Community Health Systems Inc. raised its earnings guidance for
the year as its second-quarter profit more than doubled thanks to
its acquisition of Health Management Associates Inc.
Separately, the hospital operator also announced plans to spin
off a group of 38 hospitals and Quorum Health Resources LLC, its
hospital management and consulting business. The hospitals included
in the planned spinoff are primarily located in cities or counties
that have populations of 50,000 or less.
The new company will be named Quorum Health Corp., and the
spinoff is expected to be completed in the first quarter of
2016.
The businesses that would comprise Quorum Health Corp. in 2014
generated revenue of $2.1 billion and $255 million in earnings
before interest, taxes, depreciation and amortization, Community
Health Systems said.
For 2015, the company said it now expects a profit from
continuing operations of $3.65 to $4.10 a share for the year, up
from its previous projection of $3.40 ti $4.05.
Shares of Community Health Systems, up 23.5% over the past 12
months, rose 7.2% to $62.50 in after-hours trading.
Over all, for the second quarter Community Health reported a
profit of $111 million, or 96 cents a share, compared with a
year-earlier profit of $42 million, or 37 cents a share. Profit
excluding certain items and discontinued operations rose to $1.14 a
share from 74 cents a year earlier.
"These results include operating synergies from the integration
of the HMA hospitals, the benefit of numerous strategic
initiatives, and the incremental opportunities created by the
Affordable Care Act," Chief Executive Wayne T. Smith said in a
release.
In January 2014, Community Health Systems completed its
acquisition of Health Management Associates. The $3.9 billion deal
had merged 206 hospitals.
Community Health said total admissions decreased 1.9% in the
second quarter from a year ago. On a same-hospital basis, total
admissions fell 2.2% and net operating revenue rose 2.5%.
Operating revenue increased to $4.88 billion from $4.77
billion.
Analysts surveyed by Thomson Reuters had expected a profit of 89
cents a share on $5.02 billion in revenue.
Write to Cassandra Jaramillo at cassandra.jaramillo@wsj.com
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