CHS sheds 18 hospitals, swings to $511M profit

Franklin, Tenn.-based Community Health Systems, which operates 85 hospitals in 16 states, saw revenues decline in 2020 but ended the period in the black. 

In financial documents released Feb. 17, CHS said revenues and admissions dropped last year. Admissions decreased 15.7 percent year over year and operating revenues dipped 10.8 percent. On a same-hospital basis, admissions were down 8 percent compared to 2019.

The decline in patient volume and revenues was attributable to the COVID-19 pandemic. While volumes for 2021 have not returned to pre-pandemic levels, CHS said they have improved from their lows in March and April of 2020. On a same-hospital basis, operating revenues were up 4.5 percent year over year in the fourth quarter of 2020. 

CHS said the pandemic also caused certain expenses, including those related to supply chain, to increase. However, CHS' total operating costs and expenses were down in 2020 compared to a year earlier. 

CHS ended the fourth quarter of last year with net income of $311 million on revenues of $3.1 billion, compared to a net loss of $373 million on revenues of $3.3 billion in the same period a year earlier. Looking at full-year 2020 results, the company posted net income of $511 million on revenues of $11.8 billion, compared to a net loss of $675 million on revenues of $13.2 billion in 2019. 

"Throughout the COVID-19 pandemic, I have been incredibly proud of everyone across our entire organization. Our caregivers and medical staffs have ensured that their communities have access to essential, high-quality health services," said CHS CEO Tim Hingtgen in an earnings release. "Our management teams have adapted to constantly changing dynamics and effectively executed our cost management efforts. As a result, we ended the year with strong financial results, momentum around our key strategic initiatives, and optimism about the future of our company."

During 2020, CHS received $705 million in payments through the provider relief fund established under the Coronavirus, Aid, Relief and Economic Security Act and various state and local programs. The company also received $1.2 billion in accelerated Medicare payments in April, and, as of Dec. 31, about $77 million had been repaid to CMS or assumed by buyers of hospitals the company divested, CHS said. 

The company embarked on a hospital divestiture plan in 2017 and has almost completed its sell-off spree. In 2020, the company sold 13 hospitals and closed one other. CHS has divested four hospitals this year and entered into a definitive agreement to sell one additional hospital. 

Though the company concluded its portfolio rationalization program at the end of last year, CHS said it continues to receive interest from potential acquirers of certain hospitals and may consider selling more hospitals in the future. 

CHS carried nearly $13.9 billion in long-term debt when it announced its divestiture plan at the end of 2017. The company's long-term debt totaled $12.1 billion as of Dec. 31. 

Shares of CHS traded between $9 and $9.27 on Feb. 17 and were up 0.4 percent from the day prior at market close. 

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