LOGO   

Exhibit Number

99.1

 

Investor Contact:    Kevin Hammons
   Executive Vice President
   and Chief Financial Officer
   (615) 465-7000

COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES

FIRST QUARTER 2020 RESULTS

 

 

FRANKLIN, Tenn. (April 28, 2020) – Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today announced financial and operating results for the three months ended March 31, 2020.

The following highlights the financial and operating results for the three months ended March 31, 2020.

 

   

Net operating revenues totaled $3.025 billion.

 

   

Net income attributable to Community Health Systems, Inc. common stockholders was $18 million, or $0.15 per share (diluted), compared with net loss of $(118) million, or $(1.04) per share (diluted), for the same period in 2019. Excluding the adjusting items as presented in the table in footnote (e) on page 13, net loss attributable to Community Health Systems, Inc. common stockholders was $(1.59) per share (diluted), compared to $(0.53) per share (diluted) for the same period in 2019.

 

   

Adjusted EBITDA was $309 million.

 

   

Net cash provided by operating activities was $57 million, compared with $133 million for the same period in 2019.

 

   

On a same-store basis, admissions decreased 5.2 percent and adjusted admissions decreased 4.8 percent, compared with the same period in 2019.

 

   

As discussed further below, developments related to the emergence and spread of a novel strain of coronavirus (“COVID-19”) resulted in a decline in patient volumes and increases in operating costs.

Net operating revenues for the three months ended March 31, 2020, totaled $3.025 billion, a 10.4 percent decrease, compared with $3.376 billion for the same period in 2019.

Net income attributable to Community Health Systems, Inc. common stockholders was $18 million, or $0.15 per share (diluted), for the three months ended March 31, 2020, compared with net loss of $(118) million, or $(1.04) per share (diluted), for the same period in 2019. Excluding the adjusting items as presented in the table in footnote (e) on page 13, net loss attributable to Community Health Systems, Inc. common stockholders was $(1.59) per share (diluted), for the three months ended March 31, 2020, compared to $(0.53) per share (diluted) for the same period in 2019. The change in tax valuation allowance (which was one of the adjusting items referenced above) had a positive impact of $240 million, or $2.10 per share (diluted), on net income attributable to Community Health Systems, Inc. common stockholders, and arose from the discrete tax benefits related to the release of federal and state valuation allowances on IRC Section 163(j) interest carryforwards as a result of an increase to the deductible interest expense allowed for 2019 and 2020 under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) that was enacted during the three months ended March 31, 2020. Weighted-average shares outstanding (diluted) were 114 million for the three months ended March 31, 2020, and 113 million for the three months ended March 31, 2019.

Adjusted EBITDA for the three months ended March 31, 2020, was $309 million compared with $391 million for the same period in 2019, representing a 21.0 percent decrease.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 2

April 28, 2020

 

The consolidated operating results for the three months ended March 31, 2020, reflect a 13.3 percent decrease in admissions and a 12.8 percent decrease in adjusted admissions, compared with the same period in 2019. On a same-store basis, admissions decreased 5.2 percent and adjusted admissions decreased 4.8 percent for the three months ended March 31, 2020, compared with the same period in 2019. On a same-store basis, net operating revenues decreased 3.5 percent for the three months ended March 31, 2020, compared with the same period in 2019.

Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, “We are all grateful for the courage and commitment of our nation’s healthcare workers as they put the care of their patients above all else in confronting COVID-19. Across our hospitals, physicians, nurses, and everyone else on the front lines have helped to save lives. Our organization has leveraged its resources to provide a rapid, coordinated and effective response to the pandemic. Now, we are also focused on reopening services where we can, especially for patients who have deferred important surgeries, procedures and other appointments. As we continue to manage our operations through the COVID-19 pandemic, our organization is doing everything possible to limit the spread of COVID-19 and to ensure our communities continue to have access to safe, quality healthcare.”

