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Community Health (CYH) Down 11.2% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Community Health Systems, Inc.CYH . Shares have lost about 11.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Community Health Systems Q1 Earnings Beat Estimates

Community Health Systems reported adjusted earnings of $0.08 per share in the first quarter of 2017, which beat the Zacks Consensus Estimate by 33%.

The company had incurred a loss of $1.79 per share in the first quarter, wider than a loss of $0.10 in the year-ago quarter.

Quarterly Operational Update:

In the first quarter, net operating revenue of $4.5 billion surpassed the Zacks Consensus Estimate by 3.3% but decreased 10.3% year over year.

Total admissions of 2.1 billion decreased 11.5% and adjusted admissions of 4.5 billion declined 12.5%, both on a year-over-year basis. On a same-store basis, admissions dipped 1.5% and adjusted admissions were down 1.4%, both on a year-over-year basis.

In the reported quarter, total operating expense declined 6.2% to $4.4 billion, primarily due to lower salaries and benefits paid to employees, depreciation & amortization-related expenses and other operating costs.

Financial Update:

As of Mar 31, 2017, the company's total assets declined 13% year over year to $21.7 billion. Cash and cash equivalent grew 38% year over year to $247 million.

The company paid off a substantial portion of its debt through divestures. It now has a long-term debt of $14.7 billion as of Mar 31, 2017, down 0.7% year over year.

Total shareholders' equity was $1.43 billion as of Mar 31, 2017, down 11.5% from year-end 2016.

Cash flow from operations was $242 million at the end of the first quarter, down 17.7% year over year from $294 million.

2017 Guidance

Community Health expects net operating revenue (less provision for bad debts) in the range of $15.8 billion to $16.2 billion.

The company projects adjusted EBITDA for 2017 in the range of $2-$2.175 billion.

Weighted-average diluted shares is expected the band of $112-$113 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to nine lower. In the past month, the consensus estimate has shifted down by 55.6% due to these changes.

Community Health Systems, Inc. Price and Consensus

Community Health Systems, Inc. Price and Consensus | Community Health Systems, Inc. Quote

VGM Scores

At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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