CYH - Earnings call transcript Q3 2019 | Community Health Systems, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Community Health Systems' Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. today would hand over the your I President Relations. of Vice Comeaux, Ross Investor Thank you. Please go ahead sir.

Ross Comeaux

Conference Thank welcome you, XXXX to and Call. Community Health Mike. Systems' Third Good morning, Quarter

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

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

We exchange offering. press also an to release company's intention issued regarding commence the a separate

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

change We for for in and this from covered All we or or recorded claims expenses government cases to expenses expenses losses earnings and restructuring related liability other discuss businesses; incurred promissory slides allowance those legal of calculations, change notes; estimate and adjustments expenses valuation impairment gain the will related extinguishment costs; related from benefits charges; loss professional divestitures; other also well legal CVR; call. exclude: by of settlement early accrual. as and settlements termination related fair in value and and expenses gains to to will from to debt; refer as during expense on employee sale

Chief said, Officer. Chairman like over Smith? Wayne the to Mr. call turn With and to Executive that I'd Smith,

Wayne Smith

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

comments and update will some details results. on Tom Tim company provide well operations on an on will Then as on provide then the First some our the as financial performance.

In made quarter, of terms the we progress significant third again.

investments cost-saving We additional opportunities additional leverage divestitures. continue organize to execute our growth strategic and in complete and initiatives

one and our Our strategies and are company October, that growth positioned corporate a at continues working future In to we for regional to emerge and presidents stronger headquarters discuss and CEOs to hospital our our best as early strategic success. organization better hosted practices. share opportunities

these commitment out of meetings, impressed of marketing and our leadership hospital I'm with the and Coming skills executives.

stable difference markets. developed are particularly initiatives encouraged performance and strategic with their our across to and see tenured of the CEOs these leaders a pleased We a in experienced they of have local progress and imperatives: who positive all are taking driving making results group are I'm improve how to

competitive operational connected quality and Safety and position. excellence care

improvements. sequential remains our volume continue drive as operations, of terms growth we In to same-store strong

it's smaller admissions We since been company as portfolio. different Year-to-date, with XXXX. are is ago as years same-store admissions XXXX. Year-to-date we since few than our revenue been strong surgery it's is a but a – today as growth strong a as growth adjusted were net stronger and

There performance. are number worth Turning a to the highlighting. of items third quarter's

admissions a our year-over-year on X.X%. same-store increased basis quarter third the During

up Our and adjusted were admissions surgeries grew X.X%, X.X%.

On same-store the net was line growth revenue X.X%. top

and throughout supplies XXXX. expense SWB fourth other and we made operating – the expected and in expensive progress across more categories more expense P&L savings and the Down savings quarter

million year XX% improved year-over-year. was compared increase XXX points million, $XXX and Our our adjusted of basis was margin with $XX EBITDA prior to EBITDA

to investments also have we strategic and capital and to access outpatient increase services. During year-to-date the hospital-based third quarter, a points made inpatient strengthen of number

through our the through made to On and past we side, several in to deliver the hospital-acquired over years. remain event rate in safe, middle care compassionate And the this trailing our serious resources We've safety XX.X% the quality efforts committed considerable year, patients. reduce investments conditions and over the we about months. for quality substantial progress XX of reduced

to divestiture program. Switching our

the potential Over assets for was create last -- plan, portfolio divestiture we've improved opportunities to stronger of executed growth two improved enable years, which our and designed potential. a

improvement of more couple quarters have we continue same-store during core results moving Our expected our believe and demonstrate, the to past this opportunity markets forward.

