Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today
announced financial and operating results for the three and nine
months ended September 30, 2018.
The following highlights the financial and operating results for
the three months ended September 30, 2018.
- Net operating revenues totaled
$3.451 billion.
- Net loss attributable to Community
Health Systems, Inc. common stockholders was $(325) million, or
$(2.88) per share (diluted), compared with net loss of $(110)
million, or $(0.98) per share (diluted), for the same period in
2017. Excluding the adjusting items as presented in the table in
footnote (h) on page 15, net loss attributable to Community Health
Systems, Inc. common stockholders was $(1.64) per share (diluted),
compared with $(0.79) per share (diluted) for the same period in
2017.
- Adjusted EBITDA was $372
million.
- Net cash provided by operating
activities was $346 million, compared with $114 million for the
same period in 2017.
- On a same-store basis, admissions
decreased 2.3 percent and adjusted admissions decreased 0.8
percent, compared with the same period in 2017.
Net operating revenues for the three months ended September 30,
2018, totaled $3.451 billion, a 5.9 percent decrease, compared with
$3.666 billion for the same period in 2017.
Net loss attributable to Community Health Systems, Inc. common
stockholders was $(325) million, or $(2.88) per share (diluted),
for the three months ended September 30, 2018, compared with $(110)
million, or $(0.98) per share (diluted), for the same period in
2017. Excluding the adjusting items as presented in the table in
footnote (h) on page 15, net loss attributable to Community Health
Systems, Inc. common stockholders was $(1.64) per share (diluted),
for the three months ended September 30, 2018, compared with
$(0.79) per share (diluted) for the same period in 2017.
Weighted-average shares outstanding (diluted) were 113 million for
the three months ended September 30, 2018, and 112 million for the
three months ended September 30, 2017.
Adjusted EBITDA for the three months ended September 30, 2018,
was $372 million compared with $331 million for the same period in
2017, representing a 12.4 percent increase.
The consolidated operating results for the three months ended
September 30, 2018, reflect a 12.4 percent decrease in total
admissions, and a 12.2 percent decrease in total adjusted
admissions, compared with the same period in 2017. On a same-store
basis, admissions decreased 2.3 percent and adjusted admissions
decreased 0.8 percent during the three months ended September 30,
2018, compared with the same period in 2017. On a same-store basis,
net operating revenues increased 3.2 percent during the three
months ended September 30, 2018, compared with the same period in
2017.
Net operating revenues for the nine months ended September 30,
2018, totaled $10.702 billion, a 13.0 percent decrease, compared
with $12.295 billion for the same period in 2017.
Net loss attributable to Community Health Systems, Inc. common
stockholders was $(460) million, or $(4.08) per share (diluted),
for the nine months ended September 30, 2018, compared with $(446)
million, or $(3.99) per share (diluted), for the same period in
2017. Excluding the adjusting items as presented in the table in
footnote (h) on page 15, net loss attributable to Community Health
Systems, Inc. common stockholders was $(1.52) per share (diluted)
for the nine months ended September 30, 2018, compared with net
loss of $(0.98) per share (diluted) for the same period in 2017.
Weighted-average shares outstanding (diluted) were 113 million for
the nine months ended September 30, 2018, and 112 million for the
nine months ended September 30, 2017.
Adjusted EBITDA for the nine months ended September 30, 2018,
was $1.223 billion compared with $1.294 billion for the same period
in 2017, representing a 5.5 percent decrease.
The consolidated operating results for the nine months ended
September 30, 2018, reflect a 16.5 percent decrease in total
admissions, and a 16.9 percent decrease in total adjusted
admissions, compared with the same period in 2017. On a same-store
basis, admissions decreased 2.4 percent and adjusted admissions
decreased 0.9 percent during the nine months ended September 30,
2018, compared with the same period in 2017. On a same-store basis,
net operating revenues increased 2.6 percent during the nine months
ended September 30, 2018, compared with the same period in
2017.
On September 25, 2018, the Company issued a press release to
announce a global resolution and settlement agreements ending the
U.S. Department of Justice investigation into certain conduct of
Health Management Associates, Inc. (“HMA”) and its affiliated
entities and settling qui tam lawsuits that were initiated and
pending, and known to the Company, before the Company’s acquisition
by merger of HMA in 2014. The Company previously recorded an
estimated liability at fair value of the remaining underlying
claims that are covered by the CVR agreement as part of the
acquisition accounting for HMA. This liability has been adjusted as
of September 30, 2018, to take into account the settlement amount
contemplated by the global settlement agreements, including
interest, of $266 million and has been reclassified as a current
liability in other accrued liabilities on the condensed
consolidated balance sheet at September 30, 2018. This settlement
amount will be paid in the fourth quarter of 2018. In addition,
certain components of the settlement payment are not considered
deductible for income taxes because of recent changes to the U.S.
tax code from the Tax Cuts and Jobs Act enacted in December 2017,
which resulted in approximately $23 million in deferred tax expense
during the third quarter of 2018 from the write-off of the related
deferred tax assets.
Commenting on the results, Wayne T. Smith, chairman and chief
executive officer of Community Health Systems, Inc., said, “We are
pleased with the progress we made in the third quarter, and we are
encouraged by the momentum we are seeing from strategic and
operational initiatives that have been implemented across our
portfolio of hospitals. We are especially pleased with same store
performance in many of our core markets. We believe our overall
performance will continue to improve as we complete additional
divestitures and direct our investments into markets where we have
the greatest opportunities for growth.”
