Download PDF

1. Company Snapshot

1.a. Company Description

Community Health Systems, Inc.owns, leases, and operates general acute care hospitals in the United States.It offers general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric, and rehabilitation services, as well as skilled nursing and home care services.


The company also provides outpatient services at primary care practices, urgent care centers, free-standing emergency departments, ambulatory surgery centers, imaging and diagnostic centers, retail clinics, and direct-to-consumer virtual health visits.As of December 31, 2021, it owned or leased 83 hospitals, including 81 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals with an aggregate of 13,289 licensed beds.The company was founded in 1985 and is headquartered in Franklin, Tennessee.

Show Full description

1.b. Last Insights on CYH

Community Health Systems' recent performance was negatively impacted by lower adjusted admissions, which led to a Q4 earnings miss. The company's contract labor expenses are decreasing due to improving labor trends, but this may not be enough to offset the decline in admissions. Additionally, the company's divestiture of its stake in Cedar Park Regional Medical Center to Ascension Health for $460 million in cash may be a strategic move, but it also indicates a reduction in the company's assets and potential revenue streams.

1.c. Company Highlights

2. Community Health Systems' Financial Performance: A Closer Look

Community Health Systems reported a same-store net revenue increase of 2.1% year-over-year for the fourth quarter, driven primarily by rate growth and a slight improvement in acuity. The company's adjusted EBITDA for the fourth quarter was $395 million, with a margin of 12.7%. The actual EPS came out at '-0.42', relative to estimates at '-0.20466', indicating a significant deviation from expectations. For the full year 2025, the company achieved a 2.1% year-over-year increase in same-store net revenue, driven by a 2.4% increase in net revenue per adjusted admission.

Publication Date: Mar -07

📋 Highlights
  • Same-store net revenue growth:: 2.1% year-over-year increase in 2025, driven by a 2.4% rise in net revenue per adjusted admission.
  • Debt reduction:: Leverage ratio decreased to 6.6x by year-end 2025 from 7.4x in 2024, reflecting progress in debt management.
  • 2026 guidance:: Adjusted EBITDA projected at $1.34B–$1.49B (12.7% margin in Q4 2025), with net revenue of $11.6B–$12.0B and $350M–$400M capital expenditures.
  • AI cost savings:: ERP transformation saved $50M in 2025, with additional AI-driven efficiencies expected to scale in 2026, targeting $600M–$700M operating cash flow.
  • Divestiture impact:: $1B revenue reduction from divestitures in 2025, offset by strategic reinvestment and a 33% reduction in hospital footprint since 2019 to improve scalability.

Revenue and Margin Analysis

The company's revenue growth is expected to be around 1.4% next year, according to analysts' estimates. Jason Johnson mentioned that the guidance does take into account the potential impact from reductions in enrollment in healthcare exchanges. A 20% reduction in fixed volumes would have resulted in a $100 million to $120 million reduction in net revenue. The company's EBITDA growth is expected to be around 6% on a same-facility basis, with a 2.5% to 3.5% rate increase assumption and a 5.5% to 5.3% increase due to mix, payer mix, and volume.

Valuation Metrics

Looking at the company's valuation metrics, the P/E Ratio stands at 0.88, while the EV/EBITDA ratio is at 7.3. The Net Debt / EBITDA ratio is at 7.01, indicating a significant debt burden. The company's ROE (%) is at -31.57, and ROIC (%) is at -83.24, suggesting poor profitability. The Free Cash Flow Yield (%) is at 44.79, which is a positive sign. These metrics suggest that the company's valuation is closely tied to its ability to improve profitability and reduce debt.

Operational Highlights

Kevin Hammons mentioned that the company is getting closer to the end of its programmatic divestitures and is comfortable with its portfolio as it stands. The company has been divesting standalone hospitals and focusing on networks of care, resulting in positive free cash flow. The company is also investing in AI technology to improve administrative and clinical areas, with expected savings of around $50 million this year.

Outlook

The company's guidance for 2026 indicates net revenue of $11.6 billion to $12.0 billion, adjusted EBITDA of $1.34 billion to $1.49 billion, and cash flows from operations of $600 million to $700 million. Kevin Hammons expects consumer confidence to improve throughout the year, driving growth. The company's hospital footprint has decreased by about 1/3 since 2019, but they have been efficient in reducing overhead costs and can scale their centralized services as needed.

3. NewsRoom

Card image cap

Community Health Systems, Inc. (NYSE:CYH) Receives Consensus Rating of “Hold” from Analysts

Mar -26

Source: defenseworld.net

Card image cap

Community Health Systems, Inc. (CYH) Presents at Barclays 28th Annual Global Healthcare Conference Transcript

Mar -10

Source: seekingalpha.com

Card image cap

Is Community Health Systems Attractive Despite Its Heavy Debt Load?

