee termination benefits and other restructuring charges | 2 | |||||||
| Adjusted EBITDA | $ | 391 | $ | 440 |