logo
Share SHARE
FONT-SIZE Plus   Neg

Community Health Stock Plunges On Profit Warning, Subpoena

Shares of Community Health Systems, Inc. (CYH: Quote) plunged in after-hours trading on Thursday after the hospital operator issued a profit warning for the second quarter and added that it received another subpoena from the Department of Justice relating to the investigation of Medicare short-stay admissions.

The company expects net operating revenues for the second quarter to be about $3.236 billion, compared with $3.243 billion generated last year.

According to Community Health Systems, revenues were hurt by weak volume, especially in May and June, along with higher-than-anticipated bad debts and a deterioration in payor mix.

Income before taxes is estimated to be $65 million, compared with $151.7 million in the prior year.

Adjusted Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA for the three months ended June 30 is expected to fall to $414 million from $483 million for the same period in 2012.

Adjusted EBITDA excludes discontinued operations, loss from early extinguishment of debt, and net income attributable to non-controlling interests.

The consolidated operating results for the quarter reflect a 5.1 percent decrease in total admissions and a 1.8 percent decrease in adjusted admissions from the previous year.

On a same-store basis, admissions decreased 5.7 percent and adjusted admissions decreased 2.6 percent.

Community Health Systems said this is its first significant earnings miss since the third quarter of 2006 and that its management team has intensified its focus on core operating strategies, volume initiatives and expense management.

The company also announced that the Department of Justice's investigation of Medicare short-stay admissions from emergency departments is continuing. The company has already met with the government twice this year and on July 9, it was served with an additional document subpoena.

The subpoena seeks additional documents related to the admission of inpatients from its emergency departments, as well as documents that support the factual refutations and defenses that the company has presented during its discussions with the government.

While many of the categories of documents were the same as those requested in the April 2011 subpoena, the request is being broadened to additional custodians and locations and additional categories of documents have been added.

The government also served civil investigative demands to interview two of the company's current employees, one division president and one senior vice president.

CYH closed at $47.31 on Thursday, but plunged 17.76 percent in the extended trade.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Internet giant Google Inc. (GOOGL, GOOG) has launched a new online flight search tool that makes it easy to find out the best flight deal. The tool dubbed "Google Flights" provides a calendar that one can scroll through and see the lowest fare highlighted for each day. One can also use the lowest... Hyperloop Transportation Technologies, a start-up that has adopted Elon Musk's ambitious project of high-speed transportation system, plans to build a Hyperloop test track in California and completed as early as 2016. Hyperloop Test Technologies, a crowd-funded company, plans to take Musk's dream... Colors have set the social media afire after an otherwise innocuous photo of a bodycon dress kept users guessing as to what hues permeate it. Opinions are divided, with some seeing the dress as white and gold, and others as blue and black. The photo was posted on Tumblr by a user called Swiked.
comments powered by Disqus
Follow RTT