Community Health Systems, Inc. (NYSE: CYH) (the “Company”) today
announced financial and operating results for the three and six
months ended June 30, 2016.
On April 29, 2016, the Company completed the spin-off of Quorum
Health Corporation (“QHC”), comprised of 38 affiliated hospitals
and related outpatient services in 16 states, together with Quorum
Health Resources, LLC, a subsidiary providing management advisory
and consulting services to non-affiliated hospitals. Following the
spin-off, QHC became an independent public company with its common
stock listed for trading under the symbol “QHC” on the New York
Stock Exchange. Financial and statistical data reported in this
earnings release include QHC operating results through the spin-off
date. Same-store operating results and statistical data exclude
information for the hospitals divested in the spin-off of QHC in
both the 2016 periods and the comparable periods in 2015.
Net operating revenues for the three months ended June 30, 2016,
totaled $4.590 billion, a 6.0 percent decrease compared with $4.882
billion for the same period in 2015. Income from continuing
operations attributable to Community Health Systems, Inc. common
stockholders decreased to a loss of $(1.431) billion, or $(12.90)
per share (diluted), for the three months ended June 30, 2016,
compared with income from continuing operations of $117 million, or
$1.01 per share (diluted), for the same period in 2015. During the
three months ended June 30, 2016, the Company recorded a non-cash
impairment charge of $1.400 billion to reduce the value of goodwill
for the Company’s hospital reporting unit; a charge of $169 million
to reduce the value of long-lived assets at certain hospitals that
the Company is currently marketing for sale; and a charge of $70
million to reduce the value of long-lived assets at certain
under-performing hospitals. The impairment charge recorded for
goodwill is an estimated charge resulting from a determination that
the carrying value of the Company’s hospital operations reporting
unit exceeded its fair value, primarily as the result of the
decline in the Company’s market capitalization and fair value of
long-term debt during the three months ended June 30, 2016, as well
as a decrease in the estimated future earnings of the Company
compared to previous estimates. These impairment charges do not
have an impact on the calculation of the Company’s financial
covenants under the Company’s Credit Facility. The results for the
three months ended June 30, 2016, included the loss of $(13.29) per
share (diluted) related to impairment of goodwill and long-lived
assets, loss of $(0.18) per share (diluted) from early
extinguishment of debt and loss of $(0.07) per share (diluted)
related to expenses from the spin-off of QHC, which were partially
offset by income of $0.54 per share (diluted) related to the gain
on sale of investments in unconsolidated affiliates in connection
with the Company’s sale of its minority equity interests in five
hospitals located in Las Vegas, Nevada, on April 29, 2016.
Excluding these items, income from continuing operations was $0.09
per share (diluted).
Net income attributable to Community Health Systems, Inc. common
stockholders was a loss of $(12.91) per share (diluted) for the
three months ended June 30, 2016, compared with income of $0.95 per
share (diluted) for the same period in 2015. Discontinued
operations for the three months ended June 30, 2016, consisted of
$(0.01) per share (diluted) of losses from operations of entities
sold or held for sale for a total after-tax loss of approximately
$(1) million or $(0.01) per share (diluted). Weighted-average
shares outstanding (diluted) were 111 million for the three months
ended June 30, 2016, and 116 million for the three months ended
June 30, 2015.
Net cash provided by operating activities for the three months
ended June 30, 2016, was $338 million compared with $565 million
for the same period in 2015, representing a 40.2 percent decrease.
Adjusted EBITDA for the three months ended June 30, 2016, was $563
million compared with $769 million for the same period in 2015,
representing a 26.8 percent decrease.
The consolidated operating results for the three months ended
June 30, 2016, reflect a 9.1 percent decrease in total admissions,
and an 8.5 percent decrease in total adjusted admissions, compared
with the same period in 2015. On a same-store basis, admissions
decreased 2.1 percent and adjusted admissions decreased 0.6 percent
during the three months ended June 30, 2016, compared with the same
period in 2015. On a same-store basis, net operating revenues
increased 1.2 percent during the three months ended June 30, 2016,
compared with the same period in 2015.
Net operating revenues for the six months ended June 30, 2016,
totaled $9.589 billion, a 2.1 percent decrease compared with $9.793
billion for the same period in 2015. Income from continuing
operations attributable to Community Health Systems, Inc. common
stockholders decreased to a loss of $(1.418) billion, or $(12.82)
per share (diluted), for the six months ended June 30, 2016,
compared with income from continuing operations of $209 million, or
$1.80 per share (diluted), for the same period in 2015. The results
for the six months ended June 30, 2016, included the loss of
$(13.45) per share (diluted) related to impairment of goodwill and
long-lived assets, loss of $(0.18) per share (diluted) from early
extinguishment of debt and loss of $(0.09) per share (diluted)
related to expenses from the spin-off of QHC, which were partially
offset by income of $0.54 per share (diluted) related to the gain
on sale of investments in unconsolidated affiliates, as noted
above. Excluding these items, income from continuing operations was
$0.36 per share (diluted).
Net income attributable to Community Health Systems, Inc. common
stockholders was a loss of $(12.85) per share (diluted) for the six
months ended June 30, 2016, compared with income of $1.64 per share
(diluted) for the same period in 2015. Discontinued operations for
the six months ended June 30, 2016, consisted of $(0.02) per share
(diluted) of losses from operations of entities sold or held for
sale and $(0.01) per share (diluted) of expenses related to the
impairment of long-lived assets held for sale, for a total
after-tax loss of approximately $(3) million, or $(0.03) per share
(diluted). Weighted-average shares outstanding (diluted) were 111
million for the six months ended June 30, 2016, and 116 million for
the six months ended June 30, 2015.
Net cash provided by operating activities for the six months
ended June 30, 2016, was $632 million compared with $504 million
for the same period in 2015, representing a 25.4 percent increase.
Adjusted EBITDA for the six months ended June 30, 2016, was $1.196
billion compared with $1.483 billion for the same period in 2015,
representing a 19.4 percent decrease.
The consolidated operating results for the six months ended June
30, 2016, reflect a 5.7 percent decrease in total admissions, and a
3.9 percent decrease in total adjusted admissions, compared with
the same period in 2015. On a same-store basis, admissions
decreased 2.1 percent while adjusted admissions increased 0.4
percent during the six months ended June 30, 2016, compared with
the same period in 2015. On a same-store basis, net operating
revenues increased 1.8 percent during the six months ended June 30,
2016, compared with the same period in 2015.
