Community Health Systems, Inc. Announces Second Quarter Ended June 30, 2023 Results
08/02/23
The following highlights the financial and operating results for the three months ended
-
Net operating revenues totaled
$3.115 billion . -
Net loss attributable to
Community Health Systems, Inc. stockholders was$(38) million , or$(0.29) per share (diluted), compared to$(326) million , or$(2.52) per share (diluted), for the same period in 2022. Excluding the adjusting items as presented in the table in footnote (e) on page 15, net loss attributable toCommunity Health Systems, Inc. stockholders was$(0.22) per share (diluted), compared to$(2.52) per share (diluted) for the same period in 2022. -
Adjusted EBITDA was
$373 million . -
Net cash provided by operating activities was
$86 million for the three months endedJune 30, 2023 , compared to$53 million for the same period in 2022. - On a same-store basis, admissions increased 4.8 percent and adjusted admissions increased 4.9 percent, compared to the same period in 2022.
Commenting on the results,
Three Months Ended
Net operating revenues for the three months ended
Net loss attributable to
Adjusted EBITDA for the three months ended
The decrease in net loss attributable to
Six Months Ended
Net operating revenues for the six months ended
Net loss attributable to
Adjusted EBITDA for the six months ended
The decrease in net loss attributable to
Other
During 2023, through the date of this press release, the Company has completed the divestiture of three hospitals. On
Information About Non-GAAP Financial Measures
This press 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 the Business Transformation Costs (as defined in footnote (c) to the Financial Highlights, Financial Statements and Selected Operating Data below), gain on sale of equity interests in
Additionally, this press release presents adjusted net loss attributable to
The non-GAAP financial measures set forth above are not measurements of financial performance under
The Company’s annual earnings guidance for 2023, as provided in our press release issued on
About
The Company’s headquarters are located in
|
Financial Highlights (a)(b) (In millions, except per share amounts) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
|
|
|
|
|
||||||||||||
|
Net operating revenues |
$ |
3,115 |
|
$ |
2,934 |
|
$ |
6,223 |
|
$ |
6,044 |
|
||||
|
Net income (loss) (f) |
|
2 |
|
|
(298 |
) |
|
(18 |
) |
|
(268 |
) |
||||
|
Net loss attributable to |
|
(38 |
) |
|
(326 |
) |
|
(89 |
) |
|
(327 |
) |
||||
|
Adjusted EBITDA (c) |
|
373 |
|
|
253 |
|
|
707 |
|
|
662 |
|
||||
|
Net cash provided by operating activities |
|
86 |
|
|
53 |
|
|
91 |
|
|
154 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Loss per share attributable to |
|
|
|
|
||||||||||||
|
Basic (f) |
$ |
(0.29 |
) |
$ |
(2.52 |
) |
$ |
(0.68 |
) |
$ |
(2.54 |
) |
||||
|
Diluted (e), (f) |
|
(0.29 |
) |
|
(2.52 |
) |
|
(0.68 |
) |
|
(2.54 |
) |
||||
|
|
|
|
|
|
||||||||||||
|
Weighted-average number of shares outstanding (d): |
|
|
|
|
||||||||||||
|
Basic |
|
131 |
|
|
129 |
|
|
130 |
|
|
128 |
|
||||
|
Diluted |
|
131 |
|
|
129 |
|
|
130 |
|
|
128 |
|
||||
| _________________________ | ||||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||||
|
Condensed Consolidated Statements of Loss (a)(b) (In millions, except per share amounts) (Unaudited) |
||||||||||||||
|
|
|
|
||||||||||||
|
|
|
Three Months Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
% of Net |
|
|
|
% of Net |
||||||
|
|
|
|
|
Operating |
|
|
|
Operating |
||||||
|
|
|
Amount |
|
Revenues |
|
Amount |
|
Revenues |
||||||
|
Net operating revenues |
$ |
3,115 |
|
100.0 |
% |
$ |
2,934 |
|
100.0 |
% |
||||
