Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today
announced financial and operating results for the three and nine
months ended September 30, 2023.
The following highlights the financial and operating results for
the three months ended September 30, 2023.
- Net operating revenues totaled $3.086 billion.
- Net loss attributable to Community Health Systems, Inc.
stockholders was $(91) million, or $(0.69) per share (diluted),
compared to $(42) million, or $(0.32) 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 $(0.33) per share
(diluted), compared to $(0.52) per share (diluted) for the same
period in 2022.
- Adjusted EBITDA was $360 million.
- Net cash provided by operating activities was $29 million
for the three months ended September 30, 2023, compared to $137
million for the same period in 2022.
- On a same-store basis, admissions increased 3.7 percent and
adjusted admissions increased 4.2 percent, compared to the same
period in 2022.
Commenting on the results, Tim L. Hingtgen, chief executive
officer of Community Health Systems, Inc., said, "Strong volume
growth in admissions, adjusted admissions, ER visits and clinic
appointments during the quarter reflect successful execution of
many of our key strategies, including investments in service lines,
physician recruitment, capacity optimization programs, and the
maturity of our transfer center services. Our local management
teams are focused on ensuring access to health services for their
communities and our healthcare workers continue to deliver
high-quality care for their patients.”
Three Months Ended September 30, 2023
Net operating revenues for the three months ended September 30,
2023, totaled $3.086 billion, a 2.0 percent increase compared to
$3.025 billion for the same period in 2022. On a same-store basis,
net operating revenues increased 5.1 percent for the three months
ended September 30, 2023, compared to the same period in 2022. Net
operating revenues for the three months ended September 30, 2023,
reflect a 0.5 percent increase in admissions and a 0.4 percent
increase in adjusted admissions, compared to the same period in
2022. On a same-store basis, admissions increased 3.7 percent and
adjusted admissions increased 4.2 percent for the three months
ended September 30, 2023, compared to the same period in 2022.
Net loss attributable to Community Health Systems, Inc.
stockholders was $(91) million, or $(0.69) per share (diluted), for
the three months ended September 30, 2023, compared to $(42)
million, or $(0.32) 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 $(0.33) per share (diluted) for the
three months ended September 30, 2023, compared to $(0.52) per
share (diluted) for the same period in 2022. During the three
months ended September 30, 2023, pandemic relief funds did not
materially impact net loss attributable to Community Health
Systems, Inc. stockholders. During the three months ended September
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 $84 million,
or $0.65 on a per share (diluted) basis.
Adjusted EBITDA for the three months ended September 30, 2023,
was $360 million compared to $400 million for the same period in
2022. During the three months ended September 30, 2023, pandemic
relief funds did not materially impact Adjusted EBITDA. During the
three months ended September 30, 2022, pandemic relief funds had a
positive impact on Adjusted EBITDA of approximately $115
million.
The increase in net loss attributable to Community Health
Systems, Inc. stockholders and the decrease in Adjusted EBITDA for
the three months ended September 30, 2023, compared to the same
period in 2022, is primarily due to unfavorable changes in payor
mix, a reduction in pandemic relief funds recognized, higher costs
for supplemental reimbursement programs, and increased rates for
outsourced medical specialists, partially offset by stronger
inpatient volumes and reduced expense for contract labor.
Nine months Ended September 30, 2023
Net operating revenues for the nine months ended September 30,
2023, totaled $9.308 billion, a 2.6 percent increase compared to
$9.069 billion for the same period in 2022. On a same-store basis,
net operating revenues increased 5.3 percent for the nine months
ended September 30, 2023, compared to the same period in 2022. Net
operating revenues for the nine months ended September 30, 2023,
reflect a 0.9 percent increase in admissions and a 2.4 percent
increase in adjusted admissions, compared to the same period in
2022. On a same-store basis, admissions increased 4.4 percent and
adjusted admissions increased 6.1 percent for the nine months ended
September 30, 2023, compared to the same period in 2022.
Net loss attributable to Community Health Systems, Inc.
stockholders was $(180) million, or $(1.38) per share (diluted),
for the nine months ended September 30, 2023, compared to $(369)
million, or $(2.86) 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 $(0.98) per share (diluted) for the
nine months ended September 30, 2023, compared to $(2.92) per share
(diluted) for the same period in 2022. During the nine months ended
September 30, 2023, pandemic relief funds did not materially impact
net loss attributable to Community Health Systems, Inc.
stockholders. During the nine months ended September 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 $125
million, or $0.97 on a per share (diluted) basis.
