[February 18, 2014] |
|
Community Health Systems, Inc. Announces Fourth Quarter 2013 Results with Net Operating Revenues of $3.2 Billion
FRANKLIN, Tenn. --(Business Wire)--
Community Health Systems, Inc. (NYSE: CYH) (the "Company") today
announced financial and operating results for the three months and year
ended December 31, 2013.
Net operating revenues for the three months ended December 31, 2013,
totaled $3.2 billion, a 1.4 percent decrease compared with $3.3 billion
for the same period in 2012. Income from continuing operations decreased
to $52.3 million for the three months ended December 31, 2013, compared
with $85.6 million for the same period in 2012. Both income from
continuing operations and net income attributable to Community Health
Systems, Inc. common stockholders were $0.30 per share (diluted) for the
three months ended December 31, 2013, compared with $0.69 per share
(diluted) for the same period in 2012. The results for the three months
ended December 31, 2013, include $0.02 per share (diluted) of reserves
related to the settlement of claims arising from the government's
investigation into the Company's short-stay hospital admissions, a $0.12
per share (diluted) loss from the impairment of certain long-lived
assets, and $0.05 per share (diluted) of expenses related to the
acquisition of Health Management Associates, Inc. ("HMA"). Excluding
these items, both income from continuing operations and net income
attributable to Community Health Systems, Inc. common stockholders were
$0.49 per share (diluted) for the three months ended December 31, 2013.
Weighted-average shares outstanding (diluted) were 94.7 million for the
three months ended December 31, 2013, and 90.8 million for the three
months ended December 31, 2012.
Adjusted EBITDA for the three months ended December 31, 2013, was $441.8
million compared with $481.9 million for the same period in 2012,
representing an 8.3 percent decrease. Excluding the $3.5 million of
reserves related to certain legal matters and $8.8 million of expenses
related to the HMA acquisition, Adjusted EBITDA was $454.1 million for
the three months ended December 31, 2013. Adjusted EBITDA is EBITDA
adjusted to exclude discontinued operations, loss from early
extinguishment of debt, impairment of long-lived assets and net income
attributable to non-controlling interests. The Company uses Adjusted
EBITDA as a measure of liquidity. A reconciliation of Adjusted EBITDA to
net cash provided by operating activities is included in the attached
footnotes.
The consolidated and same-store operating results for the three months
ended December 31, 2013, reflect a 10.5 percent decrease in total
admissions and a 6.7 percent decrease in total adjusted admissions
compared with the same period in 2012.
Net operating revenues for the year ended December 31, 2013, totaled
$13.00 billion, a 0.2 percent decrease compared with $13.03 billion for
the same period in 2012. Income from continuing operations decreased to
$217.3 million for the year ended December 31, 2013, compared with
$346.3 million for the same period in 2012. Both income from continuing
operations and net income attributable to Community Health Systems, Inc.
common stockholders were $1.51 per share (diluted) for the year ended
December 31, 2013, compared with $2.96 per share (diluted) for the same
period in 2012. The results for the year ended December 31, 2013,
include $0.67 per share (diluted) of reserves related to the settlement
of claims arising from the government's investigation into the Company's
short-stay hospital admissions, $0.09 per share (diluted) of expenses
related to the acquisition of HMA, a $0.12 per share (diluted) loss from
the impairment of certain long-lived assets, and a $0.01 per share
(diluted) loss from the early extinguishment of debt.
Excluding these items, both income from continuing operations and net
income attributable to Community Health Systems, Inc. common
stockholders were $2.40 per share (diluted) for the year ended
December 31, 2013. Weighted-average shares outstanding (diluted) were
93.8 million for the year ended December 31, 2013, and 89.8 million for
the year ended December 31, 2012.
Adjusted EBITDA for the year ended December 31, 2013, was $1.73 billion
compared with $1.98 billion for the same period in 2012, representing a
12.8 percent decrease. Excluding the $101.5 million reserve for the
settlement of claims arising from the government's investigation into
the Company's short-stay hospital admissions and $14.1 million of
expenses related to the HMA acquisition, Adjusted EBITDA was $1.84
billion for the year ended December 31, 2013. A reconciliation of
Adjusted EBITDA to net cash provided by operating activities is included
in the attached footnotes.
The consolidated operating results for the year ended December 31, 2013,
reflect a 6.7 percent decrease in total admissions and a 4.0 percent
decrease in total adjusted admissions compared with the same period in
2012. On a same-store basis, admissions decreased 7.2 percent while
adjusted admissions decreased 4.6 percent compared with the same period
in 2012. On a same-store basis, net operating revenues decreased 0.2
percent compared with the same period in 2012.
Commenting on the results, Wayne T. Smith, chairman and chief executive
officer of Community Health Systems, Inc., said, "Our financial and
operating results for the fourth quarter reflect a continuation of the
challenging operating environment for health care providers over the
past year. As we previously announced, weakness in volume, combined with
higher bad debts and a less favorable payor mix, affected our operating
revenues during the fourth quarter. However, we have continued to focus
on our cost management and strategic initiatives to efficiently manage
our operations in this challenging environment, and we are pleased with
the progress being made across our hospital network."
On January 27, 2014, the Company completed its acquisition of HMA
(formerly NYSE: HMA). Under the terms of the transaction, the Company
acquired each issued and outstanding share of the common stock of HMA
for $10.50 in cash, 0.06942 of a share of the Company's common stock,
and a Contingent Value Right ("CVR"), which could yield additional cash
consideration of up to $1.00 per CVR, depending on the outcome of
certain litigation matters. Pursuant to an agreement with the Federal
Trade Commission relating to the acquisition, the Company is required to
divest two acute care facilities and related outpatient businesses that
were acquired upon the acquisition of HMA: Riverview Regional Medical
Center, a 281-bed hospital located in Gadsden, Alabama, and Carolina
Pines Regional Medical Center, a 116-bed hospital in Hartsville, South
Carolina.
