Franklin, Tenn.-based Community Health Systems reported an operating income of $238 million (7.6% margin) in the second quarter, down slightly from $246 million (7.9% margin) during the same period last year.
Other expenses, primarily $216 million in interest costs, left CHS with a net loss of $13 million in the second quarter, according to financial results published July 24. In the second quarter of 2023, CHS paid $207 million in interest costs and reported a net loss of $38 million.
Seven things to know:
1. The 71-hospital, for-profit system had "another solid quarter that includes same-store, year-over-year improvements in operating results, supported by strong volume growth and expense management," according to CEO Tim Hingtgen. "This progress further demonstrates our growth mindset and ability to consistently execute on strategic opportunities to enhance our services, care for our communities and generate value for all of our stakeholders."
2. Second-quarter revenue increased 0.8% year over year to $3.14 billion. On a same-store basis, revenues increased 4.7% compared to the second quarter of 2023; admissions increased 3% and adjusted admissions were up 3.2%.
3. Second-quarter expenses increased 1.2% year over year to $2.9 billion, with "other operating expenses" seeing a slight uptick over the previous year's quarter. However, labor costs decreased 0.7% year over year to $1.3 billion and supply costs dropped 4.2% to $483 million.
4. CHS had planned to take in $1 billion from hospital sales in 2024, but suffered a blow in June when Winston-Salem, N.C.-based Novant Health scrapped its plan to buy two of its hospitals for $320 million. Novant called off the deal after an appellate court granted the Federal Trade Commission an emergency injunction blocking the deal. The agency had been fighting to block the deal for more than a year. The future of the two hospitals (Lake Norman Regional Medical Center and Statesville, N.C.-based Davis Regional Medical Center) remains up in the air.
5. CHS' long-term debt stands at more than $11.5 billion, according to its second-quarter financial report. The health system's debt exposure is likely driving its M&A strategy but faces future challenges once its debt is readjusted to new rates. The bottom line is it needs to deleverage and may offload more hospitals in the near future.
6. CHS has not purchased a hospital in the last eight years, but has added beds to existing facilities. The system operates 71 hospitals across 15 states, but has offloaded more than 30 hospitals since 2020. Last year, the company sold eight hospitals as well as the sale of a majority interest in another.
7. Adjusted EBITDA for the three months ended June 30, 2024, was $387 million, up slightly from $373 million for the same period in 2023.