Why Is Community Health Systems (CYH) Down 11.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Community Health Systems (CYH). Shares have lost about 11.8% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Community Health Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Community Health Q3 Earnings Miss on Lower Adjusted AdmissionsCommunity Health Systems reported a third-quarter 2024 adjusted loss of 30 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 16 cents. However, the bottom line improved from the prior-year loss of 33 cents per share.Net operating revenues rose 0.1% year over year to $3.1 billion in the quarter under review. The top line beat the consensus mark by a whisker.The quarterly earnings suffered from lower admissions, patient days, and higher salaries and benefits expenses. However, improved occupancy rates, reimbursement rates and lower contract labor and supplies expenses partially offset the negatives.Quarterly Operational UpdateAt the third-quarter end, the hospital count for Community Health was 69, lower than our estimate of 71.Patient days tumbled 1.5% year over year and missed our estimate by 2.5%. The average length of stay increased year over year to 4.3 days, while the occupancy rate of 49.8% improved 270 basis points year over year.Admissions fell 4.1% year over year. Adjusted admissions declined 3.7% year over year in the quarter under review. On a same-store basis, admissions and adjusted admissions improved 2.4% and 2.6%, respectively, from their corresponding prior-year quarter’s reported figures.Licensed beds of CYH totaled 11,517 as of Sept. 30, 2024, which indicates a decrease of 977 beds from the prior-year quarter. The reported figure missed our estimate by 2.9%.Total operating costs and expenses rose 13.1% year over year to $3.3 billion in the third quarter, higher than our estimate of $2.8 billion. Meanwhile, net interest expenses of $216 million increased 3.8% year over year. The metric came higher than our estimate of $211.1 million.The company reported a net loss of $355 million in the third quarter compared with $52 million in the year-ago period. Adjusted EBITDA deteriorated 3.6% year over year to $347 million in the quarter under review primarily due to higher salaries and benefits expenses, costs for outsourced medical specialists, increased patient claim denials and losses from Hurricane Helene, partially offset by improved same-store volumes, higher net benefit of supplemental reimbursement programs, reimbursement rates and reduction in supplies and contract labor expense. The metric came below our estimate of $386 million.Financial Update (as of Sept. 30, 2024)Community Health exited the third quarter with cash and cash equivalents of $33 million, which decreased from $38 million at 2023-end. Total assets of $13.9 billion decreased from $14.5 billion at 2023-end.Long-term debt amounted to $11.5 billion, which increased from $11.47 billion at 2023-end. Current maturities of long-term debt were $20 million.In the third quarter of 2024, CYH generated operating cash flows of $264 million, up from $120 million in the year-ago quarter.2024 Outlook RevisedThe company raised its net operating revenue guidance between $12.45 billion and $12.55 billion for 2024, the mid-point of which is flat from the 2023 figure of $12.5 billion.Adjusted EBITDA is now estimated to be in the range of $1.5-$1.54 billion. The mid-point of the guidance implies a 4.6% rise from the 2023 figure of $1.453 billion.Net loss per share is expected to be between 60 cents and 50 cents in 2024. Community Health reported a net loss of $1.39 per share in 2023.Depreciation and amortization continue to be predicted in the range of $465-$480 million for 2024.Net cash from operating activities is now estimated to be between $400 million and $500 million in 2024. Capital expenditures continue to be anticipated in the range of $350-$400 million. Diluted weighted-average shares outstanding continue to be estimated in the range of $132-133 million.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates review.The consensus estimate has shifted 55.56% due to these changes.VGM ScoresCurrently, Community Health Systems has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Community Health Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Community Health Systems, Inc. (CYH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks