(Adds analyst comments)
By Susan Kelly
May 6 Hospital operator Community Health Systems
Inc reported a first-quarter net loss on Tuesday,
reflecting the costs of acquiring smaller rival Health
Community Health, the second-largest U.S. for-profit
hospital operator, also narrowed its forecast for full-year
earnings at the lower end of its prior range.
Harsh winter weather in key markets and a milder flu season
dragged on first-quarter results, but implementation of the
Affordable Care Act is starting to have a positive impact on
operations, Community Health Chief Executive Officer Wayne Smith
CRT Capital Research analyst Sheryl Skolnick expressed
disappointment at the results, noting that revenue came in below
Wall Street expectations and patient admissions were the weakest
in the for-profit hospital sector.
Community Health faces a challenge in turning around some of
Health Management's struggling hospitals, Skolnick said.
"We are really worried here that (Community Health) has
bitten off far more risk than it can handle," Skolnick wrote in
a note to clients.
Community Health, which completed its acquisition of Health
Management Associates in January, posted a first-quarter loss of
$112 million, or $1.04 a share, compared with net income of $79
million, or 86 cents a share, a year ago.
Excluding one-time items, the Franklin, Tennessee-based
company said it earned 27 cents a share from continuing
operations in the quarter. Net operating revenue rose 28
percent, to $4.2 billion.
On that basis, analysts were expecting a profit of 19 cents
a share, on revenue of $4.31 billion, according to Thomson
But at hospitals it has operated for at least one year, net
operating revenue declined 4 percent from a year ago as patient
admissions decreased 8.1 percent.
Community Health said it now expects full-year earnings from
continuing operations of $2.70 to $3.20 a share. In February the
company forecast 2014 earnings in a range of $2.70 to $3.75 a
Most hospital companies in the first quarter have reported
early signs that President Barack Obama's healthcare law is
bringing more insured patients through their doors, but said it
is too early to draw conclusions about the overall impact.
No. 3 hospital chain Tenet Healthcare Corp said on
Tuesday the number of newly insured patients it has treated
ramped up in February through April.
Community Health shares closed 1.1 percent lower at $39.42
Tuesday on the New York Stock Exchange.
(Reporting by Susan Kelly in Chicago; Editing by Bernard Orr,
Andre Grenon and Prudence Crowther)