Community Health Systems, Inc.

Ladies and gentlemen, thank you for standing by and welcome to community health system second quarter 2020 earnings conference call at this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now turn the conference over to your speaker today, Mr. Ross Cuomo, Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, Mike. Good morning and welcome to Community Health System's second quarter conference call. Before we begin the call, I'd like to read the following disclosure statement. This conference call may contain certain forward-looking statements, including all statements that do not relate solely to historical or current facts. These forward-looking statements are subject to a number of known and unknown risk, which are described in headings such as risk factors in our annual report on Form 10-K and other reports filed with or furnished to the Securities and Exchange Commission. As a consequence, actual results may differ significantly from those expressed in any forward-looking statements in today's discussion. We do not intend to update any of these forward-looking statements. Yesterday afternoon, we issued a press release with our financial statements and definitions and calculations of adjusted EBITDA and adjusted EPS. For those of you listening to the live broadcast of this conference call, a supplemental slide presentation has been posted to our website. We will refer to those slides during this earnings call. All calculations we will discuss also exclude gain or loss from early extinguishment of debt, impairment expense as well as gains or losses on the sale of businesses, expenses from government and other legal settlements and related costs, expenses from settlement and legal expenses related to cases covered by the CVR, expenses related to employee termination benefits and other restructuring charges, change in valuation allowances recorded for commissary notes, change in estimate for professional liability claims accrual, change in tax valuation allowance. With that said, I'd like to turn the call over to Wayne Smith, the Chairman and Chief Executive Officer. Mr. Smith.

Thank you, Ross. Good morning and welcome everyone to our second quarter conference call. I'm joined today by Tim Hingston, our President and Chief Operating Officer. Dr. Lynn Simon, President of Clinical Operations and Chief Medical Officer, and Kevin Hammonds, Executive Vice President and Chief Financial Officer. It goes without saying that the COVID fight is still on, but I think we're fighting a very good fight as indicated by our second quarter results. We reported our first quarter results at the end of April, and I concluded my remarks by saying that CHS is a strong and resilient organization that has always managed to solve problems that we remain ready for whatever might come next and that we would do our best for everyone who counts on us. Three months later, we find ourselves in the position of caring for many more COVID-19 patients now than we were back at that point in April. We're also balancing the healthcare needs of non-COVID patients, having successfully reopened substantially all of our services that were suspended in the early stages of this pandemic and ensuring that All who need health care in our communities will continue to have access, quality, and safe health care. The credit, of course, goes to every physician, every nurse, every clinician, caregiver, support worker, who shows up every day to serve our patients. Our medical staff and employees have been extraordinary during these extraordinary times. And while you may not be seeing as many health care hero signs displayed as we saw back in March and April. The heroic work continues, and we're extremely grateful. We operate in a number of states that have been hit harder by COVID-19 in recent weeks, Florida, Texas, Arizona, and others. In each market where COVID-19 cases have increased significantly, our single purpose is to deliver new health care services safely. We're doing everything possible to protect our patients, employees, their families, and others in our communities. Safety always comes first for us, and every hospital has implemented protocols to prevent the spread of COVID-19 inside our facilities. We want people to know that they're safe in our care and safe working in our hospitals. At the beginning of the quarter, volumes were very low in our markets, just like they were across the country. This was due in large part to the federal recommendations, stay-at-home orders, and state restrictions on elective procedures, and also because consumers were fearful of and adhering to social distancing recommendations. As states lifted those restrictions, we engaged directly with the patients who had deferred healthcare, reassuring them and bringing them back for needed appointments and procedures, and emphasizing that they should not delay important healthcare services. We promoted the importance of prompt care in emergencies and continuation of care for chronic conditions and even routine screening in health services. I can't say enough about the work that was done to coordinate and collaborate with medical staff leaders and with physicians in our markets. These relationships enabled a relatively seamless restart of our elective procedures, walk-in appointments, and other services. We saw COVID volume rebound in our markets in May and June, in some cases getting closer to pre-COVID levels. Although, like many others, we saw a slower volume return and our ERs. In July, COVID-19 cases have increased across the Sun Belt, which can impact healthcare demand and likely affects consumers' willingness to access services. But in most of our markets, we are effectively managing COVID-19 while also leveraging our real-time data to monitor effective elective procedures and other volumes to ensure safe and efficient levels of operation. Our solid recovery in the second quarter was made possible by the company's commitment to operational readiness at all times. This daily focus by Tim and the team has enabled us to ramp up and down and back up as needed. And this flexibility will likely be important as we continue to face uncertainties due to the COVID-19 pandemic. Our operations and leadership teams locally and in the corporate office have artfully managed each market's unique needs while also leveraging our organization resources in a coordinated enterprise-wide response. Our response and recovery work has benefited greatly from prior investments that we made to enhance our supply chain operations, extend our transfer centers, accelerate workforce management processes, and optimize our physician practice operations. It's not just our company size, although that's part of it, but also our mindset and our ability to adapt to new conditions, to make rapid decisions, to quickly coordinate resources, and deploy expertise where it's needed. These strengths, along with the advantage of scale, position us well to cope with the future evolution of the pandemic. They also ensure we can protect our business and improve our competitive position in the future as we move forward with strategic market opportunities and the necessary adjustments health care providers are called upon to make now to deliver even better care and more innovatively in the future. Let me turn to the funds we received from the CARES Act for just a moment, and Kevin will We'll get into this in much greater detail in a few minutes. Runs from the CARE Act have been very helpful to our organization and so many other healthcare providers. Support through the pandemic relief funds and accelerated Medicare payments provided liquidity, ensuring the industry could maintain more jobs, survive business disruptions and volume declines, and they supported the continuation of essential services for our communities. But the potential negative impact of COVID-19 will not likely end until we are able to control the pandemic and healthcare providers will continue to need the support of our country while we care for Americans who count on community hospitals to always be available when they need us. Looking forward, while COVID-19 is a primary focus, we're also continuing to plan for the future. Our divestitures, as we wrap up the portfolio rationalization program this year, we strengthen the portfolio and improve liquidity. Our stronger portfolio is benefiting from the investments in strategic growth drivers, including capital investments and net revenue initiatives that will deliver market share gains in both inpatient and outpatient lines of business. Our strategic margin improvement program also remains on track, with a solid reduction across numerous expense categories, producing greater efficiency across the organization. And our confidence continues to run high. And while nothing is assured in a public crisis, we will manage through this pandemic to the best of our abilities, controlling what we can control and adapting whenever we need to. Let me say once more how grateful I am to everyone across the Community Health Systems organization. I'm proud of our achievements in these difficult circumstances. I hope that everyone will continue to do their part to help control the spread of the virus and protect one another. We want our caregivers to be safe, we want our patients to recover, and we must all do our part. And now I'd like to turn the call over to Dr. Lynn Simon, who continues to lead many of our critical aspects in our response to the pandemic. Dr. Simon.