Community Health Systems, Inc. Announces Third Quarter 2020 Results
10/27/20
The following highlights the financial and operating results for the three months ended
-
Net operating revenues totaled
$3.126 billion . -
Net income attributable to
Community Health Systems, Inc. common stockholders was$112 million , or$0.97 per share (diluted), compared with net loss of$(17) million , or$(0.15) per share (diluted), for the same period in 2019. Excluding the adjusting items as presented in the table in footnote (e) on page 17, net income attributable toCommunity Health Systems, Inc. common stockholders was$0.18 per share (diluted), compared to net loss of$(0.29) per share (diluted) for the same period in 2019. -
Adjusted EBITDA was
$431 million , compared with$388 million for the same period in 2019. -
No pandemic relief funds from the CARES Act, PPPHCE Act or other sources of relief were recognized during the three months ended
September 30, 2020 , as further discussed below. -
Net cash provided by operating activities was
$393 million , compared with net cash used in operating activities of$(74) million for the same period in 2019. -
Approximately
$261 million principal amount of notes outstanding were extinguished through open market repurchases during the three months endedSeptember 30, 2020 . - On a same-store basis, admissions decreased 6.2 percent and adjusted admissions decreased 11.5 percent, compared with the same period in 2019.
Net operating revenues for the three months ended
Net income attributable to
Adjusted EBITDA for the three months ended
Payments received by the Company through the
The consolidated operating results for the three months ended
Net operating revenues for the nine months ended
Net income attributable to
Adjusted EBITDA for the nine months ended
The consolidated operating results for the nine months ended
No debt was issued during the three months ended
Commenting on the results,
COVID – 19 Pandemic:
The COVID-19 pandemic continues to adversely affect the Company’s operations and financial results for the current year due to decreases in net operating revenues driven primarily by declines in patient volumes, as noted above, and increases in expenses related to supply chain and other expenditures.
Consistent with the disclosures in the Company’s earnings releases filed on
As a result of the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations, and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency. Sources of relief include the CARES Act, which was enacted on
During the nine months ended
The Company previously recognized approximately
On
As evidenced by the issuance of the
Medicare accelerated payments of approximately
The PHSSEF payments received to date as noted above and which the Company may receive in the future under the CARES Act and the PPPHCE Act, have been and may continue to be beneficial in partially mitigating the impact of the COVID-19 pandemic on the Company’s results of operations and financial position. Additionally, the federal government may consider additional stimulus and relief efforts, but the Company is unable to predict whether additional stimulus measures will be enacted or their impact, if any. The Company is unable to assess the extent to which anticipated ongoing negative impacts on the Company arising from the COVID-19 pandemic will be offset by benefits which the Company may recognize or receive in the future under the CARES Act, the PPPHCE Act or any future stimulus measures.
The Company completed the divestiture of three hospitals on
Financial and statistical data for 2019 and 2020 presented in this press release includes the operating results of divested or closed hospitals through the effective closing date of each respective divestiture or hospital closing. Same-store operating results exclude the results of a hospital acquired in 2019 and the hospitals divested or closed in 2019 and during the nine months ended