Adjusted EBITDA, a non-GAAP financial measure, is EBITDA
adjusted to exclude discontinued operations, loss from early
extinguishment of debt, impairment of goodwill and long-lived
assets, gain on sale of investments in unconsolidated affiliates,
net income attributable to noncontrolling interests, acquisition
and integration expenses from the acquisition of Health Management
Associates, Inc. (“HMA”), expenses incurred related to the spin-off
of QHC, expense (income) related to government legal settlements
and related costs, and expense (income) from fair value adjustments
related to the HMA legal proceedings, accounted for at fair value,
underlying the CVR agreement, and related legal expenses. For
information regarding why the Company believes Adjusted EBITDA
presents useful information to investors, and for a reconciliation
of Adjusted EBITDA to net cash provided by operating activities,
see footnote (e) to the Financial Highlights, Financial Statements
and Selected Operating Data below.
Commenting on the results, Wayne T. Smith, chairman and chief
executive officer of Community Health Systems, Inc., said, “During
the second quarter, we completed the successful spin-off of Quorum
Health Corporation. Additional divestiture activity is underway as
part of our portfolio rationalization strategy, which we believe
will ultimately produce a higher performing, more sustainable group
of hospitals and outpatient services. We also revised our
organization structure and promoted key leaders into new roles.
While our operating performance fell short of expectations this
period, our management team and local operators are aggressively
pursuing key initiatives and growth opportunities in markets where
we believe we have the greatest potential to generate better
operational and financial results.”
Included on pages 16, 17, 18 and 19 of this press release are
tables setting forth the Company’s updated 2016 annual earnings
guidance. The 2016 guidance is based on the Company’s historical
operating performance, current trends and other assumptions that
the Company believes are reasonable at this time, and reflects the
impact of the spin-off of QHC and other planned divestitures that
the Company expects to occur in 2016.
Community Health Systems, Inc. is one of the largest publicly
traded hospital companies in the United States and a leading
operator of general acute care hospitals in communities across the
country. After giving effect to the spin-off noted above, the
Company, through its subsidiaries, owns, leases or operates 159
affiliated hospitals in 22 states with an aggregate of nearly
27,000 licensed beds.
The Company’s headquarters are located in Franklin, Tennessee, a
suburb south of Nashville. Shares in Community Health Systems, Inc.
are traded on the New York Stock Exchange under the symbol “CYH.”
More information about the Company can be found on its website at
www.chs.net.
Community Health Systems, Inc. will hold a conference call on
Wednesday, August 3, 2016, at 10:00 a.m. Central, 11:00 a.m.
Eastern, to review financial and operating results for the second
quarter ended June 30, 2016. Investors will have the opportunity to
listen to a live internet broadcast of the conference call by
clicking on the Investor Relations link of the Company’s website at
www.chs.net. To listen to the live call, please go to the website
at least fifteen minutes early to register, download and install
any necessary audio software. For those who cannot listen
to the live broadcast, a replay will be available shortly
after the call and will continue to be available through September
3, 2016. Copies of this press release and conference call slide
show, as well as the Company’s Current Report on Form 8-K
(including this press release), will be available on the Company’s
website at www.chs.net.
COMMUNITY HEALTH SYSTEMS,
INC. AND SUBSIDIARIES Financial Highlights (a)(b)(c)(d)
(In millions, except per share amounts) (Unaudited)
Three
Months Ended Six Months Ended June 30, June
30, 2016 2015 2016 2015 Net
operating revenues $ 4,590 $ 4,882 $ 9,589 $ 9,793 (Loss) income
from continuing operations (f), (i), (k) (1,405 ) 140 (1,368 ) 252
Net (loss) income attributable to
Community Health Systems, Inc. stockholders
(1,432 ) 111 (1,421 ) 189 Adjusted EBITDA (e) 563 769 1,196 1,483
Net cash provided by operating activities 338 565 632 504
Basic (loss) earnings per share
attributable to Community Health Systems, Inc. common
stockholders:
Continuing operations (f), (i) $ (12.90 ) $ 1.02 $ (12.82 ) $ 1.82
Discontinued operations (0.01 ) (0.06 ) (0.03
) (0.17 ) Net (loss) income $ (12.91 ) $ 0.96 $
(12.85 ) $ 1.65
Diluted (loss) earnings per share
attributable to Community Health Systems, Inc. common stockholders
(l):
Continuing operations (f), (h), (i) $ (12.90 ) $ 1.01 $ (12.82 ) $
1.80 Discontinued operations (0.01 ) (0.06 )
(0.03 ) (0.17 ) Net (loss) income (h) $ (12.91 ) $ 0.95
$ (12.85 ) $ 1.64
Weighted-average number of shares outstanding (g): Basic 111 115
111 115 Diluted 111 116 111 116
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY
HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of (Loss) Income (a)(b)(c)(d) (In millions, except
per share amounts) (Unaudited)
Three Months Ended June 30,
2016 2015 Amount
% of Net
Operating
Revenues
Amount
% of Net
Operating
Revenues
Operating revenues (net of contractual allowances and discounts) $
5,290 $ 5,614 Provision for bad debts 700
732 Net operating revenues 4,590
100.0 % 4,882 100.0 % Operating costs and
expenses: Salaries and benefits 2,154 46.9 % 2,217 45.4 % Supplies
759 16.6 % 750 15.4 % Other operating expenses 1,056 23.1 % 1,125
23.0 % Government settlement and related costs (j) - - % (6 ) (0.1
)% Electronic health records incentive reimbursement (31 ) (0.7 )%
(55 ) (1.1 )% Rent 112 2.4 % 113 2.3 % Depreciation and
amortization 276 6.0 % 291 6.0 % Impairment of goodwill and
long-lived assets (i) 1,639 35.7 % 6
0.1 % Total operating costs and expenses 5,965 130.0
% 4,441 91.0 % (Loss) income from operations
(f), (i) (1,375 ) (30.0 )% 441 9.0 % Interest expense, net 246 5.4
% 239 4.9 % Loss from early extinguishment of debt 30 0.7 % 9 0.2 %
Gain on sale of investments in unconsolidated affiliates (k) (94 )
(2.1 )% - - % Equity in earnings of unconsolidated affiliates
(14 ) (0.4 )% (21 ) (0.4 )%
