CYH - Earnings call transcript Q2 2018 | Community Health Systems, Inc.

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Operator

Good morning. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Community Health Systems 2018 Q2 quarterly conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [indiscernible]. the to turn now will call Mr. over I Investor Comeaux, Vice of President Ross Relations.

your may conference. You begin

Ross Comeaux

Mike. morning you quarter Thank Good conference Systems Community call. second Health and welcome to

the I Before forward-looking the forward-looking statements facts. solely statements, that call would to following Factors statements certain headings disclosure all in are known not and Annual unknown like which such may we contain subject statement. call, as These to do XX-K begin including a historically in Risk to conference This the Form filed current number read of on Commission. relate Securities to reports and with our furnished are Report risks, other Exchange described and or or

any to and in not calculations a forward-looking We EBITDA do As we any Yesterday our update discussion. financial statements statements definitions significantly consequence, a results in may today's intend actual these release with issued differ and afternoon, and forward-looking of press adjusted statements. EPS. adjusted expressed from of those

For our those slide posted listening been of broadcast has presentation a live to conference the call, this supplemental of website. to you

We to over said, charges, as will government the also Wayne impairment related the discontinued and benefits and the like other Smith, will earnings Executive and/or during slides restructuring to CVR and With expenses legal divestitures, to of operations and Smith? extinguishment from termination related expense sale related gains adjustments expenses. well the liability HMA Chief employee to legal legal incurred Officer. discuss would Chairman other or loss turn related businesses, to early expenses losses expense, Mr. related that agreement exclude of fair from calculations All call as costs, refer value Mr. debt, those settlements to the I to expenses proceedings call. to we this on and related

Wayne Smith

President and Lynn and and Executive Operations and call welcome Aaron, Tom is Chief second President our our Good to Financial Officer. our on of the Operating quarter Vice Medical Ross. Dr. today Officer With Tim Simon, call. Thank Clinical us Officer, Hingtgen, our Chief you President morning conference and Chief

second call turn Then with will over on as Tom we performance call and ongoing provide company that our progress with who to second our results. will operations quarter. I during by discuss we Tim, opportunities many Let's some made the details comments today more encouraged the the well additional our start pleased the in color on are and financial the very as we Overall, quarter and have. have will are the quarter the

drove progress multiple During manage on expense core our pushed corporate our and out the refinancing quarter, we management our is operational on transactions, the from helping made continue and to maturities program operational performance costs. which divestiture improvements, us focus analytics years debt

for see As of I terms There improvement. in continued highlighting of are opportunities still the quarter. said, a worth number we positives second

performance. growth adjusted same-store Our nearly surgery admission year-over-year driven improved by flat was

this X.X% EBITDA Down million up basis up to On net the in adjusted year-over-year. of performance admission quarter, revenue adding first net our at margin EBITDA and during in the XX.X% adjusted line performance up the the our per was was pricing side, XXX adjusted $XXX was with P&L, came X.X%. quarter during second same-store revenue points

call. incremental corporate core a and Looking in and growth operational same-store of various of Tim introduced initiatives from development, results, later in forward. these discuss will are executed were moving hospital with detail at we second quarter have the stages programs expect leadership which Tim the number pleased in teams we that growth, our the more and

with our have core on our of position, us and resources on sustainable markets shift higher know, to same-store in better potential profitability. also networks growth working we and and you focus allow more growth market strategies, been divestitures, improved to As to hospitals addition which

expect EBITDA margin. our to benefit volumes incremental and program divestiture will our current We

divestiture that call approximately current of billion $X hospitals XXXX. for accounted plans in in for Our full net year revenue

billion approximately Today, capital. we include plan. our net the which not gross these proceeds of the from expect retention of of $X.X to does We divestiture have divestitures divestiture hospitals generate working completed seven

current to the expect majority plan We close end XXXX. of our of by

As our to continue we move strengthen forward, and we optimize will portfolio.

component like for Improvement minute. would both track quality safety highest care One our for within care level Now safety patients of a care a the I our that strategy. quality our and of remain of remains committed We quality investments and through healthcare the to serious deliver key we and is talk of resources the metric our continuum system. communities to to patients throughout events. about

event safety HMA serious reported historically have hospitals for reductions and our legacy We separately.

patient HMA legacy medication serious hospitals continue and safety can enhanced error from three our the January as includes in initiatives advance safety of now in incidences which is HMA seen we have June administration lines, medication XX% safety results Meanwhile, our be now over Along additionally with our to hospitals. on adoption program fewer years XX.X%. processes, combined we HMA and our events consolidated our such reduction focus With legacy to reduction which into XXXX. now the these