Information About Non-GAAP Financial Measures
This earnings release presents Adjusted EBITDA, a non-GAAP financial measure, which is EBITDA adjusted to add back net income attributable to noncontrolling interests and to exclude loss (gain) from early extinguishment of debt, impairment and (gain) loss on sale of businesses, expense related to government and other legal settlements and related costs, expense related to employee termination benefits and other restructuring charges, expense from settlement and fair value adjustments on the CVR agreement liability related to the
Additionally, this earnings release presents adjusted net income (loss) attributable to
The Company’s headquarters are located in
Financial Highlights (a)(b) | ||||||||||||||
(In millions, except per share amounts) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended |
|
|
Nine Months Ended |
|||||||||||
|
|
|
|
|||||||||||
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
|
|||||
Net operating revenues | $ |
3,126 |
$ |
3,246 |
|
$ |
8,670 |
$ |
9,925 |
|
||||
Net income (loss) (f), (g) |
128 |
2 |
|
254 |
(244 |
) |
||||||||
Net income (loss) attributable to |
112 |
(17 |
) |
200 |
(302 |
) |
||||||||
Adjusted EBITDA (c) |
431 |
388 |
|
1,194 |
1,181 |
|
||||||||
Net cash provided by (used in) operating activities |
393 |
(74 |
) |
2,102 |
191 |
|
||||||||
Earnings (loss) per share attributable to Community | ||||||||||||||
Basic (f), (g) | $ |
0.98 |
$ |
(0.15 |
) |
$ |
1.74 |
$ |
(2.66 |
) |
||||
Diluted (e), (f), (g) |
0.97 |
(0.15 |
) |
1.74 |
(2.66 |
) |
||||||||
Weighted-average number of shares outstanding (d): | ||||||||||||||
Basic |
115 |
114 |
|
115 |
114 |
|
||||||||
Diluted |
116 |
114 |
|
115 |
114 |
|
||||||||
___ For footnotes, see pages 15, 16 and 17. |
Condensed Consolidated Statements of Income (Loss) (a)(b) | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
|||||||||||||||
2020 |
|
|
|
2019 |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
% of Net |
|
|
|
|
% of Net |
|||||||
|
|
|
Operating |
|
|
|
|
Operating |
|||||||
Amount |
|
Revenues |
|
Amount |
|
Revenues |
|||||||||
Net operating revenues | $ |
3,126 |
|
100.0 |
|
% |
$ |
3,246 |
|
100.0 |
|
% |
|||
Operating costs and expenses: | |||||||||||||||
Salaries and benefits |
1,365 |
|
43.7 |
|
% |
1,469 |
|
45.3 |
|
% |
|||||
Supplies |
523 |
|
16.7 |
|
% |
526 |
|
16.2 |
|
% |
|||||
Other operating expenses |
736 |
|
23.6 |
|
% |
812 |
|
24.9 |
|
% |
|||||
Government and other legal settlements and related costs (g) |
- |
|
- |
|
% |
26 |
|
0.8 |
|
% |
|||||
Lease cost and rent |
85 |
|
2.7 |
|
% |
79 |
|
2.4 |
|
% |
|||||
Pandemic relief funds |
- |
|
- |
|
% |
- |
|
- |
|
% |
|||||
Depreciation and amortization |
139 |
|
4.4 |
|
% |
151 |
|
4.7 |
|
% |
|||||
Impairment and (gain) loss on sale of businesses, net (f) |
(7 |
) |
(0.2 |
) |
% |
(1 |
) |
(0.0 |
) |
% |
|||||
Total operating costs and expenses |
2,841 |
|
90.9 |
|
% |
3,062 |
|
94.3 |
|
% |
|||||
Income from operations (f), (g) |
285 |
|
9.1 |
|
% |
184 |
|
5.7 |
|
% |
|||||
Interest expense, net |
257 |
|
8.2 |
|
% |
259 |
|
8.0 |
|
% |
|||||
Gain from early extinguishment of debt |
(115 |
) |
(3.7 |
) |
% |
- |
|
- |
|
% |
|||||
Equity in earnings of unconsolidated affiliates |
(5 |
) |
(0.1 |
) |
% |
(3 |
) |
(0.1 |
) |
% |
|||||
Income (loss) before income taxes |
148 |
|
4.7 |
|
% |
(72 |
) |
(2.2 |
) |
% |
|||||
Provision for (benefit from) income taxes |
20 |
|
0.6 |
|
% |
(74 |
) |
(2.3 |
) |
% |
|||||
Net income (f), (g) |
128 |
|
4.1 |
|
% |
2 |
|
0.1 |
|
% |
|||||
Less: Net income attributable to noncontrolling interests |
16 |
|
0.5 |
|
% |
19 |
|
0.6 |
|
% |
|||||
Net income (loss) attributable to |
$ |
112 |
|
3.6 |
|
% |
$ |
(17 |
) |
(0.5 |
) |
% |
|||
Earnings (loss) per share attributable to Community | |||||||||||||||
Basic (f), (g) | $ |
0.98 |
|
$ |
(0.15 |
) |
|||||||||
Diluted (e), (f), (g) | $ |
0.97 |
|
$ |
(0.15 |
) |