|
Operating costs and expenses: |
|
|
|
|
||||||||||
|
Salaries and benefits |
|
1,338 |
|
42.9 |
% |
|
1,295 |
|
44.1 |
% |
||||
|
Supplies |
|
504 |
|
16.2 |
% |
|
487 |
|
16.6 |
% |
||||
|
Other operating expenses |
|
836 |
|
26.8 |
% |
|
830 |
|
28.3 |
% |
||||
|
Lease cost and rent |
|
80 |
|
2.6 |
% |
|
78 |
|
2.7 |
% |
||||
|
Pandemic relief funds |
|
- |
|
- |
% |
|
(8 |
) |
(0.3 |
)% |
||||
|
Depreciation and amortization |
|
124 |
|
4.0 |
% |
|
133 |
|
4.5 |
% |
||||
|
Impairment and (gain) loss on sale of businesses, net (f) |
|
(13 |
) |
(0.4 |
)% |
|
- |
|
- |
% |
||||
|
Total operating costs and expenses |
|
2,869 |
|
92.1 |
% |
|
2,815 |
|
95.9 |
% |
||||
|
Income from operations (f) |
|
246 |
|
7.9 |
% |
|
119 |
|
4.1 |
% |
||||
|
Interest expense, net |
|
207 |
|
6.6 |
% |
|
218 |
|
7.4 |
% |
||||
|
Equity in earnings of unconsolidated affiliates |
|
(1 |
) |
(0.0 |
)% |
|
(1 |
) |
(0.0 |
)% |
||||
|
Income (loss) before income taxes |
|
40 |
|
1.3 |
% |
|
(98 |
) |
(3.3 |
)% |
||||
|
Provision for income taxes |
|
38 |
|
1.2 |
% |
|
200 |
|
6.8 |
% |
||||
|
Net income (loss) (f) |
|
2 |
|
0.1 |
% |
|
(298 |
) |
(10.1 |
)% |
||||
|
Less: Net income attributable to noncontrolling interests |
|
40 |
|
1.3 |
% |
|
28 |
|
1.0 |
% |
||||
|
Net loss attributable to |
$ |
(38 |
) |
(1.2 |
)% |
$ |
(326 |
) |
(11.1 |
)% |
||||
|
Loss per share attributable to Community |
|
|
|
|
||||||||||
|
Basic (f) |
$ |
(0.29 |
) |
|
$ |
(2.52 |
) |
|
||||||
|
Diluted (e), (f) |
$ |
(0.29 |
) |
|
$ |
(2.52 |
) |
|
||||||
|
Weighted-average number of shares outstanding (d): |
|
|
|
|
||||||||||
|
Basic |
|
131 |
|
|
|
129 |
|
|
||||||
|
Diluted |
|
131 |
|
|
|
129 |
|
|
||||||
| _________________________ | ||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||
|
Condensed Consolidated Statements of Loss (a)(b) (In millions, except per share amounts) (Unaudited) |
||||||||||||||
|
|
|
|
||||||||||||
|
|
|
Six Months Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
||||||||||
|
|
|
|
|
% of Net |
|
|
|
% of Net |
||||||
|
|
|
|
|
Operating |
|
|
|
Operating |
||||||
|
|
|
Amount |
|
Revenues |
|
Amount |
|
Revenues |
||||||
|
Net operating revenues |
$ |
6,223 |
|
100.0 |
% |
$ |
6,044 |
|
100.0 |
% |
||||
|
Operating costs and expenses: |
|
|
|
|
||||||||||
|
Salaries and benefits |
|
2,703 |
|
43.5 |
% |
|
2,620 |
|
43.4 |
% |
||||
|
Supplies |
|
1,011 |
|
16.2 |
% |
|
985 |
|
16.3 |
% |
||||
|
Other operating expenses |
|
1,671 |
|
26.9 |
% |
|
1,683 |
|
27.8 |
% |
||||
|
Lease cost and rent |
|
161 |
|
2.6 |
% |
|
155 |
|
2.6 |
% |
||||
|
Pandemic relief funds |
|
- |
|
- |
% |
|
(55 |
) |
(0.9 |
)% |
||||
|
Depreciation and amortization |
|
255 |
|
4.1 |
% |
|
261 |
|
4.3 |
% |
||||
|
Impairment and (gain) loss on sale of businesses, net (f) |
|
(35 |
) |
(0.6 |
)% |
|
6 |
|
0.1 |
% |
||||
|
Total operating costs and expenses |
|
5,766 |
|
92.7 |
% |
|
5,655 |
|
93.6 |
% |
||||
|
Income from operations (f) |
|
457 |
|
7.3 |
% |
|
389 |
|
6.4 |
% |
||||
|
Interest expense, net |
|
414 |
|
6.6 |
% |
|
435 |
|
7.2 |
% |
||||
|
Loss from early extinguishment of debt |
|
- |
|
- |
% |
|
5 |
|
- |
% |
||||
|
Equity in earnings of unconsolidated affiliates |
|
(4 |
) |
(0.1 |
)% |
|
(6 |
) |
(0.1 |
)% |
||||
|
Income (loss) before income taxes |
|
47 |
|
0.8 |
% |
|
(45 |
) |
(0.7 |
)% |
||||
|
Provision for income taxes |
|
65 |
|
1.1 |
% |
|
223 |
|
3.7 |
% |
||||
|
Net loss (f) |
|
(18 |
) |
(0.3 |
)% |
|
(268 |
) |
(4.4 |
)% |
||||
|
Less: Net income attributable to noncontrolling interests |
|
71 |
|
1.1 |
% |
|
59 |
|
1.0 |
% |
||||
|
Net loss attributable to |
$ |
(89 |
) |
(1.4 |
)% |
$ |
(327 |
) |
(5.4 |
)% |
||||
|