Mar -09

Source: zacks.com

Card image cap

CYH Agreed to Sell 4 Arkansas Hospitals for $112M to Reduce Debt

Mar -06

Source: zacks.com

Card image cap

Community Health Systems, Inc. (CYH) Presents at J.P. Morgan 2026 Global Leveraged Finance Conference Transcript

Mar -03

Source: seekingalpha.com

Card image cap

Community Health Systems to Participate in Upcoming Investor Conferences in March

Feb -24

Source: businesswire.com

Card image cap

Community Health Systems, Inc. (CYH) Q4 2025 Earnings Call Transcript

Feb -19

Source: seekingalpha.com

Card image cap

Community Health Q4 Earnings Beat Estimates on Lower Expenses

Feb -19

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.89%)

6. Segments

Managed Care and Other Third-party Payors

Expected Growth: 3%

The 3% growth in Managed Care and Other Third-party Payors from Community Health Systems, Inc. is driven by increasing enrollment in government-sponsored health plans, expansion of value-based care models, and strategic partnerships with payors to improve patient outcomes and reduce costs.

Medicare

Expected Growth: 2.8%

Medicare growth from Community Health Systems, Inc. is driven by an aging population, increasing healthcare utilization, and favorable reimbursement rates. Additionally, the company's strategic focus on quality care and cost management, as well as its expansion into value-based care models, contribute to the 2.8% growth rate.

Medicare Managed Care

Expected Growth: 2.9%

Medicare Managed Care from Community Health Systems, Inc. growth of 2.9% driven by increasing Medicare Advantage enrollment, expansion of value-based care models, and strategic partnerships. Additionally, demographic trends, such as aging population and rising healthcare demand, contribute to growth. Effective cost management and investments in digital health infrastructure also support this growth rate.

Medicaid

Expected Growth: 2.7%

Medicaid growth from Community Health Systems, Inc. is driven by increasing Medicaid expansion, favorable policy changes, and strategic hospital acquisitions. Additionally, the company's focus on improving operational efficiency and cost management has contributed to the 2.7% growth rate.

Self-pay

Expected Growth: 2.5%

Self-pay growth of 2.5% from Community Health Systems, Inc. is driven by increasing patient volumes, expansion of urgent care centers, and strategic partnerships with employers and payers. Additionally, the company's focus on improving patient engagement and digital health platforms has contributed to the growth.

7. Detailed Products

Hospital Operations

Community Health Systems, Inc. operates general acute care hospitals that provide a range of medical services, including emergency care, surgical services, and rehabilitation services.

Physician Practices

The company operates physician practices that provide primary care, specialty care, and urgent care services to patients.

Outpatient Services

Community Health Systems, Inc. offers outpatient services, including imaging, laboratory, and physical therapy services.

Home Health Services

The company provides home health services, including skilled nursing, physical therapy, and occupational therapy.

Ambulatory Surgery Centers

Community Health Systems, Inc. operates ambulatory surgery centers that provide outpatient surgical services.

8. Community Health Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Community Health Systems, Inc. faces moderate threat from substitutes, as patients have limited alternatives for hospital services, but some outpatient procedures can be performed in alternative settings.

Bargaining Power Of Customers

Community Health Systems, Inc. has a low bargaining power of customers, as individual patients have limited negotiating power, but large employers and insurers may have some bargaining power.

Bargaining Power Of Suppliers

Community Health Systems, Inc. faces moderate bargaining power of suppliers, as suppliers of medical equipment and pharmaceuticals have some negotiating power, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

Community Health Systems, Inc. faces a low threat of new entrants, as high barriers to entry, including regulatory hurdles and capital requirements, limit the likelihood of new hospital systems entering the market.

Intensity Of Rivalry

Community Health Systems, Inc. operates in a highly competitive industry, with many hospitals and health systems competing for patients, physicians, and market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 112.91%
Debt Cost 11.72%
Equity Weight -12.91%
Equity Cost 11.72%
WACC 11.72%
Leverage -874.57%

11. Quality Control: Community Health Systems, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
P3 Health Partners

A-Score: 4.8/10

Value: 10.0

Growth: 4.4

Quality: 3.9

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

1-Year Total Return ->

View Full Report
Stock-Card
The Oncology Institute

A-Score: 4.8/10

Value: 9.6

Growth: 3.2

Quality: 5.6

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

1-Year Total Return ->

View Full Report
Stock-Card
DocGo

A-Score: 4.0/10

Value: 10.0

Growth: 8.3

Quality: 3.8

Yield: 0.0

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

View Full Report
Stock-Card
Sonida Senior Living

A-Score: 3.9/10

Value: 5.2

Growth: 2.7

Quality: 2.1

Yield: 0.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
American Oncology Network

A-Score: 3.8/10

Value: 5.2

Growth: 4.3

Quality: 2.8

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

1-Year Total Return ->

View Full Report
Stock-Card
Community Health Systems

A-Score: 3.8/10

Value: 9.5

Growth: 2.7

Quality: 4.3

Yield: 0.0

Momentum: 4.5

Volatility: 1.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.86$

Current Price

2.86$

Potential

-0.00%

Expected Cash-Flows