|||||||||
Weighted-average number of shares outstanding (d): | |||||||||||||||
Basic |
115 |
|
114 |
|
|||||||||||
Diluted |
116 |
|
114 |
|
|||||||||||
|
|
||||||||||||||
____ For footnotes, see pages 15, 16 and 17. |
Condensed Consolidated Statements of Income (Loss) (a)(b) | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Nine Months Ended |
|||||||||||||||
2020 |
|
|
|
2019 |
|
|
|||||||||
|
|
|
% of Net |
|
|
|
|
% of Net |
|||||||
|
|
|
Operating |
|
|
|
|
Operating |
|||||||
Amount |
|
Revenues |
|
Amount |
|
Revenues |
|||||||||
Net operating revenues | $ |
8,670 |
|
100.0 |
|
% |
$ |
9,925 |
|
100.0 |
|
% |
|||
Operating costs and expenses: | |||||||||||||||
Salaries and benefits |
4,054 |
|
46.8 |
|
% |
4,499 |
|
45.3 |
|
% |
|||||
Supplies |
1,439 |
|
16.6 |
|
% |
1,623 |
|
16.4 |
|
% |
|||||
Other operating expenses |
2,211 |
|
25.4 |
|
% |
2,516 |
|
25.3 |
|
% |
|||||
Government and other legal settlements and related costs (g) |
4 |
|
0.0 |
|
% |
35 |
|
0.4 |
|
% |
|||||
Lease cost and rent |
248 |
|
2.9 |
|
% |
240 |
|
2.4 |
|
% |
|||||
Pandemic relief funds |
(448 |
) |
(5.2 |
) |
% |
- |
|
- |
|
% |
|||||
Depreciation and amortization |
424 |
|
4.9 |
|
% |
456 |
|
4.6 |
|
% |
|||||
Impairment and (gain) loss on sale of businesses, net (f) |
48 |
|
0.6 |
|
% |
70 |
|
0.7 |
|
% |
|||||
Total operating costs and expenses |
7,980 |
|
92.0 |
|
% |
9,439 |
|
95.1 |
|
% |
|||||
Income from operations (f), (g) |
690 |
|
8.0 |
|
% |
486 |
|
4.9 |
|
% |
|||||
Interest expense, net |
779 |
|
9.0 |
|
% |
782 |
|
7.9 |
|
% |
|||||
(Gain) loss from early extinguishment of debt |
(111 |
) |
(1.3 |
) |
% |
31 |
|
0.3 |
|
% |
|||||
Equity in earnings of unconsolidated affiliates |
(11 |
) |
(0.1 |
) |
% |
(12 |
) |
(0.1 |
) |
% |
|||||
Income (loss) before income taxes |
33 |
|
0.4 |
|
% |
(315 |
) |
(3.2 |
) |
% |
|||||
Benefit from income taxes |
(221 |
) |
(2.5 |
) |
% |
(71 |
) |
(0.7 |
) |
% |
|||||
Net income (loss) (f), (g) |
254 |
|
2.9 |
|
% |
(244 |
) |
(2.5 |
) |
% |
|||||
Less: Net income attributable to noncontrolling interests |
54 |
|
0.6 |
|
% |
58 |
|
0.5 |
|
% |
|||||
Net income (loss) attributable to |
$ |
200 |
|
2.3 |
|
% |
$ |
(302 |
) |
(3.0 |
) |
% |
|||
Earnings (loss) per share attributable to Community | |||||||||||||||
Basic (f), (g) | $ |
1.74 |
|
$ |
(2.66 |
) |
|||||||||
Diluted (e), (f), (g) | $ |
1.74 |
|
$ |
(2.66 |
) |
|||||||||
Weighted-average number of shares outstanding (d): | |||||||||||||||
Basic |
115 |
|
114 |
|
|||||||||||
Diluted |
115 |
|
114 |
|
|||||||||||
___ For footnotes, see pages 15, 16 and 17. |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||
(In millions) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended |
|
|
Nine Months Ended |
|||||||||||
|
|
|
|
|||||||||||
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
|
|||||
Net income (loss) | $ |
128 |
$ |
2 |
|
$ |
254 |
$ |
(244 |
) |
||||
Other comprehensive (loss) income, net of income taxes: | ||||||||||||||
Net change in fair value of interest rate swaps, net of tax |
- |
(1 |
) |
- |
(3 |
) |
||||||||
Net change in fair value of available-for-sale debt securities, net of tax |
- |
1 |
|
3 |
5 |
|
||||||||
Amortization and recognition of unrecognized pension cost components, net of tax |
- |
- |
|
1 |
- |
|
||||||||
Other comprehensive income |
- |
- |
|
4 |
2 |
|
||||||||
Comprehensive income (loss) |
128 |
2 |
|
258 |
(242 |
) |
||||||||
Less: Comprehensive income attributable to noncontrolling interests |
16 |
19 |
|
54 |
58 |
|
||||||||
Comprehensive income (loss) attributable to |
$ |
112 |
$ |
(17 |
) |
$ |
204 |
$ |
(300 |
) |
||||
___ For footnotes, see pages 15, 16 and 17. |
Selected Operating Data (a) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||
Consolidated |
Same-Store |
||||||||||||||||||||
|
2020 |
|
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
|
2019 |
|
|
% Change |
|||
Number of hospitals (at end of period) |
|
93 |
|
|
