Community Health Systems, Inc. · NYSE:CYH
Community Health Systems — Q2 2018 Earnings Presentation
29 slides from Community Health Systems's earnings presentation, July 2018
Slide 1: Investor Presentation 2nd Quarter Ended June 30, 2018
Investor Presentation 2nd Quarter Ended June 30, 2018
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 • 119 Hospitals in 20 States* • Over 700,000 Annual Admissions • Over 3.9 Million Annual ED Visits • 91,500 Employees • 15,750 Physicians on Medical Staffs, including approximately 2,060 employed physicians *as o
Slide 4: CHS Strategic Imperatives
CHS Strategic Imperatives Our Strategic Imperatives are the most highly-prioritized, high-impact areas of focus for our organization. Safety Operational Connected Competitive Quality Excellence Care Position 4
Slide 5: Serving Select Markets
Serving Select Markets 119 Hospitals 20 States TOP FIVE STATES Q2 2018 % of Hospitals Net Revenue Florida 19 15.1% Indiana 11 11.8% Texas 12 11.4% Alabama 6 9.0% Tennessee 12 7.5% Total Top 5 54.8% *as of June 30, 2018 5
Slide 6: CHS Regional Networks
CHS Regional Networks Lutheran Health Network Northwest Healthcare • 8 hospitals • 2 hospitals • 1,110 physicians • 640 physicians Commonwealth Health • 6 hospitals • 820 physicians Tennova Healthcare • 12 Hospitals • 1,630 physicians Bayfront Health • 6 hospitals • 1,420 physicians Alabama Network
Slide 7: 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 7
Slide 8: 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% -10% -22.9% -20% -29.1% -30% -40.3% -44.0% -40% -47.6% -54.3% -54.0% -50% -58.7% -6
Slide 9: Growth - Focused on the Continuum of Care
Growth - Focused on the Continuum of Care • Value-Based Care Acute Care • Consumer-Focused Delivery 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/ Phys
Slide 10: Growth - Through More Access Points
Growth - Through More Access Points 52 Surgery Centers 40 Urgent Care Centers 48 Walk-In or Retail Clinics 10 Freestanding EDs 88 Home Health Agencies (20% JV partner) 112 Diagnostic Centers 785 Physician Clinics 10
Slide 11: 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 12: Growth – Accountable Care Organizations (ACOs)
Growth – Accountable Care Organizations (ACOs) 15 MSSP ACOs 4K+ Participating Providers 260K+ Attributed MFFS Lives 500+ Participating Practices & Hospitals 12
Slide 13: 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 14: 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 15: Operational Efficiency
Operational Efficiency SWB Management Supply Chain Optimization Shared Service Centers Vendor Efficiencies High Opportunity Hospitals Peak Performance Teams 15
Slide 16: Payor Mix (Consolidated)
Payor Mix (Consolidated) Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 13.5% 13.1% 59.2% Medicaid 58.2% Medicaid Managed Managed Care & Other 26.5% Care & Other 27.3% Medicare Medicare 0.8% 1.4% Self-Pay Self-Pay Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 12.9%
Slide 17: Q2 2018 Highlights
Q2 2018 Highlights Q2 2018 YTD 2018 compared to compared to Q2 2017 YTD 2017 Consolidated Same Store Consolidated Same Store Net Operating Revenues -14.0% 3.3% -16.0% 2.5% Admissions -16.9% -2.1% -18.3% -2.2% Adjusted Admissions -16.9% -0.2% -19.0% -1.0% Surgeries -15.6% 0.0% -18.0% -1.3% ER Visits
Slide 18: Q2 2018 Same-Store Operations Highlights
Q2 2018 Same-Store Operations Highlights Same-Store Net Revenue +3.3% Net Revenue per Adjusted Admission +3.5% Year-over-Year Results: Adjusted Admissions -0.2% Surgeries Flat Year-over-Year Results: Salaries and Benefits -50BPS Supplies -20BPS Other Operating Expenses +60BPS 18
Slide 19: Cash Flow and Capital Expenditures
Cash Flow and Capital Expenditures Cash Flows from Operations Capital Expenditures ($ in millions) ($ in millions) $1,882 $953 $853 $744 $1,137 $1,046 $564 $773 $274 $295 $503 $94 Note: During YTD 2018, most of the year-over-year decrease is CapEx % of net revenue (includes replacement hospitals) at
Slide 20: 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 21: 2018 Guidance Overview as of July 26, 2018
2018 Guidance Overview as of July 26, 2018 2018 Projection Range Net operating revenues (in millions) $13,900 to $14,200 Adjusted EBITDA (in millions) $1,600 to $1,650 Depreciation and amortization as a percentage of net operating revenues 4.9% to 5.0% Interest expense as a percentage of net
Slide 22: Debt Maturity as of July 6, 2018
Debt Maturity as of July 6, 2018 ($ in millions) $6,000 $5,408 $5,000 $4,000 $3,000 $2,857 $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 - $1,857 2021 (Aug) Senior Secured Not
Slide 23: 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 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: Income Summary
Income Summary (Amounts in millions, except margin and EPS) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 Change 2018 2017 Change Net Operating Revenues $ 3,562 $ 4,144 -14.0% $ 7,251 $ 8,629 -16.0% Adjusted EBITDA(1) $ 411 $ 435 -5.5% $ 851 $ 963 -11.6% Adjusted EBITDA Margin(1) 1
Slide 28: Diluted EPS – Excluding Adjustments
Diluted EPS – Excluding Adjustments Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net loss, as reported $ (0.97) $ (1.22) $ (1.20) $ (3.01) Adjustments: Discontinued operations - 0.05 - 0.06 (Gain) loss from early extinguishment of debt (0.44) 0.06 (0.41) 0.18 Impairment
Slide 29: Balance Sheet Data
Balance Sheet Data ($ in millions) June 30, 2018 December 31, 2017 Working Capital $ 1,632 $ 1,712 Total Assets $ 16,794 $ 17,450 Long Term Debt $ 13,673 $ 13,880 Stockholders’ Deficit $ (879) $ (767) • At July 6, 2018, approximately 99% of our debt was fixed, including swaps. • Net debt (long-term
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