Community Health Systems, Inc.

Good day and welcome to the Community Health System second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. We do ask that you limit yourself to one question and a single follow-up. Please also note, today's event is being recorded. I'd now like to turn the conference over to Mr. Anton High, Vice President of Investor Relations. Please go ahead.

Thank you, Rocco. Good morning and welcome to Community Health System's second quarter 2024 conference call. Joining me on today's call are Tim Henschen, Chief Executive Officer, and Kevin Hammonds, President and Chief Financial Officer. Before we begin, I must remind everyone that 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 risks, 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 SEC. 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 unit data and adjusted EPS. We've also posted a supplemental slide presentation on our website. All calculations we will discuss exclude impairment expense as well as gains or losses on the sale of businesses, expense from government and other legal matters and related costs, expense from business transformation costs, expenses related to employee termination benefits, and other restructuring charges. With that said, I'll turn the call over to Tim Hinchin, Chief Executive Officer.

Thanks, Anton. Good morning, and thank you for joining our second quarter conference call. At the midpoint of 2024, we are pleased with our progress, including a solid second quarter that produced both volume and earnings growth. In the second quarter, same-store net revenues increased 4.7%, compared to the same period last year. Adjusted EBITDA for this quarter was $387 million compared to $373 million in the second quarter of 2023. Same store admissions improved 3%, adjusted admissions improved 3.2%, and surgeries were up 0.6%. About surgeries, I want to note that the second quarter increase is on top of a record surgery volume quarter for the company last year. So we were pleased to see same-store surgical volumes reaching yet a new high in the second quarter this year. This progress is driven in part by particularly strong outpatient case volumes, including in our ambulatory surgery centers, whose performance and results are complementary to their local affiliated CHS health systems. We also experienced generally strong outpatient volumes, including growth in emergency department visits, urgent care, and in physician practices. In addition to year-over-year same-store growth, we also achieved sequential improvements over the first quarter of 2024, and we expect to carry this momentum into the second half of the year. Much of our growth is attributable to the strategic investments made in our markets, which include ongoing physician recruitment and capital investments to expand access and capacity. We've invested more than $3 billion into our health systems since 2018. which includes new and replacement hospital facilities, bed and procedural space expansion, new technologies, and a wide spectrum of access points and outpatient services. Earlier this year, we opened our new tower at Tenova North Knoxville, where performance is already exceeding initial expectations. And a major expansion is underway in South Baldwin County, Alabama, which remains on track to open this year. and will create incremental capacity and produce more growth in this rapidly growing market. Other recent openings include a freestanding emergency department in Huntsville, Alabama, which brings our company count to 18 freestanding EDs in total, several new physician practice locations, and investments to expand procedural space and services in multiple CHS hospitals. Regarding our portfolio, it has been widely reported that Novant Health ended its plans to acquire our North North Carolina hospitals. That was an abrupt decision, but given the FTC's lawsuit, we were prepared for the possibility that the transaction would not be completed. We rapidly deployed CHS resources to support our North Carolina team and to further evaluate our position and potential future opportunities in the market. That work is ongoing. The divestiture of our Cleveland, Tennessee hospital is on track and expected to be completed in the third quarter. Additional transactions are underway, and we continue to carefully review inbound interest related to other markets. We are very pleased with progress related to recruitment and retention of our workforce and the programs in place to support our teams. We hired nearly 3,000 registered nurses during the first half of 2024, and our nurse retention rate is very strong, at its highest level in a decade. Our centralized recruitment program has expanded to include allied health positions in areas such as imaging, pharmacy, lab, respiratory, and surgical services. Across these positions, hiring is up by more than 14% year over year. Other facets of cost management have been an area of strength this year, with contract labor, supplies, and other expenses turning down in the second quarter. Innovative solutions to improve care delivery in our business operations are another area of specific focus. During the second quarter, we announced an expanded partnership with Mark Cuban Cost Plus Drugs. All of our hospitals will now be able to purchase select drugs from the Cost Plus Drugs marketplace, initially resulting in hundreds of thousands of dollars in savings and enabling the potential for even greater savings over time. On July 1st, we deployed the third wave of our affiliated health systems onto our enterprise resource planning platform. The initiative, which we internally refer to as Project Empower, now supports more than half of our hospitals and will be fully deployed by the end of the year. This investment is yielding deeper insights into our business functions, and we expect to identify opportunities for additional standardization, expense management, and value creation as our experience with this enhanced operational tool matures. Our clinicians, caregivers, and local leadership teams are making a real and positive difference in every community we serve. On Tuesday, we released our 2024 Community Impact Report, and I hope you have the opportunity to take a look at it. We are so proud of the quality of care and the breadth of services we provide. and also what that means to our communities as we generate meaningful economic impact. We are committed to causes that improve health and well-being, and we are powered by an amazing group of people who care deeply about others and who ensure that our purpose to help people get well and live healthier is always fulfilled. With that, Kevin, I'll turn the call over to you.