Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q4 2017 Earnings Presentation
32 slides from Community Health Systems's earnings presentation, Feb 27, 2018
Slide 1: Investor Presentation 4th Quarter Ended December 31st, 2017
Investor Presentation 4th Quarter Ended December 31st, 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 • 125 Hospitals in 19 States • Over 700,000 Annual Admissions • Over 3.9 Million Annual ED Visits • 95,000 Employees • 16,400 Physicians on Medical Staffs, including approximately 2,200 employed physicians 3
Slide 4: CHS Operating Imperatives
CHS Operating Imperatives Growth in a Medical Staff Deliver Care Demonstrate Consumer - Collaboration and Operate Quality Driven and Clinical More Environment Integration Efficiently 4
Slide 5: Serving Non-Urban and Select Urban Markets
Serving Non-Urban and Select Urban Markets 125 Hospitals 19 States TOP FIVE STATES YE 2017 % of Hospitals Revenue(1) Florida 20 12.9% Indiana 11 10.9% Texas 12 10.0% Tennessee 16 7.9% Alabama 6 7.6% Total Top 5 49.3% (1) The revenue used in this calculation excludes the $591 million change in estima
Slide 6: Breakdown of Hospitals by Type
Breakdown of Hospitals by Type Q4 2017 Hospitals 13% 16 54% 125 23 18% 67 Hospitals 19 15% Individual Hospitals with Individual Hospitals with 9 Statewide / Regional 8 Local Hospital Markets In-Market Competition Out-of-Market Competition Hospital Networks CHS hospitals not in close CHS hospitals no
Slide 7: CHS Regional Networks
CHS Regional Networks Lutheran Health Network Northwest Healthcare • 8 hospitals • 2 hospitals • 1,130 physicians • 670 physicians Commonwealth Health • 6 hospitals • 810 physicians Tennova Healthcare • 16 Hospitals • 1,860 physicians Bayfront Health • 7 hospitals • 1,510 physicians Alabama Network
Slide 8: CHS Regional Networks – Grandview Health Market Access – Birmingham, AL
CHS Regional Networks – Grandview Health Market Access – Birmingham, AL 1 Hospital PCP Office Locations Specialist Office Locations Imaging Centers Outpatient Centers 8
Slide 9: 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 10: Growth - Focused on the Continuum of Care
Growth - Focused on the Continuum of Care Acute Care Hospital Freestanding Emergency Department Community-Based Care Post/Non-Acute Care Urgent Behavioral Care Health Center Home E-visits Ambulatory Rehab/Skilled Surgery Nursing Centers Diagnostic/ Physician Imaging Center Practices Home Health 10
Slide 11: Growth - Through More Access Points
Growth - Through More Access Points 55 Surgery Centers 45 Urgent Care Centers 48 Walk-In or Retail Clinics 9 Freestanding EDs 75 Home Health Agencies (20% JV partner) 115 Diagnostic Centers 950 Physician Clinics 11
Slide 12: Growth – Strategic and Consumer-Driven
Growth – Strategic and Consumer-Driven • Outpatient Growth & Access Point Expansion • Physician Practice Patient Access and Retention Community-Based Care • Medical Staff Collaboration Alignment • ACOs, CINs and Bundled Payments • Acuity Focus & Service Line Development Acute Care • Proprietary Tran
Slide 13: Growth – Accountable Care Organizations (ACOs)
Growth – Accountable Care Organizations (ACOs) 15 MSSP ACOs 4K+ Participating Providers 260K+ Attributed MFFS Lives 500+ Participating Practices & Hospitals 13
Slide 14: Growth – Transfer Center Strategy
Growth – Transfer Center Strategy Patient goes to ER Transferred for Higher Level of Care Post Acute Placement Providers Acute Care Employed & Affiliated Non-CHS, Urgent Care, CHS CHS Non-CHS CHS & Non-CHS FSER IRF, SNF, LTAC Transport Community • Centralized access point to transfer patients into a
Slide 15: Medical Staff Collaboration and Clinical Integration
Medical Staff Collaboration and Clinical Integration • Value Based Care Initiatives • Accountable Care Organizations (ACOs) • Clinically Integrated Networks (CINs) Medical • CMS Bundled Payment Programs (Total Joints) Staff • Service Line Development: Physician Alignment Leadership & Involvement • A
Slide 16: 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 Infor
Slide 17: Operational Efficiency