During 2018, the Company has completed nine hospital
divestitures. In addition, the Company has entered into definitive
agreements to sell five additional hospitals, which divestitures
have not yet been completed. The Company is pursuing additional
interests for sale transactions involving hospitals, which,
together with the hospitals that are currently subject to
definitive agreements and the hospitals that have been divested
during 2018, had a combined total of at least $2.0 billion in
annual net operating revenues and combined mid-single digit
Adjusted EBITDA margins during 2017. These sale transactions are
currently in various stages of negotiation with potential buyers.
There can be no assurance that these potential divestitures (or the
potential divestitures currently 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.
Financial and statistical data for 2018 and 2017 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
the hospitals divested in 2018 and 2017.
Information About Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP financial measure, is EBITDA
adjusted to add back net income attributable to noncontrolling
interests and to exclude the effect of discontinued operations,
loss (gain) from early extinguishment of debt, impairment and
(gain) loss on sale of businesses, gain on sale of investments in
unconsolidated affiliates, expense incurred related to the spin-off
of QHC, expense incurred related to the sale of a majority
ownership interest in the Company’s home care division, expense
(income) related to government and other legal settlements and
related costs, expense related to employee termination benefits and
other restructuring charges, expense (income) from settlement and
fair value adjustments on the CVR agreement liability related to
the HMA legal proceedings and related legal expenses, and the
overall impact of the change in estimate related to net patient
revenue recorded in the fourth quarter of 2017 resulting from the
increase in contractual allowances and the provision for bad
debts.
For information regarding why the Company believes Adjusted
EBITDA provides useful information to investors, and for a
reconciliation of Adjusted EBITDA to net income attributable to
Community Health Systems, Inc. stockholders, see footnote (e) to
the Financial Highlights, Financial Statements and Selected
Operating Data below.
Additionally, the Company has provided adjusted loss from
continuing operations attributable to Community Health Systems,
Inc. common stockholders per share (diluted) and adjusted net loss
attributable to Community Health Systems, Inc. common stockholders
per share (diluted) to reflect the impact on earnings per share
from the selected items used in the calculation of Adjusted EBITDA.
For a presentation and reconciliation of these measures, see
footnote (h) to the Financial Highlights, Financial Statements and
Selected Operating Data below.
Included on pages 17, 18, 19 and 20 of this press release are
tables setting forth the Company’s 2018 updated annual earnings
guidance. The 2018 guidance is based on the Company’s historical
operating performance, current trends and other assumptions that
the Company believes are reasonable at this time, and reflects the
impact of planned divestitures in 2018.
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 117 affiliated hospitals in 20 states with an aggregate of
approximately 19,000 licensed beds.
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
Tuesday, October 30, 2018, at 10:00 a.m. Central, 11:00 a.m.
Eastern, to review financial and operating results for the third
quarter ended September 30, 2018. Investors will have the
opportunity to listen to a live Internet broadcast of the
conference call by clicking on the Investor Relations link of the
Company’s website at www.chs.net. To listen to the live call,
please go to the website at least fifteen minutes early to
register, download and install any necessary audio software. For
those who cannot listen to the live broadcast, a replay will be
available shortly after the call and will continue to be available
through November 30, 2018. 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)(c)(d) (In millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2018
2017 2018 2017 Net operating revenues
(k) $ 3,451 $ 3,666 $ 10,702 $ 12,295 Loss from continuing
operations (f), (i), (j) (308 ) (88 ) (405 ) (380 )
Net loss attributable to Community Health
Systems, Inc. stockholders
(325 ) (110 ) (460 ) (446 ) Adjusted EBITDA (e) 372 331 1,223 1,294
Net cash provided by operating activities 346 114 440 617
Basic loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (i), (j) $ (2.88 ) $ (0.96 ) $ (4.08 ) $
(3.91 ) Discontinued operations - (0.02 )
- (0.08 ) Net loss $ (2.88 ) $ (0.98 ) $ (4.08
) $ (3.99 )
Diluted loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (h), (i), (j) $ (2.88 ) $ (0.96 ) $
(4.08 ) $ (3.91 ) Discontinued operations -
(0.02 ) - (0.08 ) Net loss (h) $ (2.88 ) $
(0.98 ) $ (4.08 ) $ (3.99 ) Weighted-average number of
shares outstanding (g): Basic 113 112 113 112 Diluted 113 112 113
112
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Loss (a)(b)(c)(d) (In millions,
except per share amounts) (Unaudited)
Three Months Ended
September 30, 2018 2017 Amount
% of Net
OperatingRevenues
Amount
% of Net
OperatingRevenues
Operating revenues (net of contractual allowances and discounts) $
4,333 Provision for bad debts 667 Net
operating revenues (k) $ 3,451 100.0 % 3,666 100.0 %
Operating costs and expenses: Salaries and benefits 1,585
45.9 % 1,724 47.0 % Supplies 565 16.4 % 610 16.6 % Other operating
expenses 858 24.9 % 911 24.9 % Government and other legal
settlements and related costs (j) 2 0.1 % 1 - % Electronic health
records incentive reimbursement (1 ) - % (2 ) - % Rent 83 2.4 % 93
2.5 % Depreciation and amortization 173 5.0 % 206 5.6 % Impairment
and (gain) loss on sale of businesses, net (i) 112
3.2 % 33 0.9 % Total operating costs and expenses
3,377 97.9 % 3,576 97.5 % Income
from operations (f), (i), (j) 74 2.1 % 90 2.5 % Interest expense,
net 256 7.3 % 238 6.5 % Loss from early extinguishment of debt 27
0.8 % 4 0.1 % Equity in earnings of unconsolidated affiliates
(5 ) (0.1 )% (5 ) (0.1 )% Loss from continuing
operations before income taxes (204 ) (5.9 )% (147 ) (4.0 )%
Provision for (benefit from) income taxes 104 3.0 %
(59 ) (1.6 )% Loss from continuing operations (f), (i), (j)
(308 ) (8.9 )% (88 ) (2.4 )% Discontinued
operations, net of taxes: Loss from operations of entities sold or
held for sale - - % (1 ) - % Impairment of hospitals sold or held
for sale - - % (1 ) - % Loss from discontinued
operations, net of taxes - - % (2 ) (0.1 )%
Net loss (308 ) (8.9 )% (90 ) (2.5 )% Less: Net income attributable
to noncontrolling interests 17 0.5 % 20
0.5 % Net loss attributable to Community Health Systems, Inc.