Loss per share attributable to Community |
|
|
|
|
||||||||||
|
Basic (f) |
$ |
(0.68 |
) |
|
$ |
(2.54 |
) |
|
||||||
|
Diluted (e), (f) |
$ |
(0.68 |
) |
|
$ |
(2.54 |
) |
|
||||||
|
Weighted-average number of shares outstanding (d): |
|
|
|
|
||||||||||
|
Basic |
|
130 |
|
|
|
128 |
|
|
||||||
|
Diluted |
|
130 |
|
|
|
128 |
|
|
||||||
| _________________________ | ||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||
|
Condensed Consolidated Statements of Comprehensive Loss (In millions) (Unaudited) |
||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
||||||||||||
|
Net income (loss) |
$ |
2 |
|
$ |
(298 |
) |
$ |
(18 |
) |
$ |
(268 |
) |
||||
|
Other comprehensive (loss) income, net of income taxes: |
|
|
|
|
||||||||||||
|
Net change in fair value of available-for-sale debt securities, net of tax |
|
(1 |
) |
|
(6 |
) |
|
2 |
|
|
(14 |
) |
||||
|
Other comprehensive (loss) income |
|
(1 |
) |
|
(6 |
) |
|
2 |
|
|
(14 |
) |
||||
|
Comprehensive income (loss) |
|
1 |
|
|
(304 |
) |
|
(16 |
) |
|
(282 |
) |
||||
|
Less: Comprehensive income attributable to noncontrolling interests |
|
40 |
|
|
28 |
|
|
71 |
|
|
59 |
|
||||
|
Comprehensive loss attributable to |
$ |
(39 |
) |
$ |
(332 |
) |
$ |
(87 |
) |
$ |
(341 |
) |
||||
| _________________________ | ||||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||||
|
Selected Operating Data (a) (Dollars in millions) (Unaudited) |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Three Months Ended |
||||||||||||||||||||
|
|
|
Consolidated |
|
Same-Store |
||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||||||
|
Number of hospitals (at end of period) |
|
78 |
|
|
84 |
|
|
|
78 |
|
|
78 |
|
|
||||||||
|
Licensed beds (at end of period) |
|
12,735 |
|
|
13,341 |
|
|
|
12,735 |
|
|
12,645 |
|
|
||||||||
|
Beds in service (at end of period) |
|
10,843 |
|
|
11,608 |
|
|
|
10,843 |
|
|
10,912 |
|
|
||||||||
|
Admissions |
|
108,799 |
|
|
107,805 |
|
0.9 |
% |
|
108,326 |
|
|
103,356 |
|
4.8 |
% |
||||||
|
Adjusted admissions |
|
249,442 |
|
|
247,119 |
|
0.9 |
% |
|
248,087 |
|
|
236,427 |
|
4.9 |
% |
||||||
|
Patient days |
|
486,142 |
|
|
498,189 |
|
|
|
484,735 |
|
|
480,071 |
|
|
||||||||
|
Average length of stay (days) |
|
4.5 |
|
|
4.6 |
|
|
|
4.5 |
|
|
4.6 |
|
|
||||||||
|
Occupancy rate (average beds in service) |
|
49.3 |
% |
|
47.3 |
% |
|
|
49.3 |
% |
|
48.5 |
% |
|
||||||||
|
Net operating revenues |
$ |
3,115 |
|
$ |
2,934 |
|
6.2 |
% |
$ |
3,104 |
|
$ |
2,842 |
|
9.2 |
% |
||||||
|
Net inpatient revenues as a % of net operating revenues |
|
47.0 |
% |
|
44.9 |
% |
|
|
47.0 |
% |
|
45.1 |
% |
|
||||||||
|
Net outpatient revenues as a % of net operating revenues |
|
53.0 |
% |
|
55.1 |
% |
|
|
53.0 |
% |
|
54.9 |
% |
|
||||||||
|
Income from operations (f) |
$ |
246 |
|
$ |
119 |
|
106.7 |
% |
|
|
|
|||||||||||
|
Income from operations as a % of net operating revenues |
|
7.9 |
% |
|
4.1 |
% |
|
|
|
|
||||||||||||
|
Depreciation and amortization |
$ |
124 |
|
$ |
133 |
|
|
|
|
|
||||||||||||
|
Equity in earnings of unconsolidated affiliates |
$ |
(1 |
) |
$ |
(1 |
) |
|
|
|
|
||||||||||||
|
Net loss attributable to |
$ |
(38 |
) |
$ |
(326 |
) |
88.3 |
% |
|
|
|
|||||||||||
|
Net loss attributable to |
|
-1.2 |
% |
|
-11.1 |
% |
|
|
|
|
||||||||||||
|
Adjusted EBITDA (c) |
$ |
373 |
|
$ |
253 |
|
47.4 |
% |
|
|
|
|||||||||||
|
Adjusted EBITDA as a % of net operating revenues |
|
12.0 |
% |
|
8.6 |
% |
|
|
|
|
||||||||||||
|
Net cash provided by operating activities |
$ |
86 |
|
$ |
53 |
|
62.3 |
% |
|
|
|
|||||||||||
| _________________________ | ||||||||||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||||||||||
|