COVID – 19 Pandemic:

Due to the decline in patient volumes as a result of the COVID-19 pandemic beginning during the second half of March, the impact from the COVID-19 pandemic on the Company’s operations and financial results for the three months ended March 31, 2020 included decreases in net operating revenues and increases in expenses related to supply chain and other expenditures.

As previously announced in a Current Report on Form 8-K filed by the Company on April 6, 2020 (the “April 6 Form 8-K”), the Company is not able to fully quantify the impact that COVID-19 will have on its financial results during 2020, but expects developments related to COVID-19 to materially affect the Company’s financial performance in 2020. Moreover, as a result of the continuously changing and unpredictable environment related to COVID-19, as disclosed in the April 6 Form 8-K, the Company withdrew its 2020 financial guidance previously issued in its earnings release dated February 19, 2020 and is not providing further guidance in this earnings release.

Federal and state governments have passed legislation, promulgated regulations, and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency. Sources of relief include the CARES Act, which was enacted on March 27, 2020, and the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”), which was enacted on April 24, 2020. The CARES Act includes $100 billion in funding to be distributed to eligible providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”) as well as an expansion of the Medicare Accelerated and Advance Payment Program. The PPPHCE Act includes additional emergency appropriations for COVID-19 response, including $75 billion to be distributed to eligible providers through the PHSSEF.

In April 2020, the Company received approximately $245 million in payments through the PHSSEF and received accelerated Medicare payments of approximately $1.2 billion via the Medicare Accelerated and Advance Payment Program. These payments did not qualify for recognition in the three months ended March 31, 2020. PHSSEF payments (both under the CARES Act and the PPPHCE Act) are intended to compensate healthcare providers for lost revenues and incremental expenses incurred in response to the COVID-19 pandemic and are not required to be repaid provided that recipients attest to and comply with certain terms and conditions, including (in the case of payments under the CARES Act) limitations on balance billing and not using funds received from the PHSSEF to reimburse expenses or losses that other sources are obligated to reimburse (terms and conditions with respect to payments under the PPPHCE Act have not been finalized). In contrast, the payments under the Medicare Accelerated and Advance Payment Program are advances that providers must repay. The accelerated Medicare payments are interest free for up to 12 months and the program currently requires that CMS recoup the accelerated payments beginning 120 days after receipt by the provider, by withholding future Medicare fee-for-service payments for claims until such time as the full accelerated payment has been recouped. The program currently requires that any outstanding balance remaining after 12 months must be repaid by the provider or be subjected to a 10.25% interest rate.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 3

April 28, 2020

 

The PHSSEF payments and accelerated payments received to date and which the Company may receive in the future under the CARES Act and the PPPHCE Act as noted above, or other legislation, will be beneficial in addressing the impact of the COVID-19 pandemic on its results of operations and financial position. However, the Company is unable to assess the extent to which anticipated negative impacts on the Company arising from the COVID-19 pandemic will be offset by amounts and benefits received, and which the Company may receive in the future, under the CARES Act, the PPPHCE Act or other legislation.

On January 1, 2020, the Company completed the divestiture of three hospitals (in respect of which the Company received proceeds at a preliminary closing on December 31, 2019). In addition, since January 1, 2020 the Company has entered into several definitive agreements to sell a total of seven hospitals, for which the Company expects to receive aggregate proceeds of approximately $400 million. These divestitures, which are expected to be completed at various times during the second and third quarters of 2020, will mark the end of the formal portfolio rationalization strategy, which commenced in 2017. There can be no assurance that these potential divestitures subject to definitive agreements will be completed, or if they are completed, the ultimate timing of the completion of these divestitures. The Company continues to receive interest from potential acquirers for certain of its hospitals, and may, from time to time, consider selling additional hospitals following the completion of the Company’s formal portfolio rationalization strategy.

Financial and statistical data for 2019 and 2020 presented in this press release includes the operating results of divested hospitals through the effective closing date of each respective divestiture. Same-store operating results exclude the results of a hospital acquired in 2019 and the hospitals divested in 2019 and 2020.

