Community Health Systems on Thursday beat Wall Street expectations with a second quarter report showing net loss narrowed to $110 million, compared to $137 million for the same period in 2017.
Net operating revenues dropped 14% to $3.56 billion — a total slightly higher than analyst predictions —compared with $4.14 billion for the same period in 2017. The 119-hospital system saw admissions decrease by almost 17%.
On a same-store basis, admissions decreased 2.1% and adjusted admissions were down 0.2% during the three month period. Same-store net operating revenues, an area of focus for the system, increased 3.3% — the strongest since 2012, according to Jefferies.
Despite the steep revenue and admissions drops, Q2 had some positive aspects for CHS, a company beleaguered by debt and vexed shareholders in recent months. The 20-state hospital system hired financial advisors in March to restructure its long-term debt, which was at $13.8 billion at the end of last year.
As another facet of its cost-cutting and expense management efforts, CHS is continuing its divestment strategy. The Franklin, Tennessee-based hospital operator has sold off seven hospitals so far this year with plans to slough five more, in addition to the 30 divested in 2017.
“Our second quarter results reflect progress in our key areas of strategic focus,” CHS CEO Wayne Smith said in the report — most notably “improvements in same-store operating results, progress on divestitures and successful refinancing.”
Smith’s new direction comes on the heels of investor uncertainty in his administrative abilities. Last August, investor ASL Strategic Value Fund called for his replacement.
In a note Friday, a Jefferies analyst commended CHS management for its more conservative guidance strategy and cost-controlling endeavors, but noted margins were unlikely to meaningfully expand, or earnings to accelerate, due to persistent same-store volume pressure.