quarter the billion accounting gross multiples. current third part $XXX proceeds of margin. to consisted proceeds. divestitures $X as for of generating of plan, this hospitals at we capital divestitures excluding These annual XXXX $X transaction divestiture that approximately with billion single-digit at EBITDA of plan net billion. of million completion mid-single-digit Through be revenue good is $X.X the working margin about the net low gross divestitures least a EBITDA for end closed Our anticipates approximately estimated Total expected in of revenue,

the expect by close our We to remainder plan mid-XXXX. divestiture of

last operating quality, and is more cash flow and free the a growing will divestitures, completion release moving combined near-term believe later. debt commence we provide on this growth on enhanced in with positioned our intend offer efficiency are drive growth details Also, the forward. address we margin tender our our company night, and to that to Through Tom to we maturities. press of programs focus well our announced

like Tim the for call additional over Now, to comments. turn I'd to

Tim Hingtgen

shared our ago. are improving that aligned how are and now respective annual and and quickly hospital plans place competitive Many deliver the performance our Thank markets president I took strong and motivated they executing leaders on results. continuously strategic improve will are leaders very to their was to Across they regional it organization, CEO and to positions. you, imperatives better in hospitals the strategic gratifying their initiatives, see driving few our to meeting measurable highly that also highlight Wayne. of specific our a weeks are

the of our few a latest and areas. will strategic I call, today's our focus On walk in through volumes share

adjusted continues volume revenue comp different revenue growth Surgeries of of GI stronger X.X%, as this our up growth This impacted to across and geographies transfer net On quarter, growth. admission Similar capital volumes to admissions driven X.X% X.X% EMS and in last markets. due the were lines. model, up the admissions our side, per due in was in ED this service other and cardiology, quarter. our by improved a both business line year, our ER and investments was clinical was which were quarter The performance. same-store orthopedics, be and increase number to outreach to and quarter, X.X%. Same-store enhanced outpatient X.X%. the physician seen Net toughest freestanding programs grew as second revenue increased our well center with

Overall, volume and focused we performance of our with were all opportunities our remain trends. on to these pleased continue

practices, care to solid operating We program, investments, initiatives, including well inpatient physician or strides access targeted our as as improvements on the accountable transfer include same-store emphasis development, as across our investments, ACOs, others. development. organizations care point as volume Key point access are making well primary heightened

in into care freestanding efforts While to access urgent more by entry to effective our offer points we've the base. and to the markets, adding scale critically overall very strategies and clinics work care we key foundation our for to been and primary in our continue walk-in important patient are invest growth doing our strategically expand provider care to that is service core We know we patient expand lines. and to advance EDs, primary the relationship

care to successful Our with emphasis has level. been be the in they convenience resources primary primary on locations, and supporting care need patient placing and advancing providers and recruiting experience the the right at continuously

to providing creating scheduling we in digital and online operating have and centralized includes more a options and engagement patient improving addition care In markets, our placed same-day emphasis an experience. convenient locations, consumer-focused marketing consumer most This platforms. walk-in appointments and on

our outpatient nearly is As a the X% development quarter strong quarter. than in we online the third saw efforts, double revenue growth. patient result new This access and we scheduling and our up the contributed care these digits to and more year XX,XXX initiatives also third net X.X million prior visits in from centralized of primary had from appointments

Inpatient this was up net X% quarter. revenue

hospital and our adding In on line of recent expansion focused service number and addition are specific we capital to surgical ED a outpatient also markets. deploying capacity, strategic across investments continued GI development beds, with investments,

have capacity has planned Year-to-date, cardiac come GI Alabama, Birmingham and several been over additions Wilkes-Barre, have online completion for few of quarters. at Alaska, underway new bed And and including expanded projects and surgical Palmer Knoxville, Pennsylvania. we the in a markets Park, and pipeline Texas. Texas; Victoria solid next And Cedar Tennessee;

our opportunities comprehensive incremental volume facility and in expansion also development sustainable markets of growth. share expansions which points market will are number in-depth the additions, networks, in to our midst a services new further We access core result in additional of and and and for planning

quarter, markets due implemented over this in-house were end date. I and of Last that to mentioned to rollout XX% program success this offering CHS XXXX. Switching by to now to expect our our be of our transfer we the in hospitals hospitals to We program. more expanding

that for increased more by year third transfer program the have XX%. hospitals than quarter, comparable access During our utilized have a their and transfers inbound

are we In the and momentum are many the markets. with making are generating summary, pleased we improvements we across

entire remain use we well In we achieving high in organization, on as resources of managing in our are care to most And as we efficient functions addition, corporate committed focused growth health markets. delivering the serve. across market every to the priorities, quality including our expenses

operational including move And same-store lead improved net forward, as revenue we performance. expect and strategies to to improvements we Tom? our broad EBITDA