Public patient our believe of In which Harvard on safe School of study an and collaboration the completed School supports safety we and context industry Business care. addition, with inform research we of further have Health that the the managerial on safety, Harvard culture will patient phase affiliate

anticipated call over $X.X expected that, now I our the anticipated turn for be to billion. are will to the Net In $XX.X following. terms adjusted our to includes guidance, revenues $XX.X be With EBITDA billion billion billion. to Tim. of operating to divesture $X.XX timing guidance Adjusted is

Tim Hingtgen

Thank you Wayne.

volumes, and improved sequentially. surgery adjusted admissions, all Our admissions

that growth have been core are and designed and initiatives programs drive facilities. improved implementing We revenue our to volume across

volume So markets. we were to performance in of strong many see pleased our

work we momentum expect our and initiatives, drive growth. teams leverage to fully all our As same-store of to strategic further additional

performance admissions key intent, portfolio. metrics saw stronger of We and believe both and all territory. our strategy signed agreement underlying this reflects surgeries rationalization or potential portfolio positive future letters finishing stronger in adjusted planned our divestitures development we core of across the favorably and on Excluding with statistics under definitive the volume

We also by in of basis net the was good facilities. the markets, physician quarter from lower were Overall, and same-store our hospitals focus Pricing in acuity during been on the portfolio specialties growth margin typically successful driven services also this minimal same-store X.X%. revenue lines quarter and large in dilutive selected has broader affiliated closure per with up delivered advancing higher our X.X% had into performance second performance that on selected intensity performance service year-to-date quarter. the admission adjusted part net pricing volume recruitment across surgical a and and of in some revenue

For we all the case payor categories. across index improved posted quarter, mix

all key have company's strategic and operational past. reports many initiatives of include excellence, across we are We in is quality, on making supported imperatives, care and them and connected by imperative safety strategic our which share Each specific the competitive progress of position. you progress with

investments Our to increase continuous services. growth and points include highest initiatives access to priority enable

are capital facilities. and targeted include Our expanding our service expanding and highly enhancing investments in hospital outpatient lines core and access, improving market

one two second quarter, in location For the a new have and our departments, emergency opened market Tucson Petersburg, in we instance, Virginia. first freestanding since

XXXX ASCs imaging includes walk-in EDs, focused physician development, care through Our towards and remains locations We and centers, active development primary well which service centers staff on for programs, intently pipeline each structured our line urgent engagement XXXX. care and physician and outreach additional supporting opening both more planned recruitment with targeted as growth. as development geared specialty freestanding medical remain in for

very been practice have results strong XX% in recruitment physician increase physicians commencing Our with nearly year-over-year.

centers, to call continuum convenient systems, digital channels as efforts We with in through transfer and we help it proprietary programs their online help aligned facilitate scheduling This services patients are and of encompasses making centralized care. with our is for practice care across care work closely progress like to navigation patient our and Connected connected connect initiatives centers, consumer connected to physician the patients services our initiatives. navigate appropriate significant providers care. engagement call or

drive We improving which and are very ultimately access on can volume. focused patient incremental convenience,

transfer consumer have two-thirds our that have online clinic greater centralized implemented increase scheduling quarter. centers departments than development. center services expanded quarter prior describing capabilities in of centers providers. their and emergency in now both within began patient of in have the from now of providers XXXX X,XXX X% our our particular We further markets internally versus Practices employed for year we hospitals recent and to for inbound meet scheduling centralized a our scheduling experienced for been nonaffiliated scheduling, physician fully have phone third manages provide operated on have hospitals of referrals the affiliated insourcing you And XXXX. expectations to to most of One online transfer appointments We region. our the initiative program primary select almost and quarter is access calls and that providers. care second visits the nearly the our This that we to in convenient

initiative now expectations. that we we transfer that results to been analyze access for from supported measure have year-over-year proceeding the data coordinated utilize that will markets, seeing strategy of of into is same-store markets. our of of able our key we expanded transfer expected. that schedule many benefit service markets and We and is about our be our Implementation program, this reliable markets feedback which seven progress. center, and plan this we internal are by our Once targeted ahead have activities the Based fully XX% have our on and

management. expense to Turning

leaders line year-over-year During continued increases to on the efficiency improved rate SWB our wage even X%. the quarter, with of approximately hospital drive

labor analytics and labor appropriately We real-time tools data to continue provide volumes. to our leverage utilization to adjust to safely

out supplies and operating to are drive other tools intended also savings have savings analytical incremental using lines. on enhanced companywide coordinated the initiatives rolling expense expense been and We

hospital and are most many medical resilience results. other well our staff core had perseverance meet This commitment, coming working made what key the teams. the board travel find year, and to encouraging that to it leaders local desired and I across progress of more our the and seeing generally team I as we market management producing open has exchange are of direct our members. Finally, and and markets greater leadership members local priority so validated our as to investments initiatives is of from a in with our This

our progress opportunities As cultivate to call we look organization, more even work over forward. and the forward to our me let more turn continue pursue collaborative With to moving we together that, across will relationships Tom. in

