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Community Health (CYH) Q4 Loss Wider Than Expected, Down Y/Y

Zacks Equity Research

Community Health Systems, Inc. CYH incurred adjusted loss of 42 cents per share in fourth-quarter 2018, wider than the Zacks Consensus Estimate of a loss of 58 cents and also the year-ago loss of 25 cents. This downside was mainly due to lower admissions in the reported quarter, partly offset by a decrease in expenses.

Quarterly Operational Update

In the quarter under review, net operating revenues were $3.45 billion, surpassing the Zacks Consensus Estimate by 1.9%. However, the top line improved 12.9% year over year owing to an increase in occupancy rates and the average length of stay.

The fourth quarter witnessed a decline of 9.7% in total admissions and a 9.8% fall in adjusted admissions when compared with the year-ago period.

Total operating costs and expenses were $3.6 billion, down 31.5% year over year owing to lower salaries and benefits plus supplies, rent and amortization.

Community Health Systems, Inc. Price, Consensus and EPS Surprise

Community Health Systems, Inc. Price, Consensus and EPS Surprise | Community Health Systems, Inc. Quote

Full-Year Results

The company incurred operating loss of $1.94 per share, comparing unfavorably with the loss of $1.20 suffered last year. However, the reported loss was lower than the company’s estimated range of a loss of $2.10$2.25.
Total revenues of $14.2 billion were down 7.8% year over year due to lower patient volumes.

Financial Update

Total assets at fourth-quarter quarter end were $15.9 billion, down 9% from the year-end 2017-level.

Cash and cash equivalents plunged 65% to $196 million from the figure as of 2017 end.

The company utilized $165 million cash from operations compared with the cash generated of $156 in the year-ago quarter.

The company has a long-term debt of $13.4 billion as of Dec 31, 2018, dipping 3.6% from the number as of Dec 31, 2017.

2019 Guidance

Loss from continuing operations per share is now estimated between $1.60 and $1.25 while revenues are projected between $12.8 billion and $13.1 billion. Adjusted EBITDA is predicted in the range of $1.625-$1.725 billion while adjusted admission is likely to inch up 0-1%

Our Take

Community Health has persistently seen soft revenues due to reduced admissions, putting pressure on the bottom line. Rising expenses also weigh on its margins. Nevertheless, the company is successfully continuing with its inorganic growth acceleration via acquisitions over the past few years. Frequent divestitures to streamline its core operations have also helped it lower its debt burden.

Zacks Rank and Performance of Other Players

Community Health carries a Zacks Rank #3 (Hold). Among other players in the healthcare space having reported fourth-quarter results, the bottom-line figures of HCA Healthcare, Inc. HCA, UnitedHealth Group Inc. UNH and Ensign Group Inc. ENSG beat estimates by 15.44%, 2.5% and 5.9%, respectively.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

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