Community Health Loses $71 Million as Collection Rates Drop

Community Health Systems (NYSE: CYH) said yesterday that it lost $70.6 million from continuing operations in the fourth quarter of 2007, as lower collectability rates and its July 2007 purchase of Triad Hospitals ("Largest Public Hospital Company in U.S. Created in $5.1 billion Deal," March 20, 2007) caused it to increased its allowance for bad debt write offs. In the fourth quarter of 2006, Community Health reported earnings of $54.9 million.

Franklin, Tenn.-based CHS said it increased its bad debt allowance in the quarter by $70.1 million, to $166.4 million. CHS said the lower collectability rates were largely caused by an increase in the number of patients qualifying for charity care, an increase in the number of patients who are indigent non-resident aliens, and a reduction in certain state Medicaid programs.

CHS’s purchase of Triad Hospitals made it the largest publicly traded operator of hospitals in the United States. Net operating revenues for the year ended December 31, 2007 totaled $7.1 billion, an increase of more than 73 percent compared with $4.1 billion in 2006. Income from continuing operations fell 66 percent to $59.9 million, compared with $177.7 million a year earlier.

"Our fourth quarter performance capped off a year of significant growth and progress for Community Health Systems," Wayne T. Smith, chairman, president and CEO, said in a press release.

CHS said it expects to earn between $2.25 and $2.45 per share in 2008 on revenue between $11 billion and $11.3 billion, as Triad’s revenues for a full year are recognized. Analysts polled by Thomson Financial are forecasting a profit of $2.30 per share on revenue of $11.6 billion.