Selected Operating Data (a) (Dollars in millions) (Unaudited) |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Six Months Ended |
||||||||||||||||||||
|
|
|
Consolidated |
|
Same-Store |
||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||||||
|
Number of hospitals (at end of period) |
|
78 |
|
|
84 |
|
|
|
78 |
|
|
78 |
|
|
||||||||
|
Licensed beds (at end of period) |
|
12,735 |
|
|
13,341 |
|
|
|
12,735 |
|
|
12,645 |
|
|
||||||||
|
Beds in service (at end of period) |
|
10,843 |
|
|
11,608 |
|
|
|
10,843 |
|
|
10,912 |
|
|
||||||||
|
Admissions |
|
218,423 |
|
|
216,172 |
|
1.0 |
% |
|
217,063 |
|
|
207,081 |
|
4.8 |
% |
||||||
|
Adjusted admissions |
|
495,275 |
|
|
478,926 |
|
3.4 |
% |
|
491,255 |
|
|
458,238 |
|
7.2 |
% |
||||||
|
Patient days |
|
994,067 |
|
|
1,049,443 |
|
|
|
989,478 |
|
|
1,011,899 |
|
|
||||||||
|
Average length of stay (days) |
|
4.6 |
|
|
4.9 |
|
|
|
4.6 |
|
|
4.8 |
|
|
||||||||
|
Occupancy rate (average beds in service) |
|
50.6 |
% |
|
50.1 |
% |
|
|
50.6 |
% |
|
51.4 |
% |
|
||||||||
|
Net operating revenues |
$ |
6,223 |
|
$ |
6,044 |
|
3.0 |
% |
$ |
6,173 |
|
$ |
5,862 |
|
5.3 |
% |
||||||
|
Net inpatient revenues as a % of net operating revenues |
|
47.1 |
% |
|
47.2 |
% |
|
|
47.1 |
% |
|
47.5 |
% |
|
||||||||
|
Net outpatient revenues as a % of net operating revenues |
|
52.9 |
% |
|
52.8 |
% |
|
|
52.9 |
% |
|
52.5 |
% |
|
||||||||
|
Income from operations (f) |
$ |
457 |
|
$ |
389 |
|
17.5 |
% |
|
|
|
|||||||||||
|
Income from operations as a % of net operating revenues |
|
7.3 |
% |
|
6.4 |
% |
|
|
|
|
||||||||||||
|
Depreciation and amortization |
$ |
255 |
|
$ |
261 |
|
|
|
|
|
||||||||||||
|
Equity in earnings of unconsolidated affiliates |
$ |
(4 |
) |
$ |
(6 |
) |
|
|
|
|
||||||||||||
|
Net loss attributable to |
$ |
(89 |
) |
$ |
(327 |
) |
72.8 |
% |
|
|
|
|||||||||||
|
Net loss attributable to |
|
-1.4 |
% |
|
-5.4 |
% |
|
|
|
|
||||||||||||
|
Adjusted EBITDA (c) |
$ |
707 |
|
$ |
662 |
|
6.8 |
% |
|
|
|
|||||||||||
|
Adjusted EBITDA as a % of net operating revenues |
|
11.4 |
% |
|
11.0 |
% |
|
|
|
|
||||||||||||
|
Net cash provided by operating activities |
$ |
91 |
|
$ |
154 |
|
-40.9 |
% |
|
|
|
|||||||||||
| _________________________ | ||||||||||||||||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||||||||||||||||
|
Condensed Consolidated Balance Sheets (In millions, except share data) (Unaudited) |
||||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
ASSETS |
|
|
||||||
|
Current assets |
|
|
||||||
|
Cash and cash equivalents |
$ |
118 |
|
$ |
118 |
|
||
|
Patient accounts receivable |
|
2,043 |
|
|
2,040 |
|
||
|
Supplies |
|
333 |
|
|
353 |
|
||
|
Prepaid income taxes |
|
100 |
|
|
99 |
|
||
|
Prepaid expenses and taxes |
|
259 |
|
|
237 |
|
||
|
Other current assets |
|
339 |
|
|
235 |
|
||
|
Total current assets |
|
3,192 |
|
|
3,082 |
|
||
|
Property and equipment |
|
9,527 |
|
|
9,639 |
|
||
|
Less accumulated depreciation and amortization |
|
(4,277 |
) |
|
(4,274 |
) |
||
|
Property and equipment, net |
|
5,250 |
|
|
5,365 |
|
||
|
|
|
4,054 |
|
|
4,166 |
|
||
|
Deferred income taxes |
|
49 |
|
|
49 |
|
||
|
Other asset, net |
|
2,103 |
|
|
2,007 |
|
||
|
Total assets |
$ |
14,648 |
|
$ |
14,669 |
|
||
|
|
|
|
||||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
||||||
|
Current liabilities |
|
|
||||||
|
Current maturities of long-term debt |
$ |
30 |
|
$ |
21 |
|
||
|
Current operating lease liabilities |
|
134 |
|
|
148 |
|
||
|
Accounts payable |
|
736 |
|
|
773 |
|
||
|
Accrued liabilities: |
|
|
||||||
|
Employee compensation |
|
560 |
|
|
637 |
|
||
|
Accrued interest |
|
189 |
|
|
189 |
|
||
|
Other |
|
427 |
|
|
418 |
|
||
|
Total current liabilities |
|
2,076 |
