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Bear of the Day: Community Health Systems (CYH)

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Community Health Systems (CYH - Free Report) has been in a slow recovery since plunging from $50 to $5 from August of 2015 to October of 2016.

But earnings estimates still don't appear to have bottomed.

Since the company reported last week, full-year 2016 estimates have fallen further from $0.57 to $0.48.

And 2017 profit projections dropped as well from $1.11 to $0.99.

Quarterly Update

Here were some updates from the company's recent report...

Community Health Systems reported adjusted earnings of 8 cents per share in the first quarter of 2017, which beat the Zacks Consensus Estimate of 6 cents by 33%.

In the first quarter, net operating revenue of $4.5 billion surpassed the Zacks Consensus Estimate by 3.3% but decreased 10.3% year over year.

Total admissions of 2.1 billion decreased 11.5% and adjusted admissions of 4.5 billion declined 12.5%, both on a year-over-year basis. On a same-store basis, admissions dipped 1.5% and adjusted admissions were down 1.4%, both on a year-over-year basis.

In the reported quarter, total operating expense declined 6.2% to $4.4 billion, primarily due to lower salaries and benefits paid to employees, depreciation & amortization-related expenses and other operating costs.

Financial Update

As of Mar 31, 2017, the company’s total assets declined 13% year over year to $21.7 billion. Cash and cash equivalent grew 38% year over year to $247 million.

The company paid off a substantial portion of its debt through divestures. It now has a long-term debt of $14.7 billion as of Mar 31, 2017, down 0.7% year over year.

Total shareholders’ equity was $1.43 billion as of Mar 31, 2017, down 11.5% from year-end 2016.

Cash flow from operations was $242 million at the end of the first quarter, down 17.7% year over year from $294 million.

2017 Guidance

Community Health expects net operating revenue (less provision for bad debts) in the range of $15.8 billion to $16.2 billion.

The company projects adjusted EBITDA for 2017 in the range of $2–$2.175 billion.

While some analysts are optimistic about the turnaround story here, until the estimates stop going down, it's probably best to stay out of this hospital.

The Zacks Rank will let you know.

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