Community Health Systems, Inc.

Good day and welcome to the Community Health System's third 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 a touch-tone phone. To withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow-up. Requeue to ask additional questions. Please note this event is being recorded. I would now like to turn the conference over to Anton Hive, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to Community Health Systems Third Core 2024 Conference Call. Participating on today's call are Tim Henschen, Chief Executive Officer, Kevin Hammonds, President and Chief Financial Officer, and Dr. Miguel Benet, Executive Vice President, Clinical Operations. Before we begin, I must remind everyone 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 FDC. 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. 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 a sale of businesses, expense from government and other legal matters and related costs, expense from business transformation costs, expense related to employee termination benefits and other restructuring charges, and change in estimate for professional claims liability. With that said, I will turn the call over to Tim Henschen, Chief Executive Officer.

Thank you, Anton, and thanks, everyone, for joining our third quarter earnings conference call. I'd like to begin by addressing the impact of back-to-back hurricanes Helene and Milton. The hurricanes impacted several of the communities we serve, primarily in Florida, Georgia, and East Tennessee. As a result, in late third quarter and early fourth quarter, CHS hospitals most likely to experience severe impact ramped down services and canceled elective procedures. In total, three of our facilities were evacuated and closed, consistent with local orders. The biggest impacts occurred in our ShorePoint Health System, located south of Tampa, Physicians Regional Healthcare System in Naples, and Tenova Newport in East Tennessee. Most significantly, ShorePoint Punta Gorda experienced major damage due to flooding. The hospital remains closed today, and remediation efforts are currently underway. Hurricane readiness and response has proven to be a core competency at CHS, and I want to note that the effort to safely evacuate patients was enabled by terrific coordination between our hospitals, our CHS Transfer Center operations, and numerous other corporate resources that worked around the clock to be ready for Helene and then Milton. Our hearts go out to all affected by these terrible weather events, and I just want to mention that our CHS CARES Fund which was established to help employees in need of financial assistance following an unforeseen disaster or situation, has already been supporting hundreds of impacted team members. Kevin will talk more about the financial impact of the hurricanes on the third quarter results in just a moment. Despite the late quarter hurricane impact, same store volumes improved with a 2.4% increase in admissions and a 2.6% increase in adjusted admissions over the prior year quarter. Surgeries improved 3.1%, led by growth in lower-acuity outpatient cases, driven by our consistent investment into ambulatory surgery sites of care. While patient demand for services was good overall, inpatient acuity skewed lower than expected, affecting net revenue, which totaled $3.09 billion in the quarter. Adjusted EBITDA was $347 million. Our third quarter results were impacted by a continued increase in denials and downgrades by insurers. We are seeing some payers aggressively deny payment for medically necessary services that have been provided for our patients. For several quarters now, the challenges we and our industry are facing regarding increasing denial activity by payers has been well documented. And over the last few years, in response to this challenge, we have stood up an enhanced utilization review program and centralized physician advisor services to ensure our patients are placed in the correct care status and that we receive the appropriate payment for their care. As a result, our physician advisor service has been able to obtain a high rate of reversal on initial payer denials. Nevertheless, the rate of denial activity by payers continues to grow, and it's continued to pressure our top line. We are making incremental investments in our centralized patient financial services processes and team, as well as our physician advisor program to continue to advocate for the appropriate classification of care for our patients and payment for the services our health systems provide. While the quarter did not fully meet all of our expectations, I remain very proud of our team's ability to face unexpected challenges head on, and I'm optimistic about our opportunities. We expect normal seasonality improvements in the fourth quarter, and we remain optimistic that our focus on adding incremental inpatient capacity, outpatient access points, and recruitment of specialists necessary to grow higher acuity service lines will position our health systems for growth into 2025 and beyond. We have been delivering upon our strategic growth plans across our health systems fueled by key capital investments. A few recent and notable investments include our Knoxville North Tower expansion, which opened earlier this year and is ramping up well. The new capacity was a catalyst for strong incremental patient volumes, posting a double-digit increase versus the same quarter last year. And this Saturday, we are opening a new patient tower and incremental surgical capacity in Baldwin County, Alabama. These developments are core components of the nearly $200 million campus expansion taking shape there, all which will create capacity for incremental market share gains in this rapidly growing region. On the outpatient side, we now operate a total of 18 freestanding ED locations following the opening of new centers in Huntsville, Alabama and Lake Granbury, Texas. We also completed the expansion of the hospital emergency department at Grandview Medical Center in Birmingham, Alabama. All of these projects have resulted in immediate volume growth. And we recently announced a definitive agreement to acquire Carbon Health's 10 urgent care locations in the Tucson, Arizona market. This will expand our urgent care footprint to 17 locations across that market. We expect that transaction to close this quarter. My confidence in our strategic direction, health system leadership teams, and especially the women and men who provide care for our patients is at an all-time high. The services we provide are critically important to our patients and communities, and our commitment to provide that care while also achieving strong operating and financial results is unwavering. With that, Kevin, let me turn the call over to you. Thank you, Tim, and good morning, everyone.