Quorum sees net loss shrink to $39M in Q1

Quorum Health's revenue declined year over year in the first quarter of 2019, and the Brentwood, Tenn.-based company ended the first quarter with a net loss.

The 26-hospital system, a spinoff of Franklin, Tenn.-based Community Health Systems, said operating revenues declined 9 percent year over year to $442.8 million in the first quarter of 2019. The decline was partially attributable to Quorum operating fewer hospitals in the first quarter of 2019 than in the same period a year earlier.

Quorum said same-hospital admissions dropped 7.4 percent year over year in the first quarter of this year due to several factors, including a decline in flu cases and the elimination of certain unprofitable service lines. When adjusted for outpatient activity, admissions were down 4.9 percent year over year.

After factoring in expenses and one-time charges, Quorum ended the first quarter of 2019 with a net loss of $39 million, compared to a loss of $99 million in the same period of the year prior.

Quorum is focused on refining its hospital portfolio to improve financial performance. Since the company began selling off hospitals in 2016, it has received $99.9 million in net proceeds from divestitures. Quorum used the bulk of those funds — $97.9 million — to pay down its debt.

"We perform an ongoing strategic review of our hospitals based upon an analysis of financial performance, current competitive conditions, market demographic and economic trends and capital allocation requirements," Quorum said in its filing with the Securities and Exchange Commission. "As part of this strategy, we engage in initiatives to divest or close underperforming hospitals and outpatient service facilities which, in turn, will allow us to reduce our corporate indebtedness and refine our hospital portfolio to become a sustainable group of hospitals and outpatient service facilities with higher operating margins."

Quorum sold Scenic Mountain Medical Center in Big Spring, Texas, in April, and the company intends to divest additional hospitals. As a result of increased marketing efforts in the first quarter of this year, Quorum said it has seen an uptick in interest from potential hospital buyers. The company's divestiture proceeds target for 2019 is $125 million to $175 million.

In addition to the hospital divestitures, Quorum is focused on improving revenue cycle performance. The company announced May 8 that it partnered with R1 RCM for end-to-end revenue cycle services at its hospitals and outpatient centers.

"During the first quarter, our team continued to execute on several key strategic goals," Quorum Health President and CEO Robert Fish said in an earnings release. "Our continued focus on cost management and the revenue cycle improvements from our new R1 partnership give me confidence that we will meet or exceed our previously stated 2019 goals."

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