CYH
Community Health Systems INC
NYSE
8-K: Community Health Systems Reports Mixed Q4 and Full Year 2023 Results, Provides 2024 Guidance
Sentiment:
Quarterly Report
20 February 2024 4:30 PM
Community Health Systems announced its fourth quarter and full year 2023 results, showing improved patient demand but facing higher costs, and provided its 2024 earnings guidance.
Worse than expected
The company's net income and adjusted EBITDA decreased compared to the same periods in the previous year.
The company reported a net loss for the full year 2023, compared to a net income in 2022.
The company is projecting a net loss per share for 2024.
Summary
- Community Health Systems reported a net income of $46 million, or $0.35 per share, for the fourth quarter of 2023, compared to $414 million, or $3.18 per share, for the same period in 2022.
- Excluding adjusting items, the company experienced a net loss of $(0.41) per share in Q4 2023, compared to a net income of $1.50 per share in Q4 2022.
- Adjusted EBITDA for Q4 2023 was $386 million, down from $404 million in Q4 2022.
- Net operating revenues for Q4 2023 totaled $3.181 billion, a 1.2% increase compared to $3.142 billion in Q4 2022.
- For the full year 2023, the company reported a net loss of $(133) million, or $(1.02) per share, compared to a net income of $46 million, or $0.35 per share, in 2022.
- Adjusted EBITDA for the full year 2023 was $1.453 billion, slightly down from $1.466 billion in 2022.
- Full year net operating revenues increased by 2.3% to $12.490 billion in 2023 from $12.211 billion in 2022.
- The company extinguished approximately $402 million of notes through repurchases in Q4 2023.
- A $1 billion offering of Senior Secured Notes due 2032 was completed, with proceeds used to purchase $985 million of Senior Secured Notes due 2026.
- The company provided 2024 guidance, projecting net operating revenues between $12.3 billion and $12.7 billion and adjusted EBITDA between $1.475 billion and $1.625 billion.
Sentiment
Score: 4
Explanation: The document presents mixed results with some positive operational improvements but significant declines in profitability and a projected loss for 2024. The sentiment is cautiously negative due to the financial challenges.
Positives
- Patient demand increased, leading to growth in same-store admissions, adjusted admissions, surgeries, and ER visits.
- Staff recruitment and retention initiatives resulted in a significant reduction in contract labor utilization.
- Investments in facility expansions, physician recruitment, and service line development contributed to growth.
- Net operating revenues increased by 1.2% in Q4 2023 and 2.3% for the full year 2023.
- The company successfully refinanced debt, reducing its overall debt burden.
- Net cash provided by operating activities increased significantly in Q4 2023 to $90 million from $9 million in Q4 2022.
Negatives
- Net income attributable to Community Health Systems, Inc. stockholders decreased significantly in Q4 2023 compared to Q4 2022.
- The company reported a net loss for the full year 2023.
- Adjusted EBITDA decreased in both Q4 and the full year 2023 compared to 2022.
- Higher costs for supplemental reimbursement programs, outsourced medical specialists, and professional liability insurance negatively impacted results.
- Unfavorable changes in payor mix and a reduction in pandemic relief funds also contributed to the decrease in profitability.
- The company is projecting a net loss per share for 2024.
Risks
- The company faces risks related to general economic and business conditions, including inflation and high interest rates.
- Changes in federal and state health reform initiatives could impact the company's operations.
- The company's substantial indebtedness and debt service obligations pose a risk.
- Failure to comply with laws and regulations could lead to adverse consequences.
- Security breaches and cyber-attacks could disrupt operations and compromise sensitive data.
- The company faces competition for qualified nurses, physicians, and other medical personnel.
- The company's ability to obtain medical supplies and pharmaceuticals at favorable prices is a risk.
- The company is exposed to liabilities and claims, including self-insured professional liability claims.
- The company's ability to successfully integrate acquisitions and realize synergies is a risk.
- The company is exposed to the impact of severe weather conditions and climate change.
- The company is exposed to the risk of pandemics, epidemics, or outbreaks of infectious diseases.
Future Outlook
The company projects 2024 net operating revenues between $12.3 billion and $12.7 billion, adjusted EBITDA between $1.475 billion and $1.625 billion, and a net loss per share between $(0.65) and $(0.05).
Management Comments
- Operational and financial results improved in 2023 as patient demand for our services increased.
- Our staff recruitment and retention initiatives generated solid gains in the number of bedside nurses and other patient care positions in our hospitals, which significantly reduced contract labor utilization.
- We also experienced growth that is directly attributable to our investments in facility expansions, physician recruitment and service line development.
- We expect this progress and momentum to continue in 2024.
Industry Context
The healthcare industry is facing challenges such as rising costs, labor shortages, and changing reimbursement models. Community Health Systems' results reflect these trends, with increased patient demand offset by higher expenses. The company's focus on cost management and strategic investments aligns with industry efforts to improve efficiency and profitability.