Adjusted EBITDA for the nine months ended September 30, 2023,
was $1.068 billion compared to $1.062 billion for the same period
in 2022. During the nine months ended September 30, 2023, pandemic
relief funds did not materially impact Adjusted EBITDA. During the
nine months ended September 30, 2022, pandemic relief funds had a
positive impact on Adjusted EBITDA of approximately $171
million.
The decrease in net loss attributable to Community Health
Systems, Inc. stockholders and the increase in Adjusted EBITDA for
the nine months ended September 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 and the sale of a
majority interest in another hospital. 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). On September 1, 2023, the Company
completed the sale of a majority interest in one hospital.
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 nine months
ended September 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.
Included on pages 16, 17, 18, 19 and 20 of this press release
are tables setting forth the Company’s 2023 updated annual earnings
guidance. The 2023 guidance is based on the Company’s historical
operating performance, current trends and other assumptions the
Company believes are reasonable at this time as more specifically
discussed below.
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 October 25, 2023, the Company’s subsidiaries own or
lease 76 affiliated hospitals with over 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, October 26, 2023, at 10:00 a.m. Central, 11:00 a.m.
Eastern, to review financial and operating results for the third
quarter ended September 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net operating revenues
$
3,086
$
3,025
$
9,308
$
9,069
Net (loss) income (f)
(52
)
-
(70
)
(267
)
Net loss attributable to Community Health
Systems,
Inc. stockholders
(91
)
(42
)
(180
)
(369
)
Adjusted EBITDA (c)
360
400
1,068
1,062
Net cash provided by operating
activities
29
137
120
291
Loss per share attributable to Community
Health
Systems, Inc. stockholders:
Basic (f)
$
(0.69
)
$
(0.32
)
$
(1.38
)
$
(2.86
)
Diluted (e), (f)
(0.69
)
(0.32
)
(1.38
)
(2.86
)
Weighted-average number of shares
outstanding (d):
Basic
131
129
130
129
Diluted
131
129
130
129
__________
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 September
30,
2023
2022
% of Net
% of Net
Operating
Operating
Amount
Revenues
Amount
Revenues
Net operating revenues
$
3,086
100.0
%
$
3,025
100.0
%
Operating costs and expenses:
Salaries and benefits
1,338
43.4
%
1,352
44.7
%
Supplies
489
15.8
%
492
16.3
%
Other operating expenses
853
27.7
%
828
27.4
%
Lease cost and rent
79
2.6
%
80
2.6
%
Pandemic relief funds
-
-
%
(115
)
(3.8
)
%
Depreciation and amortization
128
4.1
%
137
4.5
%
Impairment and (gain) loss on sale of
businesses, net (f)
26
0.8
%
47
1.6
%
Total operating costs and expenses
2,913
94.4
%
2,821
93.3
%
Income from operations (f)
173
5.6
%
204
6.7
%
Interest expense, net
208
6.8
%
217
7.2
%
Loss (gain) from early extinguishment of
debt
-
-
%
(78
)
(2.6
)
%
Equity in earnings of unconsolidated
affiliates
(2
)
(0.1
)
%
(5
)
(0.2
)
%
(Loss) income before income taxes
(33
)
(1.1
)
%
70
2.3
%
Provision for income taxes
19
0.6
%
70
2.3
%
Net (loss) income (f)
(52
)
(1.7
)
%
-
-
%
Less: Net income attributable to
noncontrolling interests
39
1.2
%
42
1.4
%
Net loss attributable to Community Health
Systems,
Inc. stockholders
$
(91
)
(2.9
)
%
$
(42
)
(1.4
)
%
Loss per share attributable to
Community
Health Systems, Inc. stockholders:
Basic (f)
$
(0.69
)
$
(0.32
)
Diluted (e), (f)
$
(0.69
)
$
(0.32
)
Weighted-average number of shares
outstanding (d):
Basic
131
129
Diluted
131
129
__________
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)
Nine Months Ended September
30,
2023
2022
% of Net
% of Net
Operating
Operating
Amount
Revenues
Amount
Revenues
Net operating revenues
$
9,308
100.0
%
$
9,069
100.0
%
Operating costs and expenses:
Salaries and benefits
4,040
43.4
%
3,972
43.8
%
Supplies
1,499
16.1
%
1,477
16.3
%
Other operating expenses
2,524
27.1
%
2,511
27.7
%
Lease cost and rent
240
2.6
%
236
2.6
%
Pandemic relief funds
-
-
%
(171
)
(1.9
)
%
Depreciation and amortization
384
4.1
%
398
4.4
%
Impairment and (gain) loss on sale of
businesses, net (f)
(9
)
(0.1
)
%
54
0.6
%
Total operating costs and expenses
8,678
93.2
%
8,477
93.5
%
Income from operations (f)
630
6.8
%
592
6.5
%
Interest expense, net
621
6.7
%
652
7.1
%
Loss (gain) from early extinguishment of
debt
-
-
%
(73
)
(0.8
)
%
Equity in earnings of unconsolidated
affiliates
(5
)
(0.1
)
%
(11
)
(0.1
)
%
Income before income taxes
14
0.2
%
24
0.3
%
Provision for income taxes
84
1.0
%
291
3.2
%
Net loss (f)
(70
)
(0.8
)
%
(267
)
(2.9
)
%
Less: Net income attributable to
noncontrolling interests
110
1.1
%
102
1.2
%
Net loss attributable to Community Health
Systems,
Inc. stockholders
$
(180
)
(1.9
)
%
$
(369
)
(4.1
)
%
Loss per share attributable to
Community
Health Systems, Inc. stockholders:
Basic (f)
$
(1.38
)
$
(2.86
)
Diluted (e), (f)
$
(1.38
)
$
(2.86
)
Weighted-average number of shares
outstanding (d):
Basic
130
129
Diluted
130
129
__________
For footnotes, see pages 13, 14 and
15.