Information About Non-GAAP Financial Measures

This earnings 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 loss on sale of businesses, expense related to government and other legal settlements and related costs, expense related to employee termination benefits and other restructuring charges, expense from settlement and fair value adjustments on the CVR agreement liability related to the Health Management Associates, Inc. (“HMA”) legal proceedings and related legal expenses, the impact of changes in estimate to increase the professional liability claims accrual recorded during the second quarter of 2019 (which estimate was further revised in the third quarter of 2019 based on updated actuarial analysis) with respect to claims incurred in 2016 and prior years and expense related to the valuation allowance recorded in the second quarter of 2019 to reserve the outstanding balance of a promissory note received from the buyer in connection with the sale of two of the Company’s hospitals in 2017, as well as income from a reduction of the valuation allowance on the outstanding balance of a promissory note from the buyer of another hospital. For information regarding why the Company believes Adjusted EBITDA provides useful information to investors, and for a reconciliation of Adjusted EBITDA to net income (loss) attributable to Community Health Systems, Inc. stockholders, see footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below.

Additionally, this earnings release presents adjusted net income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted), a non-GAAP financial measure, to reflect the impact on net income (loss) attributable to Community Health Systems, Inc. common 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 income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted), see footnote (e) to the Financial Highlights, Financial Statements and Selected Operating Data below.

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 communities across the country. The Company, through its subsidiaries, owns, leases or operates 99 affiliated hospitals in 17 states with an aggregate of approximately 16,000 licensed beds.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 4

April 28, 2020

 

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 Wednesday, April 29, 2020, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review financial and operating results for the first quarter ended March 31, 2020. 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 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.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 5

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Financial Highlights (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2020      2019  

Net operating revenues

   $ 3,025      $ 3,376  

Net income (loss) (f), (g)

     34        (101

Net income (loss) attributable to Community Health Systems, Inc. stockholders

     18        (118

Adjusted EBITDA (c)

     309        391  

Net cash provided by operating activities

     57        133  

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

     

Basic (f), (g)

   $ 0.15      $ (1.04

Diluted (e), (f), (g)

     0.15        (1.04

Weighted-average number of shares outstanding (d):

     

Basic

     114        113  

Diluted

     114        113  

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 6

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Loss) (a)(b)

(In millions, except per share amounts)

(Unaudited)

 

     Three Months Ended March 31,  
     2020     2019  
     Amount     % of Net
Operating
Revenues
    Amount     % of Net
Operating
Revenues
 

Net operating revenues

   $ 3,025       100.0   %    $ 3,376       100.0   % 

Operating costs and expenses:

        

Salaries and benefits

     1,408       46.4   %      1,542       45.7   % 

Supplies

     498       16.5   %      558       16.5   % 

Other operating expenses

     737       24.4   %      811       24.1   % 

Government and other legal settlements and related costs (g)

     2       0.1   %      5       0.1   % 

Lease cost and rent

     81       2.7   %      80       2.4   % 

Depreciation and amortization

     144       4.8   %      153       4.5   % 

Impairment and loss on sale of businesses, net (f)

     45       1.5   %      38       1.1   % 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     2,915       96.4   %      3,187       94.4   % 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations (f), (g)

     110       3.6   %      189       5.6   % 

Interest expense, net

     262       8.7   %      257       7.6   % 

Loss from early extinguishment of debt

     4       0.1   %      31       0.9   % 

Equity in earnings of unconsolidated affiliates

     (7     (0.3 ) %      (5     (0.1 ) % 
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (149     (4.9 ) %      (94     (2.8 ) % 

(Benefit from) provision for income taxes

     (183     (6.0 ) %      7       0.2   % 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) (f), (g)

     34       1.1   %      (101     (3.0 ) % 

Less: Net income attributable to noncontrolling interests

     16       0.5   %      17       0.5   % 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Community Health Systems, Inc. stockholders

   $ 18       0.6   %    $ (118     (3.5 ) % 
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic (f), (g)

   $ 0.15       $ (1.04  
  

 

