Community Health Systems second quarter net operating revenues increase 8.1% to $3.2 billion

Community Health Systems, Inc. (NYSE: CYH) (the "Company") today announced financial and operating results for the three and six months ended June 30, 2012.  

Net operating revenues for the three months ended June 30, 2012, totaled $3.2 billion, an 8.1 percent increase compared with $3.0 billion for the same period in 2011. Income from continuing operations increased to $102.2 million, or $0.93 per share (diluted), for the three months ended June 30, 2012, compared with $92.9 million, or $0.81 per share (diluted), for the same period in 2011. Net income attributable to Community Health Systems, Inc. common stockholders was $0.93 per share (diluted) for the three months ended June 30, 2012, compared with $0.39 per share (diluted) for the same period in 2011. Weighted-average shares outstanding (diluted) were 89.5 million for the three months ended June 30, 2012, and 91.8 million for the three months ended June 30, 2011.

Adjusted EBITDA for the three months ended June 30, 2012, was $483.1 million compared with $462.3 million for the same period in 2011, representing a 4.5 percent increase. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, loss from early extinguishment of debt and net income attributable to non-controlling interests. The Company uses adjusted EBITDA as a measure of liquidity. Net cash provided by operating activities for the three months ended June 30, 2012, was $295.6 million compared with $397.2 million for the same period in 2011.

The consolidated operating results for the three months ended June 30, 2012, reflect a 3.0 percent increase in total admissions and a 5.7 percent increase in total adjusted admissions compared with the same period in 2011. On a same-store basis, admissions decreased 2.0 percent while adjusted admissions increased 0.5 percent compared with the same period in 2011. On a same-store basis, net operating revenues increased 4.5 percent compared with the same period in 2011.

Net operating revenues for the six months ended June 30, 2012, totaled $6.5 billion, a 9.8 percent increase compared with $6.0 billion for the same period in 2011. Income from continuing operations increased to $201.9 million, or $1.79 per share (diluted), for the six months ended June 30, 2012, compared with $184.5 million, or $1.62 per share (diluted), for the same period in 2011. Net income attributable to Community Health Systems, Inc. common stockholders was $1.78 per share (diluted) for the six months ended June 30, 2012, compared with $1.05 per share (diluted) for the same period in 2011. The results for the six months ended June 30, 2012, include a $0.48 per share (diluted) net benefit from the resolution of an industry wide governmental settlement and a payment update relating to prior periods, a $0.10 per share (diluted) charge to establish reserves for certain legal matters, and a $0.44 per share (diluted) loss from the early extinguishment of debt. Excluding these previously mentioned items, income from continuing operations attributable to Community Health Systems, Inc. common stockholders was $1.85 per share (diluted) for the six months ended June 30, 2012, and net income attributable to Community Health Systems, Inc. common stockholders was $1.84 per share (diluted) for the six months ended June 30, 2012. Weighted-average shares outstanding (diluted) were 89.2 million for the six months ended June 30, 2012, and 92.0 million for the six months ended June 30, 2011.

Adjusted EBITDA for the six months ended June 30, 2012, was $1.0 billion compared with $919.4 million for the same period in 2011, representing a 10.8 percent increase. Net cash provided by operating activities for the six months ended June 30, 2012, was $482.9 million compared with $584.7 million for the same period in 2011.

The consolidated operating results for the six months ended June 30, 2012, reflect a 3.1 percent increase in total admissions and a 6.9 percent increase in total adjusted admissions compared with the same period in 2011. On a same-store basis, admissions decreased 2.2 percent while adjusted admissions increased 1.5 percent compared with the same period in 2011. On a same-store basis, net operating revenues increased 4.4 percent compared with the same period in 2011.

Commenting on the results, Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems, Inc., said, "Community Health Systems delivered a solid financial and operating performance for the second quarter of 2012. Revenues were up 8.1 percent on a consolidated basis and 4.5 percent on a same-store basis compared with the second quarter of last year. We are especially pleased with our volume trend improvement, with moderation in the rate of decline in admissions and an increase in adjusted admissions on a same-store basis, compared with a year ago. These results reflect execution of our key strategies for success - implementing best practice standards, making selective acquisitions, improving operational efficiencies and recruiting physicians. In addition, our focus on disciplined expense management across our hospital network has yielded positive results in a challenging environment."

On July 2, 2012, the Company announced that subsidiaries have acquired substantially all of the assets of Memorial Health Systems in York, Pennsylvania. The acquisition was effective July 1, 2012. Memorial Health Systems includes 100-bed Memorial Hospital, the Surgical Center of York and other outpatient and ancillary services.

"We have continued to extend our market reach in 2012 through selective acquisitions," added Smith. "Our strategy has always been focused on identifying select hospital facilities in strategic markets that meet our operating profile and provide significant opportunity for improvement. We will continue to pursue our acquisition strategy and leverage our proven track record of successful hospital acquisitions in a consolidating, but currently highly-fragmented industry.

"We further believe that our prospects for continued growth are very favorable in light of the recent decision surrounding healthcare reform. We are well positioned to leverage these industry dynamics as the leading operator of hospitals in non-urban and mid-size markets throughout the country. We are pleased with our progress to date and look forward to the opportunities that lie ahead in 2012 and beyond," Smith concluded.

On July 3, 2012, the Company's wholly-owned subsidiary, CHS/Community Health Systems, Inc. ("CHS"), commenced a cash tender offer for any and all of its approximately $934 million outstanding principal amount of its 8⅞% Senior Notes due 2015. The total consideration payable for each $1,000 principal amount of the 8⅞% Senior Notes validly tendered and not validly withdrawn prior to the consent expiration date of July 17, 2012, is $1,026, which includes a consent payment of $20 per $1,000 principal amount of notes. On July 18, 2012, CHS purchased approximately $639.7 million of the 8⅞% Senior Notes pursuant to the cash tender offer and notified holders of its intent to redeem all such remaining 8⅞% Senior Notes on August 17, 2012. The total consideration payable for each $1,000 principal amount of the 8⅞% Senior Notes validly tendered and not validly withdrawn after July 17, 2012, is $1,006 for each $1,000 principal amount of notes. The tender offer is scheduled to expire on August 1, 2012, unless extended or earlier terminated.

In addition, on July 18, 2012, CHS completed an offering to issue and sell $1.2 billion of 7⅛% Senior Notes due 2020. The Company used the proceeds of the offering to purchase $639.7 million of the 8⅞% Senior Notes that were validly tendered and not validly withdrawn in the cash tender offer commenced on July 3, 2012, to pay for consents delivered in connection therewith and to pay related fees and expenses. The Company intends to use remaining proceeds to redeem all remaining 8⅞% Senior Notes and, to the extent any proceeds remain, for general corporate purposes.