(Updated on May 2)
Community Health Systems managed to narrow its operating loss in the first quarter of 2018, and revenue was up slightly on a same-hospital basis.
The Franklin, Tenn.-based hospital chain on Tuesday afternoon reported revenue of about $3.7 billion in the first quarter, down nearly 18% from $4.5 billion in the first quarter of 2017. That's due in part to having 28 fewer hospitals in the first quarter of 2018. Viewed on a same-hospital basis, revenue increased 1.6% during that period.
CHS' stock price was up more than 25% on Wednesday following the company's earnings release.
Adjusted earnings before interest, taxes, depreciation and amortization also took a hit. That metric was down 16.5% to $440 million in the quarter.
Despite the lower revenue and earnings, CHS managed to narrow its loss to $25 million, down from a $199 million loss at the same time in 2017.
The health system's net cash from operating activities dried up to the tune of about 56%, ending at $106 million. Expenses dropped 21% in the quarter.
CHS operated 127 hospitals in the first quarter of 2018, compared with 155 hospitals in the first quarter of 2017. On a same-hospital basis, admissions declined 2.4% between the first quarter of 2018 and the same period in 2017. Patient days declined 1.3% on a same-hospital basis, and average length of stay was unchanged.
"We were not satisfied with our overall volume performance this quarter," Tim Hingtgen, CHS' chief operating officer, said on an earnings call Wednesday morning.
Hingtgen added that the flu, while driving improved admissions at HCA, did not improve CHS' volumes during the quarter.
"It was a relatively non-event in terms of our performance," he said.
CHS discontinued some of its lower margin service lines such as skilled nursing and pediatrics in some markets, which Hingtgen said dampened first quarter admissions and surgical volumes. Over time, however, he said CHS believes those cuts will benefit its margins.
CHS' long-term debt was $13.86 billion as of March 31, down slightly from $13.88 billion as of the end of 2017. The company has worked aggressively to divest hospitals to bring down its debt load. CHS plans to generate $1.3 billion from hospital divestitures this year, including $374 million in the second quarter.
CHS announced it plans to extend offers to its bond holders to exchange up to about $1.9 billion in 9.9% bonds due 2023 for any and all of its $1.9 billion outstanding 8% bonds due 2019. It will extend the same offer for $1.2 billion of its 8.1% bonds due 2024 in exchange for any and all of its $1.2 billion outstanding 7.1% bonds due 2020.
Once those potential exchanges are complete, the company may seek to extend or refinance its term loan G, which is due in 2019, Tom Aaron, CHS' chief financial officer, said on Wednesday's call.
CHS said Tuesday it has signed definitive agreements to sell six hospitals, and it completed one divestiture on April 1 with the sale of Bayfront Health Dade City to Adventist Health System. Those along with other potential deals CHS is exploring had $2 billion in combined operating revenue in 2017, the company said.
The news comes as CHS' investor-owned peers have released mostly positive first quarter results. Both Tenet Healthcare Corp. and HCA Healthcare reported noteworthy increases in net income and earnings.