Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced financial and operating results for the three and six months ended June 30, 2023.
The following highlights the financial and operating results for the three months ended June 30, 2023.
- Net operating revenues totaled $3.115 billion.
- Net loss attributable to Community Health Systems, Inc. stockholders was $(38) million, or $(0.29) per share (diluted), compared to $(326) million, or $(2.52) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.22) per share (diluted), compared to $(2.52) per share (diluted) for the same period in 2022.
- Adjusted EBITDA was $373 million.
- Net cash provided by operating activities was $86 million for the three months ended June 30, 2023, compared to $53 million for the same period in 2022.
- On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 4.9 percent, compared to the same period in 2022.
Commenting on the results, Tim L. Hingtgen, chief executive officer of Community Health Systems, Inc., said, "Our continued progress in the second quarter included sequential improvements in key operating metrics including patient volumes and net operating revenues, among others. During the quarter, we saw further recovery in the utilization of our healthcare services and we executed key growth and expense management initiatives that are producing strong results for our markets and the Company overall. Other strategic developments are expected to have a positive impact moving forward, including recent investments to modernize our business operations. We are in the process of redesigning numerous workflows that will further standardize and centralize key business functions across our organization, which we are referring to as Project Empower. As part of Project Empower, we are nearing the launch of a new Enterprise Resource Planning (ERP) platform which will enable us to leverage this new way of doing business as we streamline and enhance many business support services.”
Three Months Ended June 30, 2023
Net operating revenues for the three months ended June 30, 2023, totaled $3.115 billion, a 6.2percent increase compared to $2.934 billion for the same period in 2022. On a same-store basis, net operating revenues increased 9.2 percent for the three months ended June 30, 2023, compared to the same period in 2022. Net operating revenues for the three months ended June 30, 2023, reflect a 0.9 percent increase in both admissions and adjusted admissions compared to the same period in 2022. On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 4.9 percent for the three months ended June 30, 2023, compared to the same period in 2022.
Net loss attributable to Community Health Systems, Inc. stockholders was $(38) million, or $(0.29) per share (diluted), for the three months ended June 30, 2023, compared to $(326) million, or $(2.52) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.22) per share (diluted) for the three months ended June 30, 2023, compared to $(2.52) per share (diluted) for the same period in 2022. During the three months ended June 30, 2023, pandemic relief funds did not materially impact net loss attributable to Community Health Systems, Inc. stockholders. During the three months ended June 30, 2022, pandemic relief funds had a positive impact on net loss attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $6 million, or $0.05 on a per share (diluted) basis.
Adjusted EBITDA for the three months ended June 30, 2023, was $373 million compared to $253 million for the same period in 2022. During the three months ended June 30, 2023, pandemic relief funds did not materially impact Adjusted EBITDA. During the three months ended June 30, 2022, pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $8 million.
The decrease in net loss attributable to Community Health Systems, Inc. stockholders and increase in Adjusted EBITDA for the three months ended June 30, 2023, compared to the same period in 2022, is primarily due to higher inpatient and outpatient volumes, increased reimbursement rates, higher acuity, an increase in non-patient revenue, and lower costs for contract labor, partially offset by higher costs for professional liability insurance and increased rates for outsourced medical specialists.
Six Months Ended June 30, 2023
Net operating revenues for the six months ended June 30, 2023, totaled $6.223 billion, a 3.0percent increase compared to $6.044 billion for the same period in 2022. On a same-store basis, net operating revenues increased 5.3 percent for the six months ended June 30, 2023, compared to the same period in 2022. Net operating revenues for the six months ended June 30, 2023, reflect a 1.0 percent increase in admissions and a 3.4 percent increase in adjusted admissions, compared to the same period in 2022. On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 7.2 percent for the six months ended June 30, 2023, compared to the same period in 2022.
Net loss attributable to Community Health Systems, Inc. stockholders was $(89) million, or $(0.68) per share (diluted), for the six months ended June 30, 2023, compared to $(327) million, or $(2.54) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable to Community Health Systems, Inc. stockholders was $(0.65) per share (diluted) for the six months ended June 30, 2023, compared to $(2.40) per share (diluted) for the same period in 2022. During the six months ended June 30, 2023, pandemic relief funds did not materially impact net loss attributable to Community Health Systems, Inc. stockholders. During the six months ended June 30, 2022, pandemic relief funds had a positive impact on net loss attributable to Community Health Systems, Inc. stockholders (both on a consolidated and adjusted basis) of approximately $41 million, or $0.32 on a per share (diluted) basis.
Adjusted EBITDA for the six months ended June 30, 2023, was $707 million compared to $662 million for the same period in 2022. During the six months ended June 30, 2023, pandemic relief funds did not materially impact Adjusted EBITDA. During the six months ended June 30, 2022, pandemic relief funds had a positive impact on Adjusted EBITDA of approximately $55 million.
The decrease in net loss attributable to Community Health Systems, Inc. stockholders and increase in Adjusted EBITDA for the six months ended June 30, 2023, compared to the same period in 2022, is primarily due to stronger inpatient and outpatient volumes, increased reimbursement rates, higher acuity, an increase in non-patient revenue, and reduced expense for contract labor, partially offset by unfavorable changes in payor mix, a reduction in pandemic relief funds recognized, increased salaries and benefits expense, higher costs for professional liability insurance, and increased rates for outsourced medical specialists.