Included on pages 15 and 16 of this press release are tables setting
forth the Company's 2014 annual earnings guidance. The 2014 guidance is
based on the Company's historical operating performance, current trends
and other assumptions that the Company believes are reasonable at this
time.
Located in the Nashville, Tennessee, suburb of Franklin, 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 non-urban and mid-size markets throughout the
country. Through its subsidiaries, the Company currently owns, leases or
operates 206 hospitals in 29 states with an aggregate of approximately
30,900 licensed beds. Its hospitals offer a broad range of inpatient and
surgical services, outpatient treatment and skilled nursing care.
Community Health Systems, Inc. will hold a conference call on Wednesday,
February 19, 2014, at 10:00 a.m. Central, 11:00 a.m. Eastern, to review
financial and operating results for the fourth quarter ended December
31, 2013. 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 March 19, 2014. Copies of the Company's current report
on Form 8-K (including this press release) and conference call slide
show will be available on the Company's website at www.chs.net.
|
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|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Financial Highlights (a)(b)
|
(In thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating revenues
|
|
$
|
3,231,321
|
|
$
|
3,276,946
|
|
$
|
12,997,693
|
|
$
|
13,028,985
|
|
Adjusted EBITDA (c)
|
|
|
441,809
|
|
|
481,872
|
|
|
1,725,079
|
|
|
1,977,715
|
|
Income from continuing operations (d), (e)
|
|
|
52,262
|
|
|
85,626
|
|
|
217,268
|
|
|
346,269
|
|
Net income attributable to Community Health Systems, Inc.
stockholders
|
|
|
28,181
|
|
|
62,574
|
|
|
141,203
|
|
|
265,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders (g):
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
0.30
|
|
$
|
0.70
|
|
$
|
1.52
|
|
$
|
2.98
|
|
Discontinued operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(0.01
|
)
|
Net income
|
|
$
|
0.30
|
|
$
|
0.70
|
|
$
|
1.52
|
|
$
|
2.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders (g), (h):
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
0.30
|
|
$
|
0.69
|
|
$
|
1.51
|
|
$
|
2.96
|
|
Discontinued operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(0.01
|
)
|
Net income
|
|
$
|
0.30
|
|
$
|
0.69
|
|
$
|
1.51
|
|
$
|
2.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (f):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
93,372
|
|
|
89,882
|
|
|
92,633
|
|
|
89,243
|
|
Diluted
|
|
|
94,703
|
|
|
90,828
|
|
|
93,815
|
|
|
89,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
647,619
|
|
$
|
502,255
|
|
$
|
1,088,719
|
|
$
|
1,280,120
|
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Condensed Consolidated Statements of Income (a)(b)
|
(In thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
2013
|
|
2012
|
|
|
Amount
|
|
% of Net
Operating
Revenues
|
|
Amount
|
|
% of Net
Operating
Revenues
|
Operating revenues (net of contractual allowances and discounts)
|
|
$
|
3,743,291
|
|
|
|
|
$
|
3,761,599
|
|
|
|
Provision for bad debts
|
|
|
511,970
|
|
|
|
|
|
484,653
|
|
|
|
Net operating revenues
|
|
|
3,231,321
|
|
100.0
|
%
|
|
|
3,276,946
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
1,542,956
|
|
47.8
|
%
|
|
|
1,556,399
|
|
47.5
|
%
|
Supplies
|
|
|
511,871
|
|
15.8
|
%
|
|
|
500,971
|
|
15.3
|
%
|
Other operating expenses
|
|
|
720,629
|
|
22.3
|
%
|
|
|
729,761
|
|
22.2
|
%
|
Government settlement and related costs
|
|
|
3,500
|
|
0.1
|
%
|
|
|
-
|
|
0.0
|
%
|
Electronic health records incentive reimbursement (d)
|
|
|
(55,570)
|
|
(1.7)
|
%
|
|
|
(53,142)
|
|
(1.6)
|
%
|
Rent
|
|
|
72,392
|
|
2.2
|
%
|
|
|
70,505
|
|
2.2
|
%
|
Depreciation and amortization
|
|
|
200,071
|
|
6.2
|
%
|
|
|
189,196
|
|
5.8
|
%
|
Total operating costs and expenses
|
|
|
2,995,849
|
|
92.7
|
%
|
|
|
2,993,690
|
|
91.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations (d), (e)
|
|
|
235,472
|
|
7.3
|
%
|
|
|
283,256
|
|
8.6
|
%
|
Interest expense, net
|
|
|
149,412
|
|
4.7
|
%
|
|
|
160,586
|
|
4.9
|
%
|
Equity in earnings of unconsolidated affiliates
|
|
|
(6,266)
|
|
(0.2)
|
%
|
|
|
(9,420)
|
|
(0.3)
|
%
|
Impairment of long-lived assets
|
|
|
20,100
|
|
0.6
|
%
|
|
|
10,000
|
|
0.3
|
%
|
Income from continuing operations before income taxes
|
|
|
72,226
|
|
2.2
|
%
|
|
|
122,090
|
|
3.7
|
%
|
Provision for income taxes
|
|
|
19,964
|
|
0.6
|
%
|
|
|
36,464
|
|
1.1
|
%
|
Income from continuing operations (d), (e)
|
|
|
52,262
|
|
1.6
|
%
|
|
|
85,626
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations of entities sold
|
|
|
-
|
|
-
|
%
|
|
|
-
|
|
0.0
|
%
|
Loss from discontinued operations, net of taxes
|
|
|
-
|
|
-
|
%
|
|
|
-
|
|
0.0
|
%
|
Net income
|
|
|
52,262
|
|
1.6
|
%
|
|
|
85,626
|
|
2.6
|
%
|
Less: Net income attributable to noncontrolling interests
|
|
|
24,081
|
|
0.7
|
%
|
|
|
23,052
|
|
0.7
|
%
|
Net income attributable to Community Health Systems, Inc.
