Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q2 2019 Earnings Presentation
33 slides from Community Health Systems's earnings presentation, Aug 14, 2019
Slide 1: Investor Presentation 2nd Quarter Ended June 30, 2019
Investor Presentation 2nd Quarter Ended June 30, 2019 1
Slide 2: Disclaimer Statement
Disclaimer Statement 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 uncer
Slide 3: Company Background
COMPANY BACKGROUND CHS cnr as
Slide 4: CHS Background
CHS Background • 107 Hospitals in 18 States* 1985 Company Founded • Over 600,000 Annual Admissions 2018 • Over 3 Million Annual ED Visits • 87,000 Employees • 15,100 Physicians on Staffs 2000 • 2,000 Employed Physicians NYSE Listed Company Symbol: CYH *as of June 30, 2019 4
Slide 5: Strengthening Our Portfolio
Strengthening Our Portfolio By intentionally shifting the portfolio toward select suburban / urban markets, CHS is positioned for growth across the care continuum. 107 18 Hospitals States as of June 30, 2019 5
Slide 6: Executing Across the Portfolio
Executing Across the Portfolio Investments provide platform for strong performance. Strategies are Portfolio is well- Leveraging positioned aligned with recent strategic • Over 80% of our hospitals are each market’s in CSAs above 50,000 residents investments opportunities • Attractive larger markets
Slide 7: CHS Strategic Imperatives
CHS Strategic Imperatives Our Strategic Imperatives are the most highly-prioritized, high-impact areas of focus for our organization. 7
Slide 8: Committed to Quality and Safety
Committed to Quality and Safety By leveraging techniques from high-risk industries such as nuclear power and aviation, CHS is creating inherently safe hospital environments for patients and staff. DRIVERS OF HIGH SERIOUS SAFETY EVENT RATE RELIABILITY & SAFETY (SSER) -10% -22.9% SAFETY IS A CORE VALU
Slide 9: Developing Stronger Markets
DEVELOPING STRONGER MARKETS 9
Slide 10: CHS Regional Network Model
CHS Regional Network Model The regional network model provides a direct connection to CHS resources while promoting agility and quicker execution of strategic opportunities. TOP 5 STATES YTD 6-30- 2019 R % of Hospitals Net Revenue R Florida 18 15.0% R Indiana 11 13.1% R Texas 12 12.2% R R Alabama 6
Slide 11: Driving Growth
DRIVING GROWTH CHS cnr as
Slide 12: Building Healthcare Systems
Building Healthcare Systems CHS is focused on providing high quality services throughout the care continuum. ASSET # YE 2018 Freestanding Emergency Departments 11 Urgent Care Centers / Walk-In / Retail Clinics 97 Physician Practices 765 Ambulatory Surgery Centers 51 Diagnostic / Imaging Centers 107
Slide 13: Outpatient Developments
Outpatient Developments Outpatient strategies are driving growth. 53% of net revenue comes from outpatient services Access Point Primary Care Accountable Care Consumer Digital / Online Expansion Development Organization Friendly Marketing Scheduling 13
Slide 14: Accountable Care Organizations
Accountable Care Organizations CHS is focused on strategic physician alignment to further advance value-based care. 15 Medicare ACOs 2018 RESULTS 2019 4K+ 500+ 260k 97% +150 +20k Participating Participating Attributed Provider New New Providers Practices & Medicare Retention Independent Medicare Hos
Slide 15: Digital Patient Engagement
Digital Patient Engagement Expanding reach, simplifying access, and focusing on the patient experience. Search Engine & Centralized & Online Patient Engagement Digital Marketing Website Optimization Scheduling Technology Connecting with Reaching the most likely Providing convenient 24/7 Engaging wit
Slide 16: Inpatient Service Line Investments
Inpatient Service Line Investments Larger market profile provides opportunities to expand service lines, case complexity, and acuity. Medical Staff Capital & CHS Transfer Emergency Provider & Development & Technology Center Department Clinical Outreach Recruitment Prioritization Operational Services
Slide 17: CHS Transfer Center