stockholders $ (325 ) (9.4 )% $ (110 ) (3.0 )%
Basic loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (i), (j) $ (2.88 ) $ (0.96 )
Discontinued operations - (0.02 ) Net loss $
(2.88 ) $ (0.98 )
Diluted loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (h), (i), (j) $ (2.88 ) $ (0.96 )
Discontinued operations - (0.02 ) Net loss (h)
$ (2.88 ) $ (0.98 ) Weighted-average number of shares
outstanding (g): Basic 113 112 Diluted
113 112
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Loss (a)(b)(c)(d) (In millions,
except per share amounts) (Unaudited)
Nine Months Ended
September 30, 2018 2017 Amount
% of Net
OperatingRevenues
Amount
% of Net
OperatingRevenues
Operating revenues (net of contractual allowances and discounts) $
14,323 Provision for bad debts 2,028 Net operating
revenues (k) $ 10,702 100.0% 12,295 100.0% Operating
costs and expenses: Salaries and benefits 4,850 45.3% 5,704 46.4%
Supplies 1,773 16.6% 2,056 16.7% Other operating expenses 2,646
24.7% 2,984 24.3% Government and other legal settlements and
related costs (j) 9 0.1% (32) (0.3)% Electronic health records
incentive reimbursement (2) -% (25) (0.2)% Rent 257 2.4% 306 2.5%
Depreciation and amortization 531 5.0% 665 5.4% Impairment and
(gain) loss on sale of businesses, net (i) 314 2.9%
363 3.0% Total operating costs and expenses 10,378 97.0%
12,021 97.8% Income from operations (f), (i), (j) 324
3.0% 274 2.2% Interest expense, net 720 6.7% 706 5.7% (Gain) loss
from early extinguishment of debt (32) (0.3)% 35 0.3% Equity in
earnings of unconsolidated affiliates (17) (0.2)%
(13) (0.1)% Loss from continuing operations before income taxes
(347) (3.2)% (454) (3.7)% Provision for (benefit from) income taxes
58 0.6% (74) (0.6)% Loss from continuing operations
(f), (i), (j) (405) (3.8)% (380) (3.1)%
Discontinued operations, net of taxes: Loss from operations of
entities sold or held for sale - -% (4) -% Impairment of hospitals
sold or held for sale - -% (6) -% Loss from
discontinued operations, net of taxes - -% (10)
(0.1)% Net loss (405) (3.8)% (390) (3.2)% Less: Net income
attributable to noncontrolling interests 55 0.5% 56
0.4% Net loss attributable to Community Health Systems, Inc.
stockholders $ (460) (4.3)% $ (446) (3.6)%
Basic loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (i), (j) $ (4.08) $ (3.91) Discontinued
operations - (0.08) Net loss $ (4.08) $ (3.99)
Diluted loss per share attributable to
Community Health Systems, Inc. common stockholders:
Continuing operations (f), (h), (i), (j) $ (4.08) $ (3.91)
Discontinued operations - (0.08) Net loss (h) $
(4.08) $ (3.99) Weighted-average number of shares
outstanding (g): Basic 113 112 Diluted 113
112
____
For footnotes, see pages 12, 13, 14, 15
and 16.