Tom Aaron

Tim good everyone. Thanks, morning, and

discuss basis. will same-store a I third quarter-over-quarter and Now quarter on

Ross As a items mentioned reminder, call calculations on exclude earlier. this discussed

net a admissions. in is in third This quarter, and adjusted increased of During X.X% revenue the increase adjusted net per admissions a revenues X.X%. increase X.X% comprised

quarter as net X.X% XX been revenue our per non-patient TSA net basis admission fees, Excluding have points such up and would third up adjusted revenues revenue

of During the net the side revenues growth side. XX.X% operating third outpaced on our growth on increased to outpatient the net outpatient our inpatient quarter, as revenues

and of basis Advantage Fee-for-Service payer XX XX and self-pay basis of includes Medicare revenue care third Consolidated basis compared XXXX points. quarter quarter Medicaid for decreased to the shows XX basis managed Medicare mix points; decreased which points; XX XXXX points; the increased decreased other, third

Looking payer, and care, Advantage, Medicare our and decreased. Medicaid Medicare each at were while our our adjusted volumes Fee-for-Service admissions managed by volumes all up self-pay

of adjusted of quarter revenue charity sum XX.X% third care net a revenue point self-pay to XX from of XX.X% the During and increase. discounts uncollectible year-over-year, the basis increased consolidated XXXX,

operating decreased XX salaries items, For management. of FTE increased spend net XX basis points basis from for driven a expense points, a percent as expense to of by surgery growth. as Supplies related benefits our the percent revenue implant same-store stores and higher our same net revenue operating

operating percent vendor higher costs. to and a due as expense points basis XX our revenues operating insurance IT increased of net expenses stores for Other and same related

a process includes program plan Our analysis shared continued non-clinical management This administrative supply detailed team with is cost-reduction executing expansion costs. a strategic cost-reduction of hospital included initiatives improvements efforts. The certain along vendor-spend areas, and of technology-led chain currently and real the reorganizations and and estate other our corporate program. services reduction of

Many those program savings savings executed incremental move activities are and quarter achieve fourth we plans those the underway as to as savings in are we incremental through expect and the XXXX. in --

Switching flow. cash to

third of XXXX, For million. of XXXX. flows million to the $XX negative third quarter from our $XXX operations flow of This quarter were during the cash cash provided compares operations by

cash approximately third million Looking to July Sunday, at on $XXX the two to timing quarter. for the were the the higher in of cash $XXX notes accounting Due approximately interest were occurring or due payments. -- Xst million a during quarter-over-quarter paid XX on the June of interest decrease, payments

first Our operations operations of from flow first months XXXX. the for by nine of This $XXX of nine cash million to compares flows million $XXX XXXX. the were during cash provided months

of months. approximately of and decreases the and outflow year-over-year year-to-date and a more including claim tax $X interest at recent first Higher $XX created Looking million, contributed working due the a year. cash increases other cash decrease. from nine outflow approximately timing activities this $XXX capital cash from changes malpractice approximately refunds to to payments outflow of during payments Higher refinancing million million

paid cash noting worth company quarter. think that be interest As And cash it's million approximately million in $XXX interest payments flow will recent the fourth scheduled the quarter. we cash $XXX approximately third of currently during performance, about the

cash XXXX. free performance to cash positive improved expect the fourth quarter expect and during we flow such free As be in flow we

to Turning CapEx.

months nine first was of million the X.X% net revenue. for XXXX CapEx of Our or $XXX

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

capital towards allocating growth of As Tim number we're markets mentioned, a opportunities with in potential. high-growth key

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

to as announced Ross structure tender In our the we exchange mentioned, offer maturities. yesterday near-term evening a capital of to intention and Wayne debt terms and commence

address liquidity. profile We're will company's XXXX in whereby strengthen maturities transactions will pursuing portion intended the unsecured be expires we'll XXXXs and maturity improve participating of stubs. refinancing our liquidity near-term XXXX transactions exchange and and revolver significant using significantly which A the be to several January These our would XXXX through to contemplated and terminated. extended the be pay