COMMUNITY HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Comprehensive Loss
(In millions)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net (loss) income
$
(52
)
$
-
$
(70
)
$
(267
)
Other comprehensive (loss) income, net of
income taxes:
Net change in fair value of
available-for-sale debt securities, net of tax
(3
)
(6
)
(1
)
(20
)
Amortization and recognition of
unrecognized pension cost components, net of tax
-
-
-
1
Other comprehensive loss
(3
)
(6
)
(1
)
(19
)
Comprehensive loss
(55
)
(6
)
(71
)
(286
)
Less: Comprehensive income attributable to
noncontrolling interests
39
42
110
102
Comprehensive loss attributable to
Community Health
Systems, Inc. stockholders
$
(94
)
$
(48
)
$
(181
)
$
(388
)
__________
For footnotes, see pages 13, 14 and
15.
COMMUNITY HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Selected Operating Data
(a)
(Dollars in millions)
(Unaudited)
Three Months Ended September
30,
Consolidated
Same-Store
2023
2022
%
Change
2023
2022
%
Change
Number of hospitals (at end of period)
76
81
76
76
Licensed beds (at end of period)
12,494
13,309
12,494
12,443
Beds in service (at end of period)
10,621
11,559
10,621
10,712
Admissions
109,043
108,509
0.5
%
108,872
104,954
3.7
%
Adjusted admissions
249,988
248,950
0.4
%
249,743
239,721
4.2
%
Patient days
459,838
497,034
474,268
480,535
Average length of stay (days)
4.3
4.6
4.4
4.6
Occupancy rate (average beds in
service)
46.8
%
46.7
%
48.4
%
48.7
%
Net operating revenues
$
3,086
$
3,025
2.0
%
$
3,081
$
2,931
5.1
%
Net inpatient revenues as a % of net
operating
revenues
46.5
%
46.3
%
46.5
%
46.4
%
Net outpatient revenues as a % of net
operating
revenues
53.5
%
53.7
%
53.5
%
53.6
%
Income from operations (f)
$
173
$
204
-15.2
%
Income from operations as a % of net
operating revenues
5.6
%
6.7
%
Depreciation and amortization
$
128
$
137
Equity in earnings of unconsolidated
affiliates
$
(2
)
$
(5
)
Net loss attributable to Community
Health
$
(91
)
$
(42
)
-116.7
%
Systems, Inc. stockholders
Net loss attributable to Community
Health
Systems, Inc. stockholders as a % of
net
operating revenues
-2.9
%
-1.4
%
Adjusted EBITDA (c)
$
360
$
400
-10.0
%
Adjusted EBITDA as a % of net operating
revenues
11.7
%
13.2
%
Net cash provided by operating
activities
$
29
$
137
-78.8
%
__________
For footnotes, see pages 13, 14 and
15.
