Community Health Systems’ earnings are increasing after its latest (though not last) acquisition, sending its stock trading to an all-time high.
Community Health Systems’ second quarter net income was $42 million, a 40 percent year-over-year jump, on quarterly revenue twice as high, reaching $4.7 billion. Net operating revenues for the first half of 2014 for its 206-hospital network totaled $8.9 billion, a 38 percent increase.
The company’s earnings per share hit $0.37, up from $0.30 a year ago, and its stock price reached $51 on Friday, Aug. 1, the highest since it was trading at $49.85 in June 2013.
Community Health Systems’ revenue growth is being driven in large part from the addition of Health Management Associates, whose $7.6 billion acquisition was completed January 27 and added 71 hospitals to the CHS network, expanding its footprint in a number of states, particularly in Florida.
“Our integration of the HMA facilities is progressing on target and we expect to achieve our estimated operating synergies for 2014,” said Wayne Smith, chairman and CEO of the Franklin, Tenn.-based Community Health Systems, in a media release.
“Our results to date reflect our ability to leverage our successful model into an expanded operation that enhances the performance of our hospitals and, in turn, benefits more communities,” Smith said. “Importantly, we continue to identify additional opportunities to drive operating efficiencies from these acquired hospitals, and we look for further improvement in the second half of 2014.”
The company’s revenue growth is also being driven in part from changes that the Affordable Care Act is bringing to many regions, including a trend of fewer uninsured patients.
“We have already realized the early benefits of healthcare reform in the second quarter with a decline in uninsured admissions and a modest shift in payor mix, and we expect this trend to continue with further expansion of insurance coverage,” Smith said. “While we were pleased with the sequential improvement in our volume trends over the first quarter, we are focused on initiatives to drive our overall admissions.”
As CHS tries to optimize the HMA synergies, it’s also keeping its eyes open for hospitals to add to its network. CHS recently announced a definitive agreement to acquire the Natchez Regional Medical Center, in southwest Mississippi. The 179-bed medical center filed for bankruptcy in March, and if approved will be CHS’ 13th hospital in the state and the second it owns in Natchez, along with 101-bed Natchez Community Hospital.