CEO Wayne Smith says the company’s turnaround is making progress, even as shareholders take it on the chin, losing nearly $18 per share in the fourth quarter of 2017.
Community Health Systems, Inc. lost more than $2 billion in the fourth quarter of 2017, nearly $18 per share, owing to converging challenges that include plummeting revenues and lower hospital volumes, the company reported.
Franklin, Tennessee–based CHS said net operating revenues for the three months ended December 31, 2017, totaled $3 billion, a 31.6% decrease, compared with $4.4 billion for the same period in 2016.
Net operating revenues for all of 2017 totaled $15.3 billion, a 16.7% decrease, compared with $18.4 billion for the same period in 2016.
Despite the sea of red ink, CHS CEO Wayne T. Smith was upbeat, and said the company’s turnaround effort is making headway.
“We are pleased with our progress in the fourth quarter and expect to carry that momentum through 2018, as we execute strategies that we believe will strengthen our core business and drive improved results,” Smith said in prepared remarks.
“During the fourth quarter, we completed our 2017 announced divestiture plan and we intend to continue to optimize our portfolio in 2018 to help pay down debt and refine our portfolio to stronger markets,” Smith said.
Smith said that for 2018, CHS remains “committed to growth initiatives to advance our competitive position, including expanding our transfer and access program across our networks, launching Accountable Care Organizations, and strategically expanding outpatient services.”
According to a filing from CHS:
- Net operating revenues totaled more than $3 billion in the fourth quarter and were adversely impacted by a $591 million increase in contractual allowances and provision for bad debts.
- Net loss attributable to CHS stockholders was $2 billion, or nearly $18 per share, compared with net loss of $220 million, or nearly $2 per share (diluted) for the same period in 2016.
- Adjusted EBITDA was $409 million.
- Cash flow from operations was $156 million, compared with $327 million for the same period in 2016.
- Operating results for the fourth quarter reflect a 19.2% decrease in total admissions, compared with the fourth quarter of 2016. Same-hospital admissions fell 1.7% and adjusted admissions decreased .9% over the same period.
- Operating results for all of 2017, reflect a 14% decrease in total admissions when compared with 2016.
- Hurricanes Harvey and Irma resulted in a $40 million loss of net operating revenues, owing to evacuations and population disruptions before the storms, and recovery efforts afterward.
- As part of its efforts to pay down outstanding debts, CHS sold 30 hospitals in 2017, and continues to negotiate other divestitures in 2018.
- CHS recorded non-cash impairment expense totaling $1.7 billion in the fourth quarter, from an impairment charge of $1.4 billion on the value of goodwill for the CHS’s hospital reporting unit and impairment charges of $341 million to reduce the value of assets at hospitals that CHS has sold, plans to sell, and at underperforming hospitals.