In addition, the debt. restricting covenants notes will our any incur secured to contain exchange ability additional

forward, our expect drive the initiatives will same-store strategic Moving company on we to cash we're drive deleverage EBITDA and of growth which focused execution the flow. better improved allowing

volume range to year up full by year basis Same-store We adjusted anticipated through is is points to admission be $XX.X our $XX.X billion. to months X.X% billion. Net to due strength nine be of first XXX increased billion revenues anticipated to to be growth guidance. to the $X.XX EBITDA Adjusted the I'll year. during full up billion X.X%. Now are $X.X operating updated walk anticipated our

Net weighted million on million to Cash of XXX.X forecasted diluted based flow is expected average outstanding operations to to million $XXX anticipated to negative to $XXX is be $XXX million. from to share income at CapEx negative million. $XXX $X.XX be per million. is $X.XX XXX shares

back Wayne, call I'll you. return the to

Wayne Smith

available code to up Thanks, question, talk to you always can everyone open have as area Tom. limit operator, at At questions. and call us this we're that we in. to one XXX-XXX-XXXX. are reach ready to We’ll you will point But you it chance so to for

Operator

Instructions] question A.J. Rice [Operator Credit from Your from first comes Suisse.

A.J. Rice

Hi, is -- with you're in taking do you've I I'm I what And on understand big exchange. still got obviously out stub figure guess, though continued there volume three And gradual is the to you your aspects to and I which sure got going use see trends. my a XXXX. understand obviously everybody. make be ask to the it maturity Congratulations improvement it trying admissions that question XXXXs. XXXX. at trends and to you're to deal I've your trying fully debt try later. There of stuff then secured I'm that of -- out XXXX, can the some the could guess I with And to

do intermediate-term that or would think, that I any about unfold of comfortable the recently times just came over said, giving few need -- not this going of used that? deal So you to? you opportunistic that revolver with that have something offer big you stepped the see X the me this? in exchange part finally, are that then can to And on these is pieces access forward anything tell And this with change been guess, I whether March the way covenants, you as and down well is to -- How several XXXXs debt-to-EBITDA. you're holder Is I months covenant? next there would Let's I near- revolver. trying the Or this maturities? to -- that's to we'll that to in up do ask you're wondered you

Wayne Smith

one was question A.J. That a great,

Tom Aaron

think, I got all I've of that.

about going exchange you then the I'm to get So first into some I'll other talk the maturities and of mentioned.

exchange. of XXXXs to those on think XX% we opportunity least And the we -- are to the it's deal the -- at in exchange, mentioned. be you with as included So an going

secured -- $XXX secured on So X%. That's unsecured regardless is of on the our going interest don't those unsecureds to those to and will be the push the million participation. XXXX change at interest would XXXX notes, and intended exchange the

that. addresses it So

revolver to lien covenant to a going us enable we that's lien higher. that we're issuing covenant note, includes first first also that It's -- into It's so going buy going -- as XXXXs. with referencing. extend goes successful have -- that participation a hopefully you get exchange We our going to to million $XXX to out -- also the take the which very were

We'll we pay stubs paying off be use XXXX that also we're to $XXX XXXX lien of with $XXX already offering first off to intend stubs the million. So -- proceeds a the take about million. the to on-track out

there So ABL our left whatever liquidity over -- tool. our pay will then will become we and is that down and

looking and would portions will So XXXX out addressed exchange, of the stubs, XXXX XXXXs of the after we be the the stubs have the and substantial revolver.

On the on we're are this now, XXXXs, I think we watching really And big maturity. focused the transaction. markets. Right that's next the sequentially

liquidity position a and leverage that focused positive attention of a to about So get down. we'll lot on cash in be we'll executing just the been our flow to some that pay then initiatives getting we've be and talking and

Operator

Raskin Your next from Josh question from Nephron Research. comes

Josh Raskin

thanks. Good morning. Hi,

is it middle down versus portfolio sort the kind question next the of of year as around just mentioned. process of First optimization you winds

exclude well, think already those and three them us or the sort are maybe as that your reasonable margins about where what And with And what's of this portfolio to be? of to announced then help the path terms been remaining you remainder? have want margins you target as the that week in maybe operating for timing at percentage of

to timing And projects is there Or then specific delays pushing back flow due question at understand the cuts were midpoint canceled? as of say year? million the that that CapEx, discretionary projects or to the this were second around the your $XX that cutting cash CapEx Just just want well.