|
|
2,186 |
|
||
|
Long-term debt (g) |
|
11,728 |
|
|
11,614 |
|
||
|
Deferred income taxes |
|
362 |
|
|
354 |
|
||
|
Long-term operating lease liabilities |
|
580 |
|
|
605 |
|
||
|
Other long-term liabilities |
|
722 |
|
|
644 |
|
||
|
Total liabilities |
|
15,468 |
|
|
15,403 |
|
||
|
Redeemable noncontrolling interests in equity of consolidated subsidiaries |
|
583 |
|
|
541 |
|
||
|
STOCKHOLDERS’ DEFICIT |
|
|
||||||
|
|
|
|
||||||
|
Preferred stock, |
|
- |
|
|
- |
|
||
|
Common stock, |
|
1 |
|
|
1 |
|
||
|
Additional paid-in capital |
|
2,049 |
|
|
2,084 |
|
||
|
Accumulated other comprehensive loss |
|
(19 |
) |
|
(21 |
) |
||
|
Accumulated deficit |
|
(3,520 |
) |
|
(3,431 |
) |
||
|
|
|
(1,489 |
) |
|
(1,367 |
) |
||
|
Noncontrolling interests in equity of consolidated subsidiaries |
|
86 |
|
|
92 |
|
||
|
Total stockholders’ deficit |
|
(1,403 |
) |
|
(1,275 |
) |
||
|
Total liabilities and stockholders’ deficit |
$ |
14,648 |
|
$ |
14,669 |
|
||
| _________________________ | ||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||
|
Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) |
||||||||
|
|
|
|
||||||
|
|
|
Six Months Ended |
||||||
|
|
|
2023 |
|
2022 |
||||
|
|
|
|
||||||
|
Cash flows from operating activities |
|
|
||||||
|
Net loss |
$ |
(18 |
) |
$ |
(268 |
) |
||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
||||||
|
Depreciation and amortization |
|
255 |
|
|
261 |
|
||
|
Deferred income taxes |
|
29 |
|
|
221 |
|
||
|
Stock-based compensation expense |
|
10 |
|
|
8 |
|
||
|
Impairment and (gain) loss on sale of businesses, net (f) |
|
(35 |
) |
|
6 |
|
||
|
Loss from early extinguishment of debt |
|
- |
|
|
5 |
|
||
|
Other non-cash expenses, net |
|
88 |
|
|
95 |
|
||
|
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: |
|
|
||||||
|
Patient accounts receivable |
|
(2 |
) |
|
61 |
|
||
|
Supplies, prepaid expenses and other current assets |
|
(73 |
) |
|
(72 |
) |
||
|
Accounts payable, accrued liabilities and income taxes |
|
(130 |
) |
|
(63 |
) |
||
|
Other |
|
(33 |
) |
|
(100 |
) |
||
|
Net cash provided by operating activities |
|
91 |
|
|
154 |
|
||
|
|
|
|
||||||
|
Cash flows from investing activities |
|
|
||||||
|
Acquisitions of facilities and other related businesses |
|
(15 |
) |
|
(4 |
) |
||
|
Purchases of property and equipment |
|
(227 |
) |
|
(191 |
) |
||
|
Proceeds from disposition of hospitals and other ancillary operations |
|
111 |
|
|
3 |
|
||
|
Proceeds from sale of property and equipment |
|
24 |
|
|
7 |
|
||
|
Purchases of available-for-sale debt securities and equity securities |
|
(99 |
) |
|
(55 |
) |
||
|
Proceeds from sales of available-for-sale debt securities and equity securities |
|
137 |
|
|
41 |
|
||
|
Purchases of investments in unconsolidated affiliates |
|
(7 |
) |
|
(8 |
) |
||
|
Increase in other investments |
|
(29 |
) |
|
(30 |
) |
||
|
Net cash used in investing activities |
|
(105 |
) |
|
(237 |
) |
||
|
|
|
|
||||||
|
Cash flows from financing activities |
|
|
||||||
|
Repurchase of restricted stock shares for payroll tax withholding requirements |
|
(4 |
) |
|
(8 |
) |
||
|
Deferred financing costs and other debt-related costs |
|
- |
|
|
(73 |
) |
||
|
Proceeds from noncontrolling investors in joint ventures |
|
3 |
|
|
1 |
|
||
|
Redemption of noncontrolling investments in joint ventures |
|
(1 |
) |
|
(1 |
) |
||
|
Distributions to noncontrolling investors in joint ventures |
|
(83 |
) |
|
(73 |
) |
||
|
Other borrowings |
|
29 |
|
|
34 |
|
||
|
Issuance of long-term debt |
|
- |
|
|
1,535 |
|
||
|
Proceeds from ABL Facility |
|
1,527 |
|
|
- |
|
||
|
Repayments of long-term indebtedness |
|
(1,457 |
) |
|
(1,493 |
) |
||
|
