Editor's note: This story has been updated with quotes and figures shared during Thursday morning's earnings call.
The new year is "off to a good start," for Community Health Systems, which reported a somewhat narrowed $41 million net loss (-$0.32 per diluted share) and a solid uptick in operating revenues for its first quarter.
The 71-hospital for-profit system had logged a $51 million net loss during the same period last year, which, at the time, CHS attributed to a bump in Medicare Advantage patient volume.
After excluding adjustments related to impairment losses and business transformation costs, the company landed at a net loss of $0.14 per share, which was about in line with consensus estimates.
However, CHS shared a rosier picture when it came to operating revenues. Its three-month net of $3.14 billion beat estimates by about $50 million and was a 1% increase over last year.
Same-store revenues, meanwhile, rose 5.7% in reflection of the company’s numerous sell-offs during the 2023 calendar year.
"At CHS, 2024 is off to a good start, CEO Tim Hingtgen told investors at the top of Thursday's investor call.
CHS said the net operating revenues came alongside a 2.3% decline in admissions and a 4% drop in adjusted admissions compared to the prior year. Those same metrics on a same-store basis rose 3.8% and 1.9%.
Same-store net revenue per adjusted admission increased by 3.7% due to improved rates, incremental state Medicaid reimbursement and strong inpatient growth, Chief Financial Officer Kevin Hammons told investors Thursday.
"Although volume improvements continue to be led by increases in Medicare Advantage business, we did see a slightly more balanced growth profile in the first quarter of 2024 with improvements in commercial business as well,” he said of the volume and revenue trends.
Same-store volume growth for the first quarter was stronger within CHS' inpatient business, rather than its outpatient side. Here, Hammons credited the system's work on managing length of stay and opening up capacity.
On costs, CHS saw slower salaries, wages and benefits than it had projected, though executives said they still expect to face pressure over the course of the year.
Medical specialist fees, which burned many health systems over the past year or so, were held flat compared to the first quarter of 2023 and declined slightly from the end of 2024. Executives pointed to the company's work insourcing physicians in hospital-based specialties, and highlighted the 29 emergency departments and two anesthesia locations it's brought in-house in recent months.
Investors were quick to ask about CHS' cash flows and accounts receivable, which executives had said had been gummed up during the company's last earnings call.
The system reported $96 million of cash flows from operations for the quarter, up from the prior year's $5 million and primarily came from a combination of improved earnings and a release of the preceding quarter's buildup. Though Hammons went on to acknowledge that Q1 cash flow is "typically our lowest" due to resetting patient copays and deductibles, he also stressed that CHS saw no material impact on its cash flow from the Change Healthcare breach.
Franklin, Tennessee-based CHS spans 15 states, about 12,000 acute care hospital beds and more than 1,000 sites of care. Across 2023, it reported $12.5 billion in total net operating revenues, but a $0.41 per share net loss after excluding net business sale gains and other adjusting items amid several disappointing quarters for its investors.
Though CHS said it hasn’t yet completed any divestitures in the 2024 calendar year, last week the company announced plans to sell off a 351-bed hospital in Cleveland, Tennessee, and its related businesses to Hamilton Health Care System for $160 million in cash.
CHS sold off eight other hospitals and the majority interest in a ninth across 2023 and hinted in February that more sales could bring a billion or more in proceeds to the company.
CHS reaffirmed its annual earnings guidance for the coming year and saw its shares rise in Wednesday night’s after-hours trading.