Community Health Systems (NYSE:CYH) shares were down more than 12% in after-hours trading, as the company printed weaker than expected earnings for the first quarter of the year.
Community Health Systems (NYSE:CYH) stock prices fell 12.52% to $13.76 in Monday’s extended trading session when hospital operator’s quarterly earnings fell well short of estimates. The company reported adjusted net income from continuing operations of 27 cents a share on revenue of $5 billion, with analysts expecting to see earnings of 74 cents a share on revenue of $4.99 billion.
Community Health Systems (NYSE:CYH) is a hospital company and an operator of acute care hospitals in communities across the United States, providing healthcare services through the hospitals that it owns and operates in non-urban and selected urban markets throughout the United States. Its main operations are hospital operations and home care agencies.
Looking closer at the earnings data reveals that the company’s weaknesses are mostly in feeble net income growth, poor profit margins, weak operating cash flow, high debt management risk, and downbeat stock performance. Community Health Systems already missed its earnings forecasts for the previous quarter as it reported earnings per share of $0.68 versus expectations at $0.95.
Earlier in the year, Community Health Systems (NYSE:CYH) completed a spin-off Quorum Health Corporation, which aims to create two healthcare companies that are positioned to create shareholder value and to pursue unique pathways for future success. Community Health is seen to focus on creating immediate efficiencies and sharpen the company’s focus on key competitive markets.
“We intend to use the substantial majority of the net proceeds of $1.21 billion from the QHC spin-off to reduce our debt, and we expect other potential divestiture transactions this year will help drive down our debt even further,” Community Health Systems (NYSE:CYH) CEO Wayne Smith said in a statement.
DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.