 

     

 

 

   

Diluted (e), (f), (g)

   $ 0.15       $ (1.04  
  

 

 

     

 

 

   

Weighted-average number of shares outstanding (d):

        

Basic

     114         113    
  

 

 

     

 

 

   

Diluted

     114         113    
  

 

 

     

 

 

   

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 7

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)

 

     Three Months Ended
March 31,
 
             2020                      2019          

Net income (loss)

   $ 34      $ (101

Other comprehensive income (loss), net of income taxes:

     

Net change in fair value of interest rate swaps, net of tax

     —          (2

Net change in fair value of available-for-sale debt securities, net of tax

     2        2  
  

 

 

    

 

 

 

Other comprehensive income

     2        —    
  

 

 

    

 

 

 

Comprehensive income (loss)

     36        (101

Less: Comprehensive income attributable to noncontrolling interests

     16        17  
  

 

 

    

 

 

 

Comprehensive income (loss) attributable to Community Health Systems, Inc. stockholders

   $ 20      $ (118
  

 

 

    

 

 

 

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 8

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Selected Operating Data (a)

(Dollars in millions)

(Unaudited)

 

     Three Months Ended March 31,  
     Consolidated     Same-Store  
     2020     2019     % Change     2020     2019     % Change  

Number of hospitals (at end of period)

     99       106         98       98    

Licensed beds (at end of period)

     15,620       16,956         15,439       15,614    

Beds in service (at end of period)

     13,757       15,195         13,682       13,915    

Admissions

     128,248       147,888       –13.3     127,845       134,882       –5.2

Adjusted admissions

     270,156       309,875       –12.8     268,965       282,530       –4.8

Patient days

     579,937       677,081         578,220       613,141    

Average length of stay (days)

     4.5       4.6         4.5       4.5    

Occupancy rate (average beds in service)

     46.1     48.0       46.3     49.0  

Net operating revenues

   $ 3,025     $ 3,376       –10.4     $3,016       $3,125       –3.5

Net inpatient revenues as a % of net operating revenues

     47.9     48.7       47.8     48.5  

Net outpatient revenues as a % of net operating revenues

     52.1     51.3       52.2     51.5  

Income from operations (f), (g)

   $ 110     $ 189       –41.8      

Income from operations as a % of net operating revenues

     3.6     5.6        

Depreciation and amortization

   $ 144     $ 153          

Equity in earnings of unconsolidated affiliates

   $ (7   $ (5        

Net income (loss) attributable to Community Health Systems, Inc. stockholders

   $ 18     $ (118     115.3      

Net income (loss) attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues

     0.6     –3.5        

Adjusted EBITDA (c)

   $ 309     $ 391       –21.0      

Adjusted EBITDA as a % of net operating revenues

     10.2     11.6        

Net cash provided by operating activities

   $ 57     $ 133       –57.1      

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 9

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions, except share data)

(Unaudited)

 

     March 31, 2020     December 31, 2019  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 246     $ 216  

Patient accounts receivable

     2,100       2,258  

Supplies

     354       354  

Prepaid income taxes

     47       48  

Prepaid expenses and taxes

     188       193  

Other current assets

     425       358  
  

 

 

   

 

 

 

Total current assets

     3,360       3,427  
  

 

 

   

 

 

 

Property and equipment

     9,618       9,653  

Less accumulated depreciation and amortization

     (4,096     (4,045
  

 

 

   

 

 

 

Property and equipment, net

     5,522       5,608  
  

 

 

   

 

 

 

Goodwill

     4,322       4,328  
  

 

 

   

 

 

 

Deferred income taxes

     50       38  
  

 

 

   

 

 

 

Other assets, net

     2,191       2,208  
  

 

 

   

 

 

 

Total assets

   $ 15,445     $ 15,609  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

    

Current liabilities

    

Current maturities of long-term debt

   $ 30     $ 20  

Current operating lease liabilities

     132       136  

Accounts payable

     727       811  

Accrued liabilities:

    