103 |
|
|
92 |
|
|
92 |
|
|||||||||
Licensed beds (at end of period) |
|
15,252 |
|
|
16,332 |
|
|
15,071 |
|
|
15,141 |
|
|||||||||
Beds in service (at end of period) |
|
13,487 |
|
|
14,537 |
|
|
13,313 |
|
|
13,507 |
|
|||||||||
Admissions |
|
119,146 |
|
|
136,926 |
|
-13.0 |
% |
|
118,532 |
|
|
126,384 |
|
-6.2 |
% |
|||||
Adjusted admissions |
|
248,279 |
|
|
302,805 |
|
-18.0 |
% |
|
246,663 |
|
|
278,642 |
|
-11.5 |
% |
|||||
Patient days |
|
561,050 |
|
|
593,746 |
|
|
558,234 |
|
|
549,963 |
|
|||||||||
Average length of stay (days) |
|
4.7 |
|
|
4.3 |
|
|
4.7 |
|
|
4.4 |
|
|||||||||
Occupancy rate (average beds in service) |
|
45.2 |
% |
|
43.4 |
% |
|
45.6 |
% |
|
44.3 |
% |
|||||||||
Net operating revenues |
$ |
3,126 |
|
$ |
3,246 |
|
-3.7 |
% |
$ |
3,117 |
|
$ |
3,030 |
|
2.9 |
% |
|||||
Net inpatient revenues as a % of net operating revenues |
|
48.7 |
% |
|
46.1 |
% |
|
48.6 |
% |
|
45.8 |
% |
|||||||||
Net outpatient revenues as a % of net operating revenues |
|
51.3 |
% |
|
53.9 |
% |
|
51.4 |
% |
|
54.2 |
% |
|||||||||
Income from operations (f), (g) |
$ |
285 |
|
$ |
184 |
|
54.9 |
% |
|||||||||||||
Income from operations as a % of net operating revenues |
|
9.1 |
% |
|
5.7 |
% |
|||||||||||||||
Depreciation and amortization |
$ |
139 |
|
$ |
151 |
|
|||||||||||||||
Equity in earnings of unconsolidated affiliates |
$ |
(5 |
) |
$ |
(3 |
) |
|||||||||||||||
Net income (loss) attributable to |
$ |
112 |
|
$ |
(17 |
) |
758.8 |
% |
|||||||||||||
Net income (loss) attributable to |
|
3.6 |
% |
|
-0.5 |
% |
|||||||||||||||
Adjusted EBITDA (c) |
$ |
431 |
|
$ |
388 |
|
11.1 |
% |
|||||||||||||
Adjusted EBITDA as a % of net operating revenues |
|
13.8 |
% |
|
12.0 |
% |
|||||||||||||||
Net cash provided by (used in) operating activities |
$ |
393 |
|
$ |
(74 |
) |
631.1 |
% |
|||||||||||||
____ For footnotes, see pages 15, 16 and 17. |
Selected Operating Data (a) | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Nine Months Ended |
|||||||||||||||||||||
Consolidated |
Same-Store |
||||||||||||||||||||
|
2020 |
|
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
|
2019 |
|
|
% Change |
|||
Number of hospitals (at end of period) |
|
93 |
|
|
103 |
|
|
92 |
|
|
92 |
|
|||||||||
Licensed beds (at end of period) |
|
15,252 |
|
|
16,332 |
|
|
15,071 |
|
|
15,141 |
|
|||||||||
Beds in service (at end of period) |
|
13,487 |
|
|
14,537 |
|
|
13,313 |
|
|
13,507 |
|
|||||||||
Admissions |
|
353,875 |
|
|
424,214 |
|
-16.6 |
% |
|
346,814 |
|
|
384,581 |
|
-9.8 |
% |
|||||
Adjusted admissions |
|
732,770 |
|
|
915,514 |
|
-20.0 |
% |
|
716,903 |
|
|
829,065 |
|
-13.5 |
% |
|||||
Patient days |
|
1,627,907 |
|
|
1,892,873 |
|
|
1,598,752 |
|
|
1,715,201 |
|
|||||||||
Average length of stay (days) |
|
4.6 |
|
|
4.5 |
|
|
4.6 |
|
|
4.5 |
|
|||||||||
Occupancy rate (average beds in service) |
|
43.5 |
% |
|
45.5 |
% |
|
43.8 |
% |
|
46.6 |
% |
|||||||||
Net operating revenues |
$ |
8,670 |
|
$ |
9,925 |
|
-12.6 |
% |
$ |
8,557 |
|
$ |
9,136 |
|
-6.3 |
% |
|||||
Net inpatient revenues as a % of net operating revenues |
|
49.2 |
% |
|
47.3 |
% |
|
49.1 |
% |
|
47.0 |
% |
|||||||||
Net outpatient revenues as a % of net operating revenues |
|
50.8 |
% |
|
52.7 |
% |
|
50.9 |
% |
|
53.0 |
% |
|||||||||
Income from operations (f), (g) |
$ |
690 |
|
$ |
486 |
|
42.0 |
% |
|||||||||||||
Income from operations as a % of net operating revenues |
|
8.0 |
% |
|
4.9 |
% |
|||||||||||||||
Depreciation and amortization |
$ |
424 |
|
$ |
456 |
|
|||||||||||||||
Equity in earnings of unconsolidated affiliates |
$ |
(11 |
) |
$ |
(12 |
) |
|||||||||||||||
Net income (loss) attributable to |
$ |
200 |
|
$ |
(302 |
) |
166.2 |
% |
|||||||||||||
Net income (loss) attributable to |
|
2.3 |
% |
|
-3.0 |
% |
|||||||||||||||
Adjusted EBITDA (c) |
$ |
1,194 |
|
$ |
1,181 |
|
1.1 |
% |
|||||||||||||
Adjusted EBITDA as a % of net operating revenues |
|
13.8 |
% |
|
11.9 |
% |
|||||||||||||||
