It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have lost about 15.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Community Health Systems due for a breakout? 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 drivers.
Community Health Incurs Wider-Than-Expected Loss in Q1
Community Health incurred adjusted loss of 53 cents per share in first-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 44 cents. Moreover, the figure came in against the last reported quarter’s adjusted income of 13 cents per share. This downside was mainly due to lower admissions in the quarter under review.
Quarterly Operational Update
In the first quarter, net operating revenues were $3.37 billion, surpassing the Zacks Consensus Estimate by 1.8%. However, the top line declined 8.4% year over year.
The first quarter witnessed a decline of 13.4% in total admissions and a 12.8% fall in adjusted admissions when compared with the year-ago period.
Total operating costs and expenses were $3.2 billion, down 8.3% year over year owing to lower salaries and benefits plus supplies, rent and amortization.
Total assets at first-quarter end were $16.3 billion, down 2.8% from the year-end 2018-level.
Cash and cash equivalents plunged 34.7% to $277 million from the figure as of 2018 end.
The company utilized $133 million cash from operations, down 25.5% year over year.
The company has a long-term debt of $13.4 billion as of Mar 31, 2019, dipping 0.1% from the number as of Dec 31, 2018.
In the first quarter of 2019, the company closed the divestitures of seven hospitals. Also, it entered into an agreement to sell another hospital, which is due.
Loss from continuing operations per share is now estimated between $1.50 and $1.85 while revenues are projected between $12.8 billion and $13.1 billion. Adjusted EBITDA is predicted in the range of $1.625-$1.725 billion while adjusted admission is likely to inch up 0-1%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.19% due to these changes.
At this time, Community Health Systems has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
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.