Tom Aaron

Tim. you Thank

discuss second a I quarter quarter-over-quarter the basis. on will Now

this On This increase call was in As admissions. increased on a comprised XXXX net basis, reminder, for note On following. decrease basis revenues the X.X%. in net versus X.X% comparative we a Ross the discussed revenues XXXX mentioned X.X% admissions and earlier. per second a a quarter exclude calculations items same-store of quarter, a adjusted adjusted

comments Tim's quarter. cycle our to our addition in cash service collections technologies admissions, processes of initiative adjusted and about per our revenue centers, point transfer the improved the and during revenue line improved net Regarding and service reduced denials

We increased admissions X.X%. inpatient our decline also

X.X% ER net and of from benefited Our a quarter, our and surgeries hospitals improved year-over-year decreased revenue of number performance. portfolio better rates Similar were solid we visits divestitures. admission per a adjusted acuity, a delivered Medicare stronger to flat. basis, On we following last

was Our revenues the provision revenue our XX% of revenues. net outpatient after for uncollectible

During XX increased Advantage, revenue Consolidated quarter consolidated shows the consolidated Medicare basis basis the XX XXXX of includes for quarter points, same-store consolidated XXX and Medicare was a operating approximately points, XX points, points. On our basis was care net consolidated points. basis mix XX basis quarter, basis same-store compared XXXX our of which points, Medicaid basis up was down other, to of decreased net basis revenue payor basis XX basis, XXX managed and second points, second XXX basis points same-store up XXX outpatient same-store our down revenue points. Fee-for-Service same-store decreased increased points, and XX down self-pay revenue increased second XX%

Medicare Looking adjusted and managed were class, admissions care, per Medicare and up. at all our Medicaid down, payor while volumes were Fee-for-Service Advantage our our volumes self-pay

of XX.X% a and revenue consolidated for uncollectible the discounts XX% down Same-store increased uncollectible three net XX.X% XXX XX months to has During of revenue comparative sum the care, from on charity self-pay adjusted quarter, from increase. periods basis basis XX.X%. point points is revenue, to second

revenues medical as increase primarily increased decrease part specialist systems points. a by cash lower fees, operating revenues and Supplies was by net XX For XX lower same pharmaceutical expense the same Other costs. percent flow. same-store of operating primarily and higher basis our was driven basis management same store wage Switching points. services as The percent benefits for of expense by expenses points, of driven basis revenues for information decreased XX salaries items, net as operating a and stores certain stores percent in increased for improved driven a to The expense. our approximately FTE inflation. operating our net purchase our

to provided year-to-date flows half from by $XXX million. were of $XX cash operations cash during of Our the XXXX. million This flow operations first compares

revenue XXXX half receivable higher growth the were revenue while negatively growth In from June in patient change $XX terms receivable are few of negative to XX, the million contributed last strong $XX accelerated of first accounts of XXXX, which last paid flow cash from cash approximately net year to receivables were of year In with flow interest Prior half there net X.X%. interest with due the that up by from from approximately $XXX benefited items patient impacted notes. lower year. was decrease exchange noting. the to The first same-store year-over-year same-store decrease worth payments the associated million collections during million

While it's first is for XXXX XXXX. of the our XXXX, XXXX below the first and of above receivables from half patient cash half XXXX,

in We due for half $XX than improvement flow year to million prior reports from largely collections taxes distributions were to expect And cost second finally flow payable and accounts provider higher cash of accounts approximately our from receivable. cash the paid. XXXX

flow cash from expect year. We the our half second the in to operations improve of

CapEx. to Turning

revenue. CapEx year-to-date million, of $XXX X.X% or Our net was

During first revenue. $XXX XXXX, was or the of our CapEx X.X% million, net of half

high cardiology, as invest line areas. are and in around other our such service high We access additional as our towards continuing markets, acuity to orthopedics outs opportunities growth capital build points well

we the $XXX sheet. million long-term end the of At the million. we debt quarter, the cash of $XX.XX to end balance second of billion debt of long-term $XX with had quarter, current had Moving balance sheet. maturities approximately on of of approximately At second

plan forward. our reduce to expect total further our debt We divestiture moving

several our pending has relates matters, no quarters. material it been for to legal As there HMA change

by revalue liabilities to estimated on quarterly a the continue We CVRs covered the basis.

