A 14 percent decline in admissions and increased operational costs contributed to a $64 million net loss for Franklin-based Community Health Systems during the first quarter, but executives are encouraged by March trends.
Revenues for the hospital operator topped $3 billion between January and March, down 0.4 percent from the number of the same quarter last year that saw an elective surgery ban at the end of March but when CHS had more hospitals in its portfolio. Adjusted EBITDA for the quarter was $495 million, boosted by $82 million in pandemic relief funds from state and local governments. The company has also received $708 million in federal funding intended to compensate health care providers for lost revenues and incremental expenses.
CEO Tim Hingtgen said the company saw volumes increase and costs decrease month-over-month through the quarter as COVID-19 patients took up less hospital beds. Those trends are expected to continue throughout the rest of the year as the pandemic wanes, he said, at which point the company intends to shift its focus to recapturing deferred care.
“We believe we will sequentially improve each quarter. It’s still earlier in the year and there are still some uncertainties but we are seeing the effectiveness and delivery of the vaccines continue to grow and COVID cases are coming down and moderating at a much lower level,” Hingtgen said in a call with investors on Thursday. “With that, we expect to continue to recover a lot of the deferred procedures that have been out there, particularly around the higher acuity, elective procedures that have not yet come back.”
With the close of CHS’ divestiture plan, which sold off nearly 21 hospitals and centered the company’s portfolio in growing Sunbelt states, executives are now working on reaching EBITDA margins of 15 percent by reducing expenses relative to staffing and supplies and increasing revenue through capturing higher acuity patients by establishing their facilities as regional transfer centers.
CHS executives project the company will end 2021 with revenues from $11.7 billion to $12.5 billion and an adjusted EBITDA ranging from $1.65 billion to $1.8 billion. Company shares (Ticker: CYH) were up 8 percent Friday afternoon to $11.18 after a dip on Thursday. At the beginning of April, CHS shares were at their highest level since 2016, trading hands for $14.39.