Community Health (CYH) Incurs Wider-Than-Expected Loss in Q3

Community Health Systems, Inc. CYH reported adjusted loss of 77 cents per share in the third quarter of 2017, which was wider than the Zacks Consensus Estimate of a loss of 30 cents. Adjusted loss per share was also wider than a loss of 35 cents incurred in the year-ago quarter.

Net loss attributable to the common stockholders was $110 million, 39% wider than the net loss of $79 million in the year-ago quarter.

The company’s third-quarter results have been severely affected by hurricanes Harvey and Irma in Victoria, Texas and Florida. It estimates that these hurricanes resulted in a loss of net operating revenues together with incremental expenses directly related to hurricane response efforts of approximately $40 million.

Quarterly Operational Update

In the third quarter, net operating revenues of $3.66 billion missed the Zacks Consensus Estimate by 1.3% and decreased 16.3% year over year. On a same-store basis, net operating revenues fell 1.5% year over year.

The third quarter witnessed a 14.8% decrease in total admissions and a 15.5% fall in total adjusted admissions year over year. On a same-store basis, both admissions and adjusted admissions declined 2.3% from the year-ago quarter.

In the reported quarter, total operating expenses declined 15.5% to $3.6 billion, primarily due to lower salaries and benefits paid to employees, supplies, rent, depreciation & amortization-related expenses and other operating costs.

Community Health Systems, Inc. Price, Consensus and EPS Surprise

Community Health Systems, Inc. Price, Consensus and EPS Surprise | Community Health Systems, Inc. Quote

Financial Update

As of Sep 30, 2017, the company’s total assets declined 10% from year-end 2016 to $19.7 billion. Cash and cash equivalents increased 148% to $590 million from year-end 2016.

The company paid off a substantial portion of its debt through divestures. It had long-term debt of $13.9 billion as of Sep 30, 2017, down 6% year over year.

Total shareholders’ equity was $1.3 billion as of Sep 30, 2017, down 24% from year-end 2016.

Cash flow from operations was $11 million for the third quarter, down 36% year over year.

2017 Guidance Lowered

Loss from continuing operations per share is expected to lie within the range of $1.30-$1.20, wider than the previously guided range of a loss of 30-40 cents.

Community Health expects net operating revenues (less provision for bad debts) in the range of $15.8-$15.9 billion compared with the previously guided range of $15.85 billion to $16.05 billion.

The company projects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for 2017 in the range of $1,675 million to $1,725 million, down from the previous guidance of $1.825-$2 million.

Weighted-average diluted shares are expected in the band of 112-112.5 million compared with the previous guidance of 112-113 million.

Zacks Rank and Performance of Other Insurers

Community Health presently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other firms in the medical sector that have reported third-quarter earnings so far, the bottom lines of Centene Corp. CNC, Anthem Inc ANTM and UnitedHealth Group Inc. UNH beat their respective Zacks Consensus Estimate.

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