Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Investor Presentation (March 2018)
25 slides from Community Health Systems's investor presentation, Mar 15, 2018
Slide 1: CHS Update March 2018
CHS Update March 2018 Confidential Confidential Exhibit 99.1
Slide 2: Confidentiality and non-GAAP disclaimer
This presentation has been prepared for the exclusive use of the party to whom Community Health Systems, Inc. (“CHS”) delivers this presentation. Although CHS believes the information is accurate in all material respects, CHS does not make any representation or warranty, either express or implied, a
Slide 3: 2017 Consolidated Financial Results
Three months ended December 31, Fiscal year ended December 31, 2016 2017 2016 2017 Admissions (‘000s) 203 164 857 738 Adj. admissions (‘000s)(1) 440 355 1,867 1,597 Net revenue per adj. admission $10,154 $10,269 $9,874 $9,986 ($M) Adjusted net operating revenues(2) $4,469 $3,650 $18,438 $15,945 Adj.
Slide 4: Same Store 4Q and YE 2017 Highlights
(1) (1) Same Store 4Q and YE 2017 Highlights 4Q 2017 Compared to 4Q 2016 YE 2017 Compared to YE 2016 Same Store Same Store Adjusted Net Operating Revenues(1) 1.8% 0.2% Admissions -1.7% -1.9% Adjusted Admissions -0.9% -1.7% Surgeries -0.9% -2.1% ER Visits 1.4% -0.8% (1) The 2017 Non-GAAP Adjusted Net
Slide 5: Same Store 2017 Highlights
(1) (1) Same Store 2017 Highlights Year-Over-Year Change as a Percentage of Same Store Net Operating Revenues Same Store Salaries and benefits +10BPS Increase was driven by higher physician expense. Supplies expense +20BPS Driven by increased implant costs. Other operating expenses +180BPS Driven by
Slide 6: Change in Estimate / New Revenue Recognition Standard
Change in Estimate / New Revenue Recognition Standard The Company adopted the new revenue recognition accounting standard on January 1, 2018 In connection with this adoption, the Company completed an extensive data extraction and analysis of its patient revenues and patient accounts receivable and d
Slide 7: Recent Company Highlights
Recent Company Highlights CHS made significant progress rationalizing its hospital portfolio and addressing near-term debt maturities Divested 30 hospitals and received $1.7B in gross proceeds excluding retained working capital 10.4x EBITDA multiple Planning additional hospital divestitures of ~$2.0
Slide 8: Continuing to Execute Business Strategy
Continuing to Execute Business Strategy Gain market share by increasing volumes and growing revenues Increase productivity and operating efficiency to enhance profitability Improve patient safety and quality of care Rationalize portfolio through select divestitures 1 2 3 4
Slide 9: Increase Market Share: Volume and Revenue Growth
Corporate Behavioral Health Support Corporate Rehab/Skilled Nursing Support Home Health Joint Venture Partnership Outpatient Growth & Access Point Expansion Physician Practice Patient Access and Retention Medical Staff Collaboration Alignment ACOs, CINs and Bundled Payments Community-Based Care Acui
Slide 10: Expanding Services Across Continuum of Care
Expanding Services Across Continuum of Care Acute Care Post/Non-Acute Care Community-Based Care Ambulatory Surgery Centers E-visits Physician Practices Diagnostic/ Imaging Center Hospital Behavioral Health Rehab/Skilled Nursing Home Health Urgent Care Center Freestanding Emergency Department Home 1
Slide 11: Expanding Patient Access Points
Expanding Patient Access Points 1 2017(1) Surgery centers 55 Urgent care centers 45 Freestanding EDs 9 Home health agencies(2) 62 Walk-in retail clinics 48 Diagnostic centers 115 Physician clinics 950 (1)125 hospitals as of December 31, 2017. (2)20% of JV partner.
