Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q4 2018 Earnings Presentation
35 slides from Community Health Systems's earnings presentation, February 2019
Slide 1: Investor Presentation 4th Quarter Ended December 31, 2018
Investor Presentation 4th Quarter Ended December 31, 2018 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 • 113 Hospitals in 20 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 December 31, 2018 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. 113 20 Hospitals States as of December 31, 2018 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% SAFETY IS A CORE VALUE -22.9
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 YE 2018 R % of Hospitals Net Revenue R Florida 18 13.1% R Indiana 11 12.5% R Texas 12 11.8% R R Alabama 6 9.2% Mi
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 Implementation Plan Established in ACUTE & 24/7 POST-ACUTE 85% 14 51 with Nursing and care placement complete markets hospital
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 Care / PC 5 Urgent Care C
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 revenue (for 2017, provision for bad debt). 13.6% 12.7% • Total consolidated 59.6% 60.1% uncompensated care as a percent 4Q 4Q of adjusted net revenue (net 2018 2017 revenue before the
Slide 23: 4Q 2018 Highlights
4Q 2018 Highlights 4Q 2018 FY 2018 compared to compared to 4Q 2017 FY 2017 Consolidated Same Store Consolidated Same Store Net Operating Revenue -5.5% 1.9% -11.2% 2.8% Net Revenue per AA 1.8% * 3.2% * Admissions -9.7% -0.5% -15.0% -1.3% Adjusted Admissions -9.8% 0.1% -15.3% -0.4% Surgeries -6.3% 0.9
Slide 24: 2018 Quarterly Same Store Highlights
2018 Quarterly Same Store Highlights Recast with 112 hospitals in each period. ($ in millions) 1Q18 2Q18 3Q18 4Q18 FY18 Net Operating Revenue $3,354 $3,288 $3,289 $3,400 $13,331 Net Operating Revenue Growth 2.0% 3.6% 3.8% 1.9% 2.8% Net Revenue per AA 3.9% 3.3% 3.8% 1.8% * 3.2% * Admissions -2.4% -1.
Slide 25: Cash Flow & Capital Expenditures
Cash Flow & Capital Expenditures Cash Flows from Operations Capital Expenditures ($ in millions) ($ in millions) $1,882 $953 $853 (excluding Replacement Hospitals) 5 $744 CapEx % of Net Revenue $1,137 4 $564 $527 $1,046 3 $773 $737 $575 2 $274 1 0 * See slide 26 for analysis of operating cash flow.
Slide 26: Analysis of Operating Cash Flow
Analysis of Operating Cash Flow Three Months Ended Year Ended (Amounts in millions) December 31, December 31, 2018 2017 2018 2017 Cash flows from operations, as reported $ (165) $ 156 274 773 Adjustments: Shareholder derivative settlement received 1Q 2017 - - - (40) HMA legal settlement paid in 4Q 2
Slide 27: 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: ~$1.7
Slide 28: Debt Maturity as of December 31, 2018
Debt Maturity as of December 31, 2018 ($ in millions) $6,000 $5,568 $5,000 $4,000 $3,000 $2,622 $2,632 $2,388 $2,000 $1,000 $155 $121 2018 2019 2020 2021 2022 2023 2024 2019 (Nov) Senior Unsecured Notes - $155 2020 (July) Senior Unsecured Notes - $121 2021 (Jan) TLH - $1,622 2021 (Aug) Senior Secure
Slide 29: 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 29
Slide 30: Appendix: Other Financial Information
APPENDIX: Other Financial Information 30
Slide 31: 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 32: 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 33: Income Summary
Income Summary (Amounts in millions, except margin and EPS) Three Months Ended December 31, Year Ended December 31, 2018 2017 Change 2018 2017 Change Net Operating Revenues $ 3,453 $ 3,650 -5.5% $ 14,155 $ 15,945 -11.2% Adjusted EBITDA(1) $ 419 $ 409 2.4% $ 1,642 $ 1,703 -3.6% Adjusted EBITDA Margin
Slide 34: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Three Months Ended Year Ended December 31, December 31, 2018 2017 2018 2017 Net loss, as reported $ (2.91) $ (17.98) $ (6.99) $ (22.00) Adjustments: Discontinued operations - 0.03 - 0.11 Loss (gain) from early extinguishment of debt 0.02 0.03 (0.20) 0.23 Impairmen
Slide 35: Balance Sheet Data
Balance Sheet Data ($ in millions) December 31, 2018 December 31, 2017 Working Capital $ 1,157 $ 1,712 Total Assets $ 15,859 $ 17,450 Long Term Debt $ 13,392 $ 13,880 Stockholders’ Deficit $ (1,535) $ (767) • At December 31, 2018, approximately 94% of our debt was fixed, including swaps. • Net debt
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