CHS Reports Widening Losses in 2024, Outlines Strategic Plans for 2025

Community Health Systems (CHS), a major hospital operator, has reported significant financial challenges for the 2024 fiscal year, with losses expanding to $516 million from $133 million in 2023. The company attributes these widening losses to various factors, including divestitures, increasing medical specialist fees, and payer denials. Despite these setbacks, CHS has outlined strategic plans for 2025 aimed at improving its financial position and operational efficiency.

Financial Performance and Challenges

CHS ended 2024 with $11.4 billion in long-term debt and $2.3 billion in current liabilities, while maintaining only 37 days of cash and cash equivalents. The company's struggles are particularly notable when compared to industry peers such as Universal Health Services, Tenet Healthcare, and HCA Healthcare, which have shown stronger post-pandemic recoveries.

Key financial challenges faced by CHS include:

• A 5.6% year-over-year decrease in overall admissions during the fourth quarter
• Doubling of initial claims denials compared to the previous year
• A 12% increase in medical specialist fees during the fourth quarter, totaling $170 million
• Full-year medical specialist fees reaching $640 million, up 10.9% on a same-store basis compared to 2023

CFO Kevin Hammons noted that the company is enhancing its capabilities to address appeals, with 25% of denials being successfully appealed.

Strategic Initiatives and Divestiture Plans

To address its financial challenges, CHS is pursuing several strategic initiatives:

1. Continued portfolio trimming: CHS plans to finalize the sales of ShorePoint Health in Florida and Lake Norman Regional Medical Center in North Carolina in 2025, expected to generate nearly $550 million in gross proceeds.

2. Cost containment: The company is focusing on managing expenses, including bringing pricey anesthesiology services in-house to control rising costs.

3. Outpatient and post-acute care investments: CHS plans to spend between $350 million to $400 million on capital expenditures in 2025, with a focus on expanding ambulatory surgery centers and freestanding emergency departments.

4. Capacity management improvements: The company aims to enhance its ability to manage patient capacity across its facilities.

CEO Tim Hingtgen emphasized that despite the smaller portfolio, CHS is "generating roughly... similar amount of net revenue as three or four years ago," indicating that investments are yielding intended outcomes in terms of patient care and growth.

2025 Outlook and Potential Revenue Boosts

For 2025, CHS projects revenue between $12.2 billion and $12.6 billion, with adjusted EBITDA ranging from $1.5 billion to $1.6 billion. The company's outlook could improve significantly if state Medicaid supplemental payment programs in Tennessee and New Mexico are approved as anticipated.

CFO Hammons stated, "If those programs get approved for 2025, we believe, it will add an incremental $100 million to $125 million to our annual guided run rate of EBITDA." Executives expressed confidence that these programs would likely be approved, potentially providing a substantial boost to the company's financial performance in the coming year.