COMMUNITY HEALTH SYSTEMS, INC. ITEM 2.02 Results of Operations and Financial Condition
The information set forth in Item 7.01 of this Form 8-K is incorporated herein by reference.
ITEM 7.01 Regulation FD Disclosure
As an essential business, the Company's 99 hospitals, hundreds of medical clinics, access points, medical personnel, and employees have been actively preparing for COVID-19 and caring for COVID-19 patients. We are working with federal, state and local health authorities to respond to COVID-19 cases in the communities we serve and are taking or supporting measures to try to limit the spread of the virus and to mitigate the burden on the healthcare system. Certain of the measures we are taking (such as rescheduling or cancelling elective procedures at our hospitals and other healthcare facilities) will adversely affect our financial results. The Company hopes that federal, state, and local government policies along with social distancing measures will decrease the continued spread of COVID-19.
The ultimate impact from COVID-19 on the Company's operations and financial results during 2020 will depend on, among other things, the length of time and severity at which the pandemic continues to spread, the volume of canceled or rescheduled procedures and the volume of COVID-19 patients cared for across our health systems, and the impact of government and administrative regulation and stimulus on the hospital industry. Changes in net revenue due to patient volumes, payor mix and deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients as the result of business closings and layoffs), as well as potential increased expenses related to labor, supply chain or other expenditures, also could have a material impact on the Company's results. In addition, the Company is continuing to assess the impact the CARES Act could have on 2020 results. We are not able to fully quantify the impact that these factors will have on our financial results during 2020, but expect developments related to COVID-19 to materially affect the Company's financial performance in 2020.
As a result of these factors along with the continuously changing and
unpredictable environment related to COVID-19, the Company is withdrawing its
2020 financial guidance previously issued in its earnings release dated
Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding the anticipated impact of COVID-19 on the Company's operations and financial results, that involve risk and uncertainties. Although the Company believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic and competitive uncertainties and contingencies, which are difficult or impossible to predict accurately and may be beyond the control of the Company. Accordingly, the Company cannot give any assurance that its expectations will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements. A number of factors could affect the future results of the Company or the healthcare industry generally and
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could cause the Company's expected results to differ materially from those expressed in this report. These factors include, among other things:
• developments related to COVID-19, including, without limitation, related to
the length and severity of the pandemic; the volume of canceled or
rescheduled procedures and the volume of COVID-19 patients cared for across
our health systems; measures we are taking to respond to the COVID-19
pandemic; the impact of government and administrative regulation and stimulus
on us (including the CARES Act); changes in net revenue due to patient
volumes, payor mix and deteriorating macroeconomic conditions; potential
increased expenses related to labor, supply chain or other expenditures;
workforce disruptions; and supply shortages and disruptions;
• general economic and business conditions, both nationally and in the regions
in which we operate, including economic and business conditions resulting
from the COVID-19 pandemic;
• the impact of current or future federal and state health reform initiatives,
including, without limitation, the Affordable Care Act, and the potential for
the Affordable Care Act to be repealed, or found unconstitutional or
otherwise invalidated, or for additional changes to the law, its
implementation or its interpretation (including through executive orders and
court challenges);
• the extent to and manner in which states support increases, decreases or
changes in Medicaid programs, implement health insurance exchanges or alter
the provision of healthcare to state residents through regulation or
otherwise;
• the future and long-term viability of health insurance exchanges and
potential changes to the beneficiary enrollment process;
• risks associated with our substantial indebtedness, leverage and debt service
obligations, and the fact that a substantial portion of our indebtedness will
mature and become due in the near future, including our ability to refinance
such indebtedness on acceptable terms or to incur additional indebtedness,
and our ability to remain in compliance with debt covenants, as well as risks
associated with disruptions in the financial markets and the business of
financial institutions as the result of the COVID-19 pandemic which could
impact us from a financing perspective;
• demographic changes;
• changes in, or the failure to comply with, federal, state or local laws or
governmental regulations affecting our business, including any such laws or
governmental regulations which are adopted in connection with the COVID-19
pandemic;
• potential adverse impact of known and unknown government investigations,
audits, and federal and state false claims act litigation and other legal
proceedings;
• our ability, where appropriate, to enter into and maintain provider
arrangements with payors and the terms of these arrangements, which may be
further affected by the increasing consolidation of health insurers and
managed care companies and vertical integration efforts involving payors and
healthcare providers;
• changes in, or the failure to comply with, contract terms with payors and
changes in reimbursement policies or rates paid by federal or state
healthcare programs or commercial payors;
• any potential additional impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets, or changes in the useful lives
of other intangible assets;
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• changes in inpatient or outpatient Medicare and Medicaid payment levels and
methodologies;
• the effects related to the continued implementation of the sequestration
spending reductions and the potential for future deficit reduction
legislation;
• increases in the amount and risk of collectability of patient accounts
receivable, including decreases in collectability which may result from,
among other things, self-pay growth and difficulties in recovering payments
for which patients are responsible, including co-paysand deductibles;
• the efforts of insurers, healthcare providers, large employer groups and
others to contain healthcare costs, including the trend toward value-based
purchasing;
• increases in wages as a result of inflation or competition for highly
technical positions and rising supply and drug costs due to market pressure
from pharmaceutical companies and new product releases;
• liabilities and other claims asserted against us, including self-insured
malpractice claims;
• competition;
• our ability to attract and retain, at reasonable employment costs, qualified
personnel, key management, physicians, nurses and other healthcare workers;
• trends toward treatment of patients in less acute or specialty healthcare
settings, including ambulatory surgery centers or specialty hospitals;
• changes in medical or other technology;
• changes in U.S. GAAP;
• the availability and terms of capital to fund any additional acquisitions or
replacement facilities or other capital expenditures;
• our ability to successfully make acquisitions or complete divestitures,
including the disposition of hospitals and non-hospital businesses pursuant
to our portfolio rationalization and deleveraging strategy, our ability to
complete any such acquisitions or divestitures on desired terms or at all,
the timing of the completion of any such acquisitions or divestitures, and
our ability to realize the intended benefits from any such acquisitions or
divestitures;
• the impact that changes in our relationships with joint venture or
syndication partners could have on effectively operating our hospitals or
ancillary services or in advancing strategic opportunities;
• our ability to successfully integrate any acquired hospitals and non-hospital
businesses, or to recognize expected synergies from acquisitions;
• the impact of seasonal severe weather conditions, including the timing and
amount of insurance recoveries in relation to severe weather events;
• our ability to obtain adequate levels of insurance, including general
liability, professional liability, and directors and officers liability
insurance;
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• timeliness of reimbursement payments received under government programs;
• effects related to other pandemics, epidemics, or outbreaks of infectious
diseases;
• the impact of prior or potential future cyber-attacks or security breaches;
• any failure to comply with the terms of the Corporate Integrity Agreement;
• the concentration of our revenue in a small number of states;
• our ability to realize anticipated cost savings and other benefits from our
current strategic and operational cost savings initiatives;
• changes in interpretations, assumptions and expectations regarding the Tax
Cuts and Jobs Act; and
• the other risk factors set forth in our Annual Report on Form 10-K for the
year ended December 31, 2019 , filed with the Securities and Exchange
Commission on February 20, 2020 , and our other public filings with the
Securities and Exchange Commission .
The Company cautions that the information set forth in this Form 8-K is provided as of the date hereof based on currently available information. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
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