Community Health Systems, Inc. Announces Fourth Quarter 2012 Results with Net Operating Revenues of

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Community Health Systems, Inc. Announces Fourth Quarter 2012 Results with Net Operating Revenues of $3.3 Billion

FRANKLIN, Tenn.--(BUSINESS WIRE)-- Community Health Systems, Inc. (NYS: CYH) (the "Company") today announced financial and operating results for the three months and year ended December 31, 2012.

Net operating revenues for the three months ended December 31, 2012, totaled $3.3 billion, a 9.0 percent increase compared with $3.0 billion for the same period in 2011. Income from continuing operations increased to $85.6 million, or $0.69 per share (diluted), for the three months ended December 31, 2012, compared with $55.6 million, or $0.38 per share (diluted), for the same period in 2011. Net income attributable to Community Health Systems, Inc. common stockholders was $0.69 per share (diluted) for the three months ended December 31, 2012, compared with $0.35 per share (diluted) for the same period in 2011. The results for the three months ended December 31, 2012, include a $0.07 per share (diluted) loss from the impairment of certain long-lived assets and $0.09 per share (diluted) of expenses related primarily to the settlement of certain legal matters. Excluding these items, both income from continuing operations and net income attributable to Community Health Systems, Inc. common stockholders were $0.85 per share (diluted) for the three months ended December 31, 2012. For the three months ended December 31, 2011, excluding the loss from early extinguishment of debt of $0.47 per share (diluted), income from continuing operations was $0.85 per share (diluted) and net income was $0.82 per share (diluted). Weighted-average shares outstanding (diluted) were 90.8 million for the three months ended December 31, 2012, and 88.9 million for the three months ended December 31, 2011.


Adjusted EBITDA for the three months ended December 31, 2012, was $481.9 million compared with $463.8 million for the same period in 2011, representing a 3.9 percent increase. Excluding the legal matters referenced above, adjusted EBITDA was $495.3 million for the three months ended December 31, 2012. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt, impairment of long-lived assets, and net income attributable to non-controlling interests. The Company uses adjusted EBITDA as a measure of liquidity. Net cash provided by operating activities for the three months ended December 31, 2012, was $502.3 million compared with $441.7 million for the same period in 2011.

The consolidated operating results for the three months ended December 31, 2012, reflect a 4.7 percent increase in total admissions and a 6.4 percent increase in total adjusted admissions compared with the same period in 2011. On a same-store basis, admissions increased 1.0 percent while adjusted admissions increased 2.3 percent compared with the same period in 2011. On a same-store basis, net operating revenues increased 5.5 percent compared with the same period in 2011.

Net operating revenues for the year ended December 31, 2012, totaled $13.0 billion, a 9.4 percent increase compared with $11.9 billion for the same period in 2011. Income from continuing operations increased to $346.3 million, or $2.96 per share (diluted), for the year ended December 31, 2012, compared with $335.9 million, or $2.87 per share (diluted), for the same period in 2011. Net income attributable to Community Health Systems, Inc. common stockholders was $2.96 per share (diluted) for the year ended December 31, 2012, compared with $2.23 per share (diluted) for the same period in 2011. The results for the year ended December 31, 2012, include a $0.51 per share (diluted) net benefit from the resolution of an industry-wide governmental settlement and a payment update relating to prior periods, $0.22 per share (diluted) of expenses related primarily to the settlement of certain legal matters, a $0.07 per share (diluted) loss from the impairment of long-lived assets, and an $0.81 per share (diluted) loss from the early extinguishment of debt. Excluding these items, both income from continuing operations and net income attributable to Community Health Systems, Inc. common stockholders were $3.55 per share (diluted) for the year ended December 31, 2012.

For the year ended December 31, 2011, excluding the loss from early extinguishment of debt of $0.46 per share (diluted), income from continuing operations was $3.33 per share (diluted) and net income was $2.69 per share (diluted). Weighted-average shares outstanding (diluted) were 89.8 million for the year ended December 31, 2012, and 90.7 million for the year ended December 31, 2011.

Adjusted EBITDA for the year ended December 31, 2012, was $1.978 billion compared with $1.837 billion for the same period in 2011, representing a 7.7 percent increase. Excluding the industry-wide governmental settlement, payment update, and expenses related to certain legal matters mentioned above, adjusted EBITDA was $1.9 billion, representing a 5.2 percent increase from the prior year. Net cash provided by operating activities for the year ended December 31, 2012, was $1.28 billion compared with $1.26 billion for the same period in 2011.

The consolidated operating results for the year ended December 31, 2012, reflect a 4.0 percent increase in total admissions and a 6.6 percent increase in total adjusted admissions compared with the same period in 2011. On a same-store basis, admissions decreased 0.9 percent while adjusted admissions increased 1.5 percent compared with the same period in 2011. On a same-store basis, net operating revenues increased 4.6 percent compared with the same period in 2011.

Commenting on the results, Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems, Inc. said, "Our fourth quarter performance further extended Community Health Systems' consistent record of growth in 2012. Net operating revenues were up 9.0 percent and adjusted EBITDA increased by 3.9 percent over the fourth quarter last year. For the year, net operating revenues increased by 9.4 percent to reach $13.0 billion. On a same-store basis, net operating revenues were up 5.5 percent and 4.6 percent for the fourth quarter and year, respectively, reflecting our consistent ability to improve operating results at the individual hospital level. We are also encouraged by the more favorable volume trends in 2012 compared with the prior year.

