Community Health Systems leaders say they're intently focused on reopening operations that were shut down due to the COVID-19 pandemic, including resuming some elective procedures this week.
More than half of the 17 states in which the for-profit hospital chain operates in have lifted or modified their stay-at-home orders, including four of its highest revenue generating states: Indiana, Texas, Alabama and Tennessee. Franklin, Tenn.-based CHS will resume some elective procedures in all but two states next week, with every state back up in May, leaders said on an earnings call Wednesday.
"We are encouraged by what we see in the first week in terms of recovery," CHS' CEO, Wayne Smith, said on the call.
Admissions fell 5.2% on a same-store basis in the first quarter, with the damage from COVID-19 striking in the last two weeks of March. But much like HCA reported last week, the real damage to volumes has come in April. For CHS, that includes a 45% drop in adjusted admissions, a 70% drop in surgeries and a 45% drop in emergency room visits, Kevin Hammons, CHS' chief financial officer, said on the call.
"Obviously our second quarter will be materially impacted by the COVID-19 pandemic and the uncertainties around the timing of recovery and other factors as we have discussed," he said.
On the flipside, CHS has hosted more than 20,000 telehealth visits per week during the pandemic, compared with fewer than 100 per month before COVID-19, Tim Hingtgen, the company's chief operating officer, said on the call.
"This exponential growth in telehealth visits has been astounding," he said.
CHS hospitals are dedicating staff members to COVID-19 or non-COVID-19 areas, and patients are screened for coronavirus symptoms, said Lynn Simon, CHS' chief medical officer. CHS has tested about 25,000 patients for COVID-19 and has treated more than 2,000 COVID-19 patients in its hospitals, emergency departments and outpatient settings, she said.
CHS has added concierge support in its facilities to guide patients and outpatient access points for services that previously would have been inpatient to prevent COVID-19 exposure. Some clinics have expanded their hours to ensure delayed cases can be accommodated.
The company's revenue fell 10.4% in the first quarter year-over-year to $3 billion. Expenses declined 8.5% year-over-year to $2.9 billion.
CHS said its net income attributable to shareholders was $18 million in the quarter, compared with a $118 million net loss in the prior-year period when accounting for "adjusting items." The biggest such item was a $240 million positive bump from a tax valuation change that resulted from an increase to the company's deductible interest expense in 2019 and 2020 under the Coronavirus Aid, Relief and Economic Security Act. CHS' peers have so far reported lower profit in the first quarter of 2020. Universal Health Services' net income fell 39% in the quarter, and HCA Healthcare's dropped 44%.
Excluding adjusting items, however, CHS reported a steeper year-over-year net loss of $1.59 per diluted share, compared with a $0.53 loss in the prior-year period. The company's adjusted earnings before interest, taxes, depreciation and amortization fell 21% in the first quarter year-over-year to $309 million.
CHS received a $245 million grant from the $100 billion CARES Act Fund that does not need to be repaid. It also received about $1.2 billion in accelerated Medicare payments, which must be fully repaid within 12 months or be subject to a high interest rate. Neither of those payments were recognized in the first quarter results.
On Jan. 1, CHS completed the divestiture of three hospitals, and since then has entered definitive agreements to sell a total of seven hospitals, for which the company said it expects to receive $400 million. Those deals complete CHS' formal divestiture program, first announced in 2017, Hammons said.
