Community Health Systems Slips To Q1 Loss, Trims 2014 Outlook

By RTT News, 
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(RTTNews.com) - Health-care services provider Community Health Systems, Inc. ( CYH ), which acquired smaller rival Health Management Associates, Inc. in late January, reported Tuesday a net loss for the first quarter compared to a loss last year, reflecting higher operating costs and expenses as well as hefty charges.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. The company also lowered the top end of its earnings and revenue guidance range for the full-year 2014.

The company completed its $7.6 billion cash and stock deal to acquire Health Management Associates on January 27, which was agreed upon on July 30, 2013.

"We are pleased with our accomplishments for the first quarter of 2014 during what has been a challenging, yet significant period for Community Health Systems. This is the first quarter that we have reported our combined operations with HMA, and we have been fully engaged in the integration of these additional hospitals," Chairman and CEO Wayne Smith said in a statement.

The company added that the overall results for the quarter were affected by the severe winter weather in several key markets and lower flu volumes compared to the previous year.

The Franklin, Tennessee-based hospitals operator reported a net loss of $112 million or $1.04 per share for the first quarter, compared to net income of $79 million or $0.86 per share in the prior-year quarter.

Loss from continuing operations for the quarter was $92 million or $0.86 per share, compared to income of $81 million or $0.88 per share last year.

Results for the latest quarter primarily include $0.30 per share of expenses related to acquisition and integration expenses from the acquisition of HMA, and $0.42 per share of expenses related to the loss from early extinguishment of debt.

Excluding items, adjusted income per share from continuing operations was $0.27, compared to last year's $0.89. On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Net operating revenues for the quarter grew 28.1 percent to $4.20 billion from $3.27 billion in the same quarter last year, but missed twenty Wall Street analysts' consensus estimate of $4.31 billion. On a same-store basis, net operating revenues decreased 4.0 percent.

Total admissions for the quarter increased 24.7 percent and total adjusted admissions grew 28.4 percent from last year. Meanwhile, same hospital admissions decreased 8.1 percent, and adjusted same hospital admissions declined 5.3 percent.

Operating margins for the quarter contracted 460 basis points to 4.2 percent from last year as total costs and expenses as a percentage of total revenues increased 460 basis points.

Looking ahead to fiscal 2014, Health Management now expects earnings from continuing operations in a range of $2.70 to $3.20 per share, on projected revenues between $19.0 billion and $19.80 billion.

Street is currently looking for full-year 2014 earnings of $2.92 per share on revenues of $19.27 billion.

Previously, the company projected earnings from continuing operations in the range of $2.70 to $3.75 per share, and revenues between $19.0 billion and $20.20 billion.

"However, we have started to see some positive trends in our operations related to the implementation of The Affordable Care Act. We continue to focus on our volume trends and expense management in this evolving healthcare environment," Smith added.

CYH closed Tuesday's regular trading session at $39.42, down $0.44 or 1.10% on a volume of 1.96 million shares.

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This article appears in: Earnings

Referenced Stocks: CYH , TRI

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