CHS Reports Lower Results, Still Exploring Options

FRANKLIN, Tenn. – Community Health Systems Inc. reiterated Tuesday that it is exploring “a variety of options with financial sponsors” for the company but that discussions are at a preliminary state and there is no timeline for its review.

“There can be no certainty that the exploration will result in any kind of transaction,” the company said in announcing its third quarter results at close of business. CHS is the parent company of ValleyCare Health System of Ohio, which operates hospitals in Mahoning and Trumbull counties, and Sharon Regional Health System in Sharon, Pa.

The reminder that CHS is exploring options, including a potential sale of the business, comes amid lower-than expected financial resuts. Net operating revenues for the third quarter were down 9.6% from a year ago. Revenues for the three months ended Sept. 30 totaled $4.38 billion, down from $4.85 billion from the third quarter of 2015.

Adjusted earnings for the quarter were $465 million, compared with $661 million for the same period in 2015, a 29.7% decrease.

The consolidated operating results for the quarter also reflected a 12.4% decrease in total admissions, and a 13.0% decrease in total adjusted admissions, compared with the same period in 2015.

On a same-store basis, admissions decreased 2.1% and adjusted admissions decreased 1.5% during the three months ended Sept. 30, compared with the same period in 2015. On a same-store basis, net operating revenues increased 1.2% for third quarter 2016 compared with the same period in 2015.

For the nine months ended Sept. 30, net operating revenues totaled $13.97 billion, a 4.6% decrease compared with $14.64 billion for the same period in 2015. Adjusted earnings for the nine-month period were $1.66 billion, compared with $2.14 billion for the same period in 2015, a 22.5% decrease.

The consolidated operating results for the first nine months of 2016 reflect a 7.9% decrease in total admissions, and a 6.9% decrease in total adjusted admissions, compared with the same period in 2015. On a same-store basis, admissions decreased 2.0% and adjusted admissions decreased 0.2% for the nine-month period compared with the same period in 2015.

On a same-store basis, net operating revenues increased 1.6% during the nine months ended Sept. 30, compared with the same period in 2015.

Wayne T. Smith, CHS chairman and CEO, attributed the performance, which was below expectations, to lower patient volumes and higher expenses.

“Moving into the fourth quarter, we are intensely focused on driving operational improvements and generating better results,” he said. “We believe that performance improvements, combined with our portfolio rationalization efforts, should ultimately create a stronger portfolio of hospitals for the future.”

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