Employee compensation

     593       594  

Accrued interest

     180       189  

Other

     503       532  
  

 

 

   

 

 

 

Total current liabilities

     2,165       2,282  
  

 

 

   

 

 

 

Long-term debt (h)

     13,525       13,385  
  

 

 

   

 

 

 

Deferred income taxes

     29       200  
  

 

 

   

 

 

 

Long-term operating lease liabilities

     514       487  
  

 

 

   

 

 

 

Other long-term liabilities

     846       894  
  

 

 

   

 

 

 

Total liabilities

     17,079       17,248  
  

 

 

   

 

 

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

     502       502  
  

 

 

   

 

 

 

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; 119,678,238 shares issued and outstanding at March 31, 2020, and 117,822,631 shares issued and outstanding at December 31, 2019

     1       1  

Additional paid-in capital

     2,001       2,008  

Accumulated other comprehensive loss

     (7     (9

Accumulated deficit

     (4,200     (4,218
  

 

 

   

 

 

 

Total Community Health Systems, Inc. stockholders’ deficit

     (2,205     (2,218

Noncontrolling interests in equity of consolidated subsidiaries

     69       77  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (2,136     (2,141
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 15,445     $ 15,609  
  

 

 

   

 

 

 

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 10

April 28, 2020

 

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

 

     Three Months Ended March 31,  
     2020     2019  

Cash flows from operating activities

    

Net income (loss)

   $ 34     $ (101

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     144       153  

Deferred income taxes

     (184     6  

Government and other legal settlements and related costs (g)

     2       5  

Stock-based compensation expense

     2       3  

Impairment and loss on sale of businesses, net (f)

     45       38  

Loss from early extinguishment of debt

     4       31  

Other non-cash expenses, net

     49       36  

Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:

 

 

Patient accounts receivable

     158       (10

Supplies, prepaid expenses and other current assets

     (53     14  

Accounts payable, accrued liabilities and income taxes

     (78     17  

Other

     (66     (59
  

 

 

   

 

 

 

Net cash provided by operating activities

     57       133  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Acquisitions of facilities and other related businesses

     —         (4

Purchases of property and equipment

     (99     (121

Proceeds from disposition of hospitals and other ancillary operations

     2       161  

Purchases of available-for-sale debt securities and equity securities

     (17     (15

Proceeds from sales of available-for-sale debt securities and equity securities

     21       32  

Increase in other investments

     (16     (34
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (109     19  
  

 

 

   

 

 

 

Cash flows from financing activities

    

Repurchase of restricted stock shares for payroll tax withholding requirements

     (1     (1

Deferred financing costs and other debt-related costs

     (32     (25

Proceeds from noncontrolling investors in joint ventures

     —         1  

Redemption of noncontrolling investments in joint ventures

     (2     (1

Distributions to noncontrolling investors in joint ventures

     (30     (27

Proceeds from sale-lease back

     2       —    

Other borrowings

     14       12  

Issuance of long-term debt

     1,462       1,840  

Proceeds from ABL facility

     540       25  

Repayments of long-term indebtedness

     (1,871     (1,895
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     82       (71
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     30       81  

Cash and cash equivalents at beginning of period

     216       196  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 246     $ 277  
  

 

 

   

 

 

 

 

For footnotes, see pages 11, 12 and 13.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 11

April 28, 2020

 

Footnotes to Financial Highlights, Financial Statements and Selected Operating Data

 

(a)

Both financial and statistical results include the operating results of divested hospitals through the effective closing date of each respective divestiture. Same-store operating results and statistical information exclude the results of a hospital acquired in 2019 and the hospitals divested in 2019 and 2020. There were no discontinued operations reported for 2019 and 2020.

