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Community Health Systems, Inc. Announces First Quarter Ended March 31, 2024 Results
Commenting on the results, Tim L. Hingtgen, chief executive officer of Community Health Systems, Inc., said, "We were pleased with our first quarter performance compared to both prior year and prior quarter. Progress was demonstrated on key operational and strategic priorities, and we remain focused on building further momentum as we pursue the opportunities available to us this year."
The following highlights the financial and operating results for the three months ended March 31, 2024.
Net operating revenues totaled $3.140 billion. Net loss attributable to Community Health Systems, Inc. stockholders was $(41) million, or $(0.32) per share (diluted), compared to $(51) million, or $(0.40) per share (diluted), for the same period in 2023. Excluding the adjusting items as presented in the table in footnote (e) on page 12, net loss attributable to Community Health Systems, Inc. stockholders was $(0.14) per share (diluted), compared to $(0.43) per share (diluted) for the same period in 2023. Adjusted EBITDA was $378 million. Net cash provided by operating activities was $96 million for the three months ended March 31, 2024, compared to $5 million for the same period in 2023. On a same-store basis, admissions increased 3.8 percent and adjusted admissions increased 1.9 percent, compared to the same period in 2023.
Three Months Ended March 31, 2024
Net operating revenues for the three months ended March 31, 2024, totaled $3.140 billion, a 1.0 percent increase compared to $3.108 billion for the same period in 2023. On a same-store basis, net operating revenues increased 5.7 percent for the three months ended March 31, 2024, compared to the same period in 2023. Net operating revenues for the three months ended March 31, 2024, reflect a 2.3 percent decrease in admissions and a 4.0 percent decrease in adjusted admissions, compared to the same period in 2023. On a same-store basis, admissions increased 3.8 percent and adjusted admissions increased 1.9 percent for the three months ended March 31, 2024, compared to the same period in 2023.
Net loss attributable to Community Health Systems, Inc. stockholders was $(41) million, or $(0.32) per share (diluted), for the three months ended March 31, 2024, compared to $(51) million, or $(0.40) per share (diluted), for the same period in 2023. Excluding the adjusting items as presented in the table in footnote (e) on page 12, net loss attributable to Community Health Systems, Inc. stockholders was $(0.14) per share (diluted) for the three months ended March 31, 2024, compared to $(0.43) per share (diluted) for the same period in 2023.
Adjusted EBITDA for the three months ended March 31, 2024, was $378 million compared to $335 million for the same period in 2023.
The decrease in net loss attributable to Community Health Systems, Inc. stockholders and the increase in Adjusted EBITDA for the three months ended March 31, 2024, compared to the same period in 2023, are primarily due to increased reimbursement rates, a higher net benefit from supplemental reimbursement programs, reduced expense for contract labor and reductions in supplies expense.
Other
During 2024, through the date of this press release, the Company has not completed any hospital divestitures.
Financial and statistical data 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 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), expense related to government and other legal matters and related costs, 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 2024, as provided in our press release issued on February 20, 2024, is reaffirmed. The 2024 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 as provided in our press release issued on February 20, 2024 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 40 distinct markets across 15 states. As of April 24, 2024, the Company's subsidiaries own or lease 71 affiliated hospitals with approximately 12,000 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, April 25, 2024 at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the first quarter ended March 31, 2024. 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
March 31,
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------
2024 2023
-------------------------------------------------- -------------------- -------------------------------------------------- --------------------
Net operating revenues $ 3,140 $ 3,108
Net loss (f) (6 ) (20 )
Net loss attributable to Community Health Systems, Inc. stockholders (41 ) (51 )
Adjusted EBITDA (c) 378 335
Net cash provided by operating activities 96 5
Loss per share attributable to Community Health Systems, Inc. stockholders:
$ (0.32 ) $ (0.40 )
Basic (f)
(0.32 ) (0.40 )
Diluted (e), (f)
Weighted-average number of shares outstanding (d):
131 130
Basic
131 130
Diluted
_____________
For footnotes, see pages 10, 11 and 12.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)
(In millions, except per share amounts)
(Unaudited)
Three Months Ended March 31,
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------
% of Net % of Net
Operating Operating
Amount Revenues Amount Revenues
-------------------------------------------------- -------------------- -------------------------------------------------- -------------------------------------------------- -------------------- --------------------------------------------------
Net operating revenues $ 3,140 100.0 % $ 3,108 100.0 %
Operating costs and expenses:
1,368 43.5 % 1,365 43.9 %
Salaries and benefits
487 15.5 % 507 16.3 %
Supplies
845 26.9 % 835 26.9 %
Other operating expenses
77 2.5 % 81 2.6 %
Lease cost and rent
115 3.7 % 132 4.2 %
Depreciation and amortization
17 0.5 % (22 ) (0.7 )%