Wayne Smith

Sure.

look divestiture point divestitures billion on low very revenue the single-digit think were at I program this aggregate margins. EBITDA of to this of in up the in proceeds. billion So $X.X The an I'd been that program, Josh $X have

cash negative flow look to when allocate hospitals. those and we CapEx it so And and at are that we cost interest

of to so, proceeds date. those nice sales And amount we from a had

$XXX roughly that's So of proceeds. million

three hospitals -- on far. that were for single-digit on the hospitals. involving that executed divestitures the The so one most are million higher with what Monday we announced $XXX part are remaining other -- than we've transaction The

XXXX, the slightly better the these are XXXX to look at we're range you When ones more getting that higher with XX see dynamic proceeds. XXXX are those EBITDA might X.X the divestitures through times as So the multiples we've and The a percentage -- EBITDA revenue of seen times. typical you margins. in

now we're divestitures. we -- what on right so into that's And the

the if right believe implemented we've many back already getting of think into we're with that initiatives from supplies we you I look historically, operating labor, now.

that you and of the divestitures the improvement the XXX hospitals is it those of out. quarter-over-quarter some getting helped Some initiatives, some points by was basis of see but lower-margin from

at When well. our think averaging we portfolio, do up from that be getting program lift we ramp because below the we'll be look the of divestiture we the as will -- we rest as have still they and will our average divestitures some lift should be

and performance when think I comments got better, When demographics. we I The mentioned, we volume we Wayne's better back in rank than addition in to initiatives rank the driving used one peers that's the at in job next we to now. things our a we in think are markets, our those to Tim different that. company our to And markets our we've that's look look demographics spaces. is growing of

believe do we going We're So, to portfolio. grow be forward. to margin a going we've got that able

have out how in say on. some any On a got of we right go Tim projects. community CapEx, about now. I'll big our we that's let I CapEx hospital on wouldn't replacement going there's a project We've sense talk through going micro-hospital projects or still that,

talking we've we make are from much of about that been to moving I'd One host where we our other IT cloud-based. comment

That's it's software into That IT from And other that, moving. not expense purchase many moving and operating subscriptions, servers, so, cyber is protections, spend personnel. as line. going the having to we're

the for decrease that capital. little in So a of accounts bit

go assessing. fill And Tim, we how on let about you I'll in

Tim Hingtgen

Sure. Josh. Good morning,

profile obviously markets. speculative terms many In terms margin the of remaining of in opportunities, our we're so of and opportunities in very portfolio

to that I really online we're focused some driving forward surgical really mentioned, come bed markets that recent our we augment have expansions and invest where I can in As on are dollars capital the referenced. that solid those growth and going

I where where As there's at part we points. a bed those always look to portfolio. those out-migration. process, can as on invest we And point, We remain four-year market It's continue markets ED access opportunities, access said, going of data in to where our look there's per at in three on expansions, the program. planning all the that new strategic capital -- planning things are

cost of a frame. We of capital off same type plan rolled kind have our capital -- our time that

where a we pretty view So, good have to we expansion opportunities. as ongoing have portfolio

Operator

next comes from Your from Giacobbe question Ralph Citi.

Ralph Giacobbe

Thanks. Good morning.

And on guidance. kept tough down the to revenue. EBITDA I million, million but missed Just But, took things midpoint guidance you always wanted to it by ask the consensus $X by it's looks base $XX the about but about like numbers. at know

XQ. sort reconcile reduction on you new then that relates Is of at So help sizing and lower of the And savings a particular implied sort it just cost mentioned can sort this of any hoping you then as the Thanks. point program? this And the in initiative. XQ. to

Tom Aaron

Ralph. Thanks Yeah.

