Q4 2020 Community Health Systems Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to community Health systems fourth quarter and year end 2020 earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
Ask the question during the session you will need to press star one on mutual of phone.
Please be advised that today's conference is being recorded.
If you require any further assistance please press star zero.
I'd now like to hand, the conference over to your Speaker today, Mr. Boscolo, Vice President of Investor Relations. Thank you. Please go ahead.
Thank you Mike the morning, and welcome the community Health systems fourth quarter, and 2020 year end conference call. Joining me today on today's call of our Tim Headset, Chief Executive Officer, Dr. Lynn Simon is the president of clinical operations, and Chief Medical Officer, and Kevin Hammons, Executive Vice President and Chief financial.
Sure.
Before we get started I would like to remind everyone that the conference call may contain certain forward looking statements.
<unk> 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.
And our annual report on form 10-K, and other reports filed with the furnished to the Securities and Exchange Commission as a consequence actual results may differ significantly from those expressed in any forward looking statements in today's discussion and we do not intend to update any of these forward looking statements yesterday afternoon, we issued a press release.
Please with our financial statements of the definition of the calculations of adjusted EBITDA and adjusted EPS for those of you listening to the live broadcast of this conference call a supplemental slide presentation has been posted to our website.
We'll refer to those slides during this earnings call. All calculations, we will discuss also exclude gain or loss from early extinguishment of debt impairment expense as well of gains or losses on the sale of businesses income and expenses from government and other legal legal settlements and related costs expense from the settlement of professional.
The liability claims for which the third party insurers obligation to ensure the company for the underlying loss is being litigated.
<unk> from settlement of legal expenses related to cases covered by the CVR expenses related to employee termination benefits and other restructuring charges.
And valuation allowances recorded for promissory notes change in estimate for professional liability claims accrual.
With that said I'd like to turn the call over to Tim Hudson Chief Executive Officer. Thank you Rod and good morning, everyone and welcome to our fourth quarter and year end 2020 conference call.
2021 of the year like no. Other COVID-19 has had a profound impact on our lives and the pandemic has certainly impacted the health care industry.
I am incredibly proud of the essential care provided for the communities, we serve the professionalism and compassion of our frontline health care workers and for the leadership resourcefulness and considerable efforts of our hospital and corporate teams that support them.
We were laser focused on managing COVID-19 throughout 2020.
We were also able to move other important strategic priorities forward.
The best we enter 2021 with meaningful opportunities in front of us in the sense of excitement regarding the future let.
Let me start with just a few comments about our experience during the pandemic.
We provided care for more than 25000, COVID-19, inpatient admissions last year.
The majority of the adult patients wearing our hospitals during the back half of the year with more than 14000, Covid inpatient admissions in the fourth quarter alone.
Volume increased each month throughout the quarter eventually, peaking in the January.
In turn this negatively impacted electric volumes and non Covid health care demand as well as certain expense categories.
During the course of the pandemic. In addition to support from the Cares Act for the hospital industry, we believe our ability to recover from the negative impact of COVID-19 has been due to three factors first.
We implemented a dual track operating philosophy in which we prioritize care for COVID-19 patients, but we also committed to rapidly of restoring and maintaining other essential health services.
Our hospital teams were very proactive regarding the reopening of services balancing the demands of the bulk COVID-19 and non COVID-19 patients care and of safe and effective manner.
Second we continuously monitored and adjusted operational activities throughout the year in real time to ensure effective cost management and third we worked hard to provide the necessary support and resources for our medical staff and employees, who again have been very courageous and committed during the challenges of the pandemic.
Physician alignment was particularly important this year and we are grateful for strong partnerships between our hospitals and their medical staff and they worked together to care for patients, especially following various shelter in place orders and required shutdowns of certain medical services.
While managing the pandemic. We also continued to execute across our most important priorities and strategy throughout the year.
We completed our formerly announced divestiture plan with proceeds coming in above our expectations.
Investments in our core portfolio of sort of promising returns can we identify the more opportunities for network expansion.