Other
During 2023, through the date of this press release, the Company has completed the divestiture of three hospitals. On January 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on December 31, 2022). On April 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on March 31, 2023). On July 1, 2023, the Company completed the divestiture of one hospital (in respect of which the Company received proceeds at a preliminary closing on June 30, 2023). Financial and statistical data for 2023 and 2022 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. Same-store operating results and statistical information include operating results of businesses operated in the comparable current year and prior year periods and exclude businesses divested or closed in 2022 and the six months ended June 30, 2023.
Information About 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, expense related to the Business Transformation Costs (as defined in footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below), gain on sale of equity interests in Macon Healthcare, LLC, expense related to government and other legal matters and related costs, income during the fourth quarter of 2021 associated with the settlement of litigation for the recovery of amounts of certain professional liability claims settled in 2020 covered by 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 and the gain on sale by HealthTrust Purchasing Group, L.P. (“HealthTrust”) of a majority interest in CoreTrust Holdings, LLC (“CoreTrust”) completed during the fourth quarter of 2022. 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 press release presents adjusted net loss attributable to Community Health Systems, Inc. stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact on net loss 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 loss attributable to Community Health Systems, Inc. stockholders per share (diluted), see footnote (e) 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.
The Company’s annual earnings guidance for 2023, as provided in our press release issued on February 15, 2023, is reaffirmed. The 2023 guidance is based on the Company’s historical operating performance, current trends and other assumptions the Company believes are reasonable. Assumptions underlying the annual earnings guidance provided on February 15, 2023 are unchanged.
About Community Health Systems, Inc.
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 43 distinct markets across 15 states. As of August 2, 2023, the Company’s subsidiaries own or lease 77 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.
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, August 3, 2023, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the second quarter ended June 30, 2023. 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. 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.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Financial Highlights (a)(b) (In millions, except per share amounts) (Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net operating revenues | $ | 3,115 | $ | 2,934 | $ | 6,223 | $ | 6,044 | ||||||||
Net income (loss) (f) | 2 | (298 | ) | (18 | ) | (268 | ) | |||||||||
Net loss attributable to Community Health Systems, Inc. stockholders | (38 | ) | (326 | ) | (89 | ) | (327 | ) | ||||||||
Adjusted EBITDA (c) | 373 | 253 | 707 | 662 | ||||||||||||
Net cash provided by operating activities | 86 | 53 | 91 | 154 | ||||||||||||
Loss per share attributable to Community Health Systems, Inc. stockholders: | ||||||||||||||||
Basic (f) | $ | (0.29 | ) | $ | (2.52 | ) | $ | (0.68 | ) | $ | (2.54 | ) | ||||
Diluted (e), (f) | (0.29 | ) | (2.52 | ) | (0.68 | ) | (2.54 | ) | ||||||||
Weighted-average number of shares outstanding (d): | ||||||||||||||||
Basic | 131 | 129 | 130 | 128 | ||||||||||||
Diluted | 131 | 129 | 130 | 128 | ||||||||||||
| _________________________ | ||||||||||||||||
For footnotes, see pages 13, 14 and 15. | ||||||||||||||||
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Loss (a)(b) (In millions, except per share amounts) (Unaudited) | ||||||||||||||
Three Months Ended June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
% of Net | % of Net | |||||||||||||
Operating | Operating | |||||||||||||
Amount | Revenues | Amount | Revenues | |||||||||||
Net operating revenues | $ | 3,115 | 100.0 | % | $ | 2,934 | 100.0 | % | ||||||
Operating costs and expenses: | ||||||||||||||
Salaries and benefits | 1,338 | 42.9 | % | 1,295 | 44.1 | % | ||||||||
Supplies | 504 | 16.2 | % | 487 | 16.6 | % | ||||||||
Other operating expenses | 836 | 26.8 | % | 830 | 28.3 | % | ||||||||
Lease cost and rent | 80 | 2.6 | % | 78 | 2.7 | % | ||||||||
Pandemic relief funds | - | - | % | (8 | ) | (0.3 | )% | |||||||
Depreciation and amortization | 124 | 4.0 | % | 133 | 4.5 | % | ||||||||
Impairment and (gain) loss on sale of businesses, net (f) | (13 | ) | (0.4 | )% | - | - | % | |||||||
Total operating costs and expenses | 2,869 | 92.1 | % | 2,815 | 95.9 | % | ||||||||
Income from operations (f) | 246 | 7.9 | % | 119 | 4.1 | % | ||||||||
Interest expense, net | 207 | 6.6 | % | 218 | 7.4 | % | ||||||||
Equity in earnings of unconsolidated affiliates | (1 | ) | (0.0 | )% | (1 | ) | (0.0 | )% | ||||||
Income (loss) before income taxes | 40 | 1.3 | % | (98 | ) | (3.3 | )% | |||||||
Provision for income taxes | 38 | 1.2 | % | 200 | 6.8 | % | ||||||||
Net income (loss) (f) | 2 | 0.1 | % | (298 | ) | (10.1 | )% | |||||||
Less: Net income attributable to noncontrolling interests | 40 | 1.3 | % | 28 | 1.0 | % | ||||||||
Net loss attributable to Community Health Systems, Inc. stockholders | $ | (38 | ) | (1.2 | )% | $ | (326 | |||||||