Net cash provided by (used in) financing activities |
|
14 |
|
|
(78 |
) |
||
|
|
|
|
||||||
|
Net change in cash and cash equivalents |
|
- |
|
|
(161 |
) |
||
|
Cash and cash equivalents at beginning of period |
|
118 |
|
|
507 |
|
||
|
Cash and cash equivalents at end of period |
$ |
118 |
|
$ |
346 |
|
||
| _________________________ | ||||||||
|
For footnotes, see pages 13, 14 and 15. |
||||||||
|
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data |
||
|
(a) |
Both financial and statistical results include the operating results of divested or closed businesses for the periods prior to the consummation of the respective divestiture or closing. Same-store operating results and statistical information include operating results of businesses operated in the comparable current year and prior year periods and exclude businesses divested or closed in 2022 and the six months ended |
|
|
(b) |
The following table provides information needed to calculate loss per share, which is adjusted for income attributable to noncontrolling interests (in millions): |
|
|
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
Net loss attributable to |
|
|
|
|
||||||||||||
|
Net income (loss) |
$ |
2 |
|
$ |
(298 |
) |
$ |
(18 |
) |
$ |
(268 |
) |
||||
|
Less: Income attributable to noncontrolling interests, net of taxes |
|
40 |
|
|
28 |
|
|
71 |
|
|
59 |
|
||||
|
Net loss attributable to |
$ |
(38 |
) |
$ |
(326 |
) |
$ |
(89 |
) |
$ |
(327 |
) |
||||
|
(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) |
||
| The Company believes it is useful to provide investors and other users of the Company’s financial statements this performance measure to align with how management assesses the Company’s results of operations. Adjusted EBITDA also is comparable to a similar metric called Consolidated EBITDA, as defined in the Company’s asset-based loan facility (the “ABL Facility”) and the Company’s existing note indentures, which is a key component in the determination of the Company’s compliance with certain covenants under the ABL Facility and such note indentures (including the Company’s ability to service debt and incur capital expenditures), and is used to determine the interest rate and commitment fee payable under the ABL Facility (although Adjusted EBITDA does not include all of the adjustments described in the ABL Facility). Adjusted EBITDA includes the Adjusted EBITDA attributable to hospitals that were divested during the course of such year, but in each case solely to the extent relating to the period prior to the consummation of the applicable divestiture. | ||
| Adjusted EBITDA is not a measurement of financial performance under |
||
| The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net loss attributable to |
||
|
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
Net loss attributable to |
$ |
(38 |
) |
$ |
(326 |
) |
$ |
(89 |
) |
$ |
(327 |
) |
||||
|
Adjustments: |
|
|
|
|
||||||||||||
|
Provision for income taxes |
|
38 |
|
|
200 |
|
|
65 |
|
|
223 |
|
||||
|
Depreciation and amortization |
|
124 |
|
|
133 |
|
|
255 |
|
|
261 |
|
||||
|
Net income attributable to noncontrolling interests |
|
40 |
|
|
28 |
|
|
71 |
|
|
59 |
|
||||
|
Interest expense, net |
|
207 |
|
|
218 |
|
|
414 |
|
|
435 |
|
||||
|
Loss from early extinguishment of debt |
|
- |
|
|
- |
|
|
- |
|
|
5 |
|
||||
|
Impairment and (gain) loss on sale of businesses, net |
|
(13 |
) |
|
- |
|
|
(35 |
) |
|
6 |
|
||||
|
Expense from government and other legal matters and related costs |
|
- |
|
|
- |
|
|
10 |
|
|
- |
|
||||
|
Expense from business transformation costs |
|
6 |
|
|
- |
|
|
6 |
|
|
- |
|
||||
|
Expense related to employee termination benefits and other restructuring charges |