will legal continues be the reflect to CVR Our there that fees, current holders. to estimate payment probable includes no

notes ABS X, we of facility $X million and transferred credit replaced billion to in June existing increase XXXX first proceeds stub $XXX on lien In manageable during our structure retain billion terminated due secured junior $XXX with our XXXX, loan of leverage senior and our secured junior terms our maturities. securitization. asset-backed capacity April an refinancing capital in extension $X.X to On sale could issued to XXXX previously unsecured million. in and we ability debt billion net the for On number ABL XX, we it of ABL the the the notes credit million XX, $XXX resulted March revolver $X.X modify $XXX priority our we asset based $X.XX due the On permit asset to based leverage, to XXXX, amended maturing that of that balance agreement reduced a the grid a new replace completed of of exchange outstanding million. leaving XXXX, XXXX, billion of debt transactions to

exchange well We of of a due billion repay of value. G as as due the $XXX On X, proceeds senior discount due and $X.XXX secured off in transacted XXXX to and $X.XXX we Term junior $XXX manageable senior unsecured notes $XX and of unsecured XXXX offering fees for net of XXXX billion million leaving stub a XXXX, due face of used also million notes XXXX, issued at Loan the senior issued notes expenses. that July notes secured priority $X.XXX million related

is focused retained incremental capacity our of as lien liquidity. our maintain a extremely refinancing have entire operational driving secured senior $XXX organization comprehensive walked And debt result extended of improvements. substantial on through and we million earlier, Tim As maturities, these activities, first

have our we full-year refinancing which the guidance, includes from impact XXXX, our recent now updated For transactions.

flat. includes adjusted guidance growth to to Our admission the be anticipated following. is Same-store down X%

XXXX, CapEx Adjusted expected For from to of to the for doubtful expected includes billion be accounts $XXX are to billion, $XXX to to divestitures. anticipated timing to less be at billion forecasted is revenue $XXX $XX.X $X.XX Cash is net for million. million. operating to be operations which million is billion. anticipated $X.X million $XX.X adjustment the flow $XXX EBITDA provision

expect to anticipated close XXX year. million for expense $XX share operations negative continuing revenue on zero We is diluted to from of to the to based average weighted million. compared to incentives be be expected net outstanding be is tech high XXX Interest to X.XX to Income million per XXXX. X.X% negative to $X.XX in $X.XX of shares

want models. to talk third over update the to about you the Before I Wayne, quarter call your XXXX I of briefly as turn

a typically standpoint. of from quarter EBITDA As and year is a third reminder, Wayne? our revenue lowest our the quarter

Wayne Smith

Thanks Tom. questions. discussions it Mike, we and for open to are ready up

limit you can one question, as will on have time anytime, But to available talk. we you us to everyone code the At of at so reach are get can area call. We several always, to XXX-XXX-XXXX.

Operator

[Operator Instructions].

comes Suisse. question first from Your from Credit A. J. Rice

A. J. Rice

everybody. Hi, Thanks.

maybe Just big a picture question.

close tell try focus might other last there Or able do time on just and maturities that's a on that time to to current structure you you then being to as again, more the those to you does the XXXX and the you through this debt trends operating you of reworking need and improving, recent up XXXX on XXXX XXXX to had the capital have Is So you the bounce call exchange probably the the things the are few them? from through maturities but basis? for be experience and worked you still balance operations months, you interim have now going offers get maturities rework the that and and capital that due the big sustainable in get bolus to describe that structure. stabilized sheet when

Wayne Smith

of or is just AJ, strategy debt said, performance. is as first threefold thing you terms two our in So,

are that at get doing to of back right continue believe we track we refinance, the the to terms to improve in we now, go if we we hopefully performance, need lower opportunity to rate. As on a which something will market

our have divestitures. also We

take as debt advantage we performance. I that? our if kind you continually our want for of along improve improve divestitures opportunities to cap look thing of will We to know, our we we can do but of where to don't add down our is in the move biggest can way. some paying We out, the debt Tom,

Tom Aaron

No.

have, think revolver up, I the and maturities cash flow. coming manageable, given our right. cash stubs, think runway, AJ, the we ABL, are it's very We the our anticipated the

our the first the XXXXs up. we are that coming position. are unsecureds are to first. So liquidity And Those the like going be

So out. that's laid

going be We on volume, are XXXX work the are expense we all will on we shown to as financial sooner not our improve very measures, have And Tim mentioned, divestitures waiting we focused that the on operations. until flows to Also, as anticipating those, operations. the management. performance better, cash improve and we are and

Operator

Your Ralph next from from comes question Citi. Giacobbe

Ralph Giacobbe

Good Thanks. morning.