improving So been at our XXXX, and our been -- looking guidance, we that's we quarter this that. trends And on the very since with we've We're second are volume volume we've continued. happy on are where at as trends. of looked

our better X.X%, we than revenue grown look other per I'm quarter just had through that. second When going net the quarter exclude actually performing with adjusted the that second to about admission, the revenue at

performing the quarter. strong rate, we had not really on And through well only were but so, we it the on volume, second very

of bigger if rate, That's historical look primary that at you been well. was The the have have could in revenue expense would that when by some lower exclude this helped revenue quarter, was you quarter look volume. mostly than profile our driven which the at and and that as years driver, when other was we've up the is lower X.X% expect. even would this had, revenue, The we we than

trends our we've mindful to of the to we're recent that And and to be rate. without at on of that outpatient movement want be that -- the seeing just these trend we and look had careful that on we want has because most we so, rates, when dynamic just

in. that put we so And

at we pieces We a the going we third on mean holding that are there. can and important manage. to apart, can an downgrades do and on processes how an there still we've -- I what quarter I improve pick specifically, that. happening look ambitious we to -- what's rate saw the area that see will and pretty what payment, uptick growth think address the in the our We're denials are volume

On the we Ralph, expanded cost quarter reductions, in for first supply mention did time had beyond that we that the chain. the second the

with -- we now strategy contracting the we're supplies. our So were same to go trying into and the getting really and services on supplies have national well purchase that with we have with very done

that's piece So, a to that.

how other it's processes. we non-patient-facing how there -- also looking the offices, also some services, cost, from shared management at hospitals. these our at at structure need use We're how can components is structured we of think and look we and we excellence an really trade corporate at we're And operational but technology at now also this positions our we improve as

large of we'll supplies, have the benefit of other benefit quarter. We expect Xst, on will portion beyond January in that XXXX. a fourth expanding this that some do program So, incept

other -- inpatient a thing substantial X% we benefit we've That to the substantially over Advantage better that in was had our Medicare/Medicare that. benefited which than we wage a was and the That rates. on have many the October index is get recent years. to were of admissions want we going is that increase the The out new Medicare portion are call of Xst affects started I starting by

wage over on X% Again, the and will that. the to That The ought from on finalized for and within rates Medicare January effective index to for -- Advantage. we again benefit us. be Xst, eight outpatient that Medicare proposed next days eight be XX are

I coming there on a think there's think some rate do for was just the guidance caution that. we side, So, the but relief

Operator

next James Sarah comes Jaffray. from Piper from Your question

Unidentified Analyst

Hey, this phone is the investments. Chris Sarah. questions in My on outpatient [Indiscernible] are on for

is that guys made? the And pace we've You spend between given call could the seen I'm narrowing there Thanks. some you're you wondering spent of growth those sort And any care traditionally dollars guys of gap evolution you of ongoing. are and some investments seeing acute just any where out the if specifically? of of being mentioned if that have the outpatient that the spending

Tim Hingtgen

take Tim. that This Chris. is I'll one. Sure

of three construction In for have EDs, terms outpatient under as are we pipeline at speak. that still investments we our freestanding looking

served others land volume that that's and a It in the us very out been the contributor of that have expansion We access planning growth certainly profile of quarters ED important of last has the to we're that for in particular. process well. our sourcing for point couple

of near you where areas been to in you formative the announcements some investment have specifics of making we stages in the in Other still space. Won't surgery are the future. both announced publicly, with that the deals them of any give but have looking because those ambulatory if haven't some in will we investments documents we're growth doctors forward in ASC space

what on-demand access point or done in care of We've invest to the call urgent the last over several walk-in platforms. strategies care, we some continue care, refinements those We quarters.

CapEx we've I noted referenced as practice and development seen investments. primary lower-dollar more care put growth the year-over-year. are we And emphasis energy also care on and visits I historically primary our in Those incredible

on to micro-hospital a to inpatient get that Tucson that's We is of part look construction your question, line in under the It'll forward in market. we have migrating as side, second mentioned, To bringing to the be on in company. XXXX. how our that our the first Tom

stay pursuing of those some to are to inpatient bed anticipate so mentioned I will markets as in that capacity. we want try deploying just ahead be having capacity further more this crunches We also to expansions that doctors we beyond

demand line have the quarter. up keep in in OR Surgical Really a capacity comes New large-scale large fourth with we that project in Las Mexico a expansion to that Cruces, market. on

we've overall, of think weighted more balanced in been XXXX I bit heavily to XXXX. early the So, outpatient a little part very

in the of upcoming business I into more the side of see think you'll the go acute it quarters.

