Community Health Systems reported a sharp drop in earnings for the third quarter and lowered its full-year earnings outlook on the challenging environment for healthcare providers and sliding patient volume.
CHS, based in Franklin, Tenn., reported third quarter net income of $4.1 million, or $0.04 a share, compared with $44.2 million, or $0.49 a share in the same period last year.
[See also: Community Health Systems' Q1 income up]
Net income from continuing operations slid 63.3 percent to $21.6 million from $58.8 million during the year-ago quarter. Net operating revenue rose slightly to $3.22 billion from $3.21 billion, according to a news release and an earnings call on Oct. 30.
The company said that it has put in reserve $98 million to cover an expected settlement of a Department of Justice investigation into its practices for short-stay Medicare admissions from the emergency room from 2005 to 2010 and a separate DOJ investigation of practices at CHS’ Laredo, Texas hospital. The anticipated charge accounts for $0.65 a share. Additionally, $0.03 a share was related to expenses for the anticipated acquisition of Health Management Associates.
Also impacting third quarter results were declines in patient admissions. Hospital patient admissions declined 6.8 percent and 3.9 percent for total admissions adjusted for outpatient use among CHS’ 135 hospitals in 29 states in mostly rural markets.
Given the decline in patient volume and other operating challenges the company faces, CHS lowered its full-year earnings outlook. Earnings are now expected to range from $2.85 to $3.10 per share, down from the previous forecast of $2.95 to $3.25.
Despite the weak results, Wayne Smith, chairman, president and CEO of CHS, noted that net operating revenues had improved slightly and that the company is starting to realize benefits from its cost management initiatives and is well positioned for the health insurance exchanges.