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Community Health (CYH) Down 30.3% Since Q2 Earnings Report

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Community Health Systems, Inc. (CYH - Free Report) shares declined 30.3% since it reported weak second-quarter results on Jul 27, 2022. Furthermore, its adjusted EBITDA projection indicates a significant year-over-year decline.

Community Health reported a second-quarter 2022 adjusted net loss of $2.52 per share, which missed the Zacks Consensus Estimate of a loss of a penny and significantly deteriorated from the year-ago profit of 23 cents.

Net operating revenues amounted to $2,934 million, which declined 2.4% year over year in the second quarter. The top line also missed the consensus mark by 6.6%.

The weak second-quarter results were caused by lower admissions, patient days and higher operating costs.

Quarterly Operational Update

The number of hospitals at the second-quarter end was at $84 million. Patient days declined 3.7% year over year in the second quarter.

Admissions slipped 3.4% year over year, while adjusted admissions fell 0.4% year over year in the quarter under review. On a same-store basis, admissions dipped 3.5% year over year and adjusted admissions fell 0.5% from the prior-year quarter’s reported figure.

Community Health had licensed beds of 13,341 as of Jun 30, 2022, which increased from $13,320 million.

Adjusted EBITDA decreased 44.2% year over year to $253 million in the second quarter. Income from operations declined 62.1% year over year to $119 million.

Total operating costs and expenses were $2,815 million, which escalated from $2,693 million. Salaries and benefits and other operating expenses increased in the second quarter while the cost of supplies declined. Meanwhile, CYH’s interest expense, net, decreased marginally to $218 million from $219 million a year ago.

Financial Update (as of Jun 30, 2022)

Community Health exited the second quarter with cash and cash equivalents of $346 million, down from the 2021-end figure of $507 million. Total assets at the second-quarter end were at $15,058 million, down from $15,217 million at 2021-end.

Long-term debt amounted to $12,183 million, which inched up from the $12,109 million level at 2021-end. Current maturities of long-term debt were at $32 million.

Net cash provided by operating activities was at $53 million in the second quarter of 2022, down from $179 million in the year-ago period.

2022 Outlook in Details

Adjusted EBITDA is projected within $1,300-$1,400 million. The mid-point of the revised outlook suggests a decline from $1,969 million in 2021. Net operating revenues are expected in the range of $12,200-$12,500 million compared with the year-ago level of $12,368 million. For the medium-term (4 years), net revenue growth is expected in the mid-single digit.

Net cash provided by operating activities is anticipated to lie between $500 million and $600 million for 2022, lower than the prior outlook of $900 million and $1.1 billion. Last year, CYH reported net cash used in operations of $131 million.

Capex is now expected within $400-$450 million, down from the previous estimate range of $500-$600 million. Net loss per share is estimated at $2.55-$1.65 for 2022.

Zacks Rank & Key Picks

Community Health currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader medicalspace are Molina Healthcare, Inc. (MOH - Free Report) , Elevance Health Inc. (ELV - Free Report) and Agenus Inc. (AGEN - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Molina Healthcare’s 2022 bottom line indicates a 29.6% increase from the prior-year reported number. MOH beat earnings estimates in each of the past four quarters, with the average being 3.2%.

The Zacks Consensus Estimate for Elevance’s 2022 bottom line indicates 10.4% year-over-year growth. ELV beat earnings estimates in each of the past four quarters, with the average being 4.3%.

The Zacks Consensus Estimate for Agenus’ 2023 bottom line indicates a 28.1% year-over-year improvement. AGEN beat earnings estimates twice in the past four quarters and missed on the other two occasions.