Operator

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

Kevin Fischbeck

bit Great. guess you're the better Medicare bit. address to admission a structural more whether to this trends rate these of look answer payers or I that that continue you're next is seem we commercial revenue going might other of talking in the than outpatient Thanks. commercial about little that little we'll when other kind the that the seeing growth year. slower like adjusted they're I at be But see appreciate it's government. this that than per some guess less things a But I grow growing

that way demographically trends grow is faster going inpatient continue the to than Just going. to just are outpatient the

is is to conversion pricing do trend growth? really what right of EBITDA you to think able that real going where into reason to And pricing see be need actual better significantly of volume that be the than So, kind is it this to the growth now? what

Tom Aaron

We've So, been things. for a couple of underway this kind to years move outpatient. with many of

So in might be heavier quarters. we an existing little It this is certain think a headwind.

You our we actually admission year had a we -- had this quarter that was might excess our adjusted growth. in of growth recall earlier admission

So quarter this acute on continue pretty there going outpatient so the quickly. And -- see are basis. more grew will a the that. where an we be yes, procedures performed to certain outpatient happened to to we be think the side with think We just on volume that

denials we're revenue paid we're on things entitled making cycle other mentioned the downgrades. getting that we're sure, minimize so and for And the rate that we into the everything, some of I

on the The where are we on opportunities are there other pieces think this pay-for-performance.

that us our as opportunity And an revenue measures with we with that commercial other cycle negotiated in payers them and other the payers well. so for for quality arrangements incentives and is earn we

on we've from the example substantial Tucson examples actually this, And that's and portion improve think initiatives improved our setting and side, where outside cost one inpatient great EBITDA clinic the margin. we've a profile there. outpatient outpatient a our and say cost of is when -- in areas I is of moved business of of one our the the it's quickly of their areas shared to I'd broadly And more revenue to

So, but we it's side, to -- with we're And with. we revenue a where that an that's pieces here few is side, expense agree that that there for the you the trend a on way, have on deal can also think long-term enhance. trend to we going are a important

and how that lines want outpatient well. only you talk impacts revenue Tim I of inpatient service as not think to but and acuity can services drive might about

Tim Hingtgen

add profile on comments the your inpatient to as well. Sure. I'll regarding

for putting of it obviously, heavier for terms you driving per reasons the rate targeting admission than the government revenue noted greater we're payers our terms the really planning net In capital at particular. and that's a spending of mix the we're a where commercial the in in future,

that pro forma with our modeling dollars. that a So being of said, we key for our of capital component invest where all is

markets levering improve per we in investments terms net revenue should So of think help in those our those off us admission.

in improve to rate the the negotiations addition, that all so profile, underway. markets prominence I In is our share in market think ongoing getting

proficient lines, than service to so patients managing think In terms become first outpatient these the to less faced let me two that the are of -- of outpatient. two nights We've migration point at to minute needs total of I they moving of everyone's out, with status. stay bed length now

historically. obviously, for getting implants, the et that on cetera, less paid So, we're at the cost same

with we the our to vendors, setting. can on as outpatient more a now on with migrates working it implant particular create value right doctors fixated that make our that sure category, to proposition We're

liaison mix neuroscientists, that can that also that that the service all case higher improve neurosurgery lines for service bringing ED and centers for per Again, transfer it hospitals that we place to more programs should have acuity in bringing we're admission. patient revenue net our the investing: and patients EMS our a Other to line. drive

Operator

from Your comes next question Taylor from Gary JPMorgan.

