Community Health (NYSE:CYH) Systems reported a robust performance in the third quarter of 2023, with a 2% YoY growth in net operating revenues amounting to $3.1 billion. The period also saw record levels of admissions and same-store volume gains, contributing to the company's strengthened competitive position. The company's future priorities include accelerating growth, strengthening the workforce, controlling expenses, and advancing safety and quality initiatives.
Key takeaways from the earnings call include:
- The company plans to open two campus expansion projects in 2024.
- Safety and quality initiatives have led to improvements in patient safety and a reduction in mortality due to sepsis.
- Adjusted EBITDA stood at $360 million, with a margin of 11.7%.
- Cash flows from operations were temporarily impacted by various factors but are expected to improve in Q4.
- The company has updated its 2023 guidance, expecting net operating revenues of $12.4 billion to $12.5 billion and adjusted EBITDA of $1.45 billion to $1.5 billion.
Kevin Hammons, a representative of the company, discussed the reasons for a cash flow guide down during the earnings call. Factors included a delay in a cash tax refund until 2024, retirement and deferred compensation payouts, an increase in governmental litigation reserves, and delayed billing for in-sourced physicians. However, the company expects a refund if the interest limitation deduction is rolled back.
In terms of payer mix trends, the company reported no significant increase in self-pay volumes or decline in Medicaid volumes. There has been a lift in commercial volumes and a shift from Medicare fee-for-service to Medicare Advantage. The company anticipates a wage inflation rate of around 4% for 2024.
The company also highlighted a small adjustment in collectability, with overall good collectability in the quarter. The shift from Medicare fee-for-service to Medicare Advantage puts pressure on revenue, but the company remains confident in surgical growth opportunities. The guidance update reflects year-to-date results and normal seasonality in Q3, with a target of around 5% same-store revenue growth in 2024.
Hammons concluded the call by expressing appreciation for healthcare workers and provided contact information for further inquiries. The company, listed as NYSE:CYH, remains optimistic about its growth prospects and is well-positioned from a liquidity standpoint.
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