Many of our companywide initiatives continue to add value for example, our accountable care organizations or Acos continue to perform very well in partnership with nearly 5000 providers across our market. We care for approximately 250000 Medicare fee for service patient with the focus on quality and.
Value.
We have continued to increase our shared savings from the program each year since its inception.
Our telehealth program continues to provide convenient virtual access to our providers with more than 500000 telehealth visits in 2020.
And our transfer center expanded again, delivering more admissions from non CHS hospitals of patients requiring higher and higher levels of care are transferred into our facilities.
Our strategic margin improvement program produced strong results in significant savings and we are confident it will generate incremental results going forward as well.
And in 2020, we significantly improved our capital structure due to a number of successful transactions.
In summary, as a result of our focused execution across both operational and strategic priorities. The company had a strong finish to the year.
Our 2024th quarter same store net revenue increased four 5% adjust.
Adjusted EBITDA EBITDA was $614 million in the quarter up from $447 million last year.
Putting the pandemic relief funds adjusted EBITDA was $461 million up 3% over the prior year quarter.
While showing sequential improvements in admissions and adjusted admissions Covid continue to impact our volumes during the fourth quarter, particularly on the surgery line at more patient of deferred care because of Covid cases in their community Serge.
Looking forward the strategic opportunities that should produce growth on both the inpatient and outpatient sides of the business.
Our portfolio of hospitals is now primarily concentrated in sunbelt states with attractive demographics higher population growth and economic opportunity.
A stronger portfolio, coupled with high return investment positions the company for growth going forward.
Our core portfolio, we are continuing to utilize the detailed planning process in each market that leverages multiple data sources, along with market intelligence to pinpoint and then prioritize the most effective investment strategies within each particular market. This enables the effective allocation of capital and other resources to drive growth.
Through this process, we've added 250 incremental debt towards the system over the past few years, and 50, new surgical and procedural suites.
These capital investments have helped meet demand and bolstered positive volume trends in markets like Birmingham, Tucson, Naples, Knoxville, Northwest, Arkansas, Huntsville, Fort Wayne and others. In 2020, we opened a new micro hospital in Tucson, and our replacement hospital in La Porte, Indiana.
We'll open another replacement hospital in Fort Wayne later, this year and add another de Novo hospital in Tucson in early 2022.
We continue our emphasis on the development of service lines, thereby further increasing our acuity levels on the inpatient side and our investments on the outpatient side are designed to expand entry points into our networks, providing more convenient out of hospital care environments and to satisfy the evolving consumer expectation about the availability of <unk>.
The ability of health care services.
In 2020, we opened three new ambulatory surgery centers and three new freestanding emergency departments.
More ASC freestanding eds urgent care centers, along with further expansion of our physician practice locations are in the pipeline and other active development.
With our stronger portfolio, we are on a path of successfully developing growth both acute care services and our ambulatory networks moving forward.
Health care consumers and continues to be in sharp focus and of development area for the company. We continue to implement digital tools that help us interact with our patients and these interactions helped close gaps in care elevate kept appointment rate and improved patient communication and experience as well as the quality and telehealth, which I meant.
Before continues to be an opportunity for further development we.
We have also been focused on leveraging processes and technologies that connect patients from one care settings of the next which helps them navigate across network services and further builds brand loyalty.
Going forward our hospital leadership teams are enthusiastic about the opportunities in their markets.
And our corporate teams continue to support strategic clinical and operational initiatives designed to enhance the patient care and increased market share. So that we continue to provide enhanced value for our patients and the communities we serve.
We are focused on driving incrementally higher net revenue EBITDA and EBITDA margin, improving positive free cash flow and lowering our leverage in the medium term, we are targeting 15% plus EBITDA margin and reducing our leverage below six times.
As we advance all of these strategies in 2021, we are doing so at a stronger and even more resolute organization our portfolio of strong and our entire organization is excited about the future I could not be more proud of our CHF today responding to the needs of patients throughout this pandemic, while also achieving mark to Prague.
<unk> on our greatest strategic and operational priorities throughout the year.
