Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q2 2016 Earnings Presentation
28 slides from Community Health Systems's earnings presentation, 2016
Slide 1: Investor Presentation Second Quarter Ended June 30, 2016
Investor Presentation Second Quarter Ended June 30, 2016 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws that involve risk and uncertainties. All statements in this presentation other than statements of historical fact, including statements regarding projections, expected opera
Slide 3: Community Health Systems
Community Health Systems • Founded in 1985 • NYSE Listed Company since 2000 Symbol: CYH • 159 Hospitals in 22 States • Over 800,000 Annual Admissions • Over 4.5 Million Annual ED Visits • 123,000 Employees • 20,200 Physicians on Medical Staffs, including approximately 3,000 employed physicians 3
Slide 4: CHS – An Experienced Operator
CHS – An Experienced Operator YE 2014 YE 2015 Change YTD 2015 YTD 2016 Change Revenue $18,639 $19,606 5.2% $9,793 $9,589 -2.1% Adjusted EBITDA ** $2,777 $2,839 2.2% $1,196 $1,483 -19.4% EPS from Continuing Operations $ 3.29 $ 3.24 -1.5% $ 0.36 $ 1.99 -81.9% Excluding Adjustments (1) ($MM) 22,500 Rev
Slide 5: Serving Non-Urban and Select Urban Markets
Serving Non-Urban and Select Urban Markets 159 Hospitals 22 States TOP FIVE STATES YTD 2016 % of Hospitals Revenue Florida 24 13.3% Pennsylvania 17 11.8% Texas 15 9.9% Indiana 11 8.6% Tennessee 16 6.9% 5
Slide 6: Rationalizing Our Portfolio
Rationalizing Our Portfolio QHC Spin-off – Completed April 29, 2016 38 hospitals in 16 states $1.2 billion in net proceeds Sale of Joint Venture - Completed May 4, 2016 Located in Las Vegas, NV with Universal Health Services, Inc. $445 million in cash to CHS, including return of capital for
Slide 7: Corporate Strategy for Consumer-Driven Healthcare
Corporate Strategy for Consumer-Driven Healthcare Build Deliver Care Clinical Demonstrate Services and More Integration & Quality Infrastructure Efficiently Collaboration 7
Slide 8: Demonstrate Quality: Reduction of Serious Safety Event Rate
Demonstrate Quality Consistent Reduction of the Serious Safety Event Rate High Reliability Using techniques from high-risk industries like nuclear power and aviation to create inherently safe hospital environments -10.0% -15.5% -20.0% -25.0% -30.0% -35.0% -40.0% -45.0% -50.0% -56.0% -63.3% -60.0% -6
Slide 9: Demonstrate Quality: Joint Commission Top Performers
Demonstrate Quality 118 Hospitals Joint Commission Top Performers on Key Quality Measures in 2015 Consistent Improvement Year After Year 130 118* 120 107 110 100 93 86 90 80 73 70 60 2011 2012 2013 2014 2015 2011 – 2013 include CHS and HMA combined. All represent pre-QHC spin-off. *25 Facilities are
Slide 10: CHS Regional Network
CHS Regional Network Rockwood Health System • 2 hospitals • 490 physicians Lutheran Health Network • 8 hospitals Northwest Healthcare • 1,150 physicians • 2 hospitals • 630 physicians Valley Care Health of Ohio • 3 hospitals • 550 physicians Commonwealth Health • 5 hospitals • 800 physicians Tennova
Slide 11: CHS Regional Networks – Lutheran Health Network
CHS Regional Networks – Lutheran Health Network Physician 90 Offices/Clinics Urgent Care/ 8 Occupational Health Diagnostic 11 Centers Ambulatory 3 Surgery Centers 8 Hospitals 11
Slide 12: Access Points
Access Points 57 Surgery Centers 48 Urgent Care Centers 8 Freestanding EDs 75 Home Health Agencies 148 Diagnostic Centers 1,500 Physician Clinics 12
Slide 13: Delivering Care More Efficiently
Delivering Care More Efficiently Shared Resources for Productivity Improvement, Cost Controls, and Quality Improvement • Acquisitions • Financial Reporting • Managed Care • Ancillary Services • Group Purchasing • Physician Practice Management • Billing and Collections • Health Information Management
Slide 14: Clinical Integration and Collaboration: Physician Recruitment
Clinical Integration and Collaboration Physician Recruitment 4,500 4,152 4,000 3,765 3,500 3,000 2,500 2,125 2,141 1,864 2,000 1,500 1,000 901 917 500 0 2011 2012 2013 2014 2015 Q2 2015 Q2 2016 • Over 14,000 physicians recruited over the past 5 years • 1,218 mid-level licensed professionals employed
Slide 15: Q2 2016 Results of the Affordable Care Act
