Community Health (CYH) Q2 Earnings Top on Rising Admissions
Community Health Systems, Inc. CYH reported second-quarter 2023 adjusted loss of 22 cents per share, narrower than the Zacks Consensus Estimate of a loss of 29 cents. The reported loss was also narrower than the prior-year quarter’s loss of $2.52 per share.
Net operating revenues increased 6.2% year over year to $3,115 million in the quarter under review. The top line beat the consensus mark by 3.2%.
The quarterly results benefited from rising patient volumes, admissions and improved occupancy rates. However, declining patient days, length of stay and rising expenses partially offset the negatives.
Community Health Systems, Inc. Price, Consensus and EPS Surprise
Community Health Systems, Inc. price-consensus-eps-surprise-chart | Community Health Systems, Inc. Quote
Quarterly Operational Update
At the second-quarter end, the hospital count for Community Health was 78, missing our estimate by 1.3%.
Patient days tumbled 2.4% year over year. The average length of stay fell 2.2% year over year, while the occupancy rate of 49.3% improved 200 basis points year over year.
Admissions grew 0.9% year over year. Meanwhile, adjusted admissions also advanced 0.9% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 4.8% and 4.9%, respectively, from their corresponding prior-year quarter’s reported figures.
Licensed beds of CYH totaled 12,735 as of Jun 30, 2023, which indicates a decrease of 606 beds from the prior-year quarter. The reported figure missed our estimate by 4.1%.
Total operating costs and expenses increased 1.9% year over year to $2,869 million in the second quarter, higher than our estimate of $2,768.3 million. The increase was mainly due to higher salaries and benefits, supplies and lease costs and rent. Meanwhile, net interest expenses of $207 million declined 5% year over year. The metric came higher than our estimate of $200.7 million.
Community Health reported a net loss of $2 million, narrower than the prior-year quarter loss of $298 million. Adjusted EBITDA improved 47.4% year over year to $373 million in the quarter under review primarily due to improved inpatient and outpatient volumes, higher acuity and lower contract labor costs. The metric beat our estimate by 11.7%.
Financial Update (as of Jun 30, 2023)
Community Health exited the second quarter with cash and cash equivalents of $118 million, which was unchanged from the figure at 2022-end. Total assets of $14,648 million declined from $14,669 million at 2022-end.
Long-term debt amounted to $11,728 million, which increased from $11,614 million at 2022-end. Current maturities of long-term debt were $30 million.
In the first half of 2023, CYH generated operating cash flows of $91 million, up from $63 million year over year.
2023 View Reaffirmed
The company reiterated its guidance for 2023, which it had provided in the prior quarter. It expects net operating revenues between $12,200 million and $12,600 million for 2023, the mid-point of which indicates a rise of 1.5% from the 2022 reported figure of $12,211 million.
Adjusted EBITDA is estimated to be in the range of $1,475-$1,625 million. The mid-point of the guidance implies a 5.7% rise from the 2022 figure of $1,466 million.
Net loss per share is expected to be between 5 cents and 65 cents in 2023. Community Health reported a net loss of $1.38 per share in 2022.
Depreciation and amortization are predicted to be in the range of $510-$530 million. Net interest expense is estimated to be in the $815-$835 million band.
Net cash from operating activities is anticipated to be between $675 million and $825 million in 2023. Capital expenditures are expected to be between $450 and $500 million. Diluted weighted-average shares outstanding are estimated to be in the range of $130-131 million.
Zacks Rank
Community Health currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported second-quarter 2023 results so far, the bottom-line results of Acadia Healthcare Company, Inc. ACHC, Centene Corporation CNC and HCA Healthcare, Inc. HCA beat the Zacks Consensus Estimate.
Acadia Healthcare reported second-quarter 2023 adjusted earnings of 92 cents per share, which beat the Zacks Consensus Estimate by 10.8%. The bottom line improved 9.5% year over year. Total revenues amounted to $731.3 million, which advanced 12.2% year over year in the quarter under review. The top line outpaced the consensus mark by 3.4%. Total U.S. same-facility revenues of ACHC rose 11.4% year over year to $721.3 million in the second quarter. The growth came on the back of 6.1% improvement in revenue per patient day and 4.9% growth in patient days. Admissions increased 4.3% year over year. Adjusted EBITDA of $174.5 million advanced 10.9% year over year.
Centene reported second-quarter 2023 adjusted EPS of $2.10, which beat the Zacks Consensus Estimate by 2.4%. The bottom line advanced 18.6% year over year. Revenues of CNC amounted to $37,608 million, which improved 4.6% year over year. The top line outpaced the consensus mark by 3.4%. Premiums improved 7% year over year to $33,713 million, beating our estimate by 3.3%. The total membership of CNC came in at 28.4 million as of Jun 30, 2023, which increased 7.5% year over year. It reported adjusted net earnings of $1,155 million in the quarter under review, which increased 10.8% year over year.
HCA Healthcare reported second-quarter 2023 adjusted EPS of $4.29, which surpassed the Zacks Consensus Estimate by 0.2%. Also, the bottom line climbed 1.9% year over year. HCA’s revenues advanced 7% year over year to $15.9 billion. The top line beat the consensus mark by 1.8%. While same-facility equivalent admissions rose 3.7% year over year in the second quarter, same-facility admissions improved 2.2% year over year. Same-facility revenue per equivalent admission rose 2.4% year over year in the quarter under review. Adjusted EBITDA of $3.1 billion grew 0.5% year over year in the second quarter.
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