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, 2018
2017 2018 2017 Net loss $ (308 ) $ (90
) $ (405 ) $ (390 ) Other comprehensive income (loss), net of
income taxes: Net change in fair value of interest rate swaps, net
of tax 2 5 26 8 Net change in fair value of available-for-sale
securities, net of tax - 2 (2 ) 7
Amortization and recognition of
unrecognized pension cost components, net of tax
- 1 1 2
Other comprehensive income 2 8
25 17 Comprehensive loss (306 ) (82 ) (380 )
(373 ) Less: Comprehensive income attributable to noncontrolling
interests 17 20 55
56
Comprehensive loss attributable to
Community Health Systems, Inc. stockholders
$ (323 ) $ (102 ) $ (435 ) $ (429 )
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS, INC. AND
SUBSIDIARIES Selected Operating Data (a)(c) (Dollars in
millions) (Unaudited)
Three Months Ended
September 30, Consolidated Same-Store 2018
2017 % Change 2018 2017 % Change
Number of hospitals (at end of period) 118 133 117 117 Licensed
beds (at end of period) 19,684 22,012 19,558 19,562 Beds in service
(at end of period) 17,294 19,616 17,184 17,369 Admissions 150,730
171,994 -12.4 % 148,786 152,261 -2.3 % Adjusted admissions 330,681
376,597 -12.2 % 326,969 329,566 -0.8 % Patient days 669,035 756,186
661,106 671,487 Average length of stay (days) 4.4 4.4 4.4 4.4
Occupancy rate (average beds in service) 41.7 % 41.8 % 41.8 % 42.0
% Net operating revenues (k) $ 3,451 $ 3,666 -5.9 % $ 3,434 $ 3,329
3.2 %
Net inpatient revenues as a % of net
operating revenues
47.1 % 47.6 % 47.0 % 47.8 %
Net outpatient revenues as a % of net
operating revenues
52.9 % 52.4 % 53.0 % 52.2 % Income from operations (f), (i), (j) $
74 $ 90 -17.8 %
Income from operations as a % of net
operating revenues
2.1 % 2.5 % Depreciation and amortization $ 173 $ 206 Equity in
earnings of unconsolidated affiliates $ (5 ) $ (5 )
Net loss attributable to Community Health
Systems, Inc. stockholders
$ (325 ) $ (110 ) -195.5 %
Net loss attributable to Community Health
Systems, Inc. stockholders as a % of net operating revenues
-9.4 % -3.0 % Adjusted EBITDA (e) $ 372 $ 331 12.4 %
Adjusted EBITDA as a % of net operating
revenues
10.8 % 9.0 % Net cash provided by operating activities $ 346 $ 114
203.5 %
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS, INC. AND
SUBSIDIARIES Selected Operating Data (a)(c) (Dollars in
millions) (Unaudited)
Nine Months Ended
September 30, Consolidated Same-Store 2018
2017 % Change 2018 2017 % Change
Number of hospitals (at end of period) 118 133 117 117 Licensed
beds (at end of period) 19,684 22,012 19,558 19,562 Beds in service
(at end of period) 17,294 19,616 17,184 17,369 Admissions 478,919
573,671 -16.5 % 459,100 470,345 -2.4 % Adjusted admissions
1,031,390 1,241,327 -16.9 % 990,839 1,000,241 -0.9 % Patient days
2,150,553 2,569,587 2,069,294 2,105,434 Average length of stay
(days) 4.5 4.5 4.5 4.5 Occupancy rate (average beds in service)
43.6 % 43.5 % 44.0 % 44.4 % Net operating revenues (k) $ 10,702 $
12,295 -13.0 % $ 10,396 $ 10,131 2.6 %
Net inpatient revenues as a % of net
operating revenues
47.8 % 47.9 % 47.6 % 48.5 %
Net outpatient revenues as a % of net
operating revenues
52.2 % 52.1 % 52.4 % 51.5 % Income from operations (f), (i), (j) $
324 $ 274 18.2 %
Income from operations as a % of net
operating revenues
3.0 % 2.2 % Depreciation and amortization $ 531 $ 665 Equity in
earnings of unconsolidated affiliates $ (17 ) $ (13 )
Net loss attributable to Community Health
Systems, Inc. stockholders
$ (460 ) $ (446 ) -3.1 %
Net loss attributable to Community Health
Systems, Inc. stockholders as a % of net operating revenues
-4.3 % -3.6 % Adjusted EBITDA (e) $ 1,223 $ 1,294 -5.5 %
Adjusted EBITDA as a % of net operating
revenues
11.4 % 10.5 % Net cash provided by operating activities $ 440 $ 617
-28.7 %
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS,
INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets (In millions, except share data) (Unaudited)
September 30, 2018 December 31, 2017 ASSETS
Current assets Cash and cash equivalents $ 335 $ 563 Patient
accounts receivable (k) 2,347 2,384 Supplies 424 444 Prepaid income
taxes 17 17 Prepaid expenses and taxes 191 198 Other current assets
410 462 Total current assets
3,724 4,068 Property and equipment, gross
10,986 11,497 Less accumulated depreciation and amortization
(4,416 ) (4,445 ) Property and equipment, net 6,570
7,052 Goodwill 4,631
4,723 Deferred income taxes - 62
Other assets, net 1,544 1,545 Total
assets $ 16,469 $ 17,450
LIABILITIES AND
STOCKHOLDERS’ DEFICIT Current liabilities Current maturities of
long-term debt $ 35 $ 33 Accounts payable 816 967 Accrued
liabilities: Employee compensation 630 685 Accrued interest 258 229
Other (b) 740 442 Total current
liabilities 2,479 2,356 Long-term debt
(l) 13,535 13,880 Deferred income taxes
39 19 Other long-term liabilities (b)
1,051 1,360 Total liabilities
17,104 17,615 Redeemable noncontrolling
interests in equity of consolidated subsidiaries 495
527 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; 116,245,071 shares issued and
outstanding at September 30, 2018, and 114,651,004 shares issued
and outstanding at December 31, 2017
1 1 Additional paid-in capital 2,011 2,014 Accumulated other
comprehensive loss (8 ) (21 ) Accumulated deficit (3,209 )
(2,761 ) Total Community Health Systems, Inc. stockholders’
deficit (1,205 ) (767 ) Noncontrolling interests in equity of
consolidated subsidiaries 75 75 Total
stockholders’ deficit (1,130 ) (692 ) Total
liabilities and stockholders’ deficit $ 16,469 $ 17,450
____
For footnotes, see pages 12, 13, 14, 15
and 16.
