Community Health Systems, Inc.

Good day and welcome to the Community Health System's fourth quarter and full year 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Anton High, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good morning, everyone. Welcome to Community Health Systems 4-4-2024 conference call. Joining me on today's call are Tim Henschen, Chief Executive Officer, Kevin Hammond, President and Chief Financial Officer, and Dr. Miguel Benet, President of Clinical Operations and Chief Medical 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 EBITDA and adjusted EPS. We've also posted a supplemental slide presentation on our website. All calculations that we will discuss exclude gains from early extinguishment of debt, impairment gains or losses on the 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 Hinchin, Chief Executive Officer.

Tim Hinchin Thank you, Anton, and thanks everyone for joining our fourth quarter earnings conference call. I want to highlight some key performance measures for the full year and later Kevin will cover results for the quarter. I'll start today with the strong growth we are achieving across our CHF affiliated health resulting in record same store volume levels for the full year 2024. Versus prior year, same store admissions increased 3.2%, same store adjusted admissions increased 2.7%, and same store surgeries increased 1.3%. Growth like this is enabled by our capital investments, strong capacity management, and the pursuit of strategic value generating opportunities across our core portfolio. In 2024, that included significant expansion in outpatient access, such as primary care, specialty practices, and urgent care centers. In addition to de novo projects, we acquired 10 urgent care clinics in Tucson, Arizona, broadening our geographic footprint and ability to care for more patients in this market. We opened two new freestanding emergency rooms in fast-growing communities, bringing our current count to 19 freestanding EDs across the portfolio. We ended the year with a total of 47 ambulatory surgery centers. Within our markets, we are very well positioned for outpatient surgery. And as a result, same store ASC cases increased 14% last year. We also completed two major campus expansion projects, including new inpatient bed towers, emergency department and surgical services capacity. These projects have further improved our competitive position in our Knoxville, Tennessee, and Baldwin County, Alabama markets, and both continue to ramp up nicely. And we invested in procedural capacity, such as expanding and upgrading cardiac cath labs and other procedural spaces in several health systems last year. Same store net operating revenues for the year increased 5.5%, and adjusted EBITDA for the year improved 6%, which includes the benefit from supplemental state-directed payment programs in the fourth quarter, which Kevin will discuss in more detail later. We also saw improvements in both labor and supplies as a percentage of net revenue. Turning to our portfolio, in 2024, we completed divestitures in Cleveland, Tennessee and in North Carolina. We also plan to finalize other announced divestitures in the first quarter. ShorePoint Health in Florida, and Lake Norman Regional Medical Center in North Carolina. And we are in discussions which will likely result in additional strategic divestitures in 2025. We anticipate the sale of these assets will generate meaningful proceeds and leveraging value. While 2024 was a very good year in many regards, it was not without challenges. On our last call, we mentioned the impact of downgrades and denials which continue to be a troubling trend for healthcare providers. However, that situation has shown some stabilization since the third quarter. Our utilization management and physician advisor programs are performing as expected as these clinicians advocate for our patients to receive the appropriate care in appropriate settings and as we pursue payment for those services. Medical specialist fees and subsidies continue to be a pressure point, particularly in anesthesia services. To mitigate this trend, we have scaled our proven capabilities for managing insourced hospital-based services beyond hospitalist and emergency medicine into a growing number of anesthesia programs. In the fourth quarter, for instance, we rapidly insourced anesthesiology in one of our larger markets, a move which we are confident will lead to better, more integrated care and services in the most cost-effective manner. We anticipate further expansion of internally managed hospital-based provider services in 2025, which is leading to greater provider satisfaction and stability, positive quality outcomes for our patients, and the opportunity for cost savings. This is just one of many strategic initiatives highlighting how CHS is now a more agile organization, prepared and equipped to rapidly adjust to and overcome macro trends and industry headwinds as they arise. Now I'd like to spend a minute on our clinical achievements in 2024. We are proud of our advancements across many measures, including reductions in risk-adjusted mortality rates and hospital-acquired infections, and further advancements in patient safety. By the end of 2024, we reached our best-ever reduction in the serious safety event rate, down 90% from our baseline in 2013. We also saw notable gains in our patient experience measures. These results are made possible by the skills and compassionate teams working across our organization. Our work to recruit and retain a highly capable workforce continues to yield impressive results. In 2024, overall employee retention was particularly high and we achieved our best retention rate for registered nurses in the past five years. I want to thank our frontline caregivers and support teams our local leaders, and our corporate teams for all they do every day to ensure quality care for our patients. We are proud of our progress throughout 2024. We believe we accomplished what we said we would do and finished the year strong by building momentum that we can carry forward. We look forward to even more progress in 2025. Looking ahead, we expect our investments will continue to produce incremental growth. We are intensely focused on ensuring the availability of access and capacity for all of our services to help our patients get the care they need conveniently and without delay. Numerous initiatives in 2025 are designed to enhance appointment scheduling, care navigation, and to help facilitate needed follow-up services, all of which support our patients and can drive additional growth. With our enterprise resource planning platform now fully implemented, we have more insights and data than ever before. These tools can help drive efficiencies, streamline workflows, and reduce costs. And this year, we will continue to leverage partnerships and innovation to further advance patient care and support our workforce. As always, we remain dedicated to delivering high-quality healthcare services for the patients and communities who count on us every day. With that, let me turn the call over to Kevin Hammond, who will provide more context about our fourth quarter and 2024 results and guidance for the year ahead. Kevin? Thank you, Tim, and good morning, everyone.