Net cash provided by operating activities |
$ |
2,102 |
|
$ |
191 |
|
1000.5 |
% |
|||||||||||||
___ For footnotes, see pages 15, 16 and 17. |
Condensed Consolidated Balance Sheets | ||||||||
(In millions, except share data) | ||||||||
(Unaudited) | ||||||||
|
|
|
||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ |
1,823 |
|
$ |
216 |
|
||
Patient accounts receivable |
1,956 |
|
2,258 |
|
||||
Supplies |
337 |
|
354 |
|
||||
Prepaid income taxes |
50 |
|
48 |
|
||||
Prepaid expenses and taxes |
166 |
|
193 |
|
||||
Other current assets |
360 |
|
358 |
|
||||
Total current assets |
4,692 |
|
3,427 |
|
||||
Property and equipment |
9,293 |
|
9,653 |
|
||||
Less accumulated depreciation and amortization |
(4,003 |
) |
(4,045 |
) |
||||
Property and equipment, net |
5,290 |
|
5,608 |
|
||||
4,220 |
|
4,328 |
|
|||||
Deferred income taxes |
88 |
|
38 |
|
||||
Other assets, net |
2,226 |
|
2,208 |
|
||||
Total assets | $ |
16,516 |
|
$ |
15,609 |
|
||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ |
19 |
|
$ |
20 |
|
||
Current operating lease liabilities |
131 |
|
136 |
|
||||
Accounts payable |
710 |
|
811 |
|
||||
Accrued liabilities: | ||||||||
Employee compensation |
580 |
|
594 |
|
||||
Accrued interest |
180 |
|
189 |
|
||||
Other |
2,009 |
|
532 |
|
||||
Total current liabilities |
3,629 |
|
2,282 |
|
||||
Long-term debt (h) |
12,860 |
|
13,385 |
|
||||
Deferred income taxes |
29 |
|
200 |
|
||||
Long-term operating lease liabilities |
523 |
|
487 |
|
||||
Other long-term liabilities |
951 |
|
894 |
|
||||
Total liabilities |
17,992 |
|
17,248 |
|
||||
Redeemable noncontrolling interests in equity of consolidated subsidiaries |
481 |
|
502 |
|
||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, |
- |
|
- |
|
||||
Common stock, |
1 |
|
1 |
|
||||
Additional paid-in capital |
2,005 |
|
2,008 |
|
||||
Accumulated other comprehensive loss |
(5 |
) |
(9 |
) |
||||
Accumulated deficit |
(4,018 |
) |
(4,218 |
) |
||||
(2,017 |
) |
(2,218 |
) |
|||||
Noncontrolling interests in equity of consolidated subsidiaries |
60 |
|
77 |
|
||||
Total stockholders’ deficit |
(1,957 |
) |
(2,141 |
) |
||||
Total liabilities and stockholders’ deficit | $ |
16,516 |
|
$ |
15,609 |
|
||
___ For footnotes, see pages 15, 16 and 17. |
Condensed Consolidated Statements of Cash Flows | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Nine Months Ended |
|||||||
2020 |
|
|
2019 |
|
|||
Cash flows from operating activities | |||||||
Net income (loss) | $ |
254 |
|
$ |
(244 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization |
424 |
|
456 |
|
|||
Deferred income taxes |
(223 |
) |
(73 |
) |
|||
Government and other legal settlements and related costs (g) |
4 |
|
25 |
|
|||
Stock-based compensation expense |
8 |
|
8 |
|
|||
Impairment and (gain) loss on sale of businesses, net (f) |
48 |
|
70 |
|
|||
(Gain) loss from early extinguishment of debt |
(111 |
) |
31 |
|
|||
Other non-cash expenses, net |
99 |
|
140 |
|
|||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||
Patient accounts receivable |
281 |
|
82 |
|
|||
Supplies, prepaid expenses and other current assets |
16 |
|
40 |
|
|||
Medicare accelerated payments |
1,159 |
|
- |
|
|||
Repayment/derecognition of Medicare accelerated payments |
(22 |
) |
- |
|
|||
Unrecognized pandemic relief funds |
271 |
|
- |
|
|||
Accounts payable, accrued liabilities and income taxes |
(81 |
) |
(242 |
) |
|||
Other |
(25 |
) |
(102 |
) |
|||
Net cash provided by operating activities |
2,102 |
|
191 |
|
|||
Cash flows from investing activities | |||||||
Acquisitions of facilities and other related businesses |
(1 |
) |
(13 |
) |
|||
Purchases of property and equipment |
(317 |
) |
(322 |
) |
|||
Proceeds from disposition of hospitals and other ancillary operations |
347 |
|
363 |
|
|||
Proceeds from sale of property and equipment |
4 |
|
1 |
|
|||
Purchases of available-for-sale debt securities and equity securities |
(68 |
) |
(58 |
) |
|||
