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Why Is Community Health Systems (CYH) Up 2.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have added about 2.3% in that time frame, underperforming 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 drivers.
Community Health Q2 Earnings Miss on Lower Patient Days
Community Health Systems reported a second-quarter 2024 adjusted loss of 17 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 11 cents. However, the bottom line improved from the prior-year loss of 22 cents per share.
Net operating revenues rose 0.6% year over year to $3.14 billion in the quarter under review. The top line beat the consensus mark by 2%.
The quarterly earnings suffered from lower patient days, admissions and average length of stay. However, improved occupancy rates, reimbursement rates and lower contract labor and supplies expenses partially offset the negatives.
Quarterly Operational Update
At the second-quarter end, the hospital count for Community Health was 71, which aligned with our estimate.
Patient days tumbled 5.7% year over year and missed our estimate by 5.1%. The average length of stay declined year over year to 4.3 days, while the occupancy rate of 50% improved 70 basis points year over year.
Admissions fell 2.8% year over year. Adjusted admissions also declined 2.4% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 3% and 3.2%, respectively, from their corresponding prior-year quarter’s reported figures.
Licensed beds of CYH totaled 11,868 as of Jun 30, 2024, which indicates a decrease of 867 beds from the prior-year quarter. The reported figure missed our estimate by 0.1%.
Total operating costs and expenses rose 1.2% year over year to $2.9 billion in the second quarter, higher than our estimate of $2.8 billion. Meanwhile, net interest expenses of $216 million increased 4.3% year over year. The metric came higher than our estimate of $204.8 million.
The company reported a net loss of $13 million in the second quarter compared with $38 million in the year-ago period. Adjusted EBITDA improved 3.8% year over year to $387 million in the quarter under review primarily due to improved same-store volumes, higher net benefit of supplemental reimbursement programs, reimbursement rates and reduction in supplies and contract labor expense. The metric surpassed our estimate of $388.4 million.
Financial Update (as of Jun 30, 2024)
Community Health exited the second quarter with cash and cash equivalents of $39 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 $11.5 billion, which increased from $11.47 billion at 2023-end. Current maturities of long-term debt were $27 million.
In the second quarter of 2024, CYH generated operating cash flows of $101 million, up from $86 million in the year-ago quarter.
2024 Outlook Revised
The company raised its net operating revenue guidance between $12.5 billion and $12.7 billion for 2024, the mid-point of which indicates 0.8% increase from the 2023 figure of $12.5 billion.
Adjusted EBITDA is now estimated to be in the range of $1.52-$1.60 billion. The mid-point of the guidance implies a 7.4% rise from the 2023 figure of $1.453 billion.
Net loss per share is expected to be between 45 cents and 30 cents in 2024. Community Health reported a net loss of $1.39 per share in 2023.
Depreciation and amortization are now predicted to be in the range of $465-$480 million for 2024.
Net cash from operating activities is reaffirmed to be between $500 million and $650 million in 2024.Capital expenditures continue to be anticipated 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?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -25% due to these changes.
VGM Scores
At this time, Community Health Systems has a strong Growth Score of A, 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 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
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.
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Why Is Community Health Systems (CYH) Up 2.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Community Health Systems (CYH - Free Report) . Shares have added about 2.3% in that time frame, underperforming 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 drivers.
Community Health Q2 Earnings Miss on Lower Patient Days
Community Health Systems reported a second-quarter 2024 adjusted loss of 17 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 11 cents. However, the bottom line improved from the prior-year loss of 22 cents per share.
Net operating revenues rose 0.6% year over year to $3.14 billion in the quarter under review. The top line beat the consensus mark by 2%.
The quarterly earnings suffered from lower patient days, admissions and average length of stay. However, improved occupancy rates, reimbursement rates and lower contract labor and supplies expenses partially offset the negatives.
Quarterly Operational Update
At the second-quarter end, the hospital count for Community Health was 71, which aligned with our estimate.
Patient days tumbled 5.7% year over year and missed our estimate by 5.1%. The average length of stay declined year over year to 4.3 days, while the occupancy rate of 50% improved 70 basis points year over year.
Admissions fell 2.8% year over year. Adjusted admissions also declined 2.4% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 3% and 3.2%, respectively, from their corresponding prior-year quarter’s reported figures.
Licensed beds of CYH totaled 11,868 as of Jun 30, 2024, which indicates a decrease of 867 beds from the prior-year quarter. The reported figure missed our estimate by 0.1%.
Total operating costs and expenses rose 1.2% year over year to $2.9 billion in the second quarter, higher than our estimate of $2.8 billion. Meanwhile, net interest expenses of $216 million increased 4.3% year over year. The metric came higher than our estimate of $204.8 million.
The company reported a net loss of $13 million in the second quarter compared with $38 million in the year-ago period. Adjusted EBITDA improved 3.8% year over year to $387 million in the quarter under review primarily due to improved same-store volumes, higher net benefit of supplemental reimbursement programs, reimbursement rates and reduction in supplies and contract labor expense. The metric surpassed our estimate of $388.4 million.
Financial Update (as of Jun 30, 2024)
Community Health exited the second quarter with cash and cash equivalents of $39 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 $11.5 billion, which increased from $11.47 billion at 2023-end. Current maturities of long-term debt were $27 million.
In the second quarter of 2024, CYH generated operating cash flows of $101 million, up from $86 million in the year-ago quarter.
2024 Outlook Revised
The company raised its net operating revenue guidance between $12.5 billion and $12.7 billion for 2024, the mid-point of which indicates 0.8% increase from the 2023 figure of $12.5 billion.
Adjusted EBITDA is now estimated to be in the range of $1.52-$1.60 billion. The mid-point of the guidance implies a 7.4% rise from the 2023 figure of $1.453 billion.
Net loss per share is expected to be between 45 cents and 30 cents in 2024. Community Health reported a net loss of $1.39 per share in 2023.
Depreciation and amortization are now predicted to be in the range of $465-$480 million for 2024.
Net cash from operating activities is reaffirmed to be between $500 million and $650 million in 2024.Capital expenditures continue to be anticipated 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?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -25% due to these changes.
VGM Scores
At this time, Community Health Systems has a strong Growth Score of A, 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 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
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.