Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q2 2017 Earnings Presentation
29 slides from Community Health Systems's earnings presentation, August 2017
Slide 1: Investor Presentation Second Quarter Ended June 30, 2017
Investor Presentation Second Quarter Ended June 30, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and
Slide 3: Community Health Systems
Community Health Systems • Founded in 1985 • NYSE Listed Company since 2000 Symbol: CYH • 143* Hospitals in 20 States • Over 800,000 Annual Admissions • Over 4.2 Million Annual ED Visits • 110,000 Employees • 19,000 Physicians on Medical Staffs, including approximately 2,650 employed physicians *as
Slide 4: CHS – An Experienced Operator
CHS – An Experienced Operator Revenues Adjusted EBITDA ** 22,500 ($MM) 3,000 ($MM) $19,606 $2,777 $2,839 20,000 $18,639 $18,438 2,750 17,500 2,500 $2,225 15,000 2,250 $1,983 $12,833 2,000 $1,836 $1,860 12,500 $12,108 $11,708 $12,819 $1,753 1,750 $1,671 $10,840 $10,902 $1,525 10,000 1,500 $7,127 1,25
Slide 5: Income Summary
Income Summary (Amounts in millions, except margin and EPS) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 Change 2017 2016 Change Net Operating Revenues $ 4,144 $ 4,590 -9.7% $ 8,629 $ 9,589 -10.0% Adjusted EBITDA(1) $ 435 $ 563 -22.7% $ 963 $ 1,196 -19.5% Adjusted EBITDA Margin(1)
Slide 6: Payor Mix (Consolidated)
Payor Mix (Consolidated) Three Months Ended Three Months Ended June 30, 2017 June 30, 2016 11.1% 53.2% 10.5% 54.2% Medicaid Managed Medicaid Managed Care & Other Care & Other 22.5% 23.9% Medicare Medicare 12.2% 12.4% Self-Pay Self-Pay Six Months Ended Six Months Ended June 30, 2017 June 30, 2016 54.
Slide 7: Q2 2017 Highlights
Q2 2017 Highlights Q2 2017 YTD 2017 compared to compared to Q2 2016 YTD 2016 Consolidated Same Store Consolidated Same Store Net Operating Revenues -9.7% -0.7% -10.0% 0.1% Admissions -10.8% -2.5% -11.1% -1.8% Adjusted Admissions -11.2% -2.5% -11.9% -1.8% Surgeries -9.9% -2.4% -10.3% -2.1% ER Visits
Slide 8: Cash Flow and Capital Expenditures
Cash Flow and Capital Expenditures CHS Cash Flows from Operations HMA Capital Expenditures ($ in millions) ($ in millions) $1,882 $953 $853 $744 $1,156 $614 $1,089 $1,046 $407 $632 $503 $274 $274 $227 (1) Approximately $120 million was spent during the year ended CapEx % of revenue (includes replace
Slide 9: Serving Non-Urban and Select Urban Markets
Serving Non-Urban and Select Urban Markets 143* Hospitals 20 States TOP FIVE STATES Q2 2017 % of Hospitals Revenue Florida 21 12.4% Texas 15 11.6% Pennsylvania 14 11.4% Indiana 11 10.2% Tennessee 16 7.3% Total Top 5 52.9% *as of June 30, 2017 9
Slide 10: Breakdown of Hospitals by Type
Breakdown of Hospitals by Type Q2 2017 Hospitals 13% 19 46% 66 143* 26 18% Hospitals 32 23% Individual Hospitals with Individual Hospitals with 10 Statewide / Regional 12 Local Hospital Markets In-Market Competition Out-of-Market Competition Hospital Networks CHS hospitals not in close CHS hospitals
Slide 11: CHS Regional Networks
CHS Regional Networks Rockwood Health System • 2 hospitals • 510 physicians Lutheran Health Network Northwest Healthcare • 8 hospitals • 2 hospitals • 1,140 physicians • 660 physicians Commonwealth Health • 6 hospitals • 820 physicians Tennova Healthcare • 16 Hospitals • 1,830 physicians Bayfront He
Slide 12: CHS Regional Networks – Northwest Healthcare – Tucson, Arizona
CHS Regional Networks – Northwest Healthcare – Tucson, Arizona 2 Hospitals and 1 FSED Physician Offices/Clinics Urgent Care Centers Outpatient Clinics Ambulatory Surgery Centers 12
Slide 13: Rationalizing Our Portfolio
Rationalizing Our Portfolio QHC Spin-off – Completed April 29th, 2016 38 hospitals in 16 states • Net proceeds: $1.2 billion Sale of Joint Venture – Completed May 4th, 2016 Located in Las Vegas, NV with Universal Health Services, Inc. • $445 million in cash to CHS, including return of capital fo
Slide 14: Divestiture Growth
DIVESTITURE GROWTH ($,000) $5,000 (1) 35 Closed Gross Proceeds Gross Proceeds (1) $4,500 Closed Annual Net Revenue (1) 30 30 Annual Net Revenue (1) 30 $4,000 Number of Hospitals 25 $3,600 $3,600 $3,500 25 $3,000 20 $3,000 20 17 $2,400 $2,500 $2,300 $2,250 $2,000 15 $2,000 12 $1,800 10 $1,450 $1,475