stockholders
|
|
$
|
28,181
|
|
0.9
|
%
|
|
$
|
62,574
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
0.30
|
|
|
|
|
$
|
0.70
|
|
|
|
Discontinued operations
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
Net income
|
|
$
|
0.30
|
|
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders: (h)
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
0.30
|
|
|
|
|
$
|
0.69
|
|
|
|
Discontinued operations
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
Net income
|
|
$
|
0.30
|
|
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (f):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
93,372
|
|
|
|
|
|
89,882
|
|
|
|
Diluted
|
|
|
94,703
|
|
|
|
|
|
90,828
|
|
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Condensed Consolidated Statements of Income (a)(b)
|
(In thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2013
|
|
2012
|
|
|
Amount
|
|
% of Net
Operating
Revenues
|
|
Amount
|
|
% of Net
Operating
Revenues
|
Operating revenues (net of contractual allowances and discounts)
|
|
$
|
15,078,074
|
|
|
|
|
$
|
14,988,179
|
|
|
|
Provision for bad debts
|
|
|
2,080,381
|
|
|
|
|
|
1,959,194
|
|
|
|
Net operating revenues
|
|
|
12,997,693
|
|
100.0
|
%
|
|
|
13,028,985
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
6,217,747
|
|
47.8
|
%
|
|
|
6,103,931
|
|
46.9
|
%
|
Supplies
|
|
|
1,994,116
|
|
15.3
|
%
|
|
|
1,973,491
|
|
15.1
|
%
|
Other operating expenses
|
|
|
2,880,357
|
|
22.2
|
%
|
|
|
2,869,786
|
|
22.0
|
%
|
Government settlement and related costs
|
|
|
101,500
|
|
0.8
|
%
|
|
|
-
|
|
0.0
|
%
|
Electronic health records incentive reimbursement (d)
|
|
|
(165,877)
|
|
(1.3)
|
%
|
|
|
(126,734)
|
|
(1.0)
|
%
|
Rent
|
|
|
287,412
|
|
2.2
|
%
|
|
|
272,829
|
|
2.1
|
%
|
Depreciation and amortization
|
|
|
782,675
|
|
6.0
|
%
|
|
|
725,558
|
|
5.6
|
%
|
Total operating costs and expenses
|
|
|
12,097,930
|
|
93.0
|
%
|
|
|
11,818,861
|
|
90.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations (d), (e)
|
|
|
899,763
|
|
7.0
|
%
|
|
|
1,210,124
|
|
9.3
|
%
|
Interest expense, net
|
|
|
615,147
|
|
4.7
|
%
|
|
|
622,933
|
|
4.7
|
%
|
Loss from early extinguishment of debt
|
|
|
1,295
|
|
0.0
|
%
|
|
|
115,453
|
|
0.9
|
%
|
Equity in earnings of unconsolidated affiliates
|
|
|
(42,641)
|
|
(0.3)
|
%
|
|
|
(42,033)
|
|
(0.3)
|
%
|
Impairment of long-lived assets
|
|
|
20,100
|
|
0.2
|
%
|
|
|
10,000
|
|
0.1
|
%
|
Income from continuing operations before income taxes
|
|
|
305,862
|
|
2.4
|
%
|
|
|
503,771
|
|
3.9
|
%
|
Provision for income taxes
|
|
|
88,594
|
|
0.7
|
%
|
|
|
157,502
|
|
1.2
|
%
|
Income from continuing operations (d), (e)
|
|
|
217,268
|
|
1.7
|
%
|
|
|
346,269
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations of entities sold
|
|
|
-
|
|
0.0
|
%
|
|
|
(466)
|
|
0.0
|
%
|
Loss from discontinued operations, net of taxes
|
|
|
-
|
|
0.0
|
%
|
|
|
(466)
|
|
0.0
|
%
|
Net income
|
|
|
217,268
|
|
1.7
|
%
|
|
|
345,803
|
|
2.7
|
%
|
Less: Net income attributable to noncontrolling interests
|
|
|
76,065
|
|
0.6
|
%
|
|
|
80,163
|
|
0.7
|
%
|
Net income attributable to Community Health Systems, Inc.