COMMUNITY HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Selected Operating Data
(a)
(Dollars in millions)
(Unaudited)
Nine Months Ended September
30,
Consolidated
Same-Store
2023
2022
%
Change
2023
2022
%
Change
Number of hospitals (at end of period)
76
81
76
76
Licensed beds (at end of period)
12,494
13,309
12,494
12,443
Beds in service (at end of period)
10,621
11,559
10,621
10,712
Admissions
327,466
324,681
0.9
%
323,679
309,921
4.4
%
Adjusted admissions
745,207
727,677
2.4
%
736,684
694,024
6.1
%
Patient days
1,453,905
1,546,477
1,449,317
1,478,304
Average length of stay (days)
4.5
4.8
4.5
4.7
Occupancy rate (average beds in
service)
49.3
%
49.0
%
49.9
%
50.6
%
Net operating revenues
$
9,308
$
9,069
2.6
%
$
9,210
$
8,750
5.3
%
Net inpatient revenues as a % of net
operating
revenues
46.9
%
46.9
%
46.8
%
47.0
%
Net outpatient revenues as a % of net
operating
revenues
53.1
%
53.1
%
53.2
%
53.0
%
Income from operations (f)
$
630
$
592
6.4
%
Income from operations as a % of net
operating revenues
6.8
%
6.5
%
Depreciation and amortization
$
384
$
398
Equity in earnings of unconsolidated
affiliates
$
(5
)
$
(11
)
Net loss attributable to Community
Health Systems, Inc. stockholders
$
(180
)
$
(369
)
51.2
%
Net loss attributable to Community
Health Systems, Inc. stockholders as a
%
of net operating revenues
-1.9
%
-4.1
%
Adjusted EBITDA (c)
$
1,068
$
1,062
0.6
%
Adjusted EBITDA as a % of net operating
revenues
11.5
%
11.7
%
Net cash provided by operating
activities
$
120
$
291
-58.8
%
__________
For footnotes, see pages 13, 14 and
15.
COMMUNITY HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In millions, except share
data)
(Unaudited)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
91
$
118
Patient accounts receivable
2,160
2,040
Supplies
325
353
Prepaid income taxes
98
99
Prepaid expenses and taxes
249
237
Other current assets
325
235
Total current assets
3,248
3,082
Property and equipment
9,367
9,639
Less accumulated depreciation and
amortization
(4,207
)
(4,274
)
Property and equipment, net
5,160
5,365
Goodwill
3,943
4,166
Deferred income taxes
49
49
Other asset, net
2,274
2,007
Total assets
$
14,674
$
14,669
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities
Current maturities of long-term debt
$
22
$
21
Current operating lease liabilities
121
148
Accounts payable
837
773
Accrued liabilities:
Employee compensation
513
637
Accrued interest
184
189
Other
472
418
Total current liabilities
2,149
2,186
Long-term debt (g)
11,820
11,614
Deferred income taxes
344
354
Long-term operating lease liabilities
560
605
Other long-term liabilities
694
644
Total liabilities
15,567
15,403
Redeemable noncontrolling interests in
equity of consolidated subsidiaries
329
541
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; 136,772,094
shares issued and outstanding at September
30, 2023, and 134,703,717 shares
issued and outstanding at December 31,
2022
1
1
Additional paid-in capital
2,170
2,084
Accumulated other comprehensive loss
(23
)
(21
)
Accumulated deficit
(3,611
)
(3,431
)
Total Community Health Systems, Inc.
stockholders’ deficit
(1,463
)
(1,367
)
Noncontrolling interests in equity of
consolidated subsidiaries
241
92
Total stockholders’ deficit
(1,222
)
(1,275
)
Total liabilities and stockholders’
deficit
$
14,674
$
14,669
__________
For footnotes, see pages 13, 14 and
15.
COMMUNITY HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(In millions)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities
Net loss
$
(70
)
$
(267
)
Adjustments to reconcile net loss to net
cash provided by
operating activities:
Depreciation and amortization
384
398
Deferred income taxes
22
290
Stock-based compensation expense
16
14
Impairment and (gain) loss on sale of
businesses, net (f)
(9
)
54
Loss (gain) from early extinguishment of
debt
-
(73
)
Other non-cash expenses, net
132
140
Changes in operating assets and
liabilities, net of effects of
acquisitions and divestitures:
Patient accounts receivable
(119
)
93
Supplies, prepaid expenses and other
current assets
(100
)
(94
)
Accounts payable, accrued liabilities and
income taxes
(69
)
(90
)
Other
(67
)
(174
)
Net cash provided by operating
activities
120
291
Cash flows from investing activities
Acquisitions of facilities and other
related businesses
(35
)
(9
)
Purchases of property and equipment
(357
)
(284
)
Proceeds from disposition of hospitals and
other ancillary operations
123
3
Proceeds from sale of property and
equipment
27
30
Purchases of available-for-sale debt
securities and equity securities
(126
)
(73
)
Proceeds from sales of available-for-sale
debt securities and equity securities
221
62
Distribution of CoreTrust proceeds
-
121
Purchases of investments in unconsolidated
affiliates
(8
)
(18
)
Increase in other investments
(51
)
(39
)
Net cash used in investing activities
(206
)
(207
)
Cash flows from financing activities
Repurchase of restricted stock shares for
payroll tax withholding requirements
(4
)
(8
)
Deferred financing costs and other
debt-related costs
-
(73
)
Proceeds from noncontrolling investors in
joint ventures
4
10
Redemption of noncontrolling investments
in joint ventures
(1
)
(2
)
Distributions to noncontrolling investors
in joint ventures
(108
)
(105
)
Other borrowings
30
35
Issuance of long-term debt
-
1,535
Proceeds from ABL Facility
2,290
-
Repayments of long-term indebtedness
(2,152
)
(1,683
)
Net cash provided by (used in) financing
activities
59
(291
)
Net change in cash and cash
equivalents
(27
)
(207
)
Cash and cash equivalents at beginning of
period
118
507
Cash and cash equivalents at end of
period
$
91
$
300
__________
For footnotes, see pages 13, 14 and
15.