Impairment and (gain) loss on sale of businesses, net (f)
-------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
2,909 92.6 % 2,898 93.2 %
Total operating costs and expenses
-------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income from operations (f) 231 7.4 % 210 6.8 %
Interest expense, net 211 6.8 % 207 6.7 %
Equity in earnings of unconsolidated affiliates (2 ) (0.1 )% (3 ) (0.1 )%
-------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income before income taxes 22 0.7 % 6 0.2 %
Provision for income taxes 28 0.9 % 26 0.8 %
-------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net loss (f) (6 ) (0.2 )% (20 ) (0.6 )%
35 1.1 % 31 1.0 %
Less: Net income attributable to noncontrolling interests
-------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net loss attributable to Community Health Systems, Inc. stockholders $ (41 ) (1.3 )% $ (51 ) (1.6 )%
==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ========== ====================
Loss per share attributable to Community Health Systems, Inc. stockholders:
$ (0.32 ) $ (0.40 )
Basic (f)
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
$ (0.32 ) $ (0.40 )
Diluted (e), (f)
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
Weighted-average number of shares outstanding (d):
131 130
Basic
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
131 130
Diluted
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
___________
For footnotes, see pages 10, 11 and 12.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(In millions)
(Unaudited)
Three Months Ended
March 31,
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------
2024 2023
-------------------------------------------------- -------------------- -------------------------------------------------- --------------------
Net loss $ (6 ) $ (20 )
Other comprehensive (loss) income, net of income taxes:
(2 ) 3
Net change in fair value of available-for-sale debt securities, net of tax
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
(2 ) 3
Other comprehensive (loss) income
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Comprehensive loss (8 ) (17 )
35 31
Less: Comprehensive income attributable to noncontrolling interests
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Comprehensive loss attributable to Community Health Systems, Inc. stockholders $ (43 ) $ (48 )
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
___________
For footnotes, see pages 10, 11 and 12.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)
(Dollars in millions)
(Unaudited)
Three Months Ended March 31,
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ --------------------
Consolidated Same-Store
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------
2024 2023 % Change 2024 2023 % Change
--------------------------- -------------------- --------------------------- -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ --------------------
Number of hospitals (at end of period) 71 79 71 71
Licensed beds (at end of period) 11,866 12,750 11,866 11,924
Beds in service (at end of period) 10,066 10,858 10,066 10,125
Admissions 107,055 109,624 -2.3 % 107,055 103,172 3.8 %
Adjusted admissions 236,109 245,883 -4.0 % 236,113 231,625 1.9 %
Patient days 493,824 507,925 493,824 479,168
Average length of stay (days) 4.6 4.6 4.6 4.6
Occupancy rate (average beds in service) 53.9 % 51.9 % 53.9 % 52.6 %
Net operating revenues $ 3,140 $ 3,108 1.0 % $ 3,140 $ 2,970 5.7 %
Net inpatient revenues as a % of net operating revenues 48.4 % 47.1 % 48.4 % 47.0 %
Net outpatient revenues as a % of net operating revenues 51.6 % 52.9 % 51.6 % 53.0 %
Income from operations (f) $ 231 $ 210 10.0 %
Income from operations as a % of net operating revenues 7.4 % 6.8 %
Depreciation and amortization $ 115 $ 132
Equity in earnings of unconsolidated affiliates $ (2 ) $ (3 )
Net loss attributable to Community Health Systems, Inc. stockholders $ (41 ) $ (51 ) 19.6 %
Net loss attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues -1.3 % -1.6 %
Adjusted EBITDA (c) $ 378 $ 335 12.8 %
Adjusted EBITDA as a % of net operating revenues 12.0 % 10.8 %
Net cash provided by operating activities $ 96 $ 5 1820.0 %
___________
For footnotes, see pages 10, 11 and 12.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except share data)
(Unaudited)
March 31, 2024 December 31, 2023
-------------------------------------------------- -------------------- -------------------------------------------------- --------------------
ASSETS
Current assets
$ 48 $ 38
Cash and cash equivalents
2,194 2,231
Patient accounts receivable
329 328
Supplies
34 76
Prepaid income taxes
263 260
Prepaid expenses and taxes
307 275
Other current assets
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
3,175 3,208
Total current assets
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Property and equipment 9,607 9,511
(4,388 ) (4,304 )
Less accumulated depreciation and amortization
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
5,219 5,207
Property and equipment, net
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Goodwill 3,957 3,958
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Deferred income taxes 29 29
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Other assets, net 2,037 2,053
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total assets $ 14,417 $ 14,455
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
$ 34 $ 21
Current maturities of long-term debt
115 124
Current operating lease liabilities
941 912
Accounts payable
Accrued liabilities:
504 571
Employee compensation
207 160
Accrued interest
335 354
Other
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
2,136 2,142
Total current liabilities
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Long-term debt (g) 11,533 11,466
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Deferred income taxes 354 369
