A month has gone by since the last earnings report for Community Health Systems (CYH Quick QuoteCYH - Free Report) . Shares have added about 17.2% 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 catalysts.

Community Health Q4 Earnings Miss, Revenues Up Y/Y

Community Health reported fourth-quarter 2023 adjusted loss of 41 cents per share, lagging the Zacks Consensus Estimate of a profit of 3 cents. The bottom line also declined from the prior year's earnings of $1.5 per share.

Net operating revenues rose 1.2% year over year to $3.2 billion in the quarter under review. The top line beat the consensus mark of $3.15 billion.

The quarterly results benefited from a rise in admissions, lower expenses and increased patient demand. Declining patient days, length of stay and licensed beds more than offset the positives.

Quarterly Operational Update

At the fourth-quarter end, the hospital count for Community Health was 71, missing our estimate by 6.6%.

Patient days tumbled 0.5% year over year but beat our estimate by 8.2%. The average length of stay fell 2.2% year over year, while the occupancy rate of 53.5% improved 350 basis points year over year.

Admissions grew 0.7% year over year. Meanwhile, adjusted admissions also advanced 1.9% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 1.9% and 3.6%, respectively, from their corresponding prior-year quarter’s reported figures.

Licensed beds of Community Health totaled 11,902 as of Dec 31, 2023, which indicates a decrease of 930 beds from the prior-year quarter. The reported figure missed our estimate by 3.5%.

Total operating costs and expenses declined 2.1% year over year to $2.85 billion in the fourth quarter, lower than our estimate of $2.88 billion. Meanwhile, net interest expenses of $209 million increased 2% year over year. The metric came higher than our estimate of $203.9 million.

The company reported a net loss of $133 million in the fourth quarter against a profit of $46 million in the year-ago period. Adjusted EBITDA declined 4.5% year over year to $386 million in the quarter under review primarily due to changes inpayor mix, high costs of supplemental reimbursement programs partially offset by improved inpatient volumes and lower contract labor costs. The metric missed our estimate of $405 million.

Financial Update (as of Dec 31, 2023)

Community Health exited the fourth quarter with cash and cash equivalents of $38 million, which declined from $118 million at 2022-end. Total assets of $14.5 billion decreased from $14.7 billion at 2022-end.

Long-term debt amounted to $11.5 billion, which decreased from $11.6 billion at 2022-end. Current maturities of long-term debt were $21 million.

In 2023, Community Health generated operating cash flows of $210 million, down from $300 million year over year.

2024 Outlook

The company expects net operating revenues between $12.3 billion and $12.7 billion for 2024, the mid-point of which indicates no change from the 2023 figure of $12.5 billion.

Adjusted EBITDA is estimated to be in the range of $1.475-$1.625 billion. The mid-point of the guidance implies a 6.7% rise from the 2023 figure of $1.453 billion.

Net loss per share is expected to be between 65 cents and 5 cents in 2024.Community Health reported a net loss of $1.39 per share in 2023.

Depreciation and amortization are predicted to be in the range of $490-$510 million for 2024.

Net cash from operating activities is anticipated to be between $500 million and $650 million in 2024. Capital expenditures are expected to be in the range of $350-$400 million. Diluted weighted-average shares outstanding are estimated to be in the range of $132-133 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -108.89% due to these changes.

VGM Scores

Currently, Community Health Systems has a subpar Growth Score of D, though it is lagging a bit 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 quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. It's no surprise Community Health Systems has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Community Health Systems is part of the Zacks Medical - Hospital industry. Over the past month, Tenet Healthcare (THC Quick QuoteTHC - Free Report) , a stock from the same industry, has gained 12.2%. The company reported its results for the quarter ended December 2023 more than a month ago.

Tenet reported revenues of $5.38 billion in the last reported quarter, representing a year-over-year change of +7.8%. EPS of $2.68 for the same period compares with $1.96 a year ago.

For the current quarter, Tenet is expected to post earnings of $1.41 per share, indicating a change of -0.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Tenet. Also, the stock has a VGM Score of A.