COMMUNITY HEALTH SYSTEMS,
INC. AND SUBSIDIARIES Condensed Consolidated Statements of
Cash Flows (In millions) (Unaudited)
Nine Months
Ended September 30, 2018 2017 Cash flows
from operating activities Net loss $ (405 ) $ (390 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 531 665 Government and other legal
settlements and related costs (j) 9 8 Stock-based compensation
expense 10 20 Impairment of hospitals sold or held for sale - 6
Impairment and (gain) loss on sale of businesses, net (i) 314 363
(Gain) loss from early extinguishment of debt (32 ) 35 Other
non-cash expenses, net 25 24 Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures:
Patient accounts receivable 38 229 Supplies, prepaid expenses and
other current assets 14 (37 ) Accounts payable, accrued liabilities
and income taxes (47 ) (215 ) Other (17 ) (91 ) Net
cash provided by operating activities 440 617
Cash flows from investing activities Acquisitions of
facilities and other related businesses (21 ) (4 ) Purchases of
property and equipment (413 ) (428 ) Proceeds from disposition of
hospitals and other ancillary operations 228 1,666 Proceeds from
sale of property and equipment 7 4 Purchases of available-for-sale
securities and equity securities (50 ) (85 ) Proceeds from sales of
available-for-sale securities and equity securities 75 133 Increase
in other investments (76 ) (95 ) Net cash (used in)
provided by investing activities (250 ) 1,191
Cash flows from financing activities Repurchase of
restricted stock shares for payroll tax withholding requirements (1
) (5 ) Deferred financing costs and other debt-related costs (93 )
(66 ) Proceeds from noncontrolling investors in joint ventures 2 5
Redemption of noncontrolling investments in joint ventures (27 ) (5
) Distributions to noncontrolling investors in joint ventures (74 )
(79 ) Borrowings under credit agreements 24 839 Issuance of
long-term debt 1,033 3,100 Proceeds from ABL and receivables
facility 587 26 Repayments of long-term indebtedness (1,869
) (5,271 ) Net cash used in financing activities (418
) (1,456 ) Net change in cash and cash equivalents
(228 ) 352 Cash and cash equivalents at beginning of period
563 238 Cash and cash equivalents at end of
period $ 335 $ 590
____
For footnotes, see pages 12, 13, 14, 15
and 16.
Footnotes to Financial Highlights,
Financial Statements and Selected Operating Data
(a) Continuing operating results exclude discontinued
operations for the three and nine months ended September 30, 2018
and 2017. Both financial and statistical results exclude entities
in discontinued operations for all periods presented. In addition,
financial and statistical results include the operating results of
divested hospitals through the effective closing date of each
respective divestiture. Same-store operating results exclude the
results of the hospitals divested in 2018 and 2017. (b) The
contingent value right (“CVR”) was issued to shareholders of Health
Management Associates, Inc. (“HMA”) as part of the merger
consideration in the Company’s acquisition by merger of HMA in 2014
(the “HMA Merger”). The CVR entitles the holder to receive a cash
payment up to $1.00 per CVR (subject to downward adjustment but not
below zero), subject to the final resolution of certain legal
matters pertaining to HMA, as defined in the CVR agreement. If the
aggregate amount of applicable losses under the CVR agreement
exceeds a deductible of $18 million, then the amount payable in
respect of each CVR shall be reduced (but not below zero) by an
amount equal to the quotient obtained by dividing: (a) the product
of (i) all losses in excess of the deductible and (ii) 90%; by (b)
the number of CVRs outstanding on the date on which final
resolution of the existing litigation occurs. On September
25, 2018, the Company issued a press release to announce a global
resolution and settlement agreements ending the U.S. Department of
Justice investigation into certain conduct of HMA and its
affiliated entities and settling qui tam lawsuits that were
initiated and pending, and known to the Company, before the HMA
Merger. Since the HMA acquisition date of January 27, 2014, prior
to giving effect to the global settlement as noted in the table
below, approximately $36 million in costs have been incurred and
approximately $30 million of settlements have been paid related to
certain HMA legal matters, which collectively exceed the deductible
of $18 million under the CVR agreement. The Company previously
recorded an estimated liability at fair value of the remaining
underlying claims that are covered by the CVR agreement as part of
the acquisition accounting for HMA. This liability has been
adjusted as of September 30, 2018, to take into account the
settlement amount contemplated by the global settlement agreements,
including interest, of $266 million and has been reclassified as a
current liability in other accrued liabilities on the condensed
consolidated balance sheet at September 30, 2018. This settlement
amount will be paid in the fourth quarter of 2018. In addition,
although future legal fees (which are expensed as incurred) and any
attorney fees claimed for reimbursement by the relators associated
with the HMA legal matters (including the global settlement noted
above) have not been accrued or included in the table below, such
legal fees and attorney fees are to be taken into account in
determining the total amount of reductions applied to the amounts
owed to CVR holders. The Company is currently in the process of
reviewing the final payment amount required for the CVR as defined
in the CVR agreement. However, based on the total costs incurred
and settlements paid (including with respect to the global
settlement) as summarized below, the Company anticipates that no
payment will be due to the CVR holders. The following table
presents the impact of the paid and recorded amounts as described
above as applied to the CVR and the $18 million deductible and 10%
co-insurance amounts (in millions):
As of
September 30, 2018 Legal and other related costs
incurred to date $ 36 Settlements paid 30 Settlements accrued based
on final amounts 266 Estimated liability for unresolved
contingencies -
Costs incurred plus certain estimated
liabilities for CVR-related matters
332 Allocated to: CHS deductible of $18 million (18 ) CHS
co-insurance at 10% (29 )
Recorded amounts that reduce CVR value
after giving effect to deductible and co-insurance
$ 285 CVRs outstanding 265 (c)
Included in discontinued operations for the three and nine
months ended September 30, 2017, are three smaller hospitals, one
of which is being actively marketed for sale (and is no longer
separately presented as discontinued operations) and two hospitals
that have been sold. The after-tax loss for the sold or held for
sale hospitals, was approximately $2 million and $10 million for
the three and nine months ended September 30, 2017, respectively.
