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Community Health Systems, Inc. (



Q4 2011 Earnings Call

February 22, 2012 11:00 AM ET


Lizbeth Schuler – VP, IR

Wayne Smith – Chairman, President and CEO

Larry Cash – EVP and CFO


Adam Feinstein – Barclays Capital

A.J Rice – Susquehanna Financial Group

Colleen Lang – Lazard Capital Markets

Kevin Fischbeck – Bank of America Merrill Lynch

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Gary Lieberman – Wells Fargo Securities

Ralph Giacobbe – Credit Suisse

Ariel Herman – Goldman Sachs



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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' Fourth Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions)

I would now like to turn the call over to Lib Schuler, Vice President of Investor Relations of Community Health Systems. You may begin your conference.

Lizbeth R. Schuler

Thank you, Martina. Good morning and welcome to Community Health Systems fourth quarter and year-end 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, should, expect, project, target, estimate, guidance, anticipate, intend, plan, initiative, continue or words and phrases of similar meanings. 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 risks, many of which are beyond our control.

These risks and uncertainties are described in heading 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 intent 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, 2011 located on the Company's Investor Relations page at 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 the Company or Community Health Systems used herein refer to Community Health Systems, Inc. and its affiliate 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?

Wayne T. Smith

Thank you, Lib. Good morning and thank you for joining Community Health System for the conference call.

Larry Cash, our Executive Vice President and Chief Financial officer is also on the call with me. The purpose of the call is to review our financial and operating results for the quarter and the year ended December 31, 2011. We issued a press release and our 8-K after the market closed yesterday that included our financial statements. A slide presentation accompanies our prepared remarks for those of you listening to the live broadcast of this conference call on our website.

I’d like to begin our call with some comments about our quarterly results and then turn the call over to Larry, who will follow with additional details of our financial results. We are pleased with our consistent financial and operating results for the fourth quarter and the year ended December 31, 2011.

Net revenue for the fourth quarter 2011 increased 3.9% and $3.4 billion versus $3.3 billion in 2010. Adjusted EBITDA for the quarter of 2011 was $464 million, an increase of 2.8%, and income from continuing operations included the loss on early extinguishment of debt was $0.38 per share. Added back the loss of extinguishment of debt of $0.47 and the investigation legal expenses of $0.02, our EPS for the fourth quarter would have been $0.87.

Net operating revenues for the year ended December 31, 2011 increased 7.9% or $13.6 billion. EBITDA was $1.8 billion, an increase of 4.3% income from continuing operations including the loss of earlier extinguishment of debt was $336 million or $2.87 per share for the year ended December 31, 2011. Adding back the loss of earlier extinguishment of debt of $0.46 and the investigation legal expenses of $0.11, our EPS would have been $3.44, an increase of 12%.

Cash flow from operation was $1.262 billion, an increase of 6.2% over 2010.

With that, I’d like to review some of the key operating accomplishments for the year. The company recruited 1,864 new physicians for 2011 compared to 1,852 for 2010. In addition, we had another 15 midlevel practitioners during the year. Our standardized and centralized approach to physician recruiting and practice development identifies physician needs in each of our communities and increases patient access to the services.

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