optics from thought given bit, Thanks. the because hurricane a on significantly little guidance. have sort of the how saw just and improvement can hoping Q&A, quarter? versus back you just lowest opened of on guidance Just the you comments the the you And comment about the asset EBITDA, then we the better? been in of third Could guidance, the the XQ, were last the revenue the split upside just talked the I up simply much or of would sales would you wanted just third quarter comp out timing the the go just quarter, to or for before organic that revenue us even the just help timing, related have just EBITDA to impact, last maybe out flesh year, and made just just obviously

Tom Aaron

$XXX and revenue first low so to primarily question. raised by related Yes. of divestitures. the That's the On guidance, the our million. high guidance we of end timing our Ralph, the

have and divestitures mentioned low before, close. to you deteriorating margins some are we the mid times single-digit see up As EBITDA to these on the performance

So of on increased that, can midpoint the portion of million increase And that. $XX you tell math can EBITDA. do you with some on the a

historically. year out been related just we be But those aside, impact emphasize markets, Some respect going that with the was quarter the I wanted from lowest that's for called to revenue to emphasize those third comment are hurricanes to to the we of And There that to trying adjustment us the the that to quarter. hurricane quarter, divestitures. is That's there. that, comp. on an should last be then

Operator

Morgan Capital question from next Markets. RBC Your Frank comes from

Frank Morgan

flow, mean and second quarter sequential flow then ability And of little so from bridge can or have be I cash ops bit gave over secondly, more the us but to what give to from and have little would in that specific, flow ratchet the this really flexibility maybe in seasonal course morning. third to the down? Good either I you color of just your terms cash just changes of ops? much terms contributions curious, the am CapEx of impact, cash of any you Thanks. a a fourth do you around quarters? from the how to it two Do up in you CapEx just

Tom Aaron

Well.

talking So, about to of acceleration we Frank, rest due are a notes. on what the first months six with interest of payment the the was the big the year, through of portion

of have of down We one first closing year year exchange one incremental go for from the $XX million those stepdown. That of the would expense. exchange about after also million notes when interest to $XXX the

Last work six transaction can at This receivables, the we the the on of sheet in June balance Less model increase $XXX divestitures. closed you look of $XX year, the X. probably on side that transactions why is eight we year, that million So hospitals. On time of side, interest receivables. of to due about receivables, the increase the May That to timing closed on was store X. we million the when

turn close to we and that exactly is that when year of depending that just on at going manage that. We can around. degree we the end a the So dictate turn think we and think to will

lot we lastly, ought year. to as reports. net was X.X% had, at When grew tends we of I to year. a down That at look reflected AR cash year look in revenue settle collect Last We also of you quarter. year, causes the half our and then cost receivables out the in when same-store back that's X.X%, some provider That flow this And mentioned, build last quarter, you in this which the to statement. and it tax the it. programs by

last was up. strong the It AR quarter but this outperformed on quarter. and was a year mentioned, very side, XXXX, we XXXX we As XXXX

normal and do expect that committed CapEx. from to some We the some then out rest accrued there payable year. we that flexibility, don't repeat. are on will we I So have our the straighten do liabilities accounts expect that course were on of And fluctuate throughout year. the although to

get We have on there. to got CapEx are and We continue want great put can that growing to those. know markets we investment we returns

that's the is hospitals divestiture. CapEx for where on going, identified So

We are we making really replacement XXXX. And we hospital strategic don't CapEx. or are we CapEx, said as before, not but hospital have making any spend maintenance have new until

that guidance, we CapEx So down. but some or have in our we put as to year, a going manage this be, year lighter, to we do think, up ability it's

Operator

next question Jefferies. Your from Tanquilut comes from Brian

Brian Tanquilut

morning Good guys. Hi.

Just a comment answer Tom, to that follow-up, to your question. and that Frank's made you last

seems in that we status mentioned you a through cash hospital look XXXX, free XXXX, then will you as maybe And So XXXX. even just right? it, negative due probably flow, quo, at be it like replacement have just

will CapEx again. ratchet guess So I up

or or you flattish cuts that remain So assuming bring down cash the over much volumes side, next either how think do cost expense opportunities slightly have the negative? free how few about to flow years? do generation more, And you

Tom Aaron

going year divestitures are definitely Yes. comfortable, a remaining those growth you And to pretty a that they I out portfolio million if at look hold-serve EBITDA The XX divestitures. free and closed very our then free ones are free stronger when that would this low we have flow, were months. at difference cash this margin. calculation, is flow. our our they are see our of we can The definitive look last that XXXX on we portfolio negative negative that's year, those, portfolio, $XXX it serving especially we think we you almost, which we I hold cash the about cash out in to get last spun way. agreement are Those flow, historical are negative

are another years. did for going We to certainly we the not refinancing of what year size this have many

not going interest. a not to but And going So accelerated we out. are cash to to there flow divestitures the is else. be improve to volumes lot free remaining A the and with only be It's more drag portfolio. be of everything are going any going growing