As a result of I remain confident that we are continuing to position and strengthen the company to build long term value for all of our stakeholders with that let me turn the call over to Kevin.
Thank you, Tim and good morning, everyone.
As Tim described 2020 was a transformational year for the company.
As we navigated the global pandemic made considerable strategic progress and we finished the year strong.
Today, I'm going to walk through some details from the fourth quarter and the full year as well as some other recent financial highlights.
During the fourth quarter on a consolidated basis net operating revenues came in at $3 billion from $119 million.
Down five 1% from the prior year due to divestitures.
On a same store basis.
Net revenues increased four 5%.
This was comprised of the nine 5% decrease in adjusted admissions and of 15, 5% increase in net revenue per adjusted admission.
Similar to last quarter, our net revenue per adjusted admission benefited from increased acuity higher rates and better payer mix.
Adjusted EBITDA of $614 million of 37, 4%.
During the quarter and included in that the EBITDA, We recorded 153 million pandemic relief fund.
Similar to the third quarter, our hospital leadership teams executed well with good expense management across a number of categories, including salaries wages and benefits, which were 90 basis points lower year over year on a same store basis.
Purchased services and other expenses, which were 100 basis points lower year over year on a same store basis.
Our strategic margin improvement program continues to deliver cost productions with additional savings from this program planned for 2021 and beyond.
During the fourth quarter. However, our supply costs continued to be negatively impacted by COVID-19, increasing 60 basis points year over year on a same store basis, owing to increased pharmaceutical PPE lab and testing supplies expense related to the pandemic.
Switching to cash flow cash flows provided by operations were $76 million from the fourth quarter of 2020. This.
This compares to cash flow from operations of $194 million during the fourth quarter of 2019.
Looking at the quarter over quarter decrease cash interest payments were approximately $73 million higher than the fourth quarter of 2020 due to the in parts of the timing of payments.
The company paid the professional liability claim of approximately $50 million during the fourth quarter the.
The company repaid approximately 75 million debt.
During the recent quarter related to Medicare accelerated payments from pandemic relief fund due to divestitures.
Other increases and decreases in cash flows were offsets.
For full year 2020, our cash flows provided by operations were $2 2 billion.
This compares to cash flows from operations of $385 million.
During the full year of 2019.
The increase from 2020 cash flows over the prior year was attributable to the company receiving approximately $1 1 billion of Medicare accelerated payments.
The company also received approximately $705 million and provide a relief grants under the cares Act.
The company was able to defer approximately $140 million of payroll tax as a result of the cares Act.
And the other increase.
The increases and decreases from generally offsets, including improved cash from a our collection.
Collections and working capital management.
Turning to Capex for the year, we invested a similar amount of capital.
Our divestitures of our Capex for full year, 2020 was $440 million or three 7% of net revenue compared to $438 million or three 3% of net revenue in the prior year.
As Tim mentioned, we continued to invest capital into our core.
The core portfolio to strengthen our markets and as we look forward, we have a good pipeline of additional high growth opportunities.
As it relates to liquidity at the end of the fourth quarter. The company had $1 7 billion of cash on the balance sheet.
At December 31 of the company had no outstanding borrowings and approximately $679 million of borrowing base capacity under the ABL with the ability to increase the up to $1 billion.
Switching to the cares Act and pandemic relief fund during.
During 2020, we received approximately 705 million.
Through the public health and social services Emergency fund in both general and targeted distribution.
We recognized into income approximately $153 million of relief funds from the cares act during the fourth quarter and approximately $601 million for the full year.
The remaining $104 million is currently on our balance sheet is the deferred liability.
And we anticipate being able to recognize the substantial portion of that in 2021.
In terms of our divestiture program. We are pleased to have completed the formal planning.
From the transactions completed in the fourth quarter, we generated approximately $300 million of incremental proceeds.
We continue to receive inbound interest regarding potential transactions and we will continue to assess the benefit of any future growth.
Moving to the balance sheet and capital structure, we made significant improvements during the year.
At the end of the fourth quarter, we had approximately $12 2 billion of long term debt and no near term maturities.