Comparison to Industry Standards
- HCA Healthcare, a major competitor, reported a 7.1% increase in revenue for Q4 2023, while Community Health Systems saw a 1.2% increase, indicating weaker revenue growth.
- Tenet Healthcare reported a net loss of $10 million for Q4 2023, while Community Health Systems reported a net income of $46 million, suggesting better profitability in the quarter.
- Universal Health Services reported a 7.5% increase in adjusted admissions for Q4 2023, while Community Health Systems reported a 3.6% increase, indicating slower volume growth.
- The debt refinancing activity of Community Health Systems is similar to other large hospital chains that are managing their debt in a high interest rate environment.
- The divestiture of hospitals by Community Health Systems is a common strategy in the industry to optimize portfolios and focus on core markets.
Stakeholder Impact
- Shareholders will be concerned about the net loss for the full year 2023 and the projected loss for 2024.
- Employees may be affected by cost-cutting measures and restructuring efforts.
- Customers may experience changes in service offerings and pricing.
- Suppliers may be impacted by changes in procurement policies.
- Creditors will be monitoring the company's debt levels and ability to meet its obligations.
Next Steps
- The company will hold a conference call on February 21, 2024, to review the financial and operating results.
- The company will continue to focus on cost management and strategic investments to improve future performance.
Key Dates
- December 31, 2022: Date of the end of the previous financial year for comparison.
- January 1, 2023: Completion of the divestiture of one hospital.
- April 1, 2023: Completion of the divestiture of one hospital.
- July 1, 2023: Completion of the divestiture of one hospital.
- September 1, 2023: Completion of the sale of a majority interest in one hospital.
- November 1, 2023: Completion of the divestiture of two hospitals.
- December 1, 2023: Completion of the divestiture of three hospitals.
- December 22, 2023: Completion of a private offering of $1.000 billion principal amount of 10.875% Senior Secured Notes due 2032.
- December 28, 2023: Funding of the tender offer to purchase $985 million aggregate principal amount of its 8.000% Senior Secured Notes due 2026.
- December 31, 2023: Date of the end of the current financial year.
- February 20, 2024: Date of the earnings announcement.
- February 21, 2024: Date of the conference call to review financial and operating results.
Keywords
healthcare, hospitals, financial results, earnings, EBITDA, revenue, debt, refinancing, admissions, operating costs, guidance
CYH
Community Health Systems INC
NYSE
Sector: TBD
Filings with Classifications
Better than expected
1 July 2025 4:30 PM
Asset Divestiture Announcement
- The transaction generated $436 million in cash proceeds for Community Health Systems.
- An estimated pre-tax gain of $143 million ($93 million after tax) was realized from the sale.
- The final cash consideration of $436 million was higher than the amended base purchase price of $430 million, indicating positive adjustments.
Capital raise
24 April 2025 4:30 PM
Quarterly Report
- CHS entered into a privately negotiated agreement with a multi-asset investment manager to issue and sell $700 million aggregate principal amount of 10% Senior Secured Notes due 2033.
- The company expects to use the net proceeds from issuance of the 10% Senior Secured Notes due 2033, together with cash on hand, to redeem the 8% Senior Secured Notes due 2027 and to pay related fees and expenses.
Better than expected
24 April 2025 4:30 PM
Quarterly Report
- The company's net income improved significantly from a net loss in the same period last year.
Better than expected
23 April 2025 4:30 PM
Earnings Release
- The net loss attributable to Community Health Systems, Inc. stockholders improved from $(41) million to $(13) million year-over-year.
Worse than expected
3 April 2025 8:30 PM
Proxy Statement
- The net loss attributable to Community Health Systems, Inc. stockholders increased from $(133) million in 2023 to $(516) million in 2024.
Worse than expected
3 March 2025 6:06 PM
SEC Form 4 Filing
- The forfeiture of a significant portion (83.2%) of the performance-based restricted shares indicates that the company's performance during the 2022-2024 period was worse than expected, failing to meet the pre-determined performance objectives.
Worse than expected
3 March 2025 6:04 PM
SEC Form 4
- The forfeiture of a significant portion of performance-based restricted shares suggests that the company underperformed relative to its targets during the 2022-2024 performance period.
Worse than expected
3 March 2025 6:02 PM
SEC Form 4 Filing
- The forfeiture of 11,850 performance-based restricted shares suggests that the company's performance did not fully meet the established objectives for the 2022-2024 performance period.
Worse than expected
19 February 2025 4:31 PM
Annual Results
- The company reported a net loss attributable to Community Health Systems, Inc. stockholders of $516 million in 2024, compared to a net loss of $133 million in 2023.
Worse than expected
18 February 2025 4:30 PM
Quarterly Earnings Release
- The company reported a net loss attributable to Community Health Systems, Inc. stockholders for Q4 2024, compared to net income in the same period of 2023.