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 2022 and the nine months ended September 30, 2023. There
were no discontinued operations reported for 2023 and 2022.
(b)
The following table provides information needed to calculate
loss per share, which is adjusted for income attributable to
noncontrolling interests (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss attributable to Community Health
Systems, Inc. stockholders:
Net (loss) income
$
(52
)
$
-
$
(70
)
$
(267
)
Less: Income attributable to
noncontrolling interests, net of taxes
39
42
110
102
Net loss attributable to Community Health
Systems, Inc.
stockholders — basic and diluted
$
(91
)
$
(42
)
$
(180
)
$
(369
)
(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, 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 of a majority interest in CoreTrust
completed during the fourth quarter of 2022. The Company has from
time to time sold noncontrolling interests in certain of its
subsidiaries or acquired subsidiaries with existing noncontrolling
interest ownership positions. The Company believes that it is
useful to present Adjusted EBITDA because it adds back the portion
of EBITDA attributable to these third-party interests. The Company
reports Adjusted EBITDA as a measure of financial performance.
Adjusted EBITDA is a key measure used by management to assess the
operating performance of the Company’s hospital operations and to
make decisions on the allocation of resources. Adjusted EBITDA is
also used to evaluate the performance of the Company’s executive
management team and is one of the primary metrics used in
connection with determining short-term cash incentive compensation
and the achievement of vesting criteria with respect to
performance-based equity awards. In addition, management utilizes
Adjusted EBITDA in assessing the Company’s consolidated results of
operations and operational performance and in comparing the
Company’s results of operations between periods.
Footnotes to Financial
Highlights, Financial Statements and Selected Operating Data
(Continued)
The Company believes it is useful to
provide investors and other users of the Company’s financial
statements this performance measure to align with how management
assesses the Company’s results of operations. Adjusted EBITDA also
is comparable to a similar metric called Consolidated EBITDA, as
defined in the Company’s asset-based loan facility (the “ABL
Facility”) and the Company’s existing note indentures, which is a
key component in the determination of the Company’s compliance with
certain covenants under the ABL Facility and such note indentures
(including the Company’s ability to service debt and incur capital
expenditures), and is used to determine the interest rate and
commitment fee payable under the ABL Facility (although Adjusted
EBITDA does not include all of the adjustments described in the ABL
Facility). Adjusted EBITDA includes the Adjusted EBITDA
attributable to hospitals that were divested during the course of
such year, but in each case solely to the extent relating to the
period prior to the consummation of the applicable divestiture.
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 disclosed by other
companies.
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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss attributable to Community
Health
Systems, Inc. stockholders
$
(91
)
$
(42
)
$
(180
)
$
(369
)
Adjustments:
Provision for income taxes
19
70
84
291
Depreciation and amortization
128
137
384
398
Net income attributable to noncontrolling
interests
39
42
110
102
Interest expense, net
208
217
621
652
Loss (gain) from early extinguishment of
debt
-
(78
)
-
(73
)
Impairment and (gain) loss on sale of
businesses, net
26
47
(9
)
54
Expense from government and other legal
matters and related costs
24
5
33
5
Expense from business transformation
costs
6
-
13
-
Expense related to employee termination
benefits and other restructuring charges
1
2
12
2
Adjusted EBITDA
$
360
$
400
$
1,068
$
1,062
(d)
The following table sets forth components
reconciling the basic weighted-average number of shares to the
diluted weighted-average number of shares (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Weighted-average number of shares
outstanding - basic
131
129
130
129
Add effect of dilutive securities:
Stock awards and options
-
-
-
-
Weighted-average number of shares
outstanding - diluted
131
129
130
129
Footnotes to Financial
Highlights, Financial Statements and Selected Operating Data
(Continued)
The Company generated a net loss
attributable to Community Health Systems, Inc. stockholders for
each of the three and nine-month periods ended September 30, 2023
and 2022, so the effect of dilutive securities is not considered
because their effect would be antidilutive. If the Company had
generated net income, the effect of stock awards and options on the
diluted shares calculation would have been an increase of 224,178
shares and 565,641 shares during the three months ended September
30, 2023 and 2022, respectively, and 298,184 shares and 1,305,604
shares during the nine months ended September 30, 2023 and 2022,
respectively.