Proceeds from sales of available-for-sale debt securities and equity securities |
80 |
|
72 |
|
|||
Increase in other investments |
(36 |
) |
(146 |
) |
|||
Net cash provided by (used in) investing activities |
9 |
|
(103 |
) |
|||
Cash flows from financing activities | |||||||
Repurchase of restricted stock shares for payroll tax withholding requirements |
(1 |
) |
(1 |
) |
|||
Deferred financing costs and other debt-related costs |
(32 |
) |
(28 |
) |
|||
Proceeds from noncontrolling investors in joint ventures |
- |
|
10 |
|
|||
Redemption of noncontrolling investments in joint ventures |
(4 |
) |
(6 |
) |
|||
Distributions to noncontrolling investors in joint ventures |
(84 |
) |
(78 |
) |
|||
Proceeds from sale-lease back |
2 |
|
56 |
|
|||
Other borrowings |
31 |
|
26 |
|
|||
Issuance of long-term debt |
1,462 |
|
2,489 |
|
|||
Proceeds from ABL facility |
540 |
|
25 |
|
|||
Repayments of long-term indebtedness |
(2,418 |
) |
(2,620 |
) |
|||
Net cash used in financing activities |
(504 |
) |
(127 |
) |
|||
Net change in cash and cash equivalents |
1,607 |
|
(39 |
) |
|||
Cash and cash equivalents at beginning of period |
216 |
|
196 |
|
|||
Cash and cash equivalents at end of period | $ |
1,823 |
|
$ |
157 |
|
|
___ For footnotes, see pages 15, 16 and 17. |
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data
(a) Both financial and statistical results include the operating results of divested or closed hospitals through the effective closing date of each respective divestiture or hospital closing. Same-store operating results and statistical information exclude the results of a hospital acquired in 2019 and the hospitals divested or closed in 2019 and during the nine months ended
(b) The following table provides information needed to calculate earnings (loss) per share, which is adjusted for income attributable to noncontrolling interests (in millions):
Three Months Ended |
|
|
Nine Months Ended |
|||||||||||
|
|
|
|
|||||||||||
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
|
|||||
Net income (loss) attributable to |
||||||||||||||
Net income (loss) | $ |
128 |
$ |
2 |
|
$ |
254 |
$ |
(244 |
) |
||||
Less: Income attributable to noncontrolling interests, net of taxes |
16 |
19 |
|
54 |
58 |
|
||||||||
Net income (loss) attributable to |
$ |
112 |
$ |
(17 |
) |
$ |
200 |
$ |
(302 |
) |
||||
(c) EBITDA is a non-GAAP financial measure which consists of net income (loss) attributable to
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)
Adjusted EBITDA is not a measurement of financial performance under
The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net income (loss) attributable to
Three Months Ended |
|
|
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
|||||||||||||
2020 |
|
|
2019 |
|
|
|
|
2020 |
|
|
2019 |
|
|||||
Net income (loss) attributable to |
$ |
112 |
|
$ |
(17 |
) |
$ |
200 |
|
$ |
(302 |
) |
|||||
Adjustments: | |||||||||||||||||
Provision for (benefit from) income taxes |
20 |
|
(74 |
) |
(221 |
) |
(71 |
) |
|||||||||
Depreciation and amortization |
139 |
|
151 |
|
424 |
|
456 |
|
|||||||||
Net income attributable to noncontrolling interests |
16 |
|
19 |
|
54 |
|
58 |
|
|||||||||
Interest expense, net |
257 |
|
259 |
|
779 |
|
782 |
|
|||||||||
(Gain) loss from early extinguishment of debt |
(115 |
) |
- |
|
(111 |
) |
31 |
|
|||||||||
Impairment and (gain) loss on sale of businesses, net |
(7 |
) |
(1 |
) |
48 |
|
70 |
|
|||||||||
Expense from government and other legal settlements and related costs |
- |
|
26 |
|
4 |
|
35 |
|
|||||||||
Expense from settlement and legal expenses related to cases covered by the CVR |
- |
|
7 |
|
2 |
|
10 |
|
|||||||||
Expense related to employee termination benefits and other restructuring charges |
9 |
|
- |
|
15 |
|
1 |
|
|||||||||
Change in valuation allowances recorded for promissory notes |
- |
|
(2 |
) |
- |
|
21 |
|
|||||||||
Change in estimate for professional liability claims accrual |
- |
|
