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Community Health Systems Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: CYH

Our acquisition process has been very robust this year. We've acquired 4 facilities with trailing revenue over $550 million. Our acquisition of assets in Memorial Hospital in York, Pennsylvania was completed on July 1, 2012. The assets include 110 bed hospital as other, as well as other outpatient ancillary services.

The price for the fixed assets was $45 million or 40% of trailing revenue of $115 million. The hospital's trading margin is below single digits. While we've agreed to replace a placement hospital, it will not start construction for several years, and this is our 17th hospital in Pennsylvania.

The seller has disclosed a letter of intent for 2 hospital system with hospitals located in Wheeling, West Virginia and Martins Ferry, Ohio. This system has a total of 636 licensed beds and trailing revenue of approximately $170 million.

We continue to look for strategic opportunities and have a very strong and active pipeline.

As I mentioned last quarter, our patient safety organization has completed Phase I of our higher liability [ph] safety plan. We have initiated Evidence Based Order Set standardization. This standardization will help us prepare for stage 2 of meaningful use to produce computerized physician order entry requirements.

The company's updating guidance provided the first quarter earnings release. We have increased the lower end of our EBITDA about $5 million to $1.975 billion. We've also increased the low end of our 2012 EPS to $3.90 from $3.85. The high end of the range remains the same, and our 2012 EPS guidance ranges from $3.90 to $4.10.

I have a little of updates on the pending litigation investigation from what was discussed in April. And in New Mexico key time [ph] case, both sides have fully briefed their motions for summary judgment. We're waiting for their scheduling from the District Court. As for the group of investigations that involve medical necessity of inpatient admissions, we continue to cooperate by providing documents and making witnesses available, as well as participating in meetings with the government to discuss the cases. We had hoped to be in the process on the probe audit we described in April. A third-party review of sample medical records had a small number of our hospitals. That review has not begun yet. We hope that, that review will begin soon and hopefully, it will be underway by the time our next quarterly -- for the next quarterly update.

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