 

(b)

The following table provides information needed to calculate earnings (loss) per share, which is adjusted for income attributable to noncontrolling interests (in millions):

 

     Three Months Ended
March 31,
 
             2020                      2019          

Net income (loss) attributable to Community Health Systems, Inc. common stockholders:

     

Net income (loss)

   $ 34      $ (101

Less: Income attributable to noncontrolling interests, net of taxes

     16        17  
  

 

 

    

 

 

 

Net income (loss) attributable to Community Health Systems, Inc. common stockholders — basic and diluted

   $ 18      $ (118
  

 

 

    

 

 

 

 

(c)

EBITDA is a non-GAAP financial measure which consists of net income (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 loss on sale of businesses, expense related to government and other legal settlements and related costs, expense related to employee termination benefits and other restructuring charges, expense from settlement and fair value adjustments on the CVR agreement liability related to the HMA legal proceedings and related legal expenses, the impact of changes in estimate to increase the professional liability claims accrual recorded during the second quarter of 2019 (which estimate was further revised in the third quarter of 2019 based on updated actuarial analysis) with respect to claims incurred in 2016 and prior years, and expense related to the valuation allowance recorded in the second quarter of 2019 to reserve the outstanding balance of a promissory note received from the buyer in connection with the sale of two of the Company’s hospitals in 2017, as well as income from a reduction of the valuation allowance on the outstanding balance of a promissory note from the buyer of another hospital. 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 and clarifies for investors the Company’s portion of EBITDA generated by continuing operations. 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. 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”), which is a key component in the determination of the Company’s compliance with some of the covenants under the ABL Facility (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).

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 12

April 28, 2020

Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)

 

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 reported by other companies.

The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net income (loss) attributable to Community Health Systems, Inc. stockholders as derived directly from the condensed consolidated financial statements (in millions):

 

     Three Months Ended
March 31,
 
     2020      2019  

Net income (loss) attributable to Community Health Systems, Inc. stockholders

   $ 18      $ (118

Adjustments:

     

(Benefit from) provision for income taxes

     (183      7  

Depreciation and amortization

     144        153  

Net income attributable to noncontrolling interests

     16        17  

Interest expense, net

     262        257  

Loss from early extinguishment of debt

     4        31  

Impairment and loss on sale of businesses, net

     45        38  

Expense from government and other legal settlements and related costs

     2        5  

Expense from settlement and legal expenses related to cases covered by the CVR

     1        1  
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 309      $ 391  
  

 

 

    

 

 

 

 

(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
March 31,
 
     2020      2019  

Weighted-average number of shares outstanding - basic

     114        113  

Add effect of dilutive securities:

     

Stock awards and options

     —          —    
  

 

 

    

 

 

 

Weighted-average number of shares outstanding - diluted

     114        113  
  

 

 

    

 

 

 

The effect of restricted stock and stock option awards on the diluted shares calculation was an increase of 77,812 shares during the three months ended March 31, 2020. The Company generated a net loss attributable to Community Health Systems, Inc. common stockholders for the three months ended March 31, 2019, so the effect of dilutive securities is not considered because their effect would be antidilutive. If the Company had generated net income during the three months ended March 31, 2019, the effect of restricted stock and stock option awards on the diluted shares calculation would have been an increase in shares of 59,261.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 13

April 28, 2020

Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)

 

(e)

The following supplemental table reconciles net income (loss) attributable to Community Health Systems, Inc. common stockholders, as reported, on a per share (diluted) basis, to net income (loss) attributable to Community Health Systems, Inc. common 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 income (loss) attributable to Community Health Systems, Inc. common stockholders per share (diluted) presents useful information to investors by highlighting the impact on net income (loss) attributable to Community Health Systems, Inc. common 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
March 31,
 
     2020      2019  

Net income (loss), as reported

   $ 0.15      $ (1.04

Adjustments:

     

Loss from early extinguishment of debt

     0.02        0.20  

Impairment and loss on sale of businesses, net

     0.31        0.26  

Expense from government and other legal settlements and related costs

     0.01        0.03  

Expense from settlement and legal expenses related to cases covered by the CVR

     0.01        0.01  

Change in tax valuation allowance

     (2.10      —    
  

 

 

    

 

 

 

Net loss, excluding adjustments

   $ (1.59    $ (0.53
  

 

 

    

 

 

 

 

(f)

Both income from operations and net income (loss) for the three months ended March 31, 2020 and 2019, included non-cash expense of approximately $45 million and $38 million, respectively, primarily from impairment charges to reduce the value of long-lived assets, including allocated goodwill, at hospitals that the Company has identified for sale or has sold, and at certain underperforming hospitals. These impairment charges do not have an impact on the calculation of the Company’s financial covenants under the ABL Facility.