(Loss) income from continuing operations
before income taxes
(1,543 ) (33.6 )% 214 4.3 % (Benefit from) provision for income
taxes (138 ) (3.0 )% 74 1.5 % (Loss) income
from continuing operations (f), (i), (k) (1,405 ) (30.6 )%
140 2.8 % Discontinued operations, net of
taxes: Loss from operations of entities sold or held for sale
(1 ) (0.0 )% (6 ) (0.1 )% Loss from discontinued
operations, net of taxes (1 ) - % (6 ) (0.1 )% Net
(loss) income (1,406 ) (30.6 )% 134 2.7 % Less: Net income
attributable to noncontrolling interests 26 0.6 %
23 0.4 % Net (loss) income attributable to Community
Health Systems, Inc. stockholders $ (1,432 ) (31.2 )% $ 111
2.3 %
Basic (loss) earnings per share
attributable to Community Health Systems, Inc. common
stockholders:
Continuing operations (f), (i), (k) $ (12.90 ) $ 1.02 Discontinued
operations (0.01 ) (0.06 ) Net (loss) income $ (12.91
) $ 0.96
Diluted (loss) earnings per share
attributable to Community Health Systems, Inc. common
stockholders:
Continuing operations (f), (h), (i), (k) $ (12.90 ) $ 1.01
Discontinued operations (0.01 ) (0.06 ) Net (loss)
income (h) $ (12.91 ) $ 0.95 Weighted-average number
of shares outstanding (g): Basic 111 115
Diluted 111 116
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY
HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of (Loss) Income (a)(b)(c)(d) (In millions, except
per share amounts) (Unaudited)
Six Months Ended June 30,
2016 2015 Amount
% of Net
Operating
Revenues
Amount
% of Net
Operating
Revenues
Operating revenues (net of contractual allowances and discounts) $
11,044 $ 11,260 Provision for bad debts 1,455
1,467 Net operating revenues 9,589
100.0 % 9,793 100.0 % Operating costs
and expenses: Salaries and benefits 4,470 46.6 % 4,474 45.7 %
Supplies 1,559 16.3 % 1,512 15.4 % Other operating expenses 2,229
23.2 % 2,225 22.8 % Government settlement and related costs (j) 1
0.0 % 1 0.0 % Electronic health records incentive reimbursement (49
) (0.5 )% (81 ) (0.8 )% Rent 231 2.4 % 229 2.3 % Depreciation and
amortization 574 6.0 % 587 6.0 % Impairment of goodwill and
long-lived assets (i) 1,656 17.3 % 6
0.1 % Total operating costs and expenses 10,671 111.3
% 8,953 91.5 % (Loss) income from operations
(f), (i) (1,082 ) (11.3 )% 840 8.5 % Interest expense, net 496 5.2
% 481 4.8 % Loss from early extinguishment of debt 30 0.3 % 16 0.2
% Gain on sale of investments in unconsolidated affiliates (k) (94
) (1.0 )% - - % Equity in earnings of unconsolidated affiliates
(34 ) (0.4 )% (39 ) (0.4 )%
(Loss) income from continuing operations
before income taxes
(1,480 ) (15.4 )% 382 3.9 % (Benefit from) provision for income
taxes (112 ) (1.1 )% 130 1.3 % (Loss) income
from continuing operations (f), (i), (k) (1,368 ) (14.3 )%
252 2.6 % Discontinued operations, net of
taxes: Loss from operations of entities sold or held for sale (2 )
(0.0 )% (17 ) (0.2 )% Impairment of hospitals sold or held for sale
(1 ) (0.0 )% (2 ) (0.0 )% Loss on sale, net - - %
(1 ) (0.0 )% Loss from discontinued operations, net of taxes
(3 ) (0.0 )% (20 ) (0.2 )% Net (loss) income (1,371 )
(14.3 )% 232 2.4 % Less: Net income attributable to noncontrolling
interests 50 0.5 % 43 0.5 % Net (loss)
income attributable to Community Health Systems, Inc. stockholders
$ (1,421 ) (14.8 )% $ 189 1.9 %
Basic (loss) earnings per share
attributable to Community Health Systems, Inc. common
stockholders:
Continuing operations (f), (i), (k) $ (12.82 ) $ 1.82 Discontinued
operations (0.03 ) (0.17 ) Net (loss) income $ (12.85
) $ 1.65
Diluted (loss) earnings per share
attributable to Community Health Systems, Inc. common stockholders
(l):
Continuing operations (f), (h), (i), (k) $ (12.82 ) $ 1.80
Discontinued operations (0.03 ) (0.17 ) Net (loss)
income (h) $ (12.85 ) $ 1.64 Weighted-average number
of shares outstanding (g): Basic 111 115
Diluted 111 116
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY
HEALTH SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of Comprehensive (Loss) Income (In millions)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, 2016 2015 2016
2015 Net (loss) income $ (1,406 ) $ 134 $ (1,371 ) $
232 Other comprehensive (loss) income, net of income taxes: Net
change in fair value of interest rate swaps, net of tax (2 ) 8 (21
) (1 ) Net change in fair value of available-for-sale securities,
net of tax (3 ) (2 ) (1 ) (1 )
Amortization and recognition of
unrecognized pension cost components, net of tax
2 - 3 1
Other comprehensive (loss) income (3 ) 6
(19 ) (1 ) Comprehensive (loss) income (1,409 ) 140
(1,390 ) 231 Less: Comprehensive income attributable to
noncontrolling interests 26 23
50 43
Comprehensive (loss) income attributable
to Community Health Systems, Inc. stockholders
$ (1,435 ) $ 117 $ (1,440 ) $ 188
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY
HEALTH SYSTEMS, INC. AND SUBSIDIARIES Selected Operating
Data (a)(c) (Dollars in millions) (Unaudited)
Three Months Ended June 30,
Consolidated Same-Store 2016 2015 %
Change 2016 2015 % Change Number of
hospitals (at end of period) 156 196 153 153 Licensed beds (at end
of period) 26,366 29,964 26,065 26,177 Beds in service (at end of
period) 23,371 26,206 23,206 23,112 Admissions 212,259 233,517 -9.1
% 202,702 207,091 -2.1 % Adjusted admissions 468,087 511,456 -8.5 %
444,270 446,912 -0.6 % Patient days 947,492 1,033,244 909,067
928,935 Average length of stay (days) 4.5 4.4 4.5 4.5 Occupancy
rate (average beds in service) 42.5 % 43.0 % 42.8 % 43.8 % Net
operating revenues $ 4,590 $ 4,882 -6.0 % $ 4,339 $ 4,286 1.2 %
Net inpatient revenues as a % of net
patient revenues before provision for bad debts
42.8 % 42.4 % 43.0 % 42.4 %
Net outpatient revenues as a % of net
patient revenues before provision for bad debts
57.2 % 57.6 % 57.0 % 57.6 % (Loss) income from operations (f), (i)
$ (1,375 ) $ 441 -411.8 %
(Loss) income from operations as a % of
net operating revenues
-30.0 % 9.0 % Depreciation and amortization $ 276 $ 291 Equity in
earnings of unconsolidated affiliates $ (14 ) $ (21 ) Liquidity
Data: Adjusted EBITDA (e) $ 563 $ 769 -26.8 %
Adjusted EBITDA as a % of net operating
revenues
12.3 % 15.8 % Net cash provided by operating activities $ 338 $ 565
-40.2 %
Net cash provided by operating activities
as a % of net operating revenues
7.4 % 11.6 %
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY