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Long-term operating lease liabilities 546 563
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Other long-term liabilities 726 739
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total liabilities 15,295 15,279
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Redeemable noncontrolling interests in equity of consolidated subsidiaries 329 323
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
STOCKHOLDERS' DEFICIT
Community Health Systems, Inc. stockholders' deficit:
- -
Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued
1 1
Common stock, $.01 par value per share, 300,000,000 shares authorized; 138,966,388
shares issued and outstanding at March 31, 2024, and 136,774,911
shares issued and outstanding at December 31, 2023
2,192 2,185
Additional paid-in capital
(16 ) (14 )
Accumulated other comprehensive loss
(3,605 ) (3,564 )
Accumulated deficit
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
(1,428 ) (1,392 )
Total Community Health Systems, Inc. stockholders' deficit
Noncontrolling interests in equity of consolidated subsidiaries 221 245
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total stockholders' deficit (1,207 ) (1,147 )
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total liabilities and stockholders' deficit $ 14,417 $ 14,455
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
___________
For footnotes, see pages 10, 11 and 12.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Three Months Ended March 31,
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------
2024 2023
-------------------------------------------------- -------------------- -------------------------------------------------- --------------------
Cash flows from operating activities
$ (6 ) $ (20 )
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
115 132
Depreciation and amortization
(14 ) 7
Deferred income taxes
6 6
Stock-based compensation expense
17 (22 )
Impairment and (gain) loss on sale of businesses, net (f)
33 42
Other non-cash expenses, net
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
39 (2 )
Patient accounts receivable
(40 ) (50 )
Supplies, prepaid expenses and other current assets
(13 ) (32 )
Accounts payable, accrued liabilities and income taxes
(41 ) (56 )
Other
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Net cash provided by operating activities 96 5
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Cash flows from investing activities
(1 ) (8 )
Acquisitions of facilities and other related businesses
(93 ) (122 )
Purchases of property and equipment
- 92
Proceeds from disposition of hospitals and other ancillary operations
1 5
Proceeds from sale of property and equipment
(4 ) (26 )
Purchases of available-for-sale debt securities and equity securities
12 61
Proceeds from sales of available-for-sale debt securities and equity securities
(4 ) (5 )
Purchases of investments in unconsolidated affiliates
(10 ) (16 )
Increase in other investments
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Net cash used in investing activities (99 ) (19 )
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Cash flows from financing activities
(2 ) (4 )
Repurchase of restricted stock shares for payroll tax withholding requirements
- 2
Proceeds from noncontrolling investors in joint ventures
- (1 )
Redemption of noncontrolling investments in joint ventures
(50 ) (44 )
Distributions to noncontrolling investors in joint ventures
17 29
Other borrowings
933 815
Proceeds from ABL Facility
(885 ) (757 )
Repayments of long-term indebtedness
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Net cash provided by financing activities 13 40
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Net change in cash and cash equivalents 10 26
Cash and cash equivalents at beginning of period 38 118
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Cash and cash equivalents at end of period $ 48 $ 144
==================== ==================== ========== ==================== ==================== ==================== ========== ====================
___________
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data
(a) Both financial and statistical results include the operating results of divested or closed businesses for the periods prior to the consummation of the respective divestiture or closing. 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 2023. There were no discontinued operations reported for the periods presented.
Three Months Ended
March 31,
------------------------------------------------------------------------------------------------------------------------------------ --------------------
2024 2023
------------------------------------------ -------------------- -------------------------------------------------- --------------------
Net loss attributable to Community Health Systems, Inc. stockholders:
$ (6 ) $ (20 )
Net loss
35 31
Less: Income attributable to noncontrolling interests, net of taxes
-------------------- -------------------- -- -------------------- -------------------- -------------------- ---------- --------------------
(c) EBITDA is a non-GAAP financial measure which consists of net loss attributable to Community Health Systems, Inc. before interest, income taxes, and depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, 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 from third-party consulting costs associated with significant process and systems redesign across multiple functions (the "Business Transformation Costs") as part of the Company's previously disclosed multi-year initiative to modernize and consolidate technology platforms and associated processes, expense related to government and other legal matters and related costs, 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