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Community Health Systems (CYH) Up 23.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have added about 23.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Community Health Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Community Health Incurs Loss in Q3 Due to Lower Patient Days
Community Health reported third-quarter 2023 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents. However, the bottom line improved by 36.5%.
Net operating revenues rose 2% year over year to $3,086 million in the quarter under review. The top line beat the consensus mark by 1.7%.
The quarterly results were affected by declining patient days, length of stay and licensed beds year over year. Rising expenses also affected the results. However, better admissions partially offset the negatives.
Quarterly Operational Update
At the third-quarter end, the hospital count for Community Health was 76, missing our estimate by 2.6%.
Patient days tumbled 7.5% year over year. The average length of stay fell 6.5% year over year, while the occupancy rate of 46.8% improved 10 basis points year over year.
Admissions grew 0.5% year over year. Meanwhile, adjusted admissions also advanced 0.4% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 3.7% and 4.2%, respectively, from their corresponding prior-year quarter’s reported figures.
Licensed beds of CYH totaled 12,494 as of Sep 30, 2023, which indicates a decrease of 815 beds from the prior-year quarter. The reported figure missed our estimate by 3%.
Total operating costs and expenses increased 3.3% year over year to $2,913 million in the third quarter, higher than our estimate of $2,827.2 million. Meanwhile, net interest expenses of $208 million declined 4.1% year over year. The metric came higher than our estimate of $200.6 million.
Net loss of $52 million in the third quarter deteriorated from a break even in the year-ago period.Adjusted EBITDA declined 10% year over year to $360 million in the quarter under review primarily due to changes in payor mix, high costs of supplemental reimbursement programs partially offset by improved inpatient volumes and lower contract labor costs. The metric beat our estimate by 7.6%.
Financial Update (as of Sep 30, 2023)
Community Health exited the third quarter with cash and cash equivalents of $91 million, which declined from $118 million at 2022-end. Total assets of $14,674 million increased from $14,669 million at 2022-end.
Long-term debt amounted to $11,820 million, which increased from $11,614 million at 2022-end. Current maturities of long-term debt were $22 million.
In the first nine months of 2023, CYH generated operating cash flows of $120 million, down from $291 million year over year.
2023 View Revised
The company expects net operating revenues between $12,400 million and $12,500 million for 2023, the mid-point of which indicates a rise of 2% from the 2022 reported figure of $12,211 million.
Adjusted EBITDA is estimated to be in the range of $1,450-$1,500 million. The mid-point of the guidance implies a 0.6% rise from the 2022 figure of $1,466 million.
Net loss per share is expected to be between $1 and 90 cents in 2023. Community Health reported a net loss of $1.38 per share in 2022.
Depreciation and amortization are predicted to be 4.2% of net operating revenues in 2023.
Net cash from operating activities is anticipated to be between $400 million and $450 million in 2023. Capital expenditures are expected to be in the range of $450-$500 million. Diluted weighted-average shares outstanding are estimated to be in the range of $130-131 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -82.61% due to these changes.
VGM Scores
Currently, Community Health Systems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Community Health Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Community Health Systems (CYH) Up 23.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have added about 23.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Community Health Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Community Health Incurs Loss in Q3 Due to Lower Patient Days
Community Health reported third-quarter 2023 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents. However, the bottom line improved by 36.5%.
Net operating revenues rose 2% year over year to $3,086 million in the quarter under review. The top line beat the consensus mark by 1.7%.
The quarterly results were affected by declining patient days, length of stay and licensed beds year over year. Rising expenses also affected the results. However, better admissions partially offset the negatives.
Quarterly Operational Update
At the third-quarter end, the hospital count for Community Health was 76, missing our estimate by 2.6%.
Patient days tumbled 7.5% year over year. The average length of stay fell 6.5% year over year, while the occupancy rate of 46.8% improved 10 basis points year over year.
Admissions grew 0.5% year over year. Meanwhile, adjusted admissions also advanced 0.4% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 3.7% and 4.2%, respectively, from their corresponding prior-year quarter’s reported figures.
Licensed beds of CYH totaled 12,494 as of Sep 30, 2023, which indicates a decrease of 815 beds from the prior-year quarter. The reported figure missed our estimate by 3%.
Total operating costs and expenses increased 3.3% year over year to $2,913 million in the third quarter, higher than our estimate of $2,827.2 million. Meanwhile, net interest expenses of $208 million declined 4.1% year over year. The metric came higher than our estimate of $200.6 million.
Net loss of $52 million in the third quarter deteriorated from a break even in the year-ago period.Adjusted EBITDA declined 10% year over year to $360 million in the quarter under review primarily due to changes in payor mix, high costs of supplemental reimbursement programs partially offset by improved inpatient volumes and lower contract labor costs. The metric beat our estimate by 7.6%.
Financial Update (as of Sep 30, 2023)
Community Health exited the third quarter with cash and cash equivalents of $91 million, which declined from $118 million at 2022-end. Total assets of $14,674 million increased from $14,669 million at 2022-end.
Long-term debt amounted to $11,820 million, which increased from $11,614 million at 2022-end. Current maturities of long-term debt were $22 million.
In the first nine months of 2023, CYH generated operating cash flows of $120 million, down from $291 million year over year.
2023 View Revised
The company expects net operating revenues between $12,400 million and $12,500 million for 2023, the mid-point of which indicates a rise of 2% from the 2022 reported figure of $12,211 million.
Adjusted EBITDA is estimated to be in the range of $1,450-$1,500 million. The mid-point of the guidance implies a 0.6% rise from the 2022 figure of $1,466 million.
Net loss per share is expected to be between $1 and 90 cents in 2023. Community Health reported a net loss of $1.38 per share in 2022.
Depreciation and amortization are predicted to be 4.2% of net operating revenues in 2023.
Net cash from operating activities is anticipated to be between $400 million and $450 million in 2023. Capital expenditures are expected to be in the range of $450-$500 million. Diluted weighted-average shares outstanding are estimated to be in the range of $130-131 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -82.61% due to these changes.
VGM Scores
Currently, Community Health Systems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Community Health Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.