HEALTH SYSTEMS, INC. AND SUBSIDIARIES Selected Operating
Data (a)(c) (Dollars in millions) (Unaudited)
Six Months Ended June 30, Consolidated
Same-Store 2016 2015 % Change
2016 2015 % Change Number of hospitals (at end
of period) 156 196 153 153 Licensed beds (at end of period) 26,366
29,964 26,065 26,177 Beds in service (at end of period) 23,371
26,206 23,206 23,112 Admissions 451,959 479,532 -5.7 % 416,539
425,319 -2.1 % Adjusted admissions 981,406 1,021,309 -3.9 % 896,539
892,982 0.4 % Patient days 2,023,718 2,160,321 1,881,309 1,942,759
Average length of stay (days) 4.5 4.5 4.5 4.6 Occupancy rate
(average beds in service) 43.8 % 45.0 % 44.4 % 45.9 % Net operating
revenues $ 9,589 $ 9,793 -2.1 % $ 8,763 $ 8,607 1.8 %
Net inpatient revenues as a % of net
patient revenues before provision for bad debts
43.4 % 43.3 % 43.4 % 43.3 %
Net outpatient revenues as a % of net
patient revenues before provision for bad debts
56.6 % 56.7 % 56.6 % 56.7 % (Loss) income from operations (f), (i)
$ (1,082 ) $ 840 -228.8 %
(Loss) income from operations as a % of
net operating revenues
-11.3 % 8.5 % Depreciation and amortization $ 574 $ 587 Equity in
earnings of unconsolidated affiliates $ (34 ) $ (39 ) Liquidity
Data: Adjusted EBITDA (e) $ 1,196 $ 1,483 -19.4 %
Adjusted EBITDA as a % of net operating
revenues
12.5 % 15.1 % Net cash provided by operating activities $ 632 $ 504
25.4 %
Net cash provided by operating activities
as a % of net operating revenues
6.6 % 5.1 %
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY HEALTH SYSTEMS, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets (b) (In millions,
except share data) (Unaudited)
June 30, 2016 December 31, 2015 ASSETS Current
assets Cash and cash equivalents $ 461 $ 184
Patient accounts receivable, net of
allowance for doubtful accounts of $3,732 and $4,110 at June 30,
2016 and December 31, 2015, respectively
3,179 3,611 Supplies 527 580 Prepaid income taxes 33 27 Prepaid
expenses and taxes 217 197
Other current assets (including assets of
hospitals held for sale of $5 and $17 at June 30, 2016 and December
31, 2015, respectively)
425 567 Total current assets
4,842 5,166 Property and equipment 13,364
14,906 Less accumulated depreciation and amortization (4,409
) (4,794 ) Property and equipment, net 8,955
10,112 Goodwill 6,926 8,965
Other assets, net (including assets of
hospitals held for sale of $26 and $41 at June 30, 2016 and
December 31, 2015, respectively)
1,709 2,352 Total assets $ 22,432
$ 26,595
LIABILITIES AND EQUITY Current
liabilities Current maturities of long-term debt $ 253 $ 229
Accounts payable 979 1,258 Accrued interest 208 227
Accrued liabilities (including liabilities
of hospitals held for sale of $3 and $6 at June 30, 2016 and
December 31, 2015, respectively)
1,288 1,358 Total current liabilities
2,728 3,072 Long-term debt
15,110 16,556 Deferred income taxes 388
593 Other long-term liabilities 1,658
1,698 Total liabilities 19,884
21,919 Redeemable noncontrolling interests in equity
of consolidated subsidiaries 546 571
EQUITY Community Health Systems, Inc. stockholders’ equity:
Preferred stock, $.01 par value per share, 100,000,000 shares
authorized; none issued - -
Common stock, $.01 par value per share,
300,000,000 shares authorized; 113,643,956 shares issued and
outstanding at June 30, 2016, and 113,732,933 shares issued and
112,757,384 shares outstanding at December 31, 2015
1 1 Additional paid-in capital 1,965 1,963 Treasury stock, at cost,
no shares at June 30, 2016 and 975,549 shares at December 31, 2015
- (7 ) Accumulated other comprehensive loss (90 ) (73 ) Retained
earnings 19 2,135 Total Community
Health Systems, Inc. stockholders’ equity 1,895 4,019
Noncontrolling interests in equity of consolidated subsidiaries
107 86 Total equity 2,002
4,105 Total liabilities and equity $ 22,432 $
26,595
_________For footnotes, see pages 12, 13,
14 and 15.
COMMUNITY HEALTH SYSTEMS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (b) (In
millions) (Unaudited)
Six Months
Ended June 30, 2016 2015
Cash flows from operating activities Net (loss) income $ (1,371 ) $
232 Adjustments to reconcile net (loss) income to net cash provided
by operating activities: Depreciation and amortization 574 588
Government settlement and related costs (j) 1 1 Stock-based
compensation expense 26 30 Loss on sale, net - 1 Impairment of
hospitals sold or held for sale 1 2 Impairment of goodwill and
long-lived assets (i) 1,656 6 Loss from early extinguishment of
debt 30 16 Gain on sale of investments in unconsolidated affiliates
(94 ) - Other non-cash expenses, net 22 (1 ) Changes in operating
assets and liabilities, net of effects of acquisitions and
divestitures: Patient accounts receivable (40 ) (88 ) Supplies,
prepaid expenses and other current assets 31 (30 ) Accounts
payable, accrued liabilities and income taxes (212 ) (238 ) Other
8 (15 ) Net cash provided by operating
activities 632 504 Cash flows
from investing activities Acquisitions of facilities and other
related equipment (114 ) (27 ) Purchases of property and equipment
(407 ) (474 ) Proceeds from disposition of hospitals and other
ancillary operations 12 62 Proceeds from sale of property and
equipment 7 11 Purchases of available-for-sale securities (63 ) (90
) Proceeds from sales of available-for-sale securities 233 86
Proceeds from sale of investments in unconsolidated affiliates 403
- Distribution from Quorum Health Corporation 1,219 - Increase in
other investments (113 ) (80 ) Net cash provided by
(used in) investing activities 1,177 (512 )
Cash flows from financing activities Proceeds from exercise
of stock options - 22 Repurchase of restricted stock shares for
payroll tax withholding requirements (5 ) (20 ) Deferred financing
costs and other debt-related costs (22 ) (30 ) Redemption of
noncontrolling investments in joint ventures (16 ) (14 )
Distributions to noncontrolling investors in joint ventures (47 )
(48 ) Borrowings under credit agreements 2,806 2,385 Proceeds from
receivables facility 31 91 Repayments of long-term indebtedness
(4,279 ) (2,522 ) Net cash used in financing
activities (1,532 ) (136 ) Net change in cash
and cash equivalents 277 (144 ) Cash and cash equivalents at
beginning of period 184 509 Cash and
cash equivalents at end of period $ 461 $ 365
_________For footnotes, see pages 12, 13,
14 and 15.