stockholders
|
|
$
|
141,203
|
|
1.1
|
%
|
|
$
|
265,640
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders: (g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
1.52
|
|
|
|
|
$
|
2.98
|
|
|
|
Discontinued operations
|
|
|
-
|
|
|
|
|
|
(0.01)
|
|
|
|
Net income
|
|
$
|
1.52
|
|
|
|
|
$
|
2.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to Community
Health Systems, Inc. common stockholders: (g), (h)
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (d), (e)
|
|
$
|
1.51
|
|
|
|
|
$
|
2.96
|
|
|
|
Discontinued operations
|
|
|
-
|
|
|
|
|
|
(0.01)
|
|
|
|
Net income
|
|
$
|
1.51
|
|
|
|
|
$
|
2.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (f):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
92,633
|
|
|
|
|
|
89,243
|
|
|
|
Diluted
|
|
|
93,815
|
|
|
|
|
|
89,807
|
|
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Condensed Consolidated Statements of Comprehensive Income
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
52,262
|
|
|
$
|
85,626
|
|
|
$
|
217,268
|
|
$
|
345,803
|
|
Other comprehensive income, net of income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in fair value of interest rate swaps
|
|
|
12,545
|
|
|
|
17,643
|
|
|
|
60,304
|
|
|
46,409
|
|
Net change in fair value of available-for-sale securities
|
|
|
(660
|
)
|
|
|
(497
|
)
|
|
|
2,181
|
|
|
3,012
|
|
Amortization and recognition of unrecognized pension cost components
|
|
|
13,125
|
|
|
|
(13,735
|
)
|
|
|
15,320
|
|
|
(10,252
|
)
|
Other comprehensive income
|
|
|
25,010
|
|
|
|
3,411
|
|
|
|
77,805
|
|
|
39,169
|
|
Comprehensive income
|
|
|
77,272
|
|
|
|
89,037
|
|
|
|
295,073
|
|
|
384,972
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
24,081
|
|
|
|
23,052
|
|
|
|
76,065
|
|
|
80,163
|
|
Comprehensive income attributable to Community Health Systems,
Inc. stockholders
|
|
$
|
53,191
|
|
|
$
|
65,985
|
|
|
$
|
219,008
|
|
$
|
304,809
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Selected Operating Data (b)
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31,
|
|
|
Consolidated
|
|
Same-Store
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
Number of hospitals (at end of period)
|
|
|
135
|
|
|
|
135
|
|
|
|
|
|
135
|
|
|
|
135
|
|
|
|
Licensed beds (at end of period)
|
|
|
20,180
|
|
|
|
20,334
|
|
|
|
|
|
20,180
|
|
|
|
20,334
|
|
|
|
Beds in service (at end of period)
|
|
|
17,320
|
|
|
|
17,265
|
|
|
|
|
|
17,320
|
|
|
|
17,265
|
|
|
|
Admissions
|
|
|
155,145
|
|
|
|
173,392
|
|
|
-10.5
|
%
|
|
|
155,145
|
|
|
|
173,392
|
|
|
-10.5
|
%
|
Adjusted admissions
|
|
|
329,291
|
|
|
|
352,855
|
|
|
-6.7
|
%
|
|
|
329,291
|
|
|
|
352,855
|
|
|
-6.7
|
%
|
Patient days
|
|
|
687,463
|
|
|
|
756,217
|
|
|
|
|
|
687,463
|
|
|
|
756,217
|
|
|
|
Average length of stay (days)
|
|
|
4.4
|
|
|
|
4.4
|
|
|
|
|
|
4.4
|
|
|
|
4.4
|
|
|
|
Occupancy rate (average beds in service)
|
|
|
43.1
|
%
|
|
|
47.6
|
%
|
|
|
|
|
43.1
|
%
|
|
|
47.6
|
%
|
|
|
Net operating revenues
|
|
$
|
3,231,321
|
|
|
$
|
3,276,946
|
|
|
-1.4
|
%
|
|
$
|
3,231,129
|
|
|
$
|
3,276,450
|
|
|
-1.4
|
%
|
Net inpatient revenues as a % of operating revenues before
provision for bad debts
|
|
|
41.4
|
%
|
|
|
43.8
|
%
|
|
|
|
|
41.4
|
%
|
|
|
43.8
|
%
|
|
|
Net outpatient revenues as a % of operating revenues before
provision for bad debts
|
|
|
56.7
|
%
|
|
|
54.3
|
%
|
|
|
|
|
56.7
|
%
|
|
|
54.3
|
%
|
|
|
Income from operations (d), (e)
|
|
$
|
235,472
|
|
|
$
|
283,256
|
|
|
-16.9
|
%
|
|
$
|
251,495
|
|
|
$
|
299,919
|
|
|
-16.1
|
%
|
Income from operations as a % of net operating revenues
|
|
|
7.3
|
%
|
|
|
8.6
|
%
|
|
|
|
|
7.8
|
%
|
|
|
9.2
|
%
|
|
|
Depreciation and amortization
|
|
$
|
200,071
|
|
|
$
|
189,196
|
|
|
|
|
$
|
200,072
|
|
|
$
|
189,195
|
|
|
|
Equity in earnings of unconsolidated affiliates
|
|
$
|
(6,266
|
)
|
|
$
|
(9,420
|
)
|
|
|
|
$
|
(6,266
|
)
|
|
$
|
(9,420
|
)
|
|
|
Liquidity Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (c)
|
|
$
|
441,809
|
|
|
$
|
481,872
|
|
|
-8.3
|
%
|
|
|
|
|
|
|
Adjusted EBITDA as a % of net operating revenues
|
|
|
13.7
|
%
|
|
|
14.7
|
%
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
647,619
|
|
|
$
|
502,255
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities a % of net operating
revenues
|
|
|
20.0
|
%
|
|
|
15.3
|
%
|
|
|
|
|
|
|
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Selected Operating Data (b)
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
Consolidated
|
|
Same-Store
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
Number of hospitals (at end of period)
|
|
|
135
|
|
|
|
135
|
|
|
|
|
|
135
|
|
|
|
135
|
|
|
|
Licensed beds (at end of period)
|
|
|
20,180
|
|
|
|
20,334
|
|
|
|
|
|
20,180
|
|
|
|
20,334
|
|
|
|
Beds in service (at end of period)
|
|
|
17,320
|
|
|
|
17,265
|
|
|
|
|
|
17,320
|
|
|
|
17,265
|
|
|
|
Admissions
|
|
|
654,945
|
|
|
|
701,837
|
|
|
-6.7
|
%
|
|
|
651,044
|
|
|
|
701,837
|
|
|
-7.2
|
%
|
Adjusted admissions
|
|
|
1,362,344
|
|
|
|
1,418,472
|
|
|
-4.0
|
%
|
|
|
1,353,195
|
|
|
|
1,418,472
|
|
|
-4.6
|
%
|
Patient days
|
|
|
2,897,491
|
|
|
|
3,058,931
|
|
|
|
|
|
2,882,332
|
|
|
|
3,058,931
|
|
|
|
Average length of stay (days)
|
|
|
4.4
|
|
|
|
4.4
|
|
|
|
|
|
4.4
|
|
|
|
4.4
|
|
|
|
Occupancy rate (average beds in service)
|
|
|
45.9
|
%
|
|
|
48.6
|
%
|
|
|
|
|
45.9
|
%
|
|
|
48.6
|
%
|
|
|
Net operating revenues
|
|
$
|
12,997,693
|
|
|
$
|
13,028,985
|
|
|
-0.2
|
%
|
|
$
|
12,922,186
|
|
|
$
|
12,943,565
|
|
|
-0.2
|
%
|
Net inpatient revenues as a % of operating revenues before
