Community Health Systems, Inc. Announces Second Quarter 2013 Results with Net Operating Revenues of

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Community Health Systems, Inc. Announces Second Quarter 2013 Results with Net Operating Revenues of $3.2 Billion

FRANKLIN, Tenn.--(BUSINESS WIRE)-- Community Health Systems, Inc. (NYS: CYH) (the "Company") today announced financial and operating results for the three and six months ended June 30, 2013.

Net operating revenues for the three months ended June 30, 2013, totaled $3.236 billion, a 0.2 percent decrease compared with $3.243 billion for the same period in 2012. Income from continuing operations decreased to $47.1 million for the three months ended June 30, 2013, compared with $102.2 million for the same period in 2012. Both income from continuing operations and net income attributable to Community Health Systems, Inc. common stockholders were $0.32 per share (diluted) for the three months ended June 30, 2013, compared with $0.93 per share (diluted) for the same period in 2012. Weighted-average shares outstanding (diluted) were 94.1 million for the three months ended June 30, 2013, and 89.5 million for the three months ended June 30, 2012.


Adjusted EBITDA for the three months ended June 30, 2013, was $414.2 million compared with $483.1 million for the same period in 2012, representing a 14.3 percent decrease. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt, 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 June 30, 2013, was $252.0 million compared with $295.6 million for the same period in 2012.

The consolidated operating results for the three months ended June 30, 2013, reflect a 5.1 percent decrease in total admissions and a 1.8 percent decrease in total adjusted admissions compared with the same period in 2012. On a same-store basis, admissions decreased 5.7 percent while adjusted admissions decreased 2.6 percent compared with the same period in 2012. On a same-store basis, net operating revenues decreased 0.9 percent compared with the same period in 2012.

Net operating revenues for the six months ended June 30, 2013, totaled $6.548 billion, a 0.1 percent increase compared with $6.540 billion for the same period in 2012. Income from continuing operations decreased to $143.4 million, or $1.17 per share (diluted), for the six months ended June 30, 2013, compared with $201.9 million, or $1.79 per share (diluted), for the same period in 2012. Net income attributable to Community Health Systems, Inc. common stockholders was $1.17 per share (diluted) for the six months ended June 30, 2013, compared with $1.78 per share (diluted) for the same period in 2012. The results for the six months ended June 30, 2013, include a $0.01 per share (diluted) loss from the early extinguishment of debt. Excluding this loss, both income from continuing operations and net income attributable to Community Health Systems, Inc. common stockholders were $1.18 per share (diluted) for the six months ended June 30, 2013. For comparison, excluding a $0.48 per share (diluted) net benefit from the resolution of an industry-wide governmental settlement and a payment update relating to prior periods, a $0.10 per share (diluted) charge to establish reserves for certain legal matters, and a $0.44 per share (diluted) loss from the early extinguishment of debt, income from continuing operations attributable to Community Health Systems, Inc. common stockholders was $1.85 per share (diluted) and net income attributable to Community Health Systems, Inc. common stockholders was $1.84 per share (diluted) for the six months ended June 30, 2012. Weighted-average shares outstanding (diluted) were 93.0 million for the six months ended June 30, 2013, and 89.2 million for the six months ended June 30, 2012.

Adjusted EBITDA for the six months ended June 30, 2013, was $908.1 million compared with $1.0 billion for the same period in 2012, representing a 10.9 percent decrease. Net cash provided by operating activities for the six months ended June 30, 2013, was $309.2 million compared with $482.9 million for the same period in 2012.

The consolidated operating results for the six months ended June 30, 2013, reflect a 4.7 percent decrease in total admissions and a 2.7 percent decrease in total adjusted admissions compared with the same period in 2012. On a same-store basis, admissions decreased 5.8 percent while adjusted admissions decreased 3.9 percent compared with the same period in 2012. On a same-store basis, net operating revenues increased 0.3 percent compared with the same period in 2012.

Commenting on the results, Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems, Inc. said, "Our results for the second quarter reflect the ongoing challenges facing healthcare providers in 2013. As we previously announced, weakness in volume, most significantly in May and June, coupled with higher-than-anticipated bad debts and deterioration in payor mix, resulted in lower-than-anticipated net operating revenues during the period. As a result, we have intensified our focus on core operating strategies, volume initiatives and expense management across our hospital network to efficiently manage our operations in this challenging environment.

"We look forward to the opportunities ahead with the potential benefits of healthcare reform and expansion of coverage. With our strategic focus on network development and clinical excellence, we are well positioned to leverage our strengths against these industry dynamics and continue to deliver sustainable results. Our operating model has consistently demonstrated expertise across a diversity of growth drivers - implementing best practice standards, making selective acquisitions, driving operational efficiencies and recruiting physicians. Together, these efforts support our ultimate objective to deliver quality healthcare services in an efficient manner and, in turn, build stronger communities," said Smith.

