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Analysis

CHS Posts $373M Net Loss in Q4, Full Year Revenues Dip 6.7%

By Jack O'Brien  
   February 19, 2020

In a bright spot, the health system did see its quarterly adjusted EBITDA rise to nearly $450 million.

Community Health Systems (CHS) endured a tough end to 2019, as several quarterly and year-end financials worsened compared to similar periods in 2018, according to its latest earnings report released Wednesday afternoon. 

The Franklin, Tennessee–based for-profit hospital operator saw its net loss for Q4 2019 balloon to $373 million, a deterioration compared to the company's net loss of $328 million in Q4 2018.

CHS also posted a net loss per share of $3.27, a 9.9% decline in admissions, and net operating revenues of $3.28 billion, down 4.8% year-over-year.

Additionally, CHS reported declines in several year-end financial metrics as well.

The company's net operating revenues for 2019 were $13.2 billion, a decline of 6.7% year-over-year, while its adjusted EBITDA slipped by nearly 1%.

C-SUITE PERSPECTIVE:

"We concluded 2019 with a strong finish to the year. Our successful divestiture program, along with strategic growth initiatives in our core portfolio of markets, has driven better results, including improved same-store volume and net revenue growth in 2019," Wayne T. Smith, chairman and CEO of CHS, said in a statement. "As we enter 2020, we expect to deliver incremental growth, driven by a combination of continued same-store net revenue performance and execution across our strategic margin improvement programs." 

In a bright spot, the health system did see its quarterly adjusted EBITDA rise to nearly $450 million.

CHS also reduced its net loss for 2019 by $113 million and boost its net operating revenues by 4.2% on a same-store basis. 

Related: CHS Slashes Net Loss by $308M Year-Over-Year

The company's earnings report was released less than a month after the launch of a $1 billion debt tender offer.

CHS plans to use the net proceeds of the tender offer, which will expire at midnight on Thursday, to purchase "any and all" of its 5.125% Senior Secured Notes due in 2021, redeem all 2021 notes not purchased pursuant to the tender offer, and cover any related fees and expenses

Related: CHS Launches $1B Debt Tender Offer, Estimates Operating Revenues Slid in Q4

To start the year, CHS also named Kevin Hammons as chief financial officer (CFO) following the retirement of Thomas J. Aaron, who served as CFO from May 2017 until his retirement at the end of 2019.

Related: CHS Names New CFO, Completes Sale of 3 Virginia Hospitals

Looking ahead to 2020, CHS projects net operating revenues between $12.4 billion to $12.8 billion, with an adjusted EBITDA between $1.65 billion to $1.8 billion.

CHS also anticipates a net loss between $1.30 to $0.60 per share and same-store adjusted admissions growth between 1.5% to 2.5%.

ADDITIONAL CHS Q3 EARNINGS REPORT HIGHLIGHTS:

  • CHS widened its projection for capital expenditures to a range of $400 million to $500 million during 2020.
  • For 2019, the provider's net cash used in financing activities was a loss of $363 million, an improvement compared to the loss of $396 million in 2018.

For complete financial information, review CHS' filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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