20 |
|
- |
|
90 |
|
|||||||||
Adjusted EBITDA | $ |
431 |
|
$ |
388 |
|
$ |
1,194 |
|
$ |
1,181 |
|
|||||
(d) 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 |
|
|
Nine Months Ended |
|||||
|
|
|
|
|||||
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
Weighted-average number of shares outstanding - basic |
115 |
114 |
115 |
114 |
||||
Add effect of dilutive securities: | ||||||||
Stock awards and options |
1 |
- |
- |
- |
||||
Weighted-average number of shares outstanding - diluted |
116 |
114 |
115 |
114 |
||||
The effect of stock awards and options on the diluted shares calculation was an increase of 625,392 shares and 248,152 shares during the three and nine months ended
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)
(e) The following supplemental table reconciles net income (loss) attributable to
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
|
|||||||||||||
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
Net income (loss), as reported |
$ |
0.97 |
|
$ |
(0.15 |
) |
$ |
1.74 |
|
$ |
(2.66 |
) |
|||
Adjustments: | |||||||||||||||
(Gain) loss from early extinguishment of debt |
|
(0.86 |
) |
|
0.01 |
|
|
(0.84 |
) |
|
0.22 |
|
|||
Impairment and (gain) loss on sale of businesses, net |
|
0.01 |
|
|
0.01 |
|
|
0.51 |
|
|
0.60 |
|
|||
Expense from government and other legal settlements and related costs |
|
- |
|
|
0.18 |
|
|
0.02 |
|
|
0.24 |
|
|||
Expense from settlement and legal expenses related to cases covered by the CVR |
|
- |
|
|
0.05 |
|
|
0.01 |
|
|
0.07 |
|
|||
Expense related to employee termination benefits and other restructuring charges |
|
0.07 |
|
|
- |
|
|
0.10 |
|
|
0.01 |
|
|||
Change in valuation allowances recorded for promissory notes |
|
- |
|
|
(0.01 |
) |
|
- |
|
|
0.14 |
|
|||
Change in estimate for professional liability claims accrual |
|
- |
|
|
0.16 |
|
|
- |
|
|
0.63 |
|
|||
Tax effect related to HMA legal settlement |
|
- |
|
|
(0.13 |
) |
|
- |
|
|
(0.13 |
) |
|||
Change in tax valuation allowance |
|
- |
|
|
(0.42 |
) |
|
(2.09 |
) |
|
(0.42 |
) |
|||
Net income (loss), excluding adjustments |
$ |
0.18 |
|
$ |
(0.29 |
) |
$ |
(0.55 |
) |
$ |
(1.29 |
) |
|||
(f) Both income from operations and net income for the three months ended
(g) The
(h) At
Forward-Looking Statements
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 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:
• developments related to COVID-19, including, without limitation, related to the length and severity of the pandemic; the volume of canceled or rescheduled procedures; the volume of COVID-19 patients cared for across our health systems; the timing and availability of effective medical treatments and vaccines; measures we are taking to respond to the COVID-19 pandemic; the impact of government and administrative regulation on us; changes in net revenue due to patient volumes, payor mix and negative macroeconomic conditions; increased expenses related to labor, supply chain, capital or other expenditures; workforce disruptions; and supply shortages and disruptions;
• uncertainty regarding the implementation of the CARES Act, the PPPHCE Act, and any other future stimulus measures related to COVID-19, including the magnitude and timing of any future payments or benefits we may receive or realize thereunder;
• general economic and business conditions, both nationally and in the regions in which we operate, including economic and business conditions resulting from the COVID-19 pandemic;
• the impact of current or future federal and state health reform initiatives, including, without limitation, the Affordable Care Act, and the potential for the Affordable Care Act to be repealed or found unconstitutional or otherwise invalidated, or for additional changes to the law, its implementation or its interpretation (including through executive orders and court challenges);