Slide 15: 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 15
Slide 16: Demonstrate Quality
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 0% -9.6% -15.5% -17.6% -10% -21.6% -25.0% -26.4% -20% -29.6% -35.0% -30% -40.2% -45.0%
Slide 17: Access Points
Access Points 56 Surgery Centers 50 Urgent Care Centers 9 Freestanding Eds 75 Home Health Agencies (20% JV partner) 46 Walk-In Retail Clinics 131 Diagnostic Centers 1,000 Physician Clinics *as of June 30, 2017 17
Slide 18: Delivering Care More Efficiently
Delivering Care More Efficiently Shared Resources for Productivity Improvement, Cost Controls, and Quality Improvement • Acquisitions/Divestitures• Financial Reporting • Managed Care • Ancillary Services • Group Purchasing • Patient Engagement and Experience • Billing and Collections • Health Inform
Slide 19: Clinical Integration and Collaboration Physician Recruitment
Clinical Integration and Collaboration Physician Recruitment 4,500 4,152 3,896 4,000 3,765 3,500 3,000 2,500 2,125 2,141 2,000 1,500 1,308 1,172 1,000 500 0 2012 2013 2014 2015 2016 YTD 2016 YTD 2017 • Over 16,000 physicians recruited over the past 5 years • 1,183 mid-level licensed professionals em
Slide 20: 2017 Guidance Overview as of August 1, 2017
2017 Guidance Overview as of August 1, 2017 2017 Projection Range Net operating revenues less provision for bad debt (in millions) – $15,850 to $16,050 (reflects the impact of anticipated divestitures) Adjusted EBITDA (in millions) $1,825 to $2,000 Depreciation and amortization as a percentage
Slide 21: Debt Maturity as of July 7, 2017
Debt Maturity as of July 7, 2017 ($ in millions) $4,000 $3,135 $3,218 $3,100 $3,000 $3,000 $2,000 $1,200 $1,000 $600 $0 $0 2017 2018 2019 2020 2021 2022 2023 2018 (Nov) Receivables facility - $600 2021 (Jan) TLH - $2,218 2019 (Nov) 8.000% Senior Notes - $1,925 2021 (Aug) 5.125% Senior Secured Notes
Slide 22: Recent Capital Structure Highlights
Recent Capital Structure Highlights • On March 16, 2017, completed offering of $2.2 billion of 6.250% Senior Secured Notes due in 2023, in which proceeds fully extinguished our 2018 notes and 2018 term loans. • On May 12, 2017, completed a $900 million tack-on (upsized from $700 million) to 6.250% S
Slide 23: Focused Strategy
Focused Strategy Experienced Quality Management Improvements Attractive Company Markets Growth Geographic Portfolio Diversity Rationalization Consistent Proven Financial Formula Performance 23
Slide 24: Other Financial Information
Other Financial Information
Slide 25: Unaudited Supplemental Information
Unaudited Supplemental Information EBITDA is a non-GAAP financial measure which consists of net loss attributable to Community Health Systems, Inc. before interest, income taxes, and depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back net
Slide 26: Unaudited Supplemental Information
Unaudited Supplemental Information The following table reflects the reconciliation of Adjusted EBITDA, as defined, to net loss attributable to Community Health Systems, Inc. stockholders as derived directly from the condensed consolidated financial statements (in millions): Three Months Ended Six Mo
Slide 27: Net Income – Excluding Tax Effected Adjustments
Net Income – Excluding Tax Effected Adjustments ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net loss, as reported $ (137) $ (1,432) $ (335) $ (1,421) Adjustments: Discontinued operations 6 1 7 3 Loss from early extinguishment of debt 7 20 20 20 Impairmen
Slide 28: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net loss, as reported $ (1.22) $ (12.91) $ (3.01) $ (12.85) Adjustments: Discontinued operations 0.05 0.01 0.06 0.03 Loss from early extinguishment of debt 0.06 0.18 0.18 0.18 Impairment and
Slide 29: Balance Sheet Data
Balance Sheet Data ($ in millions) June 30, 2017 December 31, 2016 Working Capital $ 2,677 $ 1,779 Total Assets $ 20,873 $ 21,944 Long Term Debt $ 14,702* $ 14,789 Stockholders’ Equity $ 1,298 $ 1,615 *At June 30, 2017, approximately 85% of our debt was fixed, including swaps. 29
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