Shares of Community Health Systems have jumped more than 40 percent this week after the hospital giant posted strong end-of-year revenues and its largest increase in same-story admissions since 2008.
Fourth-quarter revenues at Franklin-based CHS totaled $3.3 billion, a 5 percent decrease year-over-year but with a smaller hospital portfolio. CHS ended the year with more than $13.2 billion in revenue.
Adjusted admissions rose 1.8 percent for the quarter, contributing to the 2.2 percent same-store increase overall in 2019 — the strongest admissions performance the company has seen in over a decade. Full-year same-store net revenue growth was 4.2 percent, which was the company's strongest performance since 2012.
Through 2018 and 2019, CHS sold 26 facilities as part of its larger divestiture plan to cut low-performing facilities — many of them acquired with Health Management Associates in 2014 — from its hospital portfolio. The sales accounted for about $2.3 billion of net revenue. Company leaders said they plan to complete their divestiture strategy by the middle of this year and are expecting $300 million from those deals.
As they complete the transitions of those hospitals, executives will begin to shift their resources toward their reshaped portfolio. (Once a rural hospital operator, more than 80 percent of CHS’s hospitals are now in markets with 50,000 people or more.) The team sought to drive efficiencies and cut costs at their remaining 101 hospitals — and are reporting stronger EBITDA numbers because of it. Year-over-year, salaries, supplies and other operating expenses as a percent of revenues were down 1.8 points.
“In terms of our forward look on those markets [...], investments in the infrastructure around the ACOs, the transfer centers, the medical staff development, the physician practices, our service line focus, all those things we believe we have a stronger core portfolio to invest in which will help us deliver [...] growth as we provided throughout our guidance,” President and COO Tim Hingtgen said in an earnings call to investors.
CHS is, however, still posting losses. In the fourth quarter, the company posted a net loss of $373 million, still largely attributable to its immense debt load and a one-time $68 million impairment charge. The company paid $259 million in interest in the last quarter of 2019 but execs said the refinancing of maturing debt last October will help them raise profit margins these next key years.
In January, CHS shares climbed 10 percent after previewing 2020 guidance. Those numbers remain unchanged as the company anticipates operating revenues to range from $12.4 billion to $12.8 billion. Adjusted EBITDA is anticipated to be $1.65 billion to $1.8 billion.
Shares of CHS (Ticker: CYH) were up 5 percent Friday afternoon to $7.07. They began the week at about $4.76. Six months ago, they were changing hands at $2.
This story first ran in our sister publication the Nashville Post.