It has been about a month since the last earnings report for Community Health Systems (CYH Quick QuoteCYH - Free Report) . Shares have added about 9.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Community Health Q1 Earnings Top on Better Occupancy Rates

Community Health reported first-quarter 2024 adjusted loss of 14 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 19 cents. The bottom line also improved from the prior year's loss of 43 cents per share.

Net operating revenues rose 1% year over year to $3.14 billion in the quarter under review. The top line beat the consensus mark by 1.5%.

The strong quarterly results benefited from improved occupancy rates, reimbursement rates and lower contract labor and supplies expenses. However, declining admissions and patient days partially offset the positives.

Quarterly Operational Update

At the first-quarter end, the hospital count for Community Health was 71, which aligned with our estimate.

Patient days tumbled 2.8% year over year and missed our estimate by 1.2%. The average length of stay remained flat year over year, while the occupancy rate of 53.9% improved 200 basis points year over year.

Admissions fell 2.3% year over year. Adjusted admissions also declined 4% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 3.8% and 1.9%, respectively, from their corresponding prior-year quarter’s reported figures.

Licensed beds of Community Health totaled 11,866 as of Mar 31, 2024, which indicates a decrease of 884 beds from the prior-year quarter. The reported figure missed our estimate by 1.5%.

Total operating costs and expenses rose 0.4% year over year to $2.91 billion in the first quarter, higher than our estimate of $2.85 billion. Meanwhile, net interest expenses of $211 million increased 1.9% year over year. The metric came higher than our estimate of $203.3 million.

The company reported a net loss of $41 million in the first quarter compared with $51 million in the year-ago period. Adjusted EBITDA improved 12.8% year over year to $378 million in the quarter under review primarily due to the higher net benefit of supplemental reimbursement programs, reimbursement rates and reduction in supplies and contract labor expense. The metric surpassed our estimate of $368.2 million.

Financial Update (as of Mar 31, 2024)

Community Health exited the first quarter with cash and cash equivalents of $48 million, which increased from $38 million at 2023-end. Total assets of $14.4 billion decreased from $14.5 billion at 2023-end.

Long-term debt amounted to $11.53 billion, which increased from $11.47 billion at 2023-end. Current maturities of long-term debt were $34 million.

In the first quarter of 2024, Community Health generated operating cash flows of $96 million, up from $5 million year over year.

2024 Outlook Reaffirmed

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, fresh estimates flatlined during the past month.

VGM Scores

At this time, Community Health Systems has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Community Health Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.