Footnotes to Financial Highlights, Financial
Statements and Selected Operating Data
(a) Continuing operating results exclude discontinued operations
for the three and six months ended June 30, 2016 and 2015. Both
financial and statistical results exclude entities in discontinued
operations for all periods presented. Same-store operating results
and statistical data exclude information for the hospitals divested
in the spin-off of QHC in both the 2016 periods and the comparable
periods in 2015.
(b) The contingent value right (“CVR”) entitles the holder to
receive a cash payment up to $1.00 per CVR (subject to downward
adjustment but not below zero), subject to the final resolution of
certain legal matters pertaining to HMA, as defined in the CVR
agreement. If the aggregate amount of applicable losses under the
CVR agreement exceeds a deductible of $18 million, then the amount
payable in respect of each CVR shall be reduced (but not below
zero) by an amount equal to the quotient obtained by dividing: (a)
the product of (i) all losses in excess of the deductible and (ii)
90%; by (b) the number of CVRs outstanding on the date on which
final resolution of the existing litigation occurs. Since the HMA
acquisition date of January 27, 2014, approximately $31 million in
costs have been incurred and approximately $29 million of
settlements have been paid related to certain HMA legal matters,
which collectively exceed the deductible of $18 million under the
CVR agreement. The Company previously recorded an estimated fair
value of the remaining underlying claims that will be covered by
the CVR of $284 million as part of the acquisition accounting for
HMA, which has been adjusted to its estimated fair value of $260
million at June 30, 2016. In addition, although future legal fees
(which are expensed as incurred) associated with the HMA legal
matters have not been accrued or included in the table below, such
legal fees are taken into account in determining the total amount
of reductions applied to the amounts owed to CVR holders.
The following table presents the impact of the recorded amounts
as described above as applied to the CVR and the $18 million
deductible and 10% co-insurance amounts (in millions):
As of June 30,
2016 Legal and other related costs incurred to date $ 31
Settlements 29 Estimated liability for probable contingencies -
Estimated liability for unresolved contingencies at fair value
260
Costs incurred plus certain estimated
liabilities for CVR-related matters
320 Allocated to: CHS deductible of $18 million (18 ) CHS
co-insurance at 10% (29 )
Recorded amounts that reduce CVR value
after giving effect to deductible and co-insurance
$ 273 CVRs outstanding 265
(c) Included in discontinued operations for the three and six
months ended June 30, 2016, are three smaller hospitals that are
being actively marketed for sale. Included in discontinued
operations for the three and six months ended June 30, 2015, were
several hospitals held for sale at December 31, 2014, some of which
were sold during the year ended December 31, 2015. The after-tax
loss for the sold or held for sale hospitals, including an
impairment charge on certain long-lived assets sold or held for
sale, was approximately $1 million and $6 million for the three
months ended June 30, 2016 and 2015, respectively, and
approximately $3 million and $20 million for the six months ended
June 30, 2016 and 2015, respectively.
(d) The following table provides information needed to calculate
(loss) income per share, which is adjusted for income attributable
to noncontrolling interests (in millions):
Three Months Ended
Six Months Ended June 30, June 30, 2016
2015 2016 2015
(Loss) income from continuing operations
attributable to Community Health Systems, Inc. common
stockholders:
(Loss) income from continuing operations, net of taxes $ (1,405 ) $
140 $ (1,368 ) $ 252
Less: Income from continuing operations
attributable to noncontrolling interests
26 23 50 43
(Loss) income from continuing operations
attributable to Community Health Systems, Inc. common stockholders
— basic and diluted
$ (1,431 ) $ 117 $ (1,418 ) $ 209
Loss from discontinued operations
attributable to Community Health Systems, Inc. common
stockholders:
Loss from discontinued operations, net of taxes $ (1 ) $ (6 ) $ (3
) $ (20 )
Less: Loss from discontinued operations
attributable to noncontrolling interests
- - - -
Loss from discontinued operations
attributable to Community Health Systems, Inc. common stockholders
— basic and diluted
$ (1 ) $ (6 ) $ (3 ) $ (20 )
(e) EBITDA is a non-GAAP financial measure which consists of net
(loss) income attributable to Community Health Systems, Inc. before
interest, income taxes, and depreciation and amortization. Adjusted
EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to
exclude discontinued operations, loss from early extinguishment of
debt, impairment of goodwill and long-lived assets, gain on sale of
investments in unconsolidated affiliates, net income attributable
to noncontrolling interests, acquisition and integration expenses
from the acquisition of HMA, expenses incurred related to the
spin-off of QHC, expense (income) related to government legal
settlements and related costs, and expense (income) from fair value
adjustments related to the HMA legal proceedings, accounted for at
fair value, underlying the CVR agreement, and related legal
expenses. The Company has from time to time sold noncontrolling
interests in certain of its subsidiaries or acquired subsidiaries
with existing noncontrolling interest ownership positions. The
Company believes that it is useful to present Adjusted EBITDA
because it excludes the portion of EBITDA attributable to these
third-party interests and clarifies for investors the Company’s
portion of EBITDA generated by continuing operations. The Company
uses Adjusted EBITDA as a measure of liquidity. The Company has
also presented Adjusted EBITDA in this release because it believes
it provides investors with additional information about the
Company’s ability to incur and service debt and make capital
expenditures. Adjusted EBITDA also aligns with a similar metric as
defined in the Company’s senior secured credit facility, which is a
key component in the determination of the Company’s compliance with
some of the covenants under the Company’s senior secured credit
facility, and is used to determine the interest rate and commitment
fee payable under the senior secured credit facility.