Anthony Makdessi

divestiture is for plan. the Anthony Makdessi Gary. I regarding quick had Hi, guys. This a just on question

$X hospitals gross for about billion. proceeds $XXX of the about of But billion plan gross about have revenue $X sold proceeds. million -- of for and now $X.X have billion of $X of billion calls You XX with recognized revenue

reconcile given to Thanks. where of is want proceeds $XXX this you've future I the of hit your going from come net to million in revenue that kind plan. number So already annualized

Tom Aaron

describe so has $X we've Anthony, least a trying at opportunity Hey, billion been actually this been good us. this as for to and

negative hospitals. I cash to As on company. beneficial divested able been proceeds be flow And to XXXX have the it's been in these some those, that XXXX of mentioned, lower-margin we've get to to-date hospitals and

amount -- the have very in that's our been relative a very our to as low but to And good -- partially EBITDA to-date. That I on that's mentioned contributes had divestitures we've multiples is EBITDA revenue, of to produced proceeds those improvement that margins.

higher, margin of the percentage expect will forward. excess going divestitures a proceeds come as something be better to revenue slightly as But will divestitures. when divestitures will in we going $X so the additional that mentioned, more is $X those the benefit the EBITDA the EBITDA billion least So And at I are hospitals, be our said multiples to traditional of be billion it in will be we range. margin

Operator

question Sachs. Tanal Your Goldman comes Steve from next from

Steve Tanal

topic follow-up Thanks to other then and a guys. ground. on just the that of follow-up covered Maybe you and lot a one

incremental then right on these revenue. just $XXX single-digit million seems admit. X.X Is earmarked I what doing helpful. know close of per more of the just little hospitals bit XX overall of the given that to the another mid was midpoints some that'll of clarity of you mix margins, we the by it's other I discussion to quarter? So times X.X%, all call if just same take raise the revenue And then just is in in of kind it's Maybe on times Thanks. the I described and And order I you the EBITDA. have thing That to and something was as but follow-up to wanted like impact a obviously angle the XXXX? payer million EBITDA, million acuity the imply the well adjusted around math $XXX of you high ballpark $XX that guess if don't sort ranges on

Tom Aaron

All right.

to on you divestitures. -- calculate of divestitures, is be might described the of math go-forward estimates EBITDA way the the on what that kind what the correct revenue the the So

on So the right there. track think I you're

national per of and would the Advantage Advantage where other above Medicare tracking we a so national obviously averages the Medicare On are rate couple up was for just The Medicare the us Medicare in revenue Medicare a growth the admission, of and been averages growing. this say total that are higher quarter those I adjusted we with growth is on Advantage. patients, have third quarter thoughts the on

That Medicare. off what look that below at yield that's slightly said we

shift amount from quarter, and down to as net of Medicare adjusted admission. but and the revenue that per that portion. Medicaid mentioned late just Self-pay significant quarter is our during impacts been And Medicare traditional we adjusted, third that's -- our that slightly. And again but growing. our that was Advantage second so small a not is a admissions And growth accelerating

just quite are -- revenue. not we clip see we way commercial So self-pay. the by those that Advantage in that volumes our dynamics growth in Medicare our the It's getting and the in

So that's one of the dynamics.

exchanges The has adjusted see into to you and but get up and the of state other calculate those admission. drive the exchanges admissions, impact down adjusted just this case you the of driving dynamic and net as admissions is link mix the adjusted the revenue calculation per

quarter think And behold very adjusted in second the again revenue we we and high that one and admissions -- per lo the net I quarter. and where had a admission exceeded adjusted

So then other but stay. I mix that the to for in out also are out primary that a bigger over there, quarter, call time. They tend we'd of payer think minor and average are dynamics There length few the the items those those ones. the are third

year-to-date. per we're are -- We over X% still net adjusted still admission revenue

weaker on And so that quarter stat. a was -- but this

Operator

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

Wayne Smith

for morning. again your this you Thank time

on made year. this As far we're call encouraged the with all we've today, so outlined we've the progress

chief continued in and for you hospital we you thank focus if chief operating discussed we're can call forward team performance officers, staff, a quality. again, on nursing Once have division to questions our us execution management concludes We of on XXX-XXX-XXXX. at stronger chief operators hospital reach financial forward, we focused and performance specifically This on XXXX continued want to officers, look officers their and our XXXX. finish call strategies strong today. and executive and any Moving to today's

Operator

this Ladies and conclude Thank conference you today's participating. for call. gentlemen,

You may now disconnect.

Community Health Systems (CYH) 30 Oct 192019 Q3 Earnings call transcript