Community Health Systems, Inc. (NYSE:CYH) Q4 2022 Earnings Call Transcript

Tim Hingtgen: Sure. In terms of the migration of inpatient cases to outpatient, that seems to have leveled off. So, we don’t believe that’s going to be as large of a headwind. But just to reiterate, for those cases, the broad majority of those cases that didn’t ferment patient to outpatient. We believe we’ve captured them within our existing health care delivery systems in our hospitals or in our ASC environment. So, we feel really good about that contribution going forward into 2023 and beyond with a full pipeline of additional access points, ASCs, what have you, that we are adding to the portfolio. In terms of the near-term growth opportunities, we called out accelerating growth as priority number 1 for Community Health Systems.

We believe we’ve invested really wisely for that in some of our highest growth markets. We have new capacity that has just recently come online or will be coming online throughout the rest of this year. So, adding incremental beds, leveraging our focus on strengthening the workforce, recruiting more staff, so we can open-up every one of those beds should be a strong catalyst for us for incremental volume growth.

Jason Cassorla: Okay. And anything on the cybersecurity incident you want to add?

Kevin Hammons: Sure. Not a whole lot to add there, but just for clarity, we have a third-party that we had contracted with for secure file transfers, this third-party experience the data breach. And in the process of that, the €“ a couple of €“ our file, CHS files were able to be accessed. The breach did not occur the best of our knowledge within our system. There’s no €“ we have no evidence that there was any breach of the CHS systems, and we’ve not experienced any type of disruption in service nor do we anticipate any disruption in service.

Jason Cassorla : Great. Thank you.

Operator: Next question will come from Stephen Baxter with Wells Fargo. Please go ahead.

Stephen Baxter: Hi, thanks. And our condolences on Ross, it’s really sad to hear about that. So, just wanted to ask about some of the drivers of the operating cash flow improvement year-over-year. So, you talked a little bit about this, it looks like you’re looking for, I think, a $450 million pickup. Some of that is the EBITDA growth you’re looking for and you talked a little bit about the, kind of the one-time items maybe impacting 2022 that are now 2023 collections, love to get a sense of whether you can maybe size some of those for us and talk about any other factors we should be considering in the year-over-year improvement? And it does look like your working capital is already down a decent amount year-over-year in 2022 and you’re expecting to make more progress. So, any insight into kind of how much further you think you can manage working capital lower would be great to hear about? Thanks.

Kevin Hammons: Sure. So, a couple of items I’d point to. One is the repayment of deferred payroll taxes of $73 million. This was COVID-related benefits that allowed us to defer payroll taxes. Half of it was repaid in 2021 and half of it was repaid in 2022. So that’s done that payment will not occur. Again, that deferral started back in 2020. We did decrease our days in AP during 2022. Near the end of the year, we took advantage of some discount opportunities and paid some things early. We’ll be able to turn that around in 2023, kind of pick that back up, which will be a positive cash flow item. Similarly, we lost a day in AR during 2022, we would expect to be able to recapture that day. So, those items of working capital I would say, would be positive impacts in 2023.