Adjusted EBITDA is not a measurement of financial performance or
liquidity under U.S. GAAP. It should not be considered in isolation
or as a substitute for net income, operating income, cash flows
from operating, investing or financing activities or any other
measure calculated in accordance with U.S. GAAP. The items excluded
from Adjusted EBITDA are significant components in understanding
and evaluating financial performance and liquidity. This
calculation of Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies.
The following table reflects the calculation of Adjusted EBITDA,
as defined, from (loss) income from continuing operations before
income taxes and reconciles Adjusted EBITDA to net cash provided by
operating activities as derived directly from the condensed
consolidated financial statements (in millions):
Three Months Ended
Six Months Ended June 30, June 30, 2016
2015 2016 2015
(Loss) income from continuing operations before income taxes
$(1,543 ) $214 $(1,480 ) $382 Adjustments: Depreciation and
amortization 276 291 574 587 Interest expense, net 246 239 496 481
Loss from early extinguishment of debt 30 9 30 16 Impairment of
goodwill and long-lived assets 1,639 6 1,656 6 Gain on sale of
investments in unconsolidated affiliates (94 ) - (94 ) - Expenses
related to the acquisition and integration of HMA - - - 1 (Income)
expense from government settlement and related costs - (6 ) 1 1
(Income) expense from fair value
adjustments and legal expenses related to cases covered by the
CVR
(1 ) 16 - 9 Expenses related to the spin-off of QHC 10 -
13 - Adjusted EBITDA $563 $769 $1,196 $1,483
Adjusted EBITDA $563 $769 $1,196 $1,483 Interest expense, net (246
) (239 ) (496 ) (481 ) Benefit from (provision for) income taxes
138 (74 ) 112 (130 )
Loss from operations of entities sold or
held for sale, net of taxes
(1 ) (6 ) (2 ) (17 ) Other non-cash expenses, net 20 6 49 26
Changes in operating assets and
liabilities, net of effects of acquisitions and divestitures
(136 ) 109 (227 ) (377 ) Net cash provided by operating
activities $338 $565 $632 $504
(f) Included in non-same-store (loss) income from operations and
(loss) income from continuing operations are pre-tax charges
related to acquisition costs of $1 million and $2 million for the
three months ended June 30, 2016 and 2015, respectively, and $3
million and $5 million for the six months ended June 30, 2016 and
2015, respectively.
(g) The following table sets forth components reconciling the
basic weighted-average number of shares to the diluted
weighted-average number of shares (in millions):
Three Months Ended Six
Months Ended June 30, June 30, 2016
2015 2016 2015
Weighted-average number of shares
outstanding - basic
111 115 111 115 Add effect of dilutive securities: Stock awards and
options - 1 - 1
Weighted-average number of shares
outstanding - diluted
111 116 111 116
The Company generated a loss from continuing operations
attributable to Community Health Systems, Inc. common stockholders
for the three and six months ended June 30, 2016, so the effect of
dilutive securities is not considered because their effect would be
antidilutive. If the Company had generated income from continuing
operations during the three and six months ended June 30, 2016, the
effect of restricted stock awards, employee stock options, and
other equity-based awards on the diluted shares calculation would
have been an increase in shares of 168,764 shares and 115,135
shares, respectively.
(h) The following supplemental tables reconcile (loss) income
from continuing operations and net income attributable to Community
Health Systems, Inc. common stockholders, as reported, on a per
share (diluted) basis, with the adjustments described herein (total
per share amounts may not add due to rounding):
Three Months Ended Six
Months Ended June 30, June 30, 2016
2015 2016 2015 (per
share - diluted) (per share - diluted) (Loss)
income from continuing operations, as reported $ (12.90 ) $ 1.01 $
(12.82 ) $ 1.80 Adjustments: Loss from early extinguishment of debt
0.18 0.05 0.18 0.09 Impairment of goodwill and long-lived assets
13.29 0.04 13.45 0.04
(Income) expense from government
settlement and related costs
- (0.03 ) - 0.01
(Income) expense from fair value
adjustments and legal expenses related to cases covered by the
CVR
- 0.08 - 0.05 Gain on sale of investments in unconsolidated
affiliates (0.54 ) - (0.54 ) - Expenses related to the spin-off of
QHC 0.07 - 0.09 -
Income from continuing operations, excluding adjustments $ 0.09
$ 1.14 $ 0.36 $ 1.99
Three
Months Ended Six Months Ended June 30, June
30, 2016 2015 2016 2015 (per
share - diluted) (per share - diluted) Net (loss)
income, as reported $ (12.91 ) $ 0.95 $ (12.85 ) $ 1.64
Adjustments: Loss from early extinguishment of debt 0.18 0.05 0.18
0.09 Impairment of goodwill and long-lived assets 13.29 0.04 13.45
0.04
(Income) expense from government
settlement and related costs
- (0.03 ) - 0.01
(Income) expense from fair value
adjustments and legal expenses related to cases covered by the
CVR
- 0.08 - 0.05 Gain on sale of investments in unconsolidated
affiliates (0.54 ) - (0.54 ) - Expenses related to the spin-off of
QHC 0.07 - 0.09 -
Net income, excluding adjustments $ 0.08 $ 1.08 $
0.33 $ 1.82
(i) Both loss from operations and loss from continuing
operations for the three and six months ended June 30, 2016,
included an impairment charge of approximately $1.639 billion, of
which $1.400 billion was a charge related to the write-down of a
portion of the goodwill for the Company’s hospital operation
reporting unit, and $239 million was a charge related to the
adjustment of the fair value of long-lived assets at certain of the
Company’s underperforming hospitals and some of the hospitals that
the Company is currently marketing for sale that have experienced
declining operating results or have had a decline in their
estimated fair value since the Company’s last impairment review. Of
this $239 million impairment charge, $169 million related to the
reduction in value of long-lived assets at such hospitals that the
Company is currently marketing for sale, and $70 million related to
the reduction in value of long-lived assets at such
under-performing hospitals. The impairment charge recorded for
goodwill is an estimated charge resulting from a determination that
the carrying value of the Company’s hospital operations reporting
unit exceeded its fair value, primarily as the result of the
decline in the Company’s market capitalization and fair value of
long-term debt during the three months ended June 30, 2016, as well
as a decrease in the estimated future earnings of the Company
compared to previous estimates. As allowed by generally accepted
accounting principles, this amount represents an estimate of the
implied goodwill in step two of the goodwill evaluation process
until that process can be finalized, which the Company expects to
complete during the third quarter of 2016. Any increases or
decreases in the fair value and resulting implied value of goodwill
will be recorded when the evaluation is complete. Also, included in
loss from operations and loss from continuing operations for the
six months ended June 30, 2016, was an impairment charge of
approximately $17 million incurred during the three months ended
March 31, 2016, related to the write-down of a portion of the
goodwill allocated to the divestitures of Lehigh Regional Medical
Center and Bartow Regional Medical Center, as well as the
impairment of certain long-lived assets at one of the Company’s
smaller hospitals where the decision was made during the quarter
ended March 31, 2016, to permanently close the hospital. These
impairment charges do not have an impact on the calculation of the
Company’s financial covenants under the Company’s Credit Facility.