|
9 |
|
|
- |
|
|
10 |
|
|
- |
|
||||
|
Adjusted EBITDA |
$ |
373 |
|
$ |
253 |
|
$ |
707 |
|
$ |
662 |
|
||||
|
(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 |
|
Six Months Ended |
|||||||||
|
|
|
|
|
|||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
|
Weighted-average number of shares outstanding - basic |
131 |
129 |
130 |
128 |
||||||||
|
Add effect of dilutive securities: |
|
|
|
|
||||||||
|
Stock awards and options |
- |
|
- |
|
- |
|
- |
|
||||
|
Weighted-average number of shares outstanding - diluted |
131 |
|
129 |
|
130 |
|
128 |
|
||||
|
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued) |
||
|
|
||
| The Company generated a net loss attributable to |
||
|
(e) |
The following supplemental table reconciles net loss attributable to |
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||
|
|
|
|
|
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
Net loss per share (diluted), as reported |
$ |
(0.29 |
) |
$ |
(2.52 |
) |
$ |
(0.68 |
) |
$ |
(2.54 |
) |
||||
|
Adjustments: |
|
|
|
|
||||||||||||
|
Loss from early extinguishment of debt |
|
- |
|
|
- |
|
|
- |
|
|
0.11 |
|
||||
|
Impairment and (gain) loss on sale of businesses, net |
|
(0.02 |
) |
|
- |
|
|
(0.13 |
) |
|
0.04 |
|
||||
|
Expense from government and other legal matters and related costs |
|
- |
|
|
- |
|
|
0.06 |
|
|
- |
|
||||
|
Expense from business transformation costs |
|
0.04 |
|
|
- |
|
|
0.04 |
|
|
- |
|
||||
|
Expense related to employee termination benefits and other restructuring charges |
|
0.05 |
|
|
- |
|
|
0.06 |
|
|
- |
|
||||
|
Net loss per share (diluted), excluding adjustments |
$ |
(0.22 |
) |
$ |
(2.52 |
) |
$ |
(0.65 |
) |
$ |
(2.40 |
) |
||||
|
(f) |
Both income from operations and net income (loss) included a net non-cash income of |
|
|
(g) |
The maximum aggregate principal amount under the ABL Facility is |
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 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, including the current negative macroeconomic conditions, ongoing inflationary pressures that have significantly increased and may continue to significantly increase our expenses, the current high interest rate environment, ongoing challenging labor market conditions and labor shortages, including the current and/or potential future adverse impact of such economic conditions and other factors on our net operating revenues (including our service mix, revenue mix, payor mix and/or patient volumes) and our ability to collect outstanding receivables, as well as the potential impact on us of financial and capital market instability and/or disruptions to the banking system due to bank failures and other factors, including any potential impact on our ability to access and or obtain the return of cash and cash equivalents, and/or our ability to access credit, liquidity and capital market sources on acceptable terms or at all;
- the impact of current or future federal and state health reform initiatives, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), and the potential for changes to the Affordable Care Act, 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 legislation, 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;
- demographic changes;
- changes in, or the failure to comply with, federal, state or local laws or governmental regulations affecting our business;
- potential adverse impact of known and unknown legal, regulatory and governmental proceedings and other loss contingencies, including governmental investigations and audits, and federal and state false claims act litigation;