Q2 2016 Results of the Affordable Care Act Data from Same Store – Hospital Volume Only YTD 2016 % Change in Adjusted Admissions Self Pay Medicaid All States +0.12% +6.25% Expansion States -13.6% +15.7% 15
Slide 16: Consolidated Payor Mix
Consolidated Payor Mix Three Months Ended Three Months Ended 6/30/2016 6/30/2015 53.2% 10.5% 52.5% 11.0% Managed Medicaid Managed Medicaid Care & Other Care & Other 23.9% 24.6% 12.4% Medicare 11.9% Medicare Self-Pay Self-Pay YTD 2016 YTD 2015 52.9% 10.4% 52.3% 10.7% Medicaid Managed Medicaid Managed
Slide 17: Q2 2016 Highlights
Q2 2016 Highlights Q2 2016 YTD 2016 Compared to Compared to Q2 2015 YTD 2015 Consolidated Same Store Consolidated Same Store (1) Net Operating Revenues -6.0% 1.2% -2.1% 1.8% Admissions -9.1% -2.1% -5.7% -2.1% Adjusted Admissions -8.5% -0.6% -3.9% 0.4% Surgeries -5.2% 1.2% -0.7% 3.2% ER Visits -10.5%
Slide 18: Q2 2016 Other Information
Q2 2016 Other Information Same Store CHS Former HMA Q2 2016 compared to Q2 2015 CHS Legacy Facilities (153 hospitals) (91 hospitals) (62 hospitals) Net Operating Revenues 1.2% 3.2% -2.6% Admissions -2.1% -1.4% -3.4% Adjusted Admissions -0.6% -0.3% -1.2% Surgeries 1.2% 3.1% -3.0% CHS Former H
Slide 19: Cash Flow and Capital Expenditures
Cash Flow and Capital Expenditures CHS Cash Flows from Operations HMA Capital Expenditures ($ in millions) ($ in millions) $1,822 $953 $853 $1,280 $769 $1,089 $1,086 $614 $474 $642(1) $388 $407 $596 $588(1) $274 $227 (1) See slide 28 for reconciliation of adjusted cash flows provided by CapEx % of r
Slide 20: Second Quarter 2016 Adjusted EBITDA Compared to First Quarter 2016
Second Quarter 2016 Adjusted EBITDA Compared to First Quarter 2016 ($ in millions) First quarter 2016, Adjusted EBITDA $633 Pro forma reduction for QHC spin-off and sale of Las Vegas (48) joint venture and increase for recent acquisitions 585 Second quarter 2016, Adjusted EBITDA 563 Sequential decli
Slide 21: 2016 Adjusted EBITDA Bridge, based on June results
2016 Adjusted EBITDA Bridge, based on June 30 results Estimate ($ in millions) Current run rate (YTD 2016 of $1,196M less HITECH of $49M, annualized ) $2,295 Less QHC and other discussed divestitures included in run rate (95) • QHC, closing date of 4/29/2016 • Sale of Las Vegas Joint Venture, cl
Slide 22: Focused Strategy
Focused Strategy Experienced Quality Management Improvements Attractive Company Markets Growth Geographic Acquisition Diversity Opportunities Consistent Proven Financial Formula Performance 22
Slide 23: Other Financial Information
Other Financial Information
Slide 24: CYH Unaudited Supplemental Information
CYH Unaudited Supplemental Information EBITDA is a non-GAAP financial measure which consists of net (loss) income attributable to Community Health Systems, Inc. before interest, income taxes, and depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to
Slide 25: Unaudited Supplemental Information
Unaudited Supplemental Information The following table reflects the calculation of Adjusted EBITDA, as defined, from (loss) income from continuing operations before income taxes and reconciles Adjusted EBITDA to net cash provided by operating activities as derived directly from the condensed consoli
Slide 26: Income Summary
Income Summary (Amounts in millions, except margin and EPS) Quarter Ended Six Months Ended 6-30-2016 6-30-2015 Change 6-30-2016 6-30-2015 Change Net Operating Revenues $ 4,590 $ 4,882 -6.0% $ 9,589 $ 9,793 -2.1% Adjusted EBITDA ** $ 563 $ 769 -26.8% $ 1,196 $ 1,483 -19.4% Adjusted EBITDA Margin ** 1
Slide 27: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Q2 2016 Q2 2015 YTD 2016 YTD 2015 Net (loss) income, as reported $ (12.91) $ 0.95 $ (12.85) $ 1.64 Discontinued operations 0.01 0.06 0.03 0.17 Loss from early extinguishment of debt 0.18 0.05 0.18 0.09 Gain on sale of investments in unconsolidated affiliates – (0.
Slide 28: Analysis of Operating Cash Flow
Analysis of Operating Cash Flow ($ in millions) YTD 2016 YTD 2015 Cash flow provided by (used in) operations, as reported $ 632 $ 504 HMA integration expenses and CVR related payments 1 29 Government settlements and related legal expenses 1 104 Expenses related to the spin-off of Quorum Health Corpo
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