Both income from operations and income from continuing operations
for the three and six months ended June 30, 2015, include an
impairment charge of approximately $6 million related to the
allocated reporting unit goodwill for one hospital where a
definitive agreement to sell the hospital was entered into during
the quarter ended June 30, 2015.
(j) The $0.03 per share (diluted) of income for “Government
settlement and related costs” for the three months ended June 30,
2015, related primarily to favorable outcomes for several qui tam
matters previously accrued and settled in principle, net of related
legal expenses. The $0.01 per share (diluted) of expense for
“Government settlement and related costs” for the six months ended
June 30, 2015, is the net impact of several qui tam lawsuits
settled in principle during the three months ended June 30, 2015,
and related legal expenses.
(k) On April 29, 2016, the Company sold its unconsolidated
minority equity interests in Valley Health System, LLC, a joint
venture with Universal Health Systems, Inc. (“UHS”) representing
four hospitals in Las Vegas, Nevada, in which the Company owned a
27.5% interest, and in Summerlin Hospital Medical Center, LLC, a
joint venture with UHS representing one hospital in Las Vegas,
Nevada, in which the Company owned a 26.1% interest. The Company
received $403 million in cash in return for the sale of its equity
interests and recognized a gain on sale of investments in
unconsolidated affiliates during the three and six months ended
June 30, 2016.
(l) Total per share amounts may not add due to rounding.
Regulation FD Disclosure
Set forth below is selected information concerning the Company’s
projected consolidated operating results for the year ending
December 31, 2016. These projections update selected guidance
issued on May 2, 2016, and are based on the Company’s historical
operating performance, current trends and other assumptions that
the Company believes are reasonable at this time. The 2016 guidance
should be considered in conjunction with the assumptions included
herein. See pages 18 and 19 for a list of factors that could affect
the future results of the Company or the healthcare industry
generally.
A reconciliation of the Company’s projected 2016 Adjusted
EBITDA, a forward-looking non-GAAP financial measure, to the most
directly comparable GAAP financial measure is omitted from this
release because the Company is unable to provide such
reconciliation without unreasonable effort (the Company’s
presentation of projected net cash provided by operating activities
later in this Regulation FD Disclosure section is not projected
using the same factors as the Adjusted EBITDA guidance, as there
are different assumptions made in connection with the determination
of such projected net cash provided by operating activities
amount). This inability results from the inherent difficulty in
forecasting generally and in quantifying certain projected amounts
that are necessary for such reconciliation. In particular,
sufficient information is not available to calculate certain
adjustments required for such reconciliation without unreasonable
effort, including interest expense, net; provision for (benefit
from) income taxes; other non-cash expenses, net; other changes in
operating assets and liabilities and other adjustments that would
be necessary to prepare a forward-looking statement of cash flows
prepared in accordance with GAAP. For the same reasons, the Company
is unable to address the probable significance of the unavailable
information.
The following is provided as guidance to analysts and
investors:
2016 Projection Range Net operating
revenues less provision for bad debts (in millions) $ 17,700
to $ 18,300 Adjusted EBITDA (in millions) $
2,400 to $ 2,550 Income from continuing operations per share -
diluted $ 1.40 to $ 1.90 Same-store hospital annual adjusted
admissions growth 0.5 % to 1.2 % Weighted-average diluted shares,
in millions 111.5 to 112.5
The following assumptions were used in developing the 2016
guidance provided above:
- The guidance excludes the financial
results of the following:
- Quorum Health Resources, LLC and the 38
hospitals associated with the spin-off of QHC from the spin-off
date of April 29, 2016 through December 31, 2016;
- Our investment in a joint venture
representing five hospitals in Las Vegas, Nevada that was divested
in the second quarter of 2016;
- Three small hospitals which remain
held-for-sale for which the operating results have been classified
in discontinued operations;
- 12 hospitals that are being actively
marketed for sale that we assume will be divested by the end of
2016; and
- An investment in non-hospital
operations that is being actively marketed for sale that we assume
will be divested by the end of 2016.
The Company may also consider additional hospitals for
disposition for which the operating results have not been excluded
from this guidance.
- The Company’s projections also exclude
the following:
- Payments related to the CVRs issued in
connection with the HMA acquisition, and changes in the valuation
of liabilities underlying the CVR;
- Losses from the early extinguishment of
debt;
- Impairment of goodwill and long-lived
assets;
- Resolution of government investigations
or other significant legal settlements;
- Costs incurred in connection with the
spin-off of QHC; and
- Other significant gains or losses that
neither relate to the ordinary course of business nor reflect the
Company’s underlying business performance.
Other assumptions used in the above guidance:
- The 2016 projections include the
results from the date of acquisition of an 80% interest in two
hospitals in La Porte, Indiana and Knox, Indiana, which were
acquired effective March 1, 2016, and an 80% interest in one
hospital in Fayetteville, Arkansas, which was acquired effective
April 1, 2016.
- Health Information Technology (HITECH)
electronic health records incentive reimbursement of approximately
$60 million to $70 million for the year ended December 31,
2016.
- Same-store hospital annual adjusted
admissions growth of 0.5% to 1.2% for 2016, which does not take
into account service closures and weather-related or other unusual
events.
- Expressed as a percentage of net
operating revenues, depreciation and amortization of approximately
6.1% to 6.2% for 2016. Additionally, this is a fixed cost and the
percentages may change as revenue varies. Such amounts exclude the
possible impact of any future hospital fixed asset impairments and
acceleration of amortization of software to be abandoned.