(e)
The following supplemental table
reconciles net loss attributable to Community Health Systems, Inc.
stockholders, as reported, on a per share (diluted) basis, to net
loss attributable to Community Health Systems, Inc. stockholders
per share (diluted) with the adjustments described herein (total
per share amounts may not add due to rounding). The Company
believes that the presentation of non-GAAP adjusted net loss
attributable to Community Health Systems, Inc. stockholders per
share (diluted) presents useful information to investors by
highlighting the impact on net loss attributable to Community
Health Systems, Inc. stockholders per share (diluted) of selected
items used in calculating Adjusted EBITDA which may not reflect the
Company’s underlying operating performance and assisting in
comparing the Company’s results of operations between periods.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss per share (diluted), as
reported
$
(0.69
)
$
(0.32
)
$
(1.38
)
$
(2.86
)
Adjustments:
Loss (gain) from early extinguishment of
debt
-
(0.53
)
-
(0.42
)
Impairment and (gain) loss on sale of
businesses, net
0.18
0.28
0.05
0.33
Expense from government and other legal
matters and related costs
0.14
0.03
0.20
0.03
Expense from business transformation
costs
0.04
-
0.08
-
Expense related to employee termination
benefits and other restructuring charges
0.01
0.01
0.07
0.01
Net loss per share (diluted), excluding
adjustments
$
(0.33
)
$
(0.52
)
$
(0.98
)
$
(2.92
)
(f)
Both income from operations and net (loss)
income included a net non-cash expense of $26 million and $47
million for the three months ended September 30, 2023 and 2022,
respectively, and a net non-cash income of $9 million and expense
of $54 million for the nine months ended September 30, 2023 and
2022, respectively, primarily from gains and losses on the sale of
certain businesses during such periods and also impairment charges
to reduce the value of certain long-lived assets at businesses the
Company identified for closure, sale or sold. These impairment
charges do not have an impact on the calculation of the Company’s
financial covenants under the ABL Facility.
(g)
The maximum aggregate principal amount
under the ABL Facility is $1.0 billion, subject to borrowing base
capacity. At September 30, 2023, the Company had outstanding
borrowings of $230 million and approximately $679 million of
additional borrowing capacity (after taking into consideration $82
million of outstanding letters of credit) under the ABL
Facility.
Regulation FD Disclosure
Set forth below is selected information concerning the Company’s
projected consolidated operating results for the year ending
December 31, 2023. These projections update selected guidance
provided on February 15, 2023, and are based on the Company’s
historical operating performance, current trends and other
assumptions that the Company believes are reasonable at this time.
The 2023 guidance should be considered in conjunction with the
assumptions included herein. See pages 18, 19 and 20 for a list of
factors that could affect the future results of the Company or the
healthcare industry generally. The following is provided as
guidance to analysts and investors:
2023 Projection Range
Net operating revenues (in millions)
$
12,400
to
$
12,500
Adjusted EBITDA (in millions)
$
1,450
to
$
1,500
Net loss per share - diluted
$
(1.00
)
to
$
(0.90
)
Weighted-average diluted shares (in
millions)
130
to
131
The following assumptions were used in developing the 2023
guidance provided above:
- The Company’s projections exclude the following:
- Effect of debt refinancing activities, including gains and
losses from early extinguishment of debt;
- Impairment of goodwill and long-lived assets;
- Previously recorded pandemic relief funds and the potential
recognition of additional pandemic relief funds;
- The impact of any potential future divestitures;
- Gains or losses from the sales of businesses;
- Employee termination benefits and restructuring costs;
- Resolution of government investigations or other significant
legal settlements;
- Costs incurred in connection with divestitures;
- Expense for third-party consulting costs associated with
significant process and systems redesign across multiple functions
as part of the Company's previously disclosed business
transformation initiative; and
- Other significant gains or losses that neither relate to the
ordinary course of business nor reflect the Company’s underlying
business performance.
Other assumptions used in the above guidance:
• Expressed as a percentage of net operating revenues,
depreciation and amortization of approximately 4.2% for 2023.
Additionally, this is a fixed cost and the percentages may vary
based on changes in net operating revenues. Such amounts exclude
the possible impact of any future hospital fixed asset
impairments.