- The company reported a larger net loss attributable to Community Health Systems, Inc. stockholders for the year ended December 31, 2024, compared to the same period in 2023.
Worse than expected
26 November 2024 4:30 PM
Material Definitive Agreement Termination
- The termination of the sale agreement is worse than expected as it removes a planned divestiture and introduces uncertainty about the future of the assets.
Delay expected
22 November 2024 4:30 PM
Asset Sale Agreement
- The Punta Gorda hospital has indefinitely suspended inpatient operations due to hurricane damage, which may cause delays in the transaction.
Worse than expected
24 October 2024 4:34 PM
Quarterly Report
- The company's net loss of $391 million in Q3 2024 is significantly worse than the $91 million loss in Q3 2023.
- The company's impairment charges and professional liability accrual adjustments are significantly higher than expected.
- The company's consolidated inpatient admissions decreased by 4.1%, indicating a decline in overall patient volume.
Worse than expected
23 October 2024 4:30 PM
Quarterly Report
- The company's net loss attributable to stockholders was significantly worse than the same period last year, increasing from $(91) million to $(391) million.
- The adjusted EBITDA decreased from $360 million to $347 million in the third quarter of 2024 compared to the same period in 2023.
- The net loss per share increased from $(0.69) to $(2.95) in the third quarter of 2024 compared to the same period in 2023.
Capital raise
25 July 2024 4:30 PM
Quarterly Report
- The company completed an offering of an additional $1.225 billion aggregate principal amount of its outstanding 10.875% Senior Secured Notes due 2032.
- Proceeds from the offering of the Tack-On Notes were used to redeem all $1.116 billion of the outstanding 8.000% Senior Secured Notes due 2026, to fund senior note repurchases, pay related fees and expenses and for general corporate purposes.
Better than expected
25 July 2024 4:30 PM
Quarterly Report
- The company's net income improved compared to the same periods in the prior year, moving from a loss to a profit.
- The company's same-store revenue growth indicates better performance in its core operations.
- The company's debt restructuring efforts, including the gain from early extinguishment of debt, positively impacted the financial results.
Delay expected
25 July 2024 4:30 PM
Quarterly Report
- The company's construction of a replacement facility in Knox, Indiana, is required to be completed by September 30, 2026, if a new lease with Starke County is not entered into.
Better than expected
24 July 2024 4:30 PM
Quarterly Report
- The company's net loss improved significantly compared to the same period last year.
- Adjusted EBITDA increased, indicating improved operational performance.
- Same-store revenues and admissions showed positive growth.
Delay expected
21 June 2024 6:01 PM
Material Definitive Agreement Termination
- The sale of the two hospitals was delayed due to the FTC's legal challenge and subsequent injunction.
Worse than expected
21 June 2024 6:01 PM
Material Definitive Agreement Termination
- The termination of the sale is worse than expected as it disrupts CHS's strategic plans and may require a reassessment of their financial and operational strategies for the two hospitals.
Capital raise
21 May 2024 9:19 PM
Debt Offering Announcement
- The company is raising $1.225 billion through a tack-on offering of senior secured notes.
- The proceeds will be used to redeem existing debt and for general corporate purposes.
Capital raise
21 May 2024 8:28 AM
Debt Offering Announcement
- The company is raising $1.125 billion through a tack-on offering of senior secured notes.
- The proceeds will be used to redeem existing debt and for general corporate purposes.
Better than expected
25 April 2024 4:32 PM
Quarterly Report
- The company's net loss improved from $20 million to $6 million year-over-year, indicating better than expected financial performance.
Delay expected
25 April 2024 4:32 PM
Quarterly Report
- The sale of Lake Norman Regional Medical Center and Davis Regional Medical Center to Novant Health, Inc. is delayed due to a complaint filed by the Federal Trade Commission.
Better than expected
24 April 2024 4:30 PM
Quarterly Report
- The company's net loss per share improved from $(0.40) to $(0.32) year-over-year.
- Adjusted EBITDA increased from $335 million to $378 million year-over-year.
- Net cash provided by operating activities increased from $5 million to $96 million year-over-year.
Delay expected
18 April 2024 4:30 PM
Asset Sale Agreement
- The agreement can be terminated if the transaction is not completed by August 31, 2024, indicating a potential for delay.
Worse than expected
28 March 2024 4:31 PM
Proxy Statement
- The company experienced a net loss attributable to stockholders of $(133) million in 2023, compared to a net income of $46 million in the prior year.
- Adjusted EBITDA decreased by 0.9% to $1.454 billion in 2023.
- Cash Flows from Operations decreased by 30.0% to $210 million.
- The stock price decreased by 27.5% as of December 31, 2023.
Worse than expected
20 February 2024 4:30 PM
Quarterly Report
- The company's net income and adjusted EBITDA decreased compared to the same periods in the previous year.
- The company reported a net loss for the full year 2023, compared to a net income in 2022.
- The company is projecting a net loss per share for 2024.
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