 

(g)

The $(0.01) per share (diluted) and $(0.03) per share (diluted) of expense for “Government and other legal settlements and related costs” for the three months ended March 31, 2020 and 2019, respectively, is the net impact of several lawsuits settled in principle during the related periods, and related legal expenses.

 

(h)

At March 31, 2020, the Company had outstanding borrowings of $380 million and approximately $239 million of additional borrowing capacity (after taking into consideration $150 million of outstanding letters of credit) under the ABL Facility.

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 14

April 28, 2020

 

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 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:

 

   

developments related to COVID-19, including, without limitation, related to the length and severity of the pandemic; the volume of canceled or rescheduled procedures; the volume of COVID-19 patients cared for across our health systems; measures we are taking to respond to the COVID-19 pandemic; the impact of government and administrative regulation on us; changes in net revenue due to patient volumes, payor mix and deteriorating macroeconomic conditions; potential increased expenses related to labor, supply chain or other expenditures; workforce disruptions; and supply shortages and disruptions;

 

   

uncertainty regarding the implementation of the CARES Act, the PPPHCE Act, and any other future stimulus measures related to COVID-19, including the magnitude and timing of any future payments or benefits we may receive thereunder;

 

   

general economic and business conditions, both nationally and in the regions in which we operate, including economic and business conditions resulting from the COVID-19 pandemic;

 

   

the impact of current or future federal and state health reform initiatives, including, without limitation, the Affordable Care Act, and the potential for the Affordable Care Act to be repealed or found unconstitutional or otherwise invalidated, or for additional changes to the law, 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 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, as well as risks associated with disruptions in the financial and capital markets as the result of the COVID-19 pandemic which could impact us from a financing and liquidity perspective;

 

   

demographic changes;

 

   

changes in, or the failure to comply with, federal, state or local laws or governmental regulations affecting our business, including any such laws or governmental regulations which are adopted in connection with the COVID-19 pandemic;

 

   

potential adverse impact of known and unknown government investigations, audits, and federal and state false claims act litigation and other legal proceedings;

 

   

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 potential additional 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;

 

-MORE-


CYH Announces First Quarter 2020 Results

Page 15

April 28, 2020

 

   

the effects related to the continued implementation of the sequestration spending reductions 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;

 

   

increases in wages as a result of inflation or competition for highly technical positions and rising supply and drug costs due to market pressure from pharmaceutical companies and new product releases;

 

   

liabilities and other claims asserted against us, including self-insured malpractice claims;

 

   

competition;

 

   

our ability to attract and retain, at reasonable employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers;

 

   

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;

 

   

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, including the disposition of hospitals and non-hospital businesses pursuant to our portfolio rationalization and deleveraging strategy, 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, or to recognize expected synergies from acquisitions;

 

   

the impact of seasonal severe weather conditions, including the timing and amount of insurance recoveries in relation to severe weather events;

 

   

our ability to obtain adequate levels of insurance, including 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 coronavirus known as COVID-19 as noted above;

 

   

the impact of cyber-attacks or security breaches;

 

   

any failure to comply with the terms of the Corporate Integrity Agreement;

 

   

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;

 

   

changes in interpretations, assumptions and expectations regarding the Tax Cuts and Jobs Act; and

 

   

the other risk factors set forth in our in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 20, 2020, and other public filings with the Securities and Exchange Commission.

The consolidated operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be experienced for any future periods. 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.

 

-END-

View differences made from one to another to evaluate Community Health Systems Inc's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Community Health Systems Inc.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account