Slide 12: Case Study: Northwest Healthcare Regional Market, Tucson
Case Study: Northwest Healthcare Regional Market Tucson, Arizona Access Points 2014 2017 Hospitals 2 2 Free Standing ED(1) 0 1 Physician Offices / Clinics 20 24 Urgent Care Centers 6 9 Outpatient Clinics 21 22 Ambulatory Surgery Centers 3 3 1 4.4% CAGR ($ in millions) (1)Second Free Standing ED to o
Slide 13: Transfer Centers Drive Enterprise Volume Growth
CHS CHS Transferred for Higher Level of Care Patient goes to ER Centralized access point to transfer patients into and out of CHS Staffed 24/7 with Nursing and Behavioral Health professionals Acute care and post acute care placement Behavioral Health telemedicine assessment and placement Compliance
Slide 14: Accountable Care Organizations (ACOs) Drive Growth
Accountable Care Organizations (ACOs) Drive Growth 500+ Participating Practices & Hospitals 4K+ Participating Providers 260K+ Attributed MFFS Lives 15 MSSP ACOs *as of January 2018 1
Slide 15: Productivity and Operational Efficiency Initiatives
Productivity and Operational Efficiency Initiatives 2 CHS continues to focus on delivering care more efficiently and reducing operating costs SWB Management Vendor Efficiencies Supply Chain Optimization Shared Service Centers Peak Performance Teams High Opportunity Hospitals
Slide 16: Improve Safety and Quality
Improve Safety and Quality High Reliability Using techniques from high-risk industries like nuclear power and aviation to create inherently safe hospital environments Consistent Reduction of the Serious Safety Event Rate Note: CHS Legacy hospitals are compared to an April 2013 baseline, while HMA ar
Slide 17: Rationalizing Portfolio
©Rationalizing Portfolio Completed + $161M Adjusted EBITDA“ x Divestitures = 4.8% Adjusted EBITDA margin EBITDA multiple : Stems + ~$91M revenue® + ~$14M expected @ = @ BREMEN «3s hospitals and Quorum Health Resources + $1.2B received S spin-off 8 + Las Vegas Joint Venture (4 hospitals) + §$700M rec
Slide 18: Statistical and Financial Impact From Portfolio Rationalization
Statistical and Financial Impact From Portfolio Rationalization 2017 compared to 2016 125 hospitals(1) 112 hospitals after excluding 2018 Planned Divestitures(2) Change Admissions -1.8% -1.4% +40bps Adjusted admissions -1.6% -1.3% +30bps Surgeries -2.3% -2.3% – 2017 Adjusted EBITDA margin 11.8% 12.6
Slide 19: Statistical and Financial Impact From Completed 2017 Transactions
As reported Completed 2017 Transactions and other non-same store Adjusted for Completed 2017 Transactions(2) (155 hospitals as of January 1, 2017) (30 hospitals) (125 hospitals) 2017 2017(1) 2017 Admissions (000s) 738 77 661 Adj. admission (000s) 1,597 172 1,425 Adjusted net revenue per adj. admissi
Slide 20: Statistical and Financial Impact After 2018 Planned Divestitures
Adjusted for Completed 2017 Transactions(2) 2018 Planned Hospital Divestitures(3) Adjusted for Completed 2017 Transactions and 2018 Planned Hospital Divestitures(4) (125 hospitals) (13 hospitals) (112 hospitals after excluding 2018 Planned Divestitures) 2017 2017 2017 Admissions (000s) 661 59 601 Ad
Slide 21: CHS Refinancing Strategy
CHS Refinancing strategy contemplates execution of several transactions with staged implementation Step 1: Completed on Feb 26, 2018 Amended Secured Net Leverage Ratio to First Lien Net Leverage Ratio and eliminated Interest Coverage Ratio for Revolver Amendment in return for cash flow revolver redu
Slide 22: Appendix
Appendix 88. CHS fica Stems, ne
Slide 23: Adjusted Net Operating Revenues and Further Adjusted EBITDA Calculation
Adjusted Net Operating Revenues and Further Adjusted EBITDA Calculation ry d Year ended December 31, 2017 Actual FY2017, as adjusted for Planned Divestitures 2017 2018 Completed Definitive Moneiang (Sinmions) 2017 Divestitures\ _ Agreements) Lots®) Adjusted net operating revenues $15,945 $15,945 $15
Slide 24: 2017 EBITDA Reconciliation for Completed 2017 and 2018 Planned Divestitures
2017 EBITDA Reconciliation for Completed 2017 and 2018 Planned Divestitures The following table reflects the reconciliation of Adjusted EBITDA, as defined, to loss from continuing operations before income taxes for the year ended December 31, 2017 for (1) the hospitals divested in 2017, (2) hospital
Slide 25: 2016 EBITDA Reconciliation for Completed 2017 Divestitures
2016 EBITDA Reconciliation for Completed 2017 Divestitures The following table reflects the reconciliation of Adjusted EBITDA, as defined, to loss from continuing operations before income taxes for the year ended December 31, 2016 for the hospitals divested in 2017. Represents interest on other debt
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