Footnotes to Financial Highlights,
Financial Statements and Selected Operating Data
(Continued)
(d) 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, 2018
2017 2018 2017
Loss from continuing operations
attributable to Community Health Systems, Inc. common
stockholders:
Loss from continuing operations, net of taxes $ (308 ) $ (88 ) $
(405 ) $ (380 )
Less: Income from continuing operations
attributable to noncontrolling interests, net of taxes
17 20 55 56
Loss from continuing operations
attributable to Community Health Systems, Inc. common stockholders
— basic and diluted
$ (325 ) $ (108 ) $ (460 ) $ (436 )
Loss from discontinued operations
attributable to Community Health Systems, Inc. common
stockholders:
Loss from discontinued operations, net of taxes $ - $ (2 ) $ - $
(10 )
Less: Loss from discontinued operations
attributable to noncontrolling interests, net of taxes
- - - -
Loss from discontinued operations
attributable to Community Health Systems, Inc. common stockholders
— basic and diluted
$ - $ (2 ) $ - $ (10 ) (e) 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 the effect
of discontinued operations, loss (gain) from early extinguishment
of debt, impairment and (gain) loss on sale of businesses, gain on
sale of investments in unconsolidated affiliates, expense incurred
related to the spin-off of QHC, expense incurred related to the
sale of a majority ownership interest in the Company’s home care
division, expense (income) related to government and other legal
settlements and related costs, expense related to employee
termination benefits and other restructuring charges, expense
(income) from settlement and fair value adjustments on the CVR
agreement liability related to the HMA legal proceedings and
related legal expenses, and the overall impact of the change in
estimate related to net patient revenue recorded in the fourth
quarter of 2017 resulting from the increase in contractual
allowances and the provision for bad debts. 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 targets used to determine short-term cash
incentive compensation. 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 senior secured
credit facility, which is a key component in the determination of
the Company’s compliance with some of the covenants under the
Company’s senior secured credit 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 senior secured credit facility (although Adjusted EBITDA
does not include all of the adjustments described in the senior
secured credit facility).
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 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, 2018 2017 2018
2017
Net loss attributable to Community Health
Systems, Inc. stockholders
$ (325 ) $ (110 ) $ (460 ) $ (446 ) Adjustments: Provision for
(benefit from) income taxes 104 (59 ) 58 (74 ) Depreciation and
amortization 173 206 531 665 Net income attributable to
noncontrolling interests 17 20 55 56 Loss from discontinued
operations - 2 - 10 Interest expense, net 256 238 720 706 Loss
(gain) from early extinguishment of debt 27 4 (32 ) 35 Impairment
and (gain) loss on sale of businesses, net 112 33 314 363
Expense (income) from government and other
legal settlements and related costs
2 1 9 (32 )
Expense (income) from settlement and fair
value adjustments and legal expenses related to cases covered by
the CVR
4 (6 ) 13 6 Expense related to the sale of a majority interest in
home care division - - - 1
Expense related to employee termination
benefits and other restructuring charges
2 2 15 4
Adjusted EBITDA $ 372 $ 331 $ 1,223 $ 1,294
(f) Included in non-same-store loss from
operations and loss from continuing operations are pre-tax charges
related to acquisition costs of less than $1 million for both the
three-month periods ended September 30, 2018 and 2017, and $2
million and $1 million for the nine-month periods ended September
30, 2018 and 2017, respectively. (g) 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,
2018 2017 2018
2017
Weighted-average number of shares
outstanding - basic
113 112 113 112 Add effect of dilutive securities: Stock awards and
options - - - -
Weighted-average number of shares
outstanding - diluted
113 112 113 112 The Company generated a loss from
continuing operations attributable to Community Health Systems,
Inc. common stockholders for the three and nine months ended
September 30, 2018 and 2017, so the effect of dilutive securities
is not considered because their effect would be antidilutive. If
the Company had generated income from continuing operations, the
effect of restricted stock awards on the diluted shares calculation
would have been an increase of 4,001 shares and 148,768 shares
during the three months ended September 30, 2018 and 2017,
respectively, and 41,705 shares and 147,618 shares during the nine
months ended September 30, 2018 and 2017, respectively.
Footnotes to Financial Highlights,
Financial Statements and Selected Operating Data
(Continued)
(h) The following supplemental tables reconcile loss from
continuing operations and net loss attributable to Community Health
Systems, Inc. common stockholders, as reported, on a per share
(diluted) basis, 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 loss from continuing
operations per share (diluted) and non-GAAP adjusted net loss
attributable to Community Health Systems, Inc. common stockholders
presents useful information to investors through highlighting the
impact on earnings per share of selected items used in calculating
Adjusted EBITDA.
