It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have lost about 54.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Community Health Q4 Earnings Beat Estimates, Soar Y/Y
Community Health reported adjusted income of 40 cents per share for fourth-quarter 2019. The Zacks Consensus Estimate was of a loss of 48 cents per share. The bottom line also came in against the year-ago quarter’s reported loss of 42 cents per share.
Quarterly Operational Update
In the fourth quarter, net operating revenues were $3.2 billion, surpassing the Zacks Consensus Estimate by 2.4%. However, the top line plunged 4.8% year over year due to reduced admissions.
The fourth quarter witnessed a 9.9% decrease in admissions and an 8.6% fall in adjusted admissions as well from the respective year-ago figures.
For the fourth quarter of 2019, the company delivered total adjusted EBITDA of $447 million, up 6.7% year over year.
Total operating costs and expenses of $3.1 billion were down 12.5% year over year owing to lower salaries and benefits, impairment and loss on sale of businesses, and supplies and other operating expenses.
Total assets at fourth-quarter end were $15.6 billion, dipping 1.6% from the level at 2018 end.
Cash and cash equivalents were up 10.2% from the level as of 2018 end.
In the fourth quarter, net cash provided by operating activities was $194 million compared with net cash used in operating activities of $165 million a year ago.
The company has long-term debt of $13.4 billion as of Dec 31, 2019, down 0.1% from the level as of Dec 31, 2018.
For the year ending Dec 31, 2020, the company expects adjusted EBITDA of $1.65-$1.8 billion. It forecasts its 2020 revenues in the range of $12.4-$12. 8 billion. Net loss attributable to the company is estimated in the band of around 60 cents to $1.30 per share. Same-store hospital annual adjusted admissions growth is assumed to be 1.5-2.5%.
Capital expenditure is predicted between $400 and $500 million whereas net cash provided by operating activities is projected between $600 and $700 million.
The company incurred net loss of 89 cents per share for the full year, narrower than $1.94 reported in 2018.
In 2019, adjusted EBITDA came in at 1.63 billion, down 0.9% year over year.
Net operating revenues for the year were $13.2 billion, down 6.7% year over year.
The company exited 2019 with 102 hospitals and 16,240 licensed beds.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.62% due to these changes.
At this time, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Community Health Systems has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.