- Community Health Systems (CHS) disclosed a net loss of $2.46 billion for 2017, compared with a loss of $1.72 billion in 2016. The loss was $2 billion in Q4 FY2017, an improvement over a loss of $220 million during the same time period in 2016.
- The 127-hospital system had a 13.9% drop in total admissions in 2017. On a same-store basis, admissions decreased 1.9% and adjusted admissions decreased 1.7% during the year ended Dec. 31, 2017, compared with the same period in 2016.
- CEO Wayne Smith sought to cast a positive light on the results, but investors did not seem pleased, sending the stock down about 10% in opening trade.
CHS has been in turnaround mode as it tries to chip away at debt by selling off hospitals.
As of the end of last year, CHS' debt load was $13.8 billion, compared with $14.7 billion the same time in 2016.
A large part of the debt comes from CHS' $7.6 billion merger deal with Health Management Associates in 2014.
Quarterly net operating revenues totaled $3 billion, a 31.6% drop for the same time period in 2016.
The company blamed part of the decrease on a $591 million increase in contractual allowances and provision for bad debts. This came as a result of new accounting processes in "preparation for the adoption of the new revenue recognition accounting guidance," the company stated.
CHS beat analysts' EPS expectations by $0.06 but missed Q4 revenue expectations by $470 million.
The net operating revenues for the full year totaled $15.35 billion, a 16.7% decrease from 2016.
Since the HMA buy, CHS has been on a hospital selling spree. Last year, the company shed 30 hospitals. CHS is continuing its divestiture plans with facilities that have received acquirers' interest. "The company is pursuing these interests for sale transactions involving hospitals with a combined total of approximately $2 billion in annual net operating revenues," CHS stated.
"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 in a statement.
"In 2018, we remain 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. We are also committed to driving operational efficiencies, and, as always, are dedicated to patient safety and clinical advancements that improve healthcare for the patients and communities we serve.”
In August, ASL Strategic Value Fund sent a letter to CHS' board of directors stating "it is time" to replace CEO Wayne Smith. The letter, dated Aug. 8, argued that action is needed immediately as management’s "previous missteps have resulted in billions of dollars of shareholder losses."
At the J.P. Morgan Healthcare Conference in January, Smith, when asked about the Health Management Assets merger, said, "Based on the facts and circumstances at the time, I certainly would do the deal. Based on a retro view of it, I wouldn't do the deal.”