Three Months Ended
Nine Months Ended September 30, September
30, 2018 2017 2018
2017 Loss from continuing operations, as
reported $ (2.88 ) $ (0.96 ) $ (4.08 ) $ (3.91 ) Adjustments: Loss
(gain) from early extinguishment of debt 0.19 0.02 (0.22 ) 0.20
Impairment and (gain) loss on sale of businesses, net 0.79 0.19
2.32 2.87
Expense (income) from government and other
legal settlements and related costs
0.01 0.01 0.06 (0.19 ) Expense (income) from settlement and fair
value adjustments and legal expenses related to cases covered by
the CVR 0.03 (0.04 ) 0.09 0.05
Expense related to employee termination
benefits and other restructuring charges
0.02 0.01 0.11 0.03 Tax effect of non-deductible portion of HMA
legal settlement 0.21 - 0.21
-
Loss from continuing operations, excluding
adjustments
$ (1.64 ) $ (0.77 ) $ (1.52 ) $ (0.95 )
Three
Months Ended Nine Months Ended September 30,
September 30, 2018 2017 2018
2017 Net loss, as reported $ (2.88 ) $ (0.98 ) $
(4.08 ) $ (3.99 ) Adjustments: Loss (gain) from early
extinguishment of debt 0.19 0.02 (0.22 ) 0.20 Impairment and (gain)
loss on sale of businesses, net 0.79 0.19 2.32 2.87
Expense (income) from government and other
legal settlements and related costs
0.01 0.01 0.06 (0.19 )
Expense (income) from settlement and fair
value adjustments and legal expenses related to cases covered by
the CVR
0.03 (0.04 ) 0.09 0.05
Expense related to employee termination
benefits and other restructuring charges
0.02 0.01 0.11 0.03 Tax effect of non-deductible portion of HMA
legal settlement 0.21 - 0.21 - Impairment of long-lived assets in
discontinued operations - 0.01 -
0.05 Net loss, excluding adjustments $ (1.64 )
$ (0.79 ) $ (1.52 ) $ (0.98 )
Footnotes to Financial Highlights,
Financial Statements and Selected Operating Data
(Continued)
(i) Both income from operations and loss from continuing
operations for the three and nine months ended September 30, 2018,
included non-cash expense of approximately $112 million and $314
million, respectively, related to impairment charges to reduce the
value of long-lived assets, including allocated goodwill, at
hospitals that the Company has identified for sale or sold. Both
income from operations and loss from continuing operations for the
three and nine months ended September 30, 2017, included non-cash
expense of approximately $33 million and $363 million,
respectively, related to impairment charges to reduce the value of
long-lived assets, including allocated goodwill, at hospitals that
the Company has identified for sale or sold. These impairment
charges do not have an impact on the calculation of the Company’s
financial covenants under the Company’s Credit Facility. (j)
The $(0.01) per share (diluted) and $(0.06) per share (diluted) of
expense for “Government and other legal settlements and related
costs” for the three and nine months ended September 30, 2018,
respectively, is the net impact of several lawsuits settled in
principle during the related periods, and related legal expenses.
The $(0.01) per share (diluted) of expense for “Government and
other legal settlements and related costs” for the three months
ended September 30, 2017, is the settlement in principle of several
lawsuits during the three months ended September 30, 2017, and
related legal expenses. The $0.19 per share (diluted) of income for
“Government and other legal settlements and related costs” for the
nine months ended September 30, 2017, is primarily the impact of
the shareholder derivative action settled during the nine months
ended September 30, 2017, net of related legal expenses. (k)
On January 1, 2018, the Company adopted the new revenue recognition
accounting standard issued by the Financial Accounting Standards
Board (“FASB”) and codified in the FASB Accounting Standards
Codification (“ASC”) as topic 606 (“ASC 606”). The revenue
recognition standard in ASC 606 outlines a single comprehensive
model for recognizing revenue as performance obligations, defined
in a contract with a customer as goods or services transferred to
the customer in exchange for consideration, are satisfied.
The Company applied the modified retrospective approach to all
contracts when adopting ASC 606. As a result, the majority of what
was previously classified as the provision for bad debts in the
statement of loss is now reflected as implicit price concessions
(as defined in ASC 606) and therefore included as a reduction to
net operating revenues in 2018. For changes in credit issues not
assessed at the date of service, the Company will prospectively
recognize those amounts as a component of operating costs and
expenses. For periods prior to the adoption of ASC 606, the
provision for bad debts has been presented consistent with the
previous revenue recognition standards that required it to be
presented separately as a component of net operating revenues.
Additionally, upon adoption of ASC 606 the allowance for doubtful
accounts of approximately $3.9 billion at December 31, 2017 was
reclassified as a component of net patient accounts receivable.
(l) For the 12-month period ended September 30, 2018, the
first lien net debt to consolidated EBITDA leverage ratio financial
covenant under the Company’s Credit Facility limited the ratio of
first lien net debt to consolidated EBITDA, as defined, to less
than or equal to 5.0 to 1.00. We were in compliance with all such
covenants at September 30, 2018, with a first lien net debt to
consolidated EBITDA leverage ratio of approximately 4.6 to 1.00.