"Community Health Systems has continued to demonstrate success in a dynamic and challenging healthcare environment. Our results for 2012 confirm the strength of our operating model and our proven ability to execute our strategy to drive efficiencies in our hospitals, recruit and retain qualified physicians, make selective acquisitions and deliver high quality healthcare services in a cost-effective manner. As we look ahead to 2013, we will continue to pursue a strategy that delivers value to both our community partners and our shareholders," added Smith.

Included on pages 15, 16 and 17 of this press release are tables setting forth the Company's 2013 annual earnings guidance. The 2013 guidance is based on the Company's historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time.

Located in the Nashville, Tennessee, suburb of Franklin, 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 non-urban and mid-size markets throughout the country. Through its subsidiaries, the Company currently owns, leases or operates 135 hospitals in 29 states with an aggregate of approximately 20,000 licensed beds. Its hospitals offer a broad range of inpatient and surgical services, outpatient treatment and skilled nursing care. In addition, through its subsidiary, Quorum Health Resources, LLC, the Company provides management and consulting services to non-affiliated general acute-care hospitals located throughout the United States. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol "CYH."

Community Health Systems, Inc. will hold a conference call on Friday, February 22, 2013, 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, 2012. 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, or at www.earnings.com. 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 through March 22, 2013. Copies of the Company's current report on Form 8-K (including this press release) and conference call slide show will be available on the Company's website at www.chs.net.

Forward-Looking Statements

Statements contained in this press release regarding expected operating results, acquisition transactions or divestitures and other events are forward-looking statements that involve risk and uncertainties. Actual future events or results may differ materially from these statements. Readers are referred to the documents filed by Community Health Systems, Inc. with the Securities and Exchange Commission, including the Company's annual report on Form 10-K, current reports on Form 8-K and quarterly reports on Form 10-Q. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

 
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)

(in thousands, except per share amounts)

(Unaudited)

   
Three Months EndedYear Ended
December 31,December 31,
2012201120122011
 
Net operating revenues$3,276,946$3,005,825$13,028,985$11,906,212
Adjusted EBITDA (c)481,872463,7671,977,7151,836,650
Income from continuing operations (d), (e), (f), (g), (h), (i)85,62655,615346,269335,894
Net income attributable to Community Health Systems, Inc. stockholders62,57430,931265,640201,948
 

Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (k):

Continuing operations (d), (e), (f), (g), (h), (i)$0.70$0.38$2.98$2.89
Discontinued operations - (0.03) (0.01) (0.65)
Net income$0.70$0.35 $2.98 $2.24 
 

Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (k), (l):

Continuing operations (d), (e), (f), (g), (h), (i)$0.69$0.38$2.96$2.87
Discontinued operations - (0.03) (0.01) (0.64)
Net income$0.69$0.35 $2.96 $2.23 
 
Weighted-average number of shares outstanding (j):
Basic89,88288,34589,24389,967
Diluted90,82888,91489,80790,666
 
Net cash provided by operating activities$502,255$441,673$1,280,120$1,261,908
 

_____

For footnotes, see pages 12, 13 and 14.

 
 
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (a)(b)

(in thousands, except per share amounts)

(Unaudited)

  
Three Months Ended December 31,
2012 2011
Amount 

% of Net

Operating

Revenues

Amount

% of Net

Operating

Revenues

Operating revenues (net of contractual allowances and discounts)$3,761,599$3,442,514
Provision for bad debts 484,653   436,689  
Net operating revenues 3,276,946 100.0% 3,005,825 100.0%
 
Operating costs and expenses:
Salaries and benefits1,556,39947.5%1,421,31047.3%
Supplies500,97115.3%467,86415.6%
Other operating expenses729,76122.2%622,50120.7%
Electronic health records incentive reimbursement (g)(53,142)-1.6%(23,170)-0.8%
Rent70,5052.2%64,6992.2%
Depreciation and amortization 189,196 5.8% 171,628 5.7%
Total operating costs and expenses 2,993,690 91.4% 2,724,832 90.7%
 
Income from operations (e), (g), (h), (i)283,2568.6%280,9939.3%
Interest expense, net160,5864.9%158,4825.2%
Loss from early extinguishment of debt-0.0%66,0192.2%
Equity in earnings of unconsolidated affiliates(9,420)-0.3%(11,146)-0.4%
Impairment of long-lived assets (f) 10,000 0.3% - 0.0%

Income from continuing operations before income taxes

122,0903.7%67,6382.3%
Provision for income taxes 36,464 1.1% 12,023 0.4%
Income from continuing operations (e), (f), (g), (h), (i) 85,626 2.6% 55,615 1.9%
 
Discontinued operations, net of taxes:
Loss from operations of entities sold-0.0%(3,223)-0.1%
Impairment of hospitals sold-0.0%-0.0%
Loss on sale, net - 0.0% 728 0.0%
Loss from discontinued operations, net of taxes - 0.0% (2,495)-0.1%
Net income85,6262.6%53,1201.8%
Less: Net income attributable to noncontrolling interests 23,052 0.7% 22,189 0.8%
Net income attributable to Community Health Systems, Inc. stockholders$62,574 1.9%$30,931 1.0%
 

Basic earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (k):

Continuing operations (e), (f), (g), (h), (i)$0.70$0.38
Discontinued operations -  (0.03)
Net income$0.70 $0.35 
 

Diluted earnings (loss) per share attributable to Community Health Systems, Inc. common stockholders (k), (l):

Continuing operations (e), (f), (g), (h), (i)$0.69$0.38
Discontinued operations -  (0.03)
Net income$0.69 $0.35 
 

Weighted-average number of shares outstanding (j):

Basic 89,882  88,345 
Diluted 90,828  88,914 
 

_____

For footnotes, see pages 12, 13 and 14.

 
   
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (a)(b)

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