provision for bad debts
|
|
|
43.2
|
%
|
|
|
44.7
|
%
|
|
|
|
|
43.2
|
%
|
|
|
44.4
|
%
|
|
|
Net outpatient revenues as a % of operating revenues before
provision for bad debts
|
|
|
55.0
|
%
|
|
|
53.4
|
%
|
|
|
|
|
54.9
|
%
|
|
|
53.7
|
%
|
|
|
Income from operations (d), (e)
|
|
$
|
899,763
|
|
|
$
|
1,210,124
|
|
|
-25.6
|
%
|
|
$
|
1,034,005
|
|
|
$
|
1,182,538
|
|
|
-12.6
|
%
|
Income from operations as a % of net operating revenues
|
|
|
7.0
|
%
|
|
|
9.3
|
%
|
|
|
|
|
8.0
|
%
|
|
|
9.1
|
%
|
|
|
Depreciation and amortization
|
|
$
|
782,675
|
|
|
$
|
725,558
|
|
|
|
|
$
|
779,291
|
|
|
$
|
725,557
|
|
|
|
Equity in earnings of unconsolidated affiliates
|
|
$
|
(42,641
|
)
|
|
$
|
(42,033
|
)
|
|
|
|
$
|
(42,641
|
)
|
|
$
|
(42,105
|
)
|
|
|
Liquidity Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (c)
|
|
$
|
1,725,079
|
|
|
$
|
1,977,715
|
|
|
-12.8
|
%
|
|
|
|
|
|
|
Adjusted EBITDA as a % of net operating revenues
|
|
|
13.3
|
%
|
|
|
15.2
|
%
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,088,719
|
|
|
$
|
1,280,120
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities as a % of net operating
revenues
|
|
|
8.4
|
%
|
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Condensed Consolidated Balance Sheets
|
(In thousands, except share data)
|
(Unaudited)
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
373,403
|
|
$
|
387,813
|
Patient accounts receivable, net of allowance for doubtful
accounts of $2,448,432 and $2,201,875 at December 31, 2013 and
2012, respectively
|
|
|
2,353,308
|
|
|
2,067,379
|
Supplies
|
|
|
377,005
|
|
|
368,172
|
Prepaid income taxes
|
|
|
107,077
|
|
|
49,888
|
Deferred income taxes
|
|
|
101,372
|
|
|
117,045
|
Prepaid expenses and taxes
|
|
|
128,476
|
|
|
126,561
|
Other current assets
|
|
|
307,322
|
|
|
302,284
|
Total current assets
|
|
|
3,747,963
|
|
|
3,419,142
|
Property and equipment
|
|
|
10,606,750
|
|
|
10,145,408
|
Less accumulated depreciation and amortization
|
|
|
(3,492,287)
|
|
|
(2,993,535)
|
Property and equipment, net
|
|
|
7,114,463
|
|
|
7,151,873
|
Goodwill
|
|
|
4,444,135
|
|
|
4,408,138
|
Other assets, net
|
|
|
1,810,734
|
|
|
1,627,182
|
Total assets
|
|
$
|
17,117,295
|
|
$
|
16,606,335
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
166,902
|
|
$
|
89,911
|
Accounts payable
|
|
|
958,593
|
|
|
825,914
|
Deferred income taxes
|
|
|
3,183
|
|
|
-
|
Accrued interest
|
|
|
111,891
|
|
|
110,702
|
Accrued liabilities
|
|
|
1,216,914
|
|
|
1,116,693
|
Total current liabilities
|
|
|
2,457,483
|
|
|
2,143,220
|
Long-term debt
|
|
|
9,286,495
|
|
|
9,451,394
|
Deferred income taxes
|
|
|
906,101
|
|
|
808,489
|
Other long-term liabilities
|
|
|
977,336
|
|
|
1,039,045
|
Total liabilities
|
|
|
13,627,415
|
|
|
13,442,148
|
Redeemable noncontrolling interests in equity of consolidated
subsidiaries
|
|
|
358,410
|
|
|
367,666
|
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; 95,987,032 shares issued and 95,011,483 shares
outstanding at December 31, 2013, and 92,925,715 shares issued and
91,950,166 shares outstanding at December 31, 2012
|
|
|
960
|
|
|
929
|
Additional paid-in capital
|
|
|
1,255,855
|
|
|
1,138,274
|
Treasury stock, at cost, 975,549 shares at December 31, 2013 and
December 31, 2012
|
|
|
(6,678)
|
|
|
(6,678)
|
Accumulated other comprehensive loss
|
|
|
(67,505)
|
|
|
(145,310)
|
Retained earnings
|
|
|
1,885,195
|
|
|
1,743,992
|
Total Community Health Systems, Inc. stockholders' equity
|
|
|
3,067,827
|
|
|
2,731,207
|
Noncontrolling interests in equity of consolidated subsidiaries
|
|
|
63,643
|
|
|
65,314
|
Total equity
|
|
|
3,131,470
|
|
|
2,796,521
|
Total liabilities and equity
|
|
$
|
17,117,295
|
|
$
|
16,606,335
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
|
Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
(Unaudited)
|
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net income
|
|
$
|
217,268
|
|
|
$
|
345,803
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
782,675
|
|
|
|
725,558
|
|
Deferred income taxes
|
|
|
69,284
|
|
|
|
53,407
|
|
Government settlement and related costs
|
|
|
101,500
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
38,403
|
|
|
|
40,896
|
|
Impairment of long-lived assets
|
|
|
20,100
|
|
|
|
10,000
|
|
Loss from early extinguishment of debt
|
|
|
1,295
|
|
|
|
115,453
|
|
Excess tax benefit relating to stock-based compensation
|
|
|
(6,715
|
)
|
|
|
(3,973
|
)
|
Other non-cash expenses, net
|
|
|
60,839
|
|
|
|
33,251
|
|
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures:
|
|
|
|
|
|
|
Patient accounts receivable
|
|
|
(285,437
|
)
|
|
|
(204,151
|
)
|
Supplies, prepaid expenses and other current assets
|
|
|
(8,453
|
)
|
|
|
(99,799
|
)
|
Accounts payable, accrued liabilities and income taxes
|
|
|
72,474
|
|
|
|
246,301
|
|
Other
|
|
|
25,486
|
|
|
|
17,374
|
|
Net cash provided by operating activities
|
|
|
1,088,719
|
|
|
|
1,280,120
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Acquisitions of facilities and other related equipment
|
|
|
(43,743
|
)
|
|
|
(322,315
|
)
|
Purchases of property and equipment
|
|
|
(613,992
|
)
|
|
|
(768,790
|
)
|
Proceeds from sale of property and equipment
|
|
|
6,409
|
|
|
|
5,897
|
|
Increase in other investments
|
|
|
(339,942
|
)
|
|
|
(297,994
|
)
|
Net cash used in investing activities
|
|
|
(991,268
|
)
|
|
|
(1,383,202
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
110,660
|
|
|
|
20,858
|
|
Repurchase of restricted stock shares for payroll tax withholding
requirements
|
|
|
