Community Health Systems 2015 Annual Report Download - page 4

Letter to Stockholders
We’re proud of our accomplishments, but also acknowledge there
have been challenges inherent in growth along the way. Looking
forward now, we remain committed to the same core values that
have always defined us and to our steadfast culture that promotes
the highest quality healthcare services. We also recognize the ever
present need for adaptation in order to create an even stronger
company and more value for our stockholders.
We recorded positive achievements in 2015, but it was also a dis-
appointing year from some business perspectives. We did not achieve
all of our goals. It has taken longer than expected to turn around
some of the former Health Management Associates hospitals which
were acquired in 2014. Some of these hospitals had large operational,
capital and managerial issues that required our attention and resources
before we could begin to focus on their growth. However, we expect
progress over time and still see opportunity to realize the full value
of these assets. Meanwhile, we continue to achieve our synergy
projections as we finish integrating this very substantial acquisition.
We achieved our estimated benefit from the Affordable Care Act in
2015 and we were encouraged to see good growth during the most
recent open enrollment period for the health insurance marketplace.
However, we recorded an increase in the allowance for doubtful
accounts due to a change in accounting estimates related to less
collections and more write offs than previously estimated. Addition-
ally, some of the states where we operate hospitals have failed, so
far, to expand their Medicaid programs leaving vulnerable citizens
without access to affordable healthcare and resulting in a higher
level of unpaid accounts at hospitals in these states. We expect,
eventually, most states will expand their Medicaid programs, which
will benefit the residents of those states and our operations.
Beyond these challenges, other external forces and economic con-
ditions adversely affected healthcare industry stocks. We ended
the year with a stock price of $26.53. Excluding certain adjustments
the Company has previously disclosed, our consolidated revenues
exceeded $19.4 billion, our adjusted EBITDA (Earnings before Interest,
Taxes, Depreciation and Amortization) was over $2.67 billion, and
our adjusted earnings per share from continuing operations were
$2.29 (diluted). The financial results for the year ended December 31,
2015, include a $169 million increase in the Company’s allowance for
doubtful accounts on the December 31, 2015 consolidated balance
sheet related to a change in estimate recorded during the three
months ended December 31, 2015. This adjustment reduced net
operating revenues and adjusted EBITDA by $169 million, or $0.94
per share (diluted), for the year ended December 31, 2015. While we
did not meet expectations in 2015, it was still a profitable year.
Community Health Systems marked its
thirtieth anniversary in 2015, a itting time
to reflect on the past and to consider our
future. Over three decades, we have grown
from a small, rural hospital operator into
one of the largest healthcare companies in
the United States.
Wayne T. Smith
Chairman of the Board and Chief Executive Officer
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