Hospital operator Community Health Systems posted $46 million in profit in 2022, down about 80% compared to $230 million in 2021.
But CHS stock rose in Thursday morning trading as the operator posted fourth-quarter profit totaling $414 million, compared to $178 million in the prior-year period. Fourth-quarter operating revenues totaled $3.14 billion, missing Wall Street expectations.
The earnings report came just two days after Franklin, Tennessee-based CHS announced that it experienced a security breach that potentially exposed the health information of 1 million patients.
Cybersecurity vendor Fortra, which contracts with CHS to provide a secure file transfer software, originally experienced the breach and notified the operator that the cyberattack had resulted in leaked CHS data. In a letter to the Securities and Exchange Commission sent Monday, CHS said that it had launched an ongoing investigation but estimated that, other than leaked data, the breach did not cause any “material interruption” to CHS operations, including care delivery.
In earnings released Wednesday, the for-profit system pointed to overall lower acuity of services, fewer inpatient admissions and an unfavorable payer mix as the cause of the decrease in its full-year profit.
Although same-store adjusted admissions increased 5% year over year in 2022, the operator reported a 1.7% decrease in admissions. Average patient stay decreased to 4.7 days in 2022, compared to five days in 2021.
CHS reported operating revenues of $12.2 billion for 2022, down 1.3% from the prior year.
High contract labor costs and an increase in salary and benefits expenses driven by inflation also weighed on the operator. CHS reported $5.3 billion in salary and benefit expenses in 2022, making up 44% of the operator’s total expenses, up from $5.2 billion in 2021.
However, CHS CEO Tim Hingtgen said in a statement that the operator had lowered its contract labor spending from its peak in early 2022, while improving retention and recruitment.
The company decreased its spending on temporary contract labor by $20 million sequentially to around $80 million, after lowering contract spending in the third quarter, according to a note from investment banking firm Jefferies.
That optimism is reflected in its 2023 revenue guidance. CHS is projecting full-year revenue between $12.2 billion and $12.6 billion this year.