CHS Transfer Center The implementation of Transfer Center services facilitates admissions to CHS hospitals. CHS TRANSFER CENTER OVERVIEW PROGRESS TO DATE Staffed Facilitates Program Expanded Established in ACUTE & 24/7 POST-ACUTE +9 18 56 with Nursing and care placement hospitals markets hospitals B
Slide 18: Care Continuum - NW Indiana Market
Care Continuum - NW Indiana Market Northwest Indiana is a prime example of a market intentionally designed to capture patients across the care continuum. FUTURE Urgent Care / PC 3 Hospitals CHICAGO • 40 miles from Portage • 55 miles from Valparaiso 3 ASCs NEW Urgent 2 FSEDs Replacement hospital Care
Slide 19: Advancing Operational Initiatives
ADVANCING OPERATIONAL INITIATIVES 19
Slide 20: Operational Efficiency
Operational Efficiency CHS is leveraging technology and scale to deliver operational excellence. SWB Management Shared Service Centers Supply Chain Optimization Vendor Efficiencies 20
Slide 21: Financial Performance
FINANCIAL PERFORMANCE CHS cnr as
Slide 22: Payor Mix (Consolidated)
Payor Mix (Consolidated) • Payor mix is presented as a percent of net revenue after the provision for uncollectible 13.5% revenue. 13.7% 60.4% 59.2% 2Q 2Q • Total consolidated 2019 2018 uncompensated care as a 24.8% 26.5% percent of adjusted net revenue (net revenue before the 0.8% provision for unc
Slide 23: 2Q 2019 Highlights
2Q 2019 Highlights 2Q 2019 YTD 2019 compared to compared to 2Q 2018 YTD 2018 Consolidated Same Store Consolidated Same Store Net Operating Revenue -7.3% 4.9% -7.9% 4.0% Net Revenue per AA 3.1% 2.7% Admissions -11.5% 2.3% -12.5% 1.1% Adjusted Admissions -12.3% 1.8% -12.5% 1.3% Surgeries -9.9% 3.4% -9
Slide 24: Cash Flow & Capital Expenditures
Cash Flow & Capital Expenditures Cash Flows from Operations Capital Expenditures ($ in millions) ($ in millions) $953 (excluding Replacement Hospitals) $1,137 CapEx % of Net Revenue $744 $1,046 5 4 $564 $527 $773 3 $295 2 $212 $274 $265 $94 1 0 2015 2016 2017 2018 YTD YTD 2018 2019 CapEx % of Net Re
Slide 25: Rationalizing Our Portfolio
Rationalizing Our Portfolio Allowing for greater investments in stronger markets as well as debt reduction. Transactions Completed in 2017 Completed the sale of 30 hospitals • Annualized revenue: ~$3.4 billion, with mid-single digit EBITDA margins • Gross proceeds, excluding working capital: ~$1.7
Slide 26: Debt Maturity as of June 30, 2019
Debt Maturity as of June 30, 2019 ($ in millions) $6,000 $5,593 $5,000 $4,000 $3,000 $2,632 $2,388 $2,000 $1,601 $1,000 $1,000 $155 $121 $0 2019 2020 2021 2022 2023 2024 2025 2026 2019 (Nov) Senior Unsecured Notes - $155 2020 (July) Senior Unsecured Notes - $121 2021 (Aug) Senior Secured Notes - $1,
Slide 27: Positioned for Growth
Positioned for Growth Strategic execution and targeted capital investments provides a platform for 2019 and beyond. 1. Developing Stronger Markets IMPROVED 2. Driving Growth REVENUE & EBITDA 3. Advancing Operational Initiatives 27
Slide 28: APPENDIX: Other Financial Information
APPENDIX: Other Financial Information 28
Slide 29: 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 30: 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 31: Income Summary
Income Summary (Amounts in millions, except margin and Net (Loss) Income per Share) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 Change 2019 2018 Change Net Operating Revenues $ 3,302 $ 3,562 -7.3% $ 6,679 $ 7,251 -7.9% Adjusted EBITDA(1) $ 402 $ 411 -2.2% $ 793 $ 851 -6.8% Adjust
Slide 32: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Net loss, as reported $ (1.47) $ (0.97) $ (2.51) $ (1.20) Adjustments: Loss (gain) from early extinguishment of debt - (0.44) 0.21 (0.41) Impairment and (gain) loss on sale of businesses, ne
Slide 33: Balance Sheet Data
Balance Sheet Data ($ in millions) June 30, 2019 December 31, 2018 Working Capital $ 981 $ 1,157 Total Assets $ 16,132 $ 15,859 Long Term Debt $ 13,393 $ 13,392 Stockholders’ Deficit $ (1,833) $ (1,535) • At June 30, 2019, over 99% of our debt was fixed, including swaps. • Net debt (long-term debt,
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