(14,896
|
)
|
|
|
(9,314
|
)
|
Payment of special dividend to stockholders
|
|
|
-
|
|
|
|
(22,535
|
)
|
Stock buy-back
|
|
|
(27,133
|
)
|
|
|
-
|
|
Deferred financing costs
|
|
|
(13,199
|
)
|
|
|
(141,219
|
)
|
Excess tax benefit relating to stock-based compensation
|
|
|
6,715
|
|
|
|
3,973
|
|
Proceeds from noncontrolling investors in joint ventures
|
|
|
289
|
|
|
|
535
|
|
Redemption of noncontrolling investments in joint ventures
|
|
|
(9,304
|
)
|
|
|
(44,287
|
)
|
Distributions to noncontrolling investors in joint ventures
|
|
|
(75,583
|
)
|
|
|
(68,344
|
)
|
Borrowings under credit agreements
|
|
|
1,194,575
|
|
|
|
3,975,866
|
|
Issuance of long-term debt
|
|
|
-
|
|
|
|
3,825,000
|
|
Proceeds from receivables facility
|
|
|
338,000
|
|
|
|
350,000
|
|
Repayments of long-term indebtedness
|
|
|
(1,621,985
|
)
|
|
|
(7,529,503
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(111,861
|
)
|
|
|
361,030
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(14,410
|
)
|
|
|
257,948
|
|
Cash and cash equivalents at beginning of period
|
|
|
387,813
|
|
|
|
129,865
|
|
Cash and cash equivalents at end of period
|
|
$
|
373,403
|
|
|
$
|
387,813
|
|
|
____ For footnotes, see pages 11, 12, 13 and 14.
|
|
|
|
|
|
|
Footnotes to Financial Highlights, Financial Statements and
Selected Operating Data
|
|
(a) The following table provides information needed to calculate
income per share, which is adjusted for income attributable to
noncontrolling interests (in thousands):
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Income from continuing operations attributable to Community Health
Systems, Inc. common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of taxes
|
|
$
|
52,262
|
|
$
|
85,626
|
|
$
|
217,268
|
|
$
|
346,269
|
|
Less: Income from continuing operations attributable to
noncontrolling interests, net of taxes
|
|
|
24,081
|
|
|
23,052
|
|
|
76,065
|
|
|
80,163
|
|
Income from continuing operations attributable to Community Health
Systems, Inc. common stockholders - basic and diluted
|
|
$
|
28,181
|
|
$
|
62,574
|
|
$
|
141,203
|
|
$
|
266,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations attributable to Community Health
Systems, Inc. common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(466
|
)
|
Less: Loss from discontinued operations attributable to
noncontrolling interests, net of taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Loss from discontinued operations attributable to Community Health
Systems, Inc. common stockholders - basic and diluted
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(466
|
)
|
|
(b) Continuing operating results exclude discontinued operations
for the three months and years ended December 31, 2013 and 2012.
Both financial and statistical results exclude entities in
discontinued operations for all periods presented.
|
|
(c) EBITDA consists of net income attributable to Community Health
Systems, Inc. before interest, income taxes, and depreciation and
amortization. Adjusted EBITDA is EBITDA adjusted to exclude
discontinued operations, loss from early extinguishment of debt,
impairment of long-lived assets and net income attributable to
noncontrolling interests. 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 included this measure 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 is the basis for a key component in
the determination of the Company's compliance with some of the
covenants under the Company's senior secured credit facility, as
well as 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 reconciles Adjusted EBITDA, as defined, to net
cash provided by operating activities as derived directly from the
condensed consolidated financial statements (in thousands):
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
Adjusted EBITDA
|
|
$
|
441,809
|
|
|
$
|
481,872
|
|
|
|
$
|
1,725,079
|
|
|
$
|
1,977,715
|
|
Interest expense, net
|
|
|
(149,412
|
)
|
|
|
(160,586
|
)
|
|
|
|
(615,147
|
)
|
|
|
(622,933
|
)
|
Provision for income taxes
|
|
|
(19,964
|
)
|
|
|
(36,464
|
)
|
|
|
|
(88,594
|
)
|
|
|
(157,502
|
)
|
Loss from operations of entities sold, net of taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(466
|
)
|
Other non-cash expenses, net
|
|
|
25,270
|
|
|
|
18,529
|
|
|
|
|
194,027
|
|
|
|
70,174
|
|
Changes in operating assets and liabilities, net of effects of
acquisitions and divestitures
|
|
|
349,916
|
|
|
|
198,904
|
|
|
|
|
(126,646
|
)
|
|
|
13,132
|
|
Net cash provided by operating activities
|
|
$
|
647,619
|
|
|
$
|
502,255
|
|
|
|
$
|
1,088,719
|
|
|
$
|
1,280,120
|
|
|
(d) Included in income from operations and income from continuing
operations for the three months and year ended December 31, 2013, is
the electronic health records incentive reimbursement, which
represents reimbursement from Medicare and Medicaid related to
certain of the Company's hospitals and for certain employed
physicians. Total costs and expenses related to the implementation
of electronic health records for the three months and year ended
December 31, 2013, were approximately $25.4 million and $99.5
million, respectively, including depreciation and amortization of
approximately $16.9 million and $63.4 million, respectively. Total
costs and expenses related to the implementation of electronic
health records for the three months and year ended December 31,
2012, were approximately $25.9 million and $72.9 million,
respectively, including depreciation and amortization of
approximately $14.9 million and $40.0 million, respectively.
