Shares of Community Health Systems fell as much as 5% Tuesday morning after the company previewed fourth-quarter results that fell below analyst expectations.
The chain, now the largest in the country by hospital count after it acquired Health Management Associates last January, detailed a number of one-time items that impacted its results.
Those factors distorted an operating performance that otherwise did not offer any big surprises, analysts contended.
Community expects to report fourth quarter net operating revenue of $4.9 billion compared with $3.2 billion in revenue for the same period in 2013. Income from continuing operations—excluding expenses related to the HMA merger—increased to $1.23 per share compared with $0.55 per share in the prior-year period.
Winter ailments such as the flu kept patients coming to its hospitals in the fourth quarter, with same-facility admissions decreasing just 0.2% year over year, and increasing 2.7% when adjusted for outpatient activity.
Yet Community's earnings guidance to investors had included some special items that did not materialize. For instance, it will now book a $36 million payment from the CMS' rural floor settlement as an adjustment to the HMA purchase price rather than a revenue gain. In addition, it is facing a delay in receiving a $14 million settlement related to the BP oil spill. Incentive payments for upgrading its health information technology also came in below expectations.
The company's results follow more upbeat earnings previews from peers HCA and Tenet Healthcare Corp. earlier this month. HCA, the largest chain by revenue, said its 2014 adjusted earnings before interest, taxes, depreciation and amortization will be higher than originally forecast. An increase in patient volume and a one-time revenue adjustment account for the improvement.
Tenet similarly cited higher volume and a better payer mix for allowing it to meet the high end of its financial guidance for 2014 and is offering a positive outlook for this year.
Community expects to report fourth quarter earnings Feb. 19.
Follow Beth Kutscher on Twitter: @MHbkutscher