Included on pages 14, 15 and 16 of this press release are tables setting forth the Company's updated 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.

As previously announced, the Company received an OIG subpoena on July 9, 2013, from the Government in connection with the Department of Justice's investigation of Medicare short-stay admissions from emergency departments. Subsequent to the Company's earnings pre-release on July 18, 2013, the Company's lawyers had a discussion with the Government regarding the subpoena, during which the Government characterized the subpoena as having two primary purposes; first, to "clean up" the prior subpoena and informal document requests in order to make sure that nothing had fallen through the cracks and, secondly, to collect certain documents relating to the factual defenses the Company has presented to the Government this year. In response to the Company's questions, the Government indicated that the subpoena generally was not intended to expand the document production to additional hospitals or to broaden the scope into any new substantive area of the investigation.

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 Tuesday, July 30, 2013, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the second quarter ended June 30, 2013. 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 through August 30, 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.

    

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Financial Highlights (a)(b)

(In thousands, except per share amounts)

(Unaudited)

 
Three Months EndedSix Months Ended
June 30,June 30,
2013201220132012
 
Net operating revenues$3,236,391$3,242,974$6,548,141$6,540,009
Adjusted EBITDA (c)414,231483,094908,0601,018,589
Income from continuing operations (d), (e), (f), (g)47,085102,167143,408201,855
Net income attributable to Community Health Systems, Inc. stockholders29,75383,359108,927158,833
 

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

Continuing operations (d), (e), (f), (g)$0.32$0.94$1.18$1.79
Discontinued operations - - - (0.01)
Net income$0.32$0.94$1.18$1.79 
 

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

Continuing operations (d), (e), (f), (g)$0.32$0.93$1.17$1.79
Discontinued operations - - - (0.01)
Net income$0.32$0.93$1.17$1.78 
 
Weighted-average number of shares outstanding (h):
Basic92,86689,14791,94088,911
Diluted94,10989,53193,02589,192
 
Net cash provided by operating activities$252,018$295,617$309,172$482,927
 

____

For footnotes, see pages 12 and 13.

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

(In thousands, except per share amounts)

(Unaudited)

 
 
Three Months Ended June 30,
20132012
Amount 

% of Net

Operating

Revenues

Amount

% of Net

Operating

Revenues

Operating revenues (net of contractual allowances and discounts)$3,768,086$3,746,428
Provision for bad debts 531,695   503,454  
Net operating revenues 3,236,391 100.0% 3,242,974 100.0%
 
Operating costs and expenses:
Salaries and benefits1,555,95148.1%1,497,44646.2%
Supplies498,03015.4%489,72915.1%
Other operating expenses729,79722.6%736,22522.7%
Electronic health records incentive reimbursement (d)(24,384)-0.8%(16,802)-0.5%
Rent71,8202.2%66,4632.0%
Depreciation and amortization 194,605 6.0% 179,801 5.5%
Total operating costs and expenses 3,025,819 93.5% 2,952,862 91.0%
 
Income from operations (d), (e), (f)210,5726.5%290,1129.0%
Interest expense, net155,0564.8%151,6074.7%
Loss from early extinguishment of debt-0.0%-0.0%
Equity in earnings of unconsolidated affiliates (9,054)-0.3% (13,181)-0.4%

Income from continuing operations before income taxes

64,5702.0%151,6864.7%
Provision for income taxes 17,485 0.5% 49,519 1.5%
Income from continuing operations (d), (e), (f) 47,085 1.5% 102,167 3.2%
 
Discontinued operations, net of taxes:
Loss from operations of entities sold - 0.0% - 0.0%
Loss from discontinued operations, net of taxes - 0.0% - 0.0%
Net income47,0851.5%102,1673.2%
Less: Net income attributable to noncontrolling interests 17,332 0.6% 18,808 0.6%
Net income attributable to Community Health Systems, Inc. stockholders$29,753 0.9%$83,359 2.6%
 

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

Continuing operations (d), (e), (f)$0.32$0.94
Discontinued operations -  - 
Net income$0.32 $0.94 
 

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

Continuing operations (d), (e), (f)$0.32$0.93
Discontinued operations -  - 
Net income$0.32 $0.93 
 

Weighted-average number of shares outstanding (h):

Basic 92,866  89,147 
Diluted 94,109  89,531 
 

____

For footnotes, see pages 12 and 13.

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

(In thousands, except per share amounts)

(Unaudited)

 
Six Months Ended June 30,
20132012
Amount 

% of Net

Operating

Revenues

Amount

% of Net

Operating

Revenues

Operating revenues (net of contractual allowances and discounts)$7,567,950$7,529,919
Provision for bad debts 1,019,809   989,910  
Net operating revenues 6,548,141 Read Full Story

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