Operational Efficiency SWB Management Supply Chain Optimization Shared Service Centers Vendor Efficiencies High Opportunity Hospitals Peak Performance Teams 17
Slide 18: Payor Mix (Consolidated)
Payor Mix (Consolidated) (1) Three Months Ended Three Months Ended December 31, 2017(2) December 31, 2016 55.1% 10.4% 53.9% 10.8% Managed Medicaid Managed Medicaid Care & Other Care & Other 21.9% 23.8% Medicare Medicare 12.6% 11.5% Self-Pay Self-Pay Year Ended Year Ended December 31, 2017(2) Decembe
Slide 19: Q4 2017 Highlights
Q4 2017 Highlights Q4 2017 YE 2017 Compared to Compared to Q4 2016 YE 2016 Consolidated Same Store Consolidated Same Store Net Operating Revenues(1) -18.3% 1.8% -13.5% 0.2% Admissions -19.2% -1.7% -13.9% -1.9% Adjusted Admissions -19.3% -0.9% -14.5% -1.7% Surgeries -19.1% -0.9% -13.9% -2.1% ER Visit
Slide 20: 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 $1,137 $614 $1,089 $1,046 $564 $773 $274 $227 (1) Approximately $120 million was spent during the year ended December 31, CapEx % of revenue (includes repl
Slide 21: 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 22: 2017 Pro-forma Annual Results Adjusted for Current Hospital Divestiture Plan
2017 Pro-forma Annual Results Adjusted for Current Hospital Divestiture Plan Same Store YE 2017 Compared to YE 2016 Current Pro-forma Change Admissions -1.9% -1.6% +30BPS Adjusted -1.7% -1.4% +30BPS Admissions Surgeries -2.1% -1.9% +20BPS Consolidated EBITDA Margin(1) 10.7% 11.4% +70BPS (1) The reve
Slide 23: Q4 2017 Pro-forma Quarterly Results Adjusted for Current Hospital Divestiture Plan
Q4 2017 Pro-forma Quarterly Results Adjusted for Current Hospital Divestiture Plan Same Store Q4 2017 Compared to Q4 2016 Current Pro-forma Change Admissions -1.7% -1.7% Flat Adjusted -0.9% -0.6% +30BPS Admissions Surgeries -0.9% -0.7% +20BPS Consolidated EBITDA Margin(1) 11.2% 11.8% +60BPS (1) The
Slide 24: 2018 Guidance Overview as of February 27, 2018
2018 Guidance Overview as of February 27, 2018 2018 Projection Range Net operating revenues (in millions) $13,600 to $13,900 Adjusted EBITDA (in millions) $1,550 to $1,650 Depreciation and amortization as a percentage of net operating revenues 5.0% to 5.1% Interest expense as a percentage of
Slide 25: Debt Maturity as of December 31, 2017
Debt Maturity as of December 31, 2017 ($ in millions) $4,000 $3,527 $2,903 $3,000 $3,100 $3,000 $2,000 $1,200 $1,000 $0 2018 2019 2020 2021 2022 2023 2019 (Nov) Receivables facility - $565 2021 (Jan) TLH - $1,903 2019 (Nov) 8.000% Senior Notes - $1,925 2021 (Aug) 5.125% Senior Secured Notes - $1,000
Slide 26: Focused Strategy
Focused Strategy Safe and Efficient Experienced Care Delivery Management Grow Market Attractive Share Markets Consumer-Focused Connected Care Geographic Diversity Position for Value-Based Care Data-Driven Reduce Leverage 26
Slide 27: Other Financial Information
Other Financial Information
Slide 28: 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 29: 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 Year E
Slide 30: Income Summary
Income Summary Note: The results below, including Non-GAAP Net Operating Revenues, Adjusted EBITDA, Adjusted EBITDA Margin and EPS from Continuing Operations Excluding Adjustments per Share, each exclude the $591 million change in estimate for contractual allowances and provision for bad debts recor
Slide 31: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Three Months Ended Year Ended December 31, December 31, 2017 2016 2017 2016 Net loss, as reported $ (17.98) $ (1.99) $ (22.00) $ (15.54) Adjustments: Discontinued operations 0.03 0.09 0.11 0.13 Loss from early extinguishment of debt 0.03 - 0.23 0.17 Impairment and
Slide 32: Balance Sheet Data
Balance Sheet Data ($ in millions) December 31, 2017 December 31, 2016 Working Capital $ 1,712 $ 1,779 Total Assets $ 17,450 $ 21,944 Long Term Debt $ 13,880(1)(2) $ 14,789 Stockholders’ (Deficit) Equity $ (767) $ 1,615 (1) At December 31, 2017, approximately 91% of our debt was fixed, including swa
Community Health Systems — Q4 2017 Earnings Presentation on 6ix