• Interest expense is estimated to be between $815 million and
$835 million while cash paid for interest, which excludes the
amortization of deferred financing costs, is expected to be $760
million to $780 million. Total fixed rate debt is expected to
average approximately 99% of total debt during 2023.
• Expressed as a percentage of net operating revenues, net
income attributable to noncontrolling interests of approximately
1.1% to 1.2% for 2023.
• Expressed as a percentage of net operating revenues, provision
for income taxes of approximately 0.8% to 0.9% for 2023.
A reconciliation of the Company’s projected 2023 Adjusted
EBITDA, a forward-looking non-GAAP financial measure, to the
Company’s projected net loss attributable to Community Health
Systems, Inc. stockholders, the most directly comparable GAAP
financial measure, is shown below (in millions):
Year Ending
December 31, 2023
Low
High
Net loss attributable to Community Health
Systems, Inc.
stockholders (1)
$
(130
)
$
(118
)
Adjustments:
Depreciation and amortization
510
530
Interest expense, net
835
815
Provision for income taxes
95
123
Net income attributable to noncontrolling
interests
140
150
Adjusted EBITDA (1)
$
1,450
$
1,500
(1)
The Company does not include in this
reconciliation the impact of certain items not included in the
Company’s forecast set forth above that would be included in a
reconciliation of historical net loss attributable to Community
Health Systems, Inc. stockholders to Adjusted EBITDA such as, but
not limited to, losses (gains) from early extinguishment of debt,
impairment and (gain) loss on sale of businesses and expense from
government and other legal matters and related costs, in light of
the fact that such items are not determinable, and/or the inherent
difficulty in quantifying such projected amounts, on a
forward-looking basis.
- Capital expenditures are projected as follows (in
millions):
2023
Guidance
Total
$
450
to
$
500
- Net cash provided by operating activities are projected as
follows (in millions):
2023
Guidance
Total
$
400
to
$
450
- Diluted weighted-average shares outstanding are projected to be
approximately 130 million to 131 million for 2023.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995
that involve risk and uncertainties. All statements in this press
release other than statements of historical fact, including
statements regarding projections, expected operating results, and
other events that depend upon or refer to future events or
conditions or that include words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “estimates,” “thinks,” and similar
expressions, are forward-looking statements. Although the Company
believes that these forward-looking statements are based on
reasonable assumptions, these assumptions are inherently subject to
significant economic and competitive uncertainties and
contingencies, which are difficult or impossible to predict
accurately and may be beyond the control of the Company.
Accordingly, the Company cannot give any assurance that its
expectations will in fact occur and cautions that actual results
may differ materially from those in the forward-looking statements.
A number of factors could affect the future results of the Company
or the healthcare industry generally and could cause the Company’s
expected results to differ materially from those expressed in this
press release.
These factors include, among other things:
- general economic and business conditions, both nationally and
in the regions in which we operate, including the current negative
macroeconomic conditions, ongoing inflationary pressures that have
significantly increased and may continue to significantly increase
our expenses, the current high interest rate environment, ongoing
challenging labor market conditions and labor shortages,
geopolitical instability, including the current and/or potential
future adverse impact of such economic conditions and other factors
on our net operating revenues (including our service mix, revenue
mix, payor mix and/or patient volumes) and our ability to collect
outstanding receivables, as well as the potential impact on us of
financial and capital market instability and/or disruptions to the
banking system due to bank failures and other factors, including
any potential impact on our ability to access and or obtain the
return of cash and cash equivalents, and/or our ability to access
credit, liquidity and capital market sources on acceptable terms or
at all;
- the impact of current or future federal and state health reform
initiatives, including the Patient Protection and Affordable Care
Act, as amended by the Health Care and Education Reconciliation Act
of 2010 (the “Affordable Care Act”), and the potential for changes
to the Affordable Care Act, its implementation or its
interpretation (including through executive orders and court
challenges);
- the extent to and manner in which states support increases,
decreases or changes in Medicaid programs, implement health
insurance exchanges or alter the provision of healthcare to state
residents through legislation, regulation or otherwise;
- the future and long-term viability of health insurance
exchanges and potential changes to the beneficiary enrollment
process;
- risks associated with our substantial indebtedness, leverage
and debt service obligations, including our ability to refinance
such indebtedness on acceptable terms or to incur additional
indebtedness, and our ability to remain in compliance with debt
covenants;
- demographic changes;
- changes in, or the failure to comply with, federal, state or
local laws or governmental regulations affecting our business;
- potential adverse impact of known and unknown legal, regulatory
and governmental proceedings and other loss contingencies,
including governmental investigations and audits, and federal and
state false claims act litigation;
- our ability, where appropriate, to enter into and maintain
provider arrangements with payors and the terms of these