- Interest expense, expressed as a
percentage of net operating revenues, of approximately 5.3% to
5.4%; however, interest expense is a fixed cost and percentages may
vary as revenue varies. Interest expense has been adjusted to
reflect the repayment of debt with proceeds from the QHC spin-off
as well as the anticipated divestitures, based on the expected
timing of those divestitures. Total fixed rate debt, including
swaps, is expected to average approximately 65% to 75% of total
debt during 2016.
- Expressed as a percentage of net
operating revenues, equity in earnings of unconsolidated affiliates
of approximately 0.1% to 0.2% for 2016.
- Expressed as a percentage of net
operating revenues, net income attributable to noncontrolling
interests of approximately 0.5% to 0.6% for 2016.
- Expressed as a percentage of income
from continuing operations before income taxes, provision for
income tax of approximately 30.0% to 32.0% for 2016.
- Capital expenditures are projected as
follows (in millions):
2016 Guidance Total $725
to $875
- Net cash provided by operating
activities, excluding costs incurred in connection with the
spin-off of QHC, cash flows related to the CVR and settlement of
legal contingencies, is projected as follows (in millions):
2016 Guidance Total
$1,300 to $1,400
- Weighted-average shares outstanding are
projected to be between approximately 111.5 million to 112.5
million for the year ended 2016.
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995
that involve risk and uncertainties. All statements in this press
release other than statements of historical fact, including
statements regarding projections, expected operating results, and
other events that depend upon or refer to future events or
conditions or that include words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “estimates,” “thinks,” and similar
expressions, are forward-looking statements. Although the Company
believes that these forward-looking statements are based on
reasonable assumptions, these assumptions are inherently subject to
significant economic and competitive uncertainties and
contingencies, which are difficult or impossible to predict
accurately and may be beyond the control of the Company.
Accordingly, the Company cannot give any assurance that its
expectations will in fact occur and cautions that actual results
may differ materially from those in the forward-looking statements.
A number of factors could affect the future results of the Company
or the healthcare industry generally and could cause the Company’s
expected results to differ materially from those expressed in this
press release.
These factors include, among other things:
- general economic and business
conditions, both nationally and in the regions in which we
operate;
- implementation, effect of, and changes
to, adopted and potential federal and state healthcare reform
legislation and other federal, state or local laws or regulations
affecting the healthcare industry;
- the extent to which states support
increases, decreases or changes in Medicaid programs, implement
health insurance exchanges or alter the provision of healthcare to
state residents through regulation or otherwise;
- the success and long-term viability of
health insurance exchanges, which may be impacted by whether a
sufficient number of payors participate;
- risks associated with our substantial
indebtedness, leverage and debt service obligations, including our
ability to incur additional indebtedness;
- demographic changes;
- changes in, or the failure to comply
with, governmental regulations;
- potential adverse impact of known and
unknown government investigations, audits, and federal and state
false claims act litigation and other legal proceedings;
- our ability, where appropriate, to
enter into and maintain provider arrangements with payors and the
terms of these arrangements, which may be further impacted by the
increasing consolidation of health insurers and managed care
companies;
- changes in, or the failure to comply
with, contract terms with payors and changes in reimbursement rates
paid by federal or state healthcare programs or commercial
payors;
- any potential additional impairments in
the carrying value of goodwill (or change in the estimated goodwill
impairment charge incurred during the three months ended June 30,
2016, pending the completion of our goodwill evaluation process),
other intangible assets, or other long-lived assets, or changes in
the useful lives of other intangible assets;
- changes in inpatient or outpatient
Medicare and Medicaid payment levels;
- the effects related to the continued
implementation of the sequestration spending reductions and the
potential for future deficit reduction legislation;
- increases in the amount and risk of
collectability of patient accounts receivable, including the impact
of the implementation of ICD-10 and decreases in collectability
which may result from, among other things, self-pay growth in
states that have not expanded Medicaid and difficulties in
recovering payments for which patients are responsible, including
co-pays and deductibles;
- the efforts of insurers, healthcare
providers and others to contain healthcare costs, including the
trend toward value-based purchasing;
- our ongoing ability to demonstrate
meaningful use of certified electronic health record technology and
recognize income for the related Medicare or Medicaid incentive
payments;
- increases in wages as a result of
inflation or competition for highly technical positions and rising
supply and drug costs due to market pressure from pharmaceutical
companies and new product releases;
- liabilities and other claims asserted
against us, including self-insured malpractice claims;
- competition;
- our ability to attract and retain, at
reasonable employment costs, qualified personnel, key management,
physicians, nurses and other healthcare workers;
- trends toward treatment of patients in
less acute or specialty healthcare settings, including ambulatory
surgery centers or specialty hospitals;
- changes in medical or other
technology;
- changes in U.S. generally accepted
accounting principles;
- the availability and terms of capital
to fund additional acquisitions or replacement facilities or other
capital expenditures;
- our ability to successfully make
acquisitions or complete divestitures, including the intended
disposition of certain hospitals and other investments as
referenced herein, our ability to complete any such acquisitions or
divestitures on desired terms or at all, the timing of the
completion of any such acquisitions or divestitures, and our
ability to realize the intended benefits from any such acquisitions
or divestitures;
- our ability to successfully integrate
any acquired hospitals, including those of HMA, or to recognize
expected synergies from acquisitions;
- the impact of seasonal severe weather
conditions;
- our ability to obtain adequate levels
of general and professional liability insurance;
- timeliness of reimbursement payments
received under government programs;
- effects related to outbreaks of
infectious diseases;
- the impact of the external, criminal
cyber-attack suffered by us in the second quarter of 2014,
including potential reputational damage, the outcome of our
investigation and any potential governmental inquiries, the outcome
of litigation filed against us in connection with this
cyber-attack, the extent of remediation costs and additional
operating or other expenses that we may continue to incur, and the
impact of potential future cyber-attacks or security breaches;
- the effects of the spin-off of QHC that
was completed on April 29, 2016 on our business, including our
ability to achieve the anticipated benefits of the spin-off;
and
- the other risk factors set forth in our
other public filings with the Securities and Exchange
Commission.
The consolidated operating results for the three and six months
ended June 30, 2016, are not necessarily indicative of the results
that may be experienced for any future periods. The Company
cautions that the projections for calendar year 2016 set forth in
this press release are given as of the date hereof based on
currently available information. The Company undertakes no
obligation to revise or update any forward-looking statements, or
to make any other forward-looking statements, whether as a result
of new information, future events or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160802006847/en/
Community Health Systems, Inc.W. Larry Cash,
615-465-7000President of Financial Services and Chief Financial
Officer
Community Health Systems (NYSE:CYH)
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