So that's we expectation hospitals and of what to. our our managing are

before, So sooner better flow, we in later. than free position a as with we mentioned rather cash are

Operator

Research. Josh from comes question next Raskin Your Nephron from

Josh Raskin

that? the the it run to that, end $XX.X curious And uptick terms Thanks. have last Medicare XQ I in rates, billion? what about regs just of the you prelim the within guess of pricing pricing? not Good rest And of out year. tell of what the morning. least, you Just And now growth I then with us an divestitures around by then below those curious about year, revenue year, run is, what's the next exiting think the the guess if the it wanted in could Is have the of that thing where do in $XX closing another I around all is rate up? ends divestitures? without As rate to you guidance just billion? assumptions When XXXX? talk again is but the cadence guidance but EBITDA in are specifically, any for if the they expected question close now? final of in at through sort more expectation Is you got terms Medicare base your

Tom Aaron

All right. Thanks Josh.

before that of and revenue side the timing low I mentioned $XXX divestitures. one, the first end. the million, So increased we high on

had compared We with as are prior in as five we where of have other transaction on some the and hospitals, eight flexibility to hospitals are transactions. several single transactions that. trying smaller These and far to a number year Steward hospitals

is Some newer buyers done of form transactions transaction not who have the different. slightly are and of these

bit taken just longer regulatory forth. it's a so So little and

that. on flexibility some ourselves give to want we So

from we that But be going this putting quarter closer little to are better do on think will able quarter, more bit we think definitely we talked the going Medicare have in in to volume that XXXX. the Medicare going closed get have to and be refine that. I we substantiality, we of the during pricing, be third revenue, about as to out a insights will we have what we model is can that to on $X see stats, climb. the majority And don't you as think billion continues Fee-for-Service that is our

Advantage. more We Medicare are moving to

the of a don't as things. move the on see we needle that So scheme

initiatives The volume we so And service have rate. got on XXXX and lines with other run going our then forth. and

We put that think be yet, with later with you maybe be you and but the about math we phone look and do math come would go on looking talk of could on glad what some some you have out not the to able post like divestiture. we I up might out to

Operator

Gupte from comes Leerink next Your from question Ana Partners.

Ana Gupte

Yes. flows question, up Hi. The and Thanks. the receivable. Good morning. again your on AR following cash

accounting rise write-down what and it, about You be a at on should the debt timing in that maybe beyond growth there Is and There collectibility ago around concerned all drove anything change in in growth case? the same-store? we a concern months few talked bad the have same-store receivables the all and related divestitures? might about to but that was of at being earlier of been this maybe in the

Tom Aaron

your for Thanks Ana. question,

doing and testing everything model. running have it's our been validating revenue got models recognition have alternative we we and in So

just better our and the processes a comfortable compliance, revenue basis XX improvements feel that's as percent have I upfront. when revenue, denial made we look our points, improved technologies think cycle we we and that mentioned, that getting I from authorizations more of that at rate with

service cash upfront, XX%. positive receivable we because are Our fact, year-over-year portion the our our job That's the on show point upfront, collections that, are better collecting our getting if of be up after so a through that experience. but coming to collect do like we analysis we we a

receivables with receivables by their a have increase, very increases also also mentioned, the receivables. are So other from the respect versus and cash flow I X are June comfortable those are shown providers where divestitures, have we with with May as And think to that negatively have and of then for big I bunch we primarily that timing And of those. we had X. model impacted big

Operator

next comes from Baird. from Robert Your question Matthew Gilmore

Matthew Gilmore

ask I wanted to additional recent future you And refinancings. terms flexibility of divestiture in proceeds debt think the repayments. Hi. got question Thanks for have I about with the

have notes can market? So put how should be open those Do the some we of Loan Or will think to you you how about H? the those in senior buy to Term the applied?

Tom Aaron

lien first effectively now to So had get to until X.XX%, we our of we leverage sale grid our on required, based proceeds are paying Loan asset below and H. a XXX% have Term we right that's down go

discretion. at to rest us, to where at use of are the so our it's X.XX%, down on have least the divestitures. that and We below going come give That of XX% proceeds be through could depending flexibility some this do thereafter EBITDA would we performance get quickly our the expect keep and And down then if timing we to that's we of year. the

those, we So what we for considerations. debt open invest that up those other on with does we proceeds, pay down how us what do options and other

expect of going So year this to emphasize, of the are to just grid debt XXX% but be going to toward Term repayment Loan we the we proceeds be operating H.