• the extent to and manner in 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 future and long-term viability of health insurance exchanges and potential changes to the beneficiary enrollment process;
• risks associated with our substantial indebtedness, leverage and debt service obligations, including our ability to refinance such indebtedness on acceptable terms or to incur additional indebtedness, and our ability to remain in compliance with debt covenants, as well as risks associated with disruptions in the financial and capital markets as the result of the COVID-19 pandemic which could impact us from a financing and liquidity perspective;
• demographic changes;
• changes in, or the failure to comply with, federal, state or local laws or governmental regulations affecting our business, including any such laws or governmental regulations which are adopted in connection with the COVID-19 pandemic;
• 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 affected by the increasing consolidation of health insurers and managed care companies and vertical integration efforts involving payors and healthcare providers;
• changes in, or the failure to comply with, contract terms with payors and changes in reimbursement policies or rates paid by federal or state healthcare programs or commercial payors;
• any potential additional impairments in the carrying value of goodwill, 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 and methodologies;
• 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 decreases in collectability which may result from, among other things, self-pay growth and difficulties in recovering payments for which patients are responsible, including co-pays and deductibles;
• the efforts of insurers, healthcare providers, large employer groups and others to contain healthcare costs, including the trend toward value-based purchasing;
• 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 or via telehealth;
• changes in medical or other technology;
• changes in
• the availability and terms of capital to fund any additional acquisitions or replacement facilities or other capital expenditures;
• our ability to successfully make acquisitions or complete divestitures, including the disposition of hospitals and non-hospital businesses pursuant to our portfolio rationalization and deleveraging strategy, 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;
• the impact that changes in our relationships with joint venture or syndication partners could have on effectively operating our hospitals or ancillary services or in advancing strategic opportunities;
• our ability to successfully integrate any acquired hospitals, or to recognize expected synergies from acquisitions;
• the impact of seasonal severe weather conditions, including the timing and amount of insurance recoveries in relation to severe weather events;
• our ability to obtain adequate levels of insurance, including general liability, professional liability, and directors and officers liability insurance;
• timeliness of reimbursement payments received under government programs;
• effects related to pandemics, epidemics, or outbreaks of infectious diseases, including the novel coronavirus causing the disease known as COVID-19 as noted above;
• the impact of cyber-attacks or security breaches;
• any failure to comply with the terms of the Corporate Integrity Agreement;
• the concentration of our revenue in a small number of states;
• our ability to realize anticipated cost savings and other benefits from our current strategic and operational cost savings initiatives;
• changes in interpretations, assumptions and expectations regarding the Tax Cuts and Jobs Act; and
• the other risk factors set forth in our in our Annual Report on Form 10-K for the year ended
The consolidated operating results for the three and nine months ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20201027006128/en/
Investor Contact:
Executive Vice President
and Chief Financial Officer
(615) 465-7000
Source: