Community Health Systems (
Q3 2011 Earnings Call
October 27, 2011 11:00 AM ET
Lizbeth Schuler – VP, IR
Wayne Smith – Chairman, President and CEO
Larry Cash – EVP and CFO
AJ Rice – Susquehanna Financial Group
Adam Feinstein – Barclays Capital
John Rex – JP Morgan
Tom Galluci – Lazard Capital Markets
Kevin Fischbeck – Bank of America
Gary Taylor – Citi Group
Previous Statements by CYH
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Good morning, ladies and gentlemen. My name is Martina and I will be your conference operator today. At this time, I would like to welcome everyone to the Community Health Systems Third Quarter Conference Call.
I would now like to turn the call over to Lizbeth Schuler, Vice President of Investor Relations for Community Health Systems. You may begin your conference.
Thank you, Martina. Good morning and welcome to Community Health Systems third quarter conference call.
Before we begin the call, I would like to read the following disclosure statement. This presentation may contain certain forward-looking statements provided by company management. These statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, including statements regarding future operations, financial results, cash flows, cost and cost management initiatives and can also be identified by the use of words like may, believe , will, would, expect, project, target, estimates, guidance, anticipate, intend, plan, initiative, continue, or words and phrases of similar meaning.
These forward-looking statements speak only as of the date hereof and are based on our current plans and expectations, and are subject to a number of known and unknown uncertainties and risk, many of which are beyond our control. These risks and uncertainties are described in headings such as risk factors in our Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.
As a consequence, current plans, anticipated actions and future financial positions and results of operations may differ significantly from those expressed in any forward-looking statements in today’s presentation. You are cautioned not to rely unduly on such forward-looking statements when evaluating the information presented, and we do not have any obligation to and do not intend to update any of these forward-looking statements.
The presentation also contains certain non-GAAP financial measures. This presentation and the company’s earnings releases for the quarter and year ended December 31, 2010, and the quarter and the year-to-date ended September 30, 2011, located on the company’s Investor Relations page at www.chs.net, include a reconciliation of the difference between certain non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.
These non-GAAP financial measures should not be considered an alternative to the GAAP financial measures. References to company or Community Health Systems used herein refer to Community Health Systems, Inc. and its affiliates, unless otherwise stated or indicated by context.
With that said, I would like to turn the call over to Mr. Wayne Smith, Chairman, President and Chief Executive Officer. Mr. Smith?
Thank you, Liz. Good morning and welcome to our quarterly conference call to review our financial and operating results for the third quarter and the nine months ended September 30, 2011. Larry Cash, our Executive Vice President and Chief Financial Officer, is with me on the call today.
After the market closed yesterday, we issued an 8-K, including a press release of our financial statements. For those of you listening to the live broadcast of this conference call on our website, a slide presentation accompanies our remarks. I’d like to begin the call with some comments about the quarter and then turn the call over to Larry who will provide additional comments on our financial results.
Community Health Systems has delivered another quarter of solid financial and operating results. These results are in spite of the continuing weakness in inpatient volumes and the challenges in the economy. We believe that the natural reaction to all of the adverse publicity and criticism during the past six months has contributed to some of our decline in inpatient volumes, particularly in smaller facilities that have twice the decline as our larger facilities.
Net operating revenues for the quarter, September 30, 2011, total $3.4 billion compared to $3.2 billion for the same period last year, an increase is 8.7%. Consolidated EBITDA increased 2.7% from $441 million to $554 million. Earnings per share from continuing operations was $0.86 versus $0.80 for the same period a year ago, an increase of 7.5%. Excluding the after-tax expense related to the Tenet lawsuit, shareholder losses and governmental investigations, our EPS for the quarter would have been $0.90.
Net operating revenue for the nine months ended September 30, 2011 was $10.2 billion, EBITDA was $1.4 billion. Earnings per share from continuing operations for the nine months ended September 30, 2011 was $2.49 compared to $2.31 for the same period a year ago, an increase of almost 8%.
With that, I would like to highlight a few significant recent accomplishments. Effective October 1, we acquired assets of Tomball Regional Medical Center in Tomball, Texas. This 358 bed hospital is located approximately 30 miles north-west of Houston and provides comprehensive healthcare services on a large campus that also includes a cancer center, heart center, women’s health center, outpatient surgery center and a sports medicine complex. The hospital has earned numerous clinical quality awards.
We have a definitive agreement to purchase assets of Moses Taylor Health Care System in Scranton, Pennsylvania, a two hospital system. This acquisition is still subject to regulatory approval. Our acquisition of the assets of Mercy Health Partners also was accomplished on May 1, 2011. This was a two hospital system plus long-term care facilities as well as other outpatient and ancillary services.