Community Health 1Q profit falls 12 percent
Hospital operator Community Health Systems Inc., which is trying to buy rival Tenet Healthcare Corp., said Wednesday that its profit fell 12 percent in the first quarter on losses related to a physician clinic it recently sold and a hospital it is selling.
Community Health Systems said net income slipped to $61.3 million, or 67 cents per share, from $70 million, or 75 cents per share, one year ago. Excluding expenses related to discontinued options, the company said it earned 80 cents per share. Its revenue rose 9 percent, to $3.41 billion from $3.13 billion.
Analysts expected a profit of 79 cents per share and $3.45 billion in revenue, according to FactSet.
Community Health focuses on non-urban and fast-growing markets. It operated 129 hospitals at the end of the quarter, up from 124 a year earlier. Its discontinued operations included a physician clinic in Oregon that it sold on Feb. 1, and a hospital it has agreed to sell at a loss of $8.4 million.
The company said its admissions grew 1.4 percent in the first quarter, and adjusted admissions rose 4.7 percent. Adjusted admissions include both inpatient admissions and outpatient procedures.
However, Community Health said admissions at hospitals open at least a year fell 3.4 percent, and adjusted admissions at those locations were flat. Revenue from hospitals open at least a year rose 5.1 percent.
Results at locations open at least a year are an important measurement because they exclude results from locations that Community Health has opened, closed, acquired, or sold in the last year.
The company maintained its 2011 outlook for a profit of $3.15 to $3.35 per share from continuing operations, and $13.9 billion to $14.2 billion in net operating revenue. Community Health said adjusted admissions at hospitals open at least a year could range between an increase or decrease of 1 percent.
Analysts expect a profit of $3.25 per share and $14.1 billion in revenue, on average.
Community Health is trying to buy smaller competitor Tenet for $3 billion, or $6 per share. Tenet has rejected Community Health's overtures, and Community Health has since taken its offer directly to Tenet shareholders and has nominated director candidates to Tenet's board. Tenet is trying to fight off the bid by adopting a "poison pill" stock dilution measure, and it has filed a lawsuit accusing Community Health of bilking Medicare.
Shares of Community Health rose 62 cents, or 2 percent, to $31.35 on Wednesday. The stock fell $1.10, or 3.5 percent, to $30.25 in aftermarket trading on the report.