Operator

from comes from Taylor question next Your Gary JPMorgan.

Gary Taylor

two-part Hi. Good question. morning. A

any and was estimated Is away? you outpatient we legal surgeries. I have you could the have and little thought to types a could material on wondered update, sort get that but legal discussion given then of you and kind that know procedures have and if where First there us stronger think potentially I then was, liabilities second I same-store pay what said no a when years we everything, about Tim number mix. part liquidity and talking been might still wondered the of on accrued if And give I you payor was, mentioned that of for? refinancing of

Tom Aaron

surgeries. will I I give on will Tim Gary, part the handle the and the first question

proceeding. still is that So

on as it And are of right federal term that. long several with mentioned, have talking the as we now. We classified we government departments

know we pay we use on on that, could is but I have opportunities no do either would So other this that upfront not real methods point updates likely that. or to we to that and yet, there on flexibility are

let I will on to you So no you. real Tim, for update surgeries. that on talking

Tim Hingtgen

biggest on outpatient to did the actually the Gary, through as Medicare regulation of adjusted line side. was the outpatient migration inpatient was improvements status driver the driver needs admissions outpatient from on surgery surgeries key see The the that with of line, a we to total change. pulled That well. and

up show adjusted as up admission an it's still showing even So this as admission. an it year, doesn't though

side to the core of seen service we outpatient, on that focus we on and strength inpatient been as the in line part seen growth those orthopedic TKAs. robotic line of cardiovascular like and referencing. But the neurosurgery all the service and inpatients acuity going TAVR, have have categories the netting of overall have in procedures We surgeries,

medical individual put So the part that have design, hospitals our in framework group of into just upon in coming we got the surgeries staff we general, things our of line each for believe a market. based development, service stronger the as we to all strategic place

Operator

question Justin Your Research. next comes from Wolfe from Lake

Steve Baxter

by being be things while Steve the Hi. was is are was Thanks Thanks. maybe wanted basis on would pretty as the your I payor about And markets any care Managed denial the points of ask stuff points in and wondering underlying quarter? the quarter-over-quarter actions trends driven you versus extent, in question. doing your quarter. for you mentioned rates XXX market trends could point to year-over-year XXX see But up mix down color collection. anything service And unusual is self-pay about I helpful. or around This the that Justin. on to significantly. you for if Baxter, then in in the you that size your basis the and

Tom Aaron

Steve. Sure,

and So the consolidated the that by same-store, I numbers provided, that's revenue. mix net payor

flat. So adjusted was a admissions, when at we standpoint, excluding X%. at about care, up look Medicare when advantage look Advantage managed Medicare we it that, was volume from

down was about Medicaid it X.X%, about up up about was was X.X%. Fee-For-Service, Combined and Advantage Fee-For-Service Medicare X%. Our was down X.X% self-pay and

what revenue collect on are I of on and now absence But point We segregate those able are getting collection. thing standpoint, our we can help. we this that improve. to of we should programs, you did to being there, with state did the self-pay, Medicaid mentioned the supplemental headwinds on the timely pass we ought what on reimbursement our what one data with have, can with from the we actually from a information really think better rate model on So more collections service and and using we just have that see that

Operator

Your from from question Goldman Steve next comes Tanal Sachs.

Steve Tanal

patient that the in light payor of think Thanks new net guess guys. a Ana's trying but a as I understand I would about of rule? should especially then Thanks. the that? same-store higher guess to curious the outlook related between the I separately else, revenue understand higher Or is well, that Is How something to guess of be drivers as well, admissions? despite lot accounting related the issue? just impacted receivables sort And revenue lower to we I being negatively growth. with connection it question, maybe mix am I

Tom Aaron

have initiatives, get to is of basically, per probably focus admissions, that service when we movement. started the line last been Well, we our year. lot so revenue the higher emphasizing net look over have at had We we adjusted a revenue

quarter, X.X%. previous it adjusted was about X.X% X.X%. some admission the get per about We For traction in think revenue was to started our four years, up I net the fourth

for now two have We quarters X.X% at a been in row.

in going that that's got revenue are grow. flat and cause to adjusted getting have we on you when to rate admissions, much your your So near

So we side. if we backwards the go getting rate that is exceed are we comfortable going volume on the are to

revenue forgot part the So the driving I the there. side first that's what's of And question

The Okay. AR up. stepping

revenue, did of declining to one, you to is, revenue, same-store declining have the if are quarter point was going trying that make the year, collecting I So you last all second we be receivables. have got

not you to phenomenon receivables in where you are going accounts think be of see and revenue. When be you flow the on same increasing cash cash relative revenue your are same providers negatively who year. with amount receivable going at we you mentioned, look with this especially to adding on that that to the as are X.X%, declining when will Secondly, building contrast impacts grown statement, And receivable, flow I prior I have their you the revenue, year, other

