CHS Predicts Large Declines in Profitability, Admissions for FY 2013

Franklin, Tenn.-based Community Health Systems has predicted its revenue, profit and admissions will all be down significantly for its 2013 fiscal year.

CHSlogoCHS previewed year-end operating results yesterday. The for-profit hospital chain expects full-year adjusted EBITDA, a measure of profitability, will hover between $1.83 billion and $1.85 billion. This would be at least 6.5 percent lower than 2012's adjusted EBITDA of $1.98 billion. CHS' net revenue is expected to total about $13 billion, a tick lower than 2012.

The sizable declines run in lockstep with CHS' operating figures. The company expects a 6.7 percent decrease in full-year admissions and a 4 percent drop in full-year adjusted admissions compared with 2012. Same-hospital admissions and adjusted admissions are projected to be even worse: a decline of 7.2 percent and 4.7 percent, respectively. CHS attributed the sluggish volumes, particularly in the fourth quarter, to softer flu rates and lower readmissions.

CHS released a preview of its 2013 results as the company prepares to complete its acquisition of Naples, Fla.-based Health Management Associates. Health Management shareholders will vote on the pending deal tomorrow.

CHS did not factor in merger-related expenses to its preview, nor did it factor the $98 million reserve set aside to cover a settlement with the Department of Justice. In the third quarter, the company announced the DOJ is investigating CHS' Medicare short-stay hospital admissions at the company's 326-bed Laredo (Texas) Medical Center.

CHS also announced more than $4 billion in new financing for the Health Management acquisition. The chain believes its net revenue this year could top $21 billion, and adjusted EBITDA could reach $3.2 billion, if and when the deal is closed.

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