COMMUNITY HEALTH SYSTEMS INC Q1 FY2025 earnings call

• Tim noted first quarter growth driven by heavier flu season, with same-store admissions, adjusted admissions, and net operating revenues showing positive trends. • Completed several divestitures since the last earnings call and announced plans to sell Cedar Park Regional Medical Center interest. • Strategic objectives for 2025 focus on delivering high-quality care, operational expertise, and financial discipline. • Kevin discussed divestiture proceeds, including $544 million from recent transactions, debt refinancing and buyback transactions to reduce leverage, and progress of the ERP project 'Project Empower'.

For the first quarter, same-store admissions increased 4%, same-store adjusted admissions rose 2.6%, and same-store net operating revenues grew 3.1%. The company completed divestitures of ShorePoint Health System in Florida, Lake Norman Regional Medical Center in North Carolina, and 50% ownership interest in Merit Health Biloxi. Plans to sell 80% interest in Cedar Park Regional Medical Center are in progress, with divestiture activity expected to slow down later in the year.

Maintained the outlook provided in February. Did not consider additional divestitures beyond those already announced. Did not include directed payment program reimbursement for New Mexico or Tennessee as they haven't been approved by CMS for 2025. If approved, these programs could add $100 to $125 million to the annual EBITDA run rate.

• Uncertainties in health care policies from Washington making planning challenging. • Potential impact of tariffs on supplies, with less than 5% of purchases from China, but remaining purchases spread across multiple countries. • Denials and downgrades in payer behavior affecting financial results, seen across all regions and service lines.

Q: Brian Tanquilut asked about volume performance, balancing with revenue per adjusted admission, tariffs, and balance sheet/cash flows.

A: Tim discussed flu impact, strong volumes in EMS, physician practices, cardiac services, and robotic surgeries; Kevin talked about expense control, tariffs with group purchasing organization, and balance sheet proceeds/refinancing.

Q: AJ Rice inquired about Tennessee and New Mexico DPP programs, and public exchanges.

A: Kevin said DPP programs in Tennessee and New Mexico not fully approved yet, Indiana program looking positive, public exchanges revenue less than 6% of total, and advocacy for premium tax credit extensions.

Q: Joshua Raskin asked about primary care and surgical specialist visits, and payer behavior.

A: Tim spoke about procedural pull-through, Kevin stated denials and downgrades occur across all regions and service lines.

Q: Andrew Mok asked about guidance despite headwinds and payer mix dynamics.

A: Kevin said headwinds were baked into guidance, Tim discussed flu impact on case mix.

Q: Stephen Baxter asked about Tennessee and New Mexico DPP retroactivity and payer mix dynamics.

A: Kevin said retro component for Tennessee not approved, Tim talked about flu impact on case mix and net revenue per adjusted admission.