Regulation FD Disclosure
Set forth below is selected information concerning the Company’s
projected consolidated operating results for the year ending
December 31, 2018. These projections update selected guidance
provided on July 26, 2018, 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 2018 guidance should be considered in conjunction with the
assumptions included herein. See pages 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:
2018 Projection Range Net operating revenues
(in millions) $ 14,000 to $ 14,200 Adjusted EBITDA
(in millions) $ 1,600 to $ 1,650 Loss from continuing operations
per share - diluted $ (2.25 ) to $ (2.10 ) Same-store hospital
annual adjusted admissions (1.0 )% to - % Weighted-average diluted
shares 113 million
The following assumptions were used in developing the 2018
guidance provided above:
- The 2018 projections include the impact
of completed divestitures and announced divestitures subject to a
definitive agreement expected to close in 2018.
- The Company’s projections also exclude
the following:
- Effect of debt refinancing activities,
including gains and losses from early extinguishment of debt;
- Impairment of goodwill and long-lived
assets;
- Gains or losses from the sales of
businesses;
- Employee termination benefits and
restructuring costs;
- Resolution of government investigations
or other significant legal settlements, including the $266 million
HMA legal global settlement that will be paid in the fourth quarter
of 2018;
- Costs incurred in connection with
divestitures;
- Insurance recoveries that may be
received for property losses and business interruption coverage
related to Hurricanes Harvey, Irma, Florence and Michael;
- Changes in the estimated impact of the
Tax Cuts and Jobs Act (“Tax Act”) on our deferred tax assets and
liabilities; 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:
- Health Information Technology (HITECH)
electronic health records incentive reimbursement will be zero for
the year ending December 31, 2018.
- Same-store hospital annual adjusted
admissions decline of (1.0)% to 0.0% for 2018, which does not take
into account service closures and weather-related or other unusual
events.
- Expressed as a percentage of net
operating revenues, depreciation and amortization of approximately
5.0% for 2018. Additionally, this is a fixed cost and the
percentages may change as revenue varies. Such amounts exclude the
possible impact of any future hospital fixed asset
impairments.
- Interest expense, expressed as a
percentage of net operating revenues, of approximately 7.0%;
however, interest expense may vary as revenue varies. Interest
expense has been adjusted to reflect the repayment of debt with
proceeds from the divestitures noted above, based on the expected
timing of those divestitures. Total fixed rate debt, including
swaps, is expected to average approximately 90% to 95% of total
debt during 2018.
- Expressed as a percentage of net
operating revenues, net income attributable to noncontrolling
interests of approximately 0.5% for 2018.
- Expressed as a percentage of net
operating revenues, provision for income taxes of approximately
0.7% to 0.8% for 2018.
A reconciliation of the Company’s projected
2018 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:
Year Ending December 31, 2018
Low High
Net loss attributable to Community Health
Systems, Inc. stockholders (1)
$ (254 ) $ (237 ) Adjustments: Depreciation and amortization 700
710 Interest expense, net 980 990 Provision for income taxes 104
112 Net income attributable to noncontrolling interests 70
75 Adjusted EBITDA (1) $ 1,600 $ 1,650
(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, (gains) losses from early extinguishment of debt,
impairment and (gain) loss on sale of businesses, and expense
(income) related to government and other legal settlements 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):
2018 Guidance
Total $ 500 to $ 575
- Net cash provided by operating
activities, excluding the payment of the HMA legal global
settlement noted above, and including accelerated interest payments
of approximately $60 million and increased interest payments from
higher interest rates of approximately $65 million associated with
debt refinancing, is projected as follows (in millions):
2018 Guidance
Total $ 550 to $ 650
- Diluted weighted-average shares
outstanding are projected to be approximately 113.0 million for
2018.
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;
- the impact of changes made to the
Affordable Care Act, the potential for repeal or additional changes
to the Affordable Care Act, its implementation or its
interpretation (including through executive orders), as well as
changes in other federal, state or local laws or regulations
affecting our business;
- the extent to 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, and the fact
that a substantial portion of our indebtedness will mature and
become due in the near future, including our ability to refinance
such indebtedness on acceptable terms or to incur additional
indebtedness;
- demographic changes;
- changes in, or the failure to comply
with, governmental regulations;
- 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 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;
- 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;
- our ongoing ability to demonstrate
meaningful use of certified electronic health record technology and
recognize income for the related Medicare or Medicaid incentive
payments, to the extent such payments have not expired;
- 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;
- changes in medical or other
technology;
- changes in U.S. generally accepted
accounting principles;
- 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
(including to realize the anticipated amount of proceeds from
contemplated dispositions), 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 general and professional liability insurance;
- timeliness of reimbursement payments
received under government programs;
- effects related to outbreaks of
infectious diseases;
- the impact of prior or potential future
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 Act; and
- the other risk factors set forth in our
Annual Report on Form 10-K for the year ended December 31, 2017,
filed with the Securities and Exchange Commission on February 28,
2018, and our other public filings with the Securities and Exchange
Commission.
The consolidated operating results for the three and nine months
ended September 30, 2018, are not necessarily indicative of the
results that may be experienced for any future periods. The Company
cautions that the projections for calendar year 2018 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, 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/20181029005678/en/
Community Health Systems, Inc.Thomas J. Aaron,
615-465-7000Executive Vice President and Chief Financial
Officer
Community Health Systems (NYSE:CYH)
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