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Community Health Lowers 2013 Forecast as Admissions Fall (1)

July 18, 2013

Community Health Systems Inc., the second-largest U.S. hospital system, cut its earnings outlook for the year as admissions decline. The shares fell 19 percent.

Income from continuing operations will be $2.95 to $3.25 a share, the Franklin, Tennessee-based company said today in a statement. Analysts were expecting profit of $3.65 a share, the average of 24 estimates (CYH:US) compiled by Bloomberg. The company said second-quarter revenue was little changed at $3.24 billion.

Weaker patient volume and higher-than-anticipated bad debts are helping stall revenue growth, Community Health said. The company, which had been subpoenaed in 2011 by federal investigators seeking documents related to Medicare and Medicaid billing, also said today it received an additional subpoena on July 9 relating to the same investigation.

“This is not good news and the stock will go down,” Sheryl Skolnick, an analyst at Stamford, Connecticut-based CRT Capital Group LLC, said in an interview. “It has significant implications. It’s going to be hard for Community to be seen as a buyer of” Health Management Associates Inc. (HMA:US)

Health Management, a hospital operator considering strategic alternatives, reached its highest market value in six years earlier this month after Reuters reported that the company had attracted takeover interest from Community Health.

Community Health fell 19 percent to $38.25 at 5:30 p.m. New York time after closing at $47.13. The shares had risen 54 percent this year.

For the three months ending June 30, Community Health said that, on a same-store basis, adjusted admissions decreased 2.6 percent compared with the same period last year. The company owns, operates orleases 135 hospitals in 29 states.

To contact the reporter on this story: Stephanie Armour in Washington at

To contact the editors responsible for this story: Romaine Bostick at; Reg Gale at

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