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Why Community Health Systems Stock Is Jumping Today

What happened

Shares of Community Health Systems (NYSE: CYH) were 11.3% higher as of 1:08 p.m. EDT on Tuesday. The nice gain came after the hospital operator announced its second-quarter earnings results after the market closed on Monday.

So what

You might think that Community Health Systems' Q2 results were fantastic based on the stock performance today. That wasn't really the case, though.

The company reported revenue of $3.3 billion, down 7.2% from the prior-year period. It also announced a net loss of $167 million, or $1.47 per share, on a generally accepted accounting principles (GAAP) basis. That result was worse than the GAAP net loss of $110 million, or $0.97 per share, posted in the same quarter of 2018.

Signs pointing to emergency room and main entrance of a hospital

Image source: Getty Images.

So, what was there to like with Community Health Systems' Q2 update? For one thing, the company beat the consensus Wall Street Q2 revenue estimate of $3.3 billion. Also, the hospital operator's non-GAAP adjusted net loss of $0.47 per share was better than the net loss of $0.51 per share expected by analysts.

Investors appeared to appreciate that Community Health Systems is making progress. They understand that the divestitures of some hospitals will cause revenue to decline but hopefully enable the company to continue improving its bottom line.

Now what

Community Health Systems Chairman and CEO Wayne T. Smith stated that the company thinks that its continued execution of strategic initiatives and controlling expenses "will lead to incremental growth in the back half of the year." Those strategic initiatives include improving safety and quality and engaging more with Accountable Care Organizations (ACOs).

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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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