|
|
(e) Included in non-same-store income from operations and income
from continuing operations are pre-tax charges related to
acquisition costs of $10.6 million and $0.9 million for the three
months ended December 31, 2013 and 2012, respectively, and $20.6
million and $10.0 million for the years ended December 31, 2013 and
2012, respectively. For the three months and year ended December 31,
2013, these acquisition costs include $8.8 million and $14.1
million, respectively, of expenses related to the acquisition of HMA.
|
|
|
(f) The following table sets forth components reconciling the basic
weighted-average number of shares to the diluted weighted-average
number of shares (in thousands):
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Weighted-average number of shares outstanding - basic
|
|
93,372
|
|
89,882
|
|
92,633
|
|
89,243
|
Add effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Stock awards and options
|
|
1,331
|
|
946
|
|
1,182
|
|
564
|
Weighted-average number of shares outstanding - diluted
|
|
94,703
|
|
90,828
|
|
93,815
|
|
89,807
|
|
(g) Total per share amounts may not add due to rounding.
|
|
(h) The following supplemental tables reconcile 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:
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(per share - diluted)
|
|
(per share - diluted)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, as reported
|
|
$
|
0.30
|
|
$
|
0.69
|
|
$
|
1.51
|
|
$
|
2.96
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Loss from early extinguishment of debt
|
|
|
-
|
|
|
-
|
|
|
0.01
|
|
|
0.81
|
|
Impairment of long-lived assets
|
|
|
0.12
|
|
|
0.07
|
|
|
0.12
|
|
|
0.07
|
|
Expenses related to the acquisition of HMA
|
|
|
0.05
|
|
|
-
|
|
|
0.09
|
|
|
-
|
|
Net benefit from industry-wide governmental settlement and payment
update
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(0.51
|
)
|
Government settlement and related costs reserve
|
|
|
0.02
|
|
|
-
|
|
|
0.67
|
|
|
-
|
|
Settlement of certain other legal matters and related expenses
|
|
|
-
|
|
|
0.09
|
|
|
-
|
|
|
0.22
|
|
Income from continuing operations, excluding adjustments
|
|
$
|
0.49
|
|
$
|
0.85
|
|
$
|
2.40
|
|
$
|
3.55
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(per share - diluted)
|
|
(per share - diluted)
|
|
|
|
|
|
|
|
|
|
Net income, as reported
|
|
$ 0.30
|
|
$ 0.69
|
|
$ 1.51
|
|
$ 2.96
|
Adjustments:
|
|
|
|
|
|
|
|
|
Loss from early extinguishment of debt
|
|
-
|
|
-
|
|
0.01
|
|
0.81
|
Impairment of long-lived assets
|
|
0.12
|
|
0.07
|
|
0.12
|
|
0.07
|
Expenses related to the acquisition of HMA
|
|
0.05
|
|
-
|
|
0.09
|
|
-
|
Net benefit from industry-wide governmental settlement and payment
update
|
|
-
|
|
-
|
|
-
|
|
(0.51)
|
Government settlement and related costs reserve
|
|
0.02
|
|
-
|
|
0.67
|
|
-
|
Settlement of certain other legal matters and related expenses
|
|
-
|
|
0.09
|
|
-
|
|
0.22
|
Net income, excluding adjustments
|
|
$ 0.49
|
|
$ 0.85
|
|
$ 2.40
|
|
$ 3.55
|
|
(i) The following represents preliminary unaudited financial and
operating results from continuing operations for HMA for the year
ended December 31, 2013. This selected unaudited financial and
operating data is based on information available to management as
of the date of this press release and is subject to revision upon
finalization of the annual financial and accounting procedures.
|
|
|
Year Ended
|
|
|
December 31, 2013
|
HMA
|
|
($ in millions)
|
(Continuing Operations)
|
|
(unaudited)
|
|
|
|
Net operating revenues less provision for bad debts
|
|
$
|
5,828
|
|
|
|
|
Adjusted EBITDA (1)
|
|
$
|
760
|
|
|
|
|
Admissions
|
|
|
333,564
|
|
|
|
|
Percent change from prior year
|
|
|
-4.0
|
%
|
|
|
|
Adjusted admissions
|
|
|
676,576
|
|
|
|
|
Percent change from prior year
|
|
|
-1.6
|
%
|
|
|
|
Same-store admissions
|
|
|
320,926
|
|
|
|
|
Percent change from prior year
|
|
|
-7.6
|
%
|
|
|
|
Same-store adjusted admissions
|
|
|
659,447
|
|
|
|
|
Percent change from prior year
|
|
|
-4.1
|
%
|
|
|
|
(1) Excludes change of control and other expenses related to the
change in board of directors and acquisition by Community Health
Systems, Inc.
|
|
|
|
|
|
|
Regulation FD Disclosure
The following tables set forth selected information concerning the
Company's projected consolidated operating results for the year ending
December 31, 2014. These projections update selected preliminary
guidance provided on January 6, 2014, 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 2014 guidance
should be considered in conjunction with the assumptions included
herein. See page 17 for a list of factors that could affect the future
results of the Company or the healthcare industry generally.