- 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 security breaches, cyber-attacks, loss of data, other cybersecurity threats or incidents, and any actual or perceived failures to comply with legal requirements governing the privacy and security of health information or other regulated, sensitive or confidential information, or legal requirements regarding data privacy or data protection, and the impact of the security breach announced by us on
February 13, 2023 , including legal, reputational, and financial risks associated with this security breach, existing and/or any future litigation associated with this security breach, any potential regulatory inquiries to which we may become subject in connection with this security breach, and the extent of remediation and other additional costs that may be incurred by us in connection with this security breach;
- any potential 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 implementation of the sequestration spending reductions pursuant to both the Budget Control Act of 2011 and the Pay-As-You-Go Act of 2010 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;
- the impact of competitive labor market conditions and the shortage of nurses, including in connection with our ability to hire and retain qualified nurses, physicians, other medical personnel and key management, and increased labor expenses as a result of such competitive labor market conditions, inflation and competition for such positions;
- the non-performance of third parties with whom we contract with respect to providing hospital-based physicians and the effectiveness of our efforts to mitigate such non-performance including through acquisitions of outsourced medical specialist businesses, engagement with new or replacement providers, employment of physicians and re-negotiation or assumption of existing contracts;
- any failure to obtain medical supplies or pharmaceuticals at favorable prices;
- liabilities and other claims asserted against us, including self-insured professional liability claims;
- competition;
- 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;
- any failure of our ongoing process of redesigning and consolidating key business functions, including through the implementation of a new core enterprise resource planning system, to proceed as expected or to be completed successfully;
-
changes in
U.S. GAAP;
- 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, 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 and/or outpatient facilities, or to recognize expected synergies from acquisitions;
- the impact of severe weather conditions and climate change, as well as the timing and amount of insurance recoveries in relation to severe weather events;
- our ability to obtain adequate levels of insurance, including cyber, 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 impact of any future developments related to COVID-19 and the COVID-19 pandemic on our business, results of operations, financial condition, and/or cash flows;
- any failure to comply with our obligations under license or technology agreements;
- challenging economic conditions in non-urban communities in which we operate;
- 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;
- any changes in or interpretations of income tax laws and regulations; and
-
the risk factors set forth in our Annual Report on Form 10-K for the year ended
December 31, 2022 , filed with theSecurities and Exchange Commission (the “SEC”) onFebruary 17, 2023 and other filings filed with theSEC .
The consolidated operating results for the three and six months ended
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President and Chief Financial Officer
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