Operator

question Kevin next comes America. of Bank from from Fischbeck Your

Kevin Fischbeck

Thanks.

think be? at there divestitures margins And cost done, more talked on guys has think on where a savings. bit guess, opportunity are You the side, supply making I about SWB, ultimately do progress seeing the when you the ultimate can on next margins so the heading portfolio guess, about conversations this to? some of get years, round that into where in you your ultimately obviously been can the financing. do three of improvements I call far operational

Tom Aaron

but be and some to is some have got leverage overall we get driver think We getting want really is going goals. going Well, the primary down rates. to expense we and play internal be to of that a our volume through management,

And of are things side be think revenue so volume and will obviously I volumes. and going that emphasize let we are we our on some the Tim, the you driving managing that. long-term address to

Tim Hingtgen

service results. important the that's physician most line the strategies to speaking component but keep I Again, recruitment Sure. and strategies, line those is really drives service the

recruitment or it. markets, we primary also that the physician from right reduce specialists over quarters, care so market several still targeted migration markets out and have reported on but We we losing last focused drive share be transferred our attracting in to the our steal in may also out can

physician We have six strong had Commencement results. strong, up is through XX% months. recruitment year-over-year over

in very Our affiliated a non-same-store of group our have practices clinics doctors. robust

XXX We same are year. were months than about up the we six more last

our on program, those practices we transfer practices So provide just patients that in those to We are have some know ramp-up care. qualified making all community which phase, sure in sequential to work physicians continue that are building our opportunities. the outreach their centers, us physicians through showing and are

this already So what commenced, we doctors. again, we previous than top doctors On strong years. in year had have of we we have strong, pipeline a signed more have of

We ready Almost doctors already XXX have more that signed have a class agreements. the pipeline. to in commence strong

built strategic our comes fact we have plans, to from that them. and service So fixed really doctors optimism the line fulfill have strategies

Wayne Smith

a don't margins. well holdings our lift divestitures give have those as, forget As relatively since will low us

of a out as will lift well. get So that we

Operator

Wells from Costa Fargo. Peter from comes question last Our

Peter Costa

divestitures private free Good pay negative or positive desire coming you view those that you any last couple really to that large this divestitures still cash your flow you. your you of perhaps more do and to at capital would or for round to lower with get another nonurban think alternatively, about, rounds wanted way? down operator or to prices consider coming that I a together changes believe forward have point? your to really of the your needs, your to you do you but of that morning. Thank Is will in to a you going do And do something divestitures debt? divestitures do competitors will ask are of some ability hospital in, impact the

Wayne Smith

private differentiate So the first markets. on markets question, and pretty to in to terms capital our we hard been of markets, and get sustainable working large have

we we very are markets in So couple in. feel

are We going forward. an I those in highly don't of that's think markets. issue competitive us for kind

the over two, second we last working question, the divestitures couple, years. On have on been our three

know that process the refined I facilities think the us we have to point will long-term. which down for we work

markets More work will importantly, for us long-term. which

I group said work times, it us. and we in a will hospitals have that several the future where for So markets, sustainable growth for of sustainable I we generate which have think think

Tim Hingtgen

to just is Peter, am that And when companies and when a what payors. have our way, in I those of had I trying build and bargaining the their of our you buyers look those that in their buyers power our at more the buyer, market look not hospitals, they would rural most hospitals fit been at been by you not two transaction, and add, of hospitals. understanding many with out them of sure would strategic

of anyway, I an be don't to impact. that's think much So going

Wayne Smith

the now still perhaps But to we the those The within our for we physicians markets are country beginning of add the and of we well. improvement of put across are showing comments number are have effort a work a great facilities, we strategies performance. thing that There markets growth. executives is in have good to that seeing place in and facilities the place see as opportunity we all in substantial are this in terms all have have outstanding that number that will I that operational would our

a opportunity left. are our good number have So we performance But markets. we seeing in of still

Operator

I turn to Smith over will the closing now for Mr. comments. back call

Wayne Smith

spending Thank us you time with for today.

operating We for We financial management hospital want our staff, today. strategies chief have officers, hospital chief and the XXX-XXX-XXXX. their call look year. officers on quality. outlined are the thank specifically any Thank division teams to focus can operators our executive updating we you continued performance very and always focused and the forward on nursing and chief you. you questions, throughout reach us on officers This to continued you at concludes again, our progress today. for We Once have if

Operator

concludes This today's call. conference

You may now disconnect.

Community Health Systems (CYH) 27 Jul 182018 Q2 Earnings call transcript