The following is provided as guidance to analysts and investors:
|
|
2014 Projection Range
|
Net operating revenues less provision for bad debts (in millions)
|
|
$
|
19,000
|
|
|
to
|
|
$
|
20,200
|
|
Adjusted EBITDA (in millions)
|
|
$
|
2,825
|
|
|
to
|
|
$
|
3,075
|
|
Income from continuing operations per share - diluted
|
|
$
|
2.70
|
|
|
to
|
|
$
|
3.75
|
|
Same-store hospital annual adjusted admissions growth
|
|
|
(3.0)
|
%
|
|
to
|
|
|
1.0
|
%
|
Weighted-average diluted shares (in millions)
|
|
|
113
|
|
|
to
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
The following assumptions were used in developing the 2014 guidance
provided above:
-
The Company's projection excludes the following:
-
Payments related to the contingent value rights issued in
connection with the HMA acquisition;
-
Future losses on the early extinguishment of debt;
-
Impairment of long-lived assets;
-
Resolution of government investigations or other significant legal
settlements;
-
Transaction costs and other expenses incurred in connection with
the acquisition of HMA;
-
Gains or losses from conforming accounting adjustments between CHS
and HMA; and
-
Other significant gains or losses that neither relate to the
ordinary course of our business nor reflect our underlying
business performance.
-
The 2014 projections include the results of operations from the
acquisition of HMA effective January 27, 2014.
-
Excluded from these projections are two hospitals required to be
divested as part of receiving regulatory approval from the Federal
Trade Commission, one hospital being sold as a result of the exercise
of a right of first refusal and one hospital for which HMA had entered
into a definitive agreement to sell prior to the Company's acquisition
of HMA.
-
The 2014 projections assume completing three to four additional
targeted hospital acquisitions, of those currently in process.
Other assumptions used in the above guidance:
-
Benefits to Adjusted EBITDA from Healthcare Reform in 2014 of 0.5% to
0.8% of net operating revenues
-
Achievement of acquisition synergies related to the HMA acquisition of
approximately $100 million during the first year of operations.
-
Health Information Technology (HITECH) electronic health records
incentive reimbursement of approximately 1.0% to 1.3% of net operating
revenues for the year ended December 31, 2014. For the first quarter
ending March 31, 2014, HITECH incentive reimbursement is projected to
be approximately $30 million.
-
Continuation and approval of the California hospital provider fee
program for 2014.
-
Same-store hospital annual adjusted admissions growth 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 6.2% to 6.5% for 2014, an increase over
2013 primarily relating to the investments being made in information
systems technology and the acquisition of HMA; however, the adjustment
to fair market value of the acquired HMA assets remains subject to
finalization, therefore depreciation and amortization may vary
accordingly. Additionally, this is a fixed cost and the percentages
may vary as revenue varies. Such amounts exclude the possible impact
of any future hospital fixed asset impairments.
-
Interest expense, expressed as a percentage of net operating revenues,
of approximately 5.0% to 5.2%; however, interest expense is a fixed
cost and percentages may vary as revenue varies. Total fixed rate
debt, including swaps, is expected to average approximately 60% to 70%
of total debt during 2014.
-
Expressed as a percentage of net operating revenues, equity in
earnings of unconsolidated affiliates of approximately 0.2% to 0.3%
for 2014.
-
Expressed as a percentage of net operating revenues, net income
attributable to noncontrolling interests of approximately 0.6% to 0.8%
for 2014.
-
Expressed as a percentage of income from continuing operations before
income taxes, provision for income tax of approximately 29.0% to 32.0%
for 2014.
-
Capital expenditures are projected as follows (in millions):
|
|
2014
|
|
|
Guidance
|
Total
|
|
$
|
975
|
|
to
|
|
$
|
1,150
|
|
|
|
|
|
|
|
|
|
-
Net cash provided by operating activities is projected as follows (in
millions):
|
|
2014
|
|
|
Guidance
|
Total
|
|
$
|
1,600
|
|
to
|
|
$
|
1,800
|
|
|
|
|
|
|
|
-
Weighted average shares outstanding are projected to be approximately
113 million to 115 million for 2014 and have been adjusted to include
the estimated dilutive impact from "in-the-money" stock options and
restricted shares.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act, Section 21E of the
Exchange Act 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 are 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 and effect of adopted and potential federal and state
healthcare legislation;
-
risks associated with our substantial indebtedness, leverage, and debt
service obligations;
-
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 managed
care provider arrangements and the terms of these arrangements;
-
changes in, or the failure to comply with, managed care provider
contracts, which could result in, among other things, disputes and
changes in reimbursements, both prospectively and retroactively;
-
changes in inpatient or outpatient Medicare and Medicaid payment
levels;
-
increases in the amount and risk of collectability of patient accounts
receivable;
-
increases in wages as a result of inflation or competition for highly
technical positions and rising supply 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
health care 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;
-
our ability to successfully make acquisitions or complete divestitures;
-
our ability to successfully integrate any acquired hospitals,
including those of HMA, or to recognize expected synergies from
acquisitions;
-
the impact of the acquisition of HMA on third-party relationships;
-
our ability to obtain adequate levels of general and professional
liability insurance;
-
timeliness of reimbursement payments received under government
programs; and
-
the other risk factors set forth in our public filings with the
Securities and Exchange Commission.
The consolidated operating results for the three months and year ended
December 31, 2013, are not necessarily indicative of the results that
may be experienced for any such future period or for any future year.
The Company cautions that the projections for calendar year 2014 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.
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