arrangements, which may be further affected by the increasing
consolidation of health insurers and managed care companies and
vertical integration efforts involving payors and healthcare
providers;
- changes in, or the failure to comply with, contract terms with
payors and changes in reimbursement policies or rates paid by
federal or state healthcare programs or commercial payors;
- any security breaches, cyber-attacks, loss of data, other
cybersecurity threats or incidents, and any actual or perceived
failures to comply with legal requirements governing the privacy
and security of health information or other regulated, sensitive or
confidential information, or legal requirements regarding data
privacy or data protection;
- any potential impairments in the carrying value of goodwill,
other intangible assets, or other long-lived assets, or changes in
the useful lives of other intangible assets;
- changes in inpatient or outpatient Medicare and Medicaid
payment levels and methodologies;
- the effects related to the implementation of the sequestration
spending reductions pursuant to both the Budget Control Act of 2011
and the Pay-As-You-Go Act of 2010 and the potential for future
deficit reduction legislation;
- increases in the amount and risk of collectability of patient
accounts receivable, including decreases in collectability which
may result from, among other things, self-pay growth and
difficulties in recovering payments for which patients are
responsible, including co-pays and deductibles;
- the efforts of insurers, healthcare providers, large employer
groups and others to contain healthcare costs, including the trend
toward value-based purchasing;
- the impact of competitive labor market conditions and the
shortage of nurses, including in connection with our ability to
hire and retain qualified nurses, physicians, other medical
personnel and key management, and increased labor expenses as a
result of such competitive labor market conditions, inflation and
competition for such positions;
- the inability of third parties with whom we contract to provide
hospital-based physicians and the effectiveness of our efforts to
mitigate such non-performance including through acquisitions of
outsourced medical specialist businesses, engagement with new or
replacement providers, employment of physicians and re-negotiation
or assumption of existing contracts;
- any failure to obtain medical supplies or pharmaceuticals at
favorable prices;
- liabilities and other claims asserted against us, including
self-insured professional liability claims;
- competition;
- trends toward treatment of patients in less acute or specialty
healthcare settings, including ambulatory surgery centers or
specialty hospitals or via telehealth;
- changes in medical or other technology;
- any failure of our ongoing process of redesigning and
consolidating key business functions, including through the
implementation of a new core enterprise resource planning system,
to proceed as expected or to be completed successfully;
- changes in U.S. GAAP;
- the availability and terms of capital to fund any additional
acquisitions or replacement facilities or other capital
expenditures;
- our ability to successfully make acquisitions or complete
divestitures, our ability to complete any such acquisitions or
divestitures on desired terms or at all, the timing of the
completion of any such acquisitions or divestitures, and our
ability to realize the intended benefits from any such acquisitions
or divestitures;
- the impact that changes in our relationships with joint venture
or syndication partners could have on effectively operating our
hospitals or ancillary services or in advancing strategic
opportunities;
- our ability to successfully integrate any acquired hospitals
and/or outpatient facilities, or to recognize expected synergies
from acquisitions;
- the impact of severe weather conditions and climate change, as
well as the timing and amount of insurance recoveries in relation
to severe weather events;
- our ability to obtain adequate levels of insurance, including
cyber, general liability, professional liability, and directors and
officers liability insurance;
- timeliness of reimbursement payments received under government
programs;
- effects related to pandemics, epidemics, or outbreaks of
infectious diseases, including the impact of any future
developments related to COVID-19 and the COVID-19 pandemic on our
business, results of operations, financial condition, and/or cash
flows;
- any failure to comply with our obligations under license or
technology agreements;
- challenging economic conditions in non-urban communities in
which we operate;
- the concentration of our revenue in a small number of
states;
- our ability to realize anticipated cost savings and other
benefits from our current strategic and operational cost savings
initiatives;
- any changes in or interpretations of income tax laws and
regulations; and
- the risk factors set forth in our Annual Report on Form 10-K
for the year ended December 31, 2022, filed with the Securities and
Exchange Commission (the “SEC”) on February 17, 2023 and other
filings filed with the SEC.
The consolidated operating results for the three and nine months
ended September 30, 2023, are not necessarily indicative of the
results that may be experienced for any future periods. The Company
cautions that the projections for calendar year 2023 set forth in
this press release are given as of the date hereof based on
currently available information. The Company undertakes no
obligation to revise or update any forward-looking statements
(including such guidance), or to make any other forward-looking
statements, whether as a result of new information, future events
or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025718246/en/
Investor Contact:
Kevin Hammons President and Chief Financial Officer (615)
465-7000
Community Health Systems (NYSE:CYH)
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