From the capital structure side, we executed a number of recent transactions.
As a reminder, in the third quarter, we executed an open market debt repurchase program.
During which we used $143 million of cash to purchase of $261 million of debt.
In late October we launched the cash tender offer.
Which ultimately allowed us to use $78 million of cash to repurchase $87 million of debt.
And in December we executed an exchange utilizing $400 million of cash and 10 million shares of company stock to retire $700 million of debt.
Combined these transactions captured approximately $340 million.
Of discount on our debt retirement.
Following these transactions, we extended approximately $5 seven.
Billion of debt.
In December we extended our 2023 first lien bonds up to 2027 and 2029 of net in January we extended $1 8 billion second lien notes due 2029 and $1 1 billion first lien notes.
2031.
In the past year, we've paid off over $1 1 billion of debt lowered our leverage by approximately one five turns and reduced annual cash interest run rate by approximately $190 million.
On slide 13 of our supplemental slide presentation. We have included our pro forma debt maturity profile of.
This slide includes the refinancings I just mentioned.
Also following these transactions, we called the remaining $125 million of 2022 unsecured notes and we will fund the purchase of these notes with available cash later this month.
Adding all this together during the past few quarters, we have significantly extended debt maturities and lowered our annual cash interest. Our next maturity now if not due until June 2014.
Now I will walk through our full year 2021 day.
Net operating revenues are anticipated to be between $11 7 billion, the $12 5 billion.
Adjusted EBITDA is anticipated to be between $1 six the $1 8 million.
Which does not include the potential recognition of additional pandemic relief funds net.
Net income per share is anticipated to be zero to <unk> 60 per share based on weighted average diluted shares outstanding of $129 million, the 130 million shares cash.
Cash flow from operations is forecasted at $600 million to $750 million, excluding the repayment of <unk>.
Medicare accelerated payments cash.
FX is expected to be between $400 million to $500 million in.
And cash interest is expected to be $830 million to $840 million.
In terms of 2021, we expect.
The expense savings from our strategic margin improvement program to build throughout the year with more significant cost reductions in the back half of 2021.
As such in.
In terms of EBITDA performance for the year, we expect the cadence of EBITDA to generally increase sequentially during the year with our fourth quarter being our strongest EBITDA quarter of the year.
Ross I'll now turn the call back over to you.
Thanks, Tim and Kevin at this point, Mike we're ready to open up the call for questions. We'll limit everyone to one question today, but as always you can reach of six one <unk>.
For six months of 7000.
Okay.
And as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or cash key please standby, while we compile the Q&A roster.
Your first question comes from Frank Morgan from RBC capital markets.
Good morning, Great job guys. When you think about this sub six leverage target over the intermediate term.
Yes are you getting there or is that more of a function of margin expansion because of media margins are getting pretty close to the mid teens right now or is there something really of more on the the cash flow sadly longer term view of Capex.
And I guess on the subject of Capex I just wanted to verify our excuse me just cash flow I wanted to verify that the the.
Three hospitals that have already.
Closed on January one.
Is that already in your guidance and I think you said there was one more hospital there that had and just curious if that was factored into either of the procedure of the EBITDA.
Yes.
Sure Frank This is Kevin I'll start off here.
As we think about getting below six times levered.
We certainly expect to continue to grow our EBITDA.
Naturally grow into.
Our capital structure and believe that we will get there.
A lot of organic growth as well as some additional EBITDA margin.
Growth so as we think about some of the capital we're spending the additional access points and growth opportunities. We have in our markets with our core portfolio believe we'll get there will also be generating.
Positive free cash level as we move out into the future and things of that there are opportunities for some debt reduction through cash flow generation as well with respect to the guidance the hospitals.
We did close already those are all factored into our guidance at this point.
Your next question comes from Josh Raskin from that from the research.
Hi, Thanks, good morning could.
Could you just give an update on your outpatient development I think I heard the III ASC three freestanding eds. This year, maybe perhaps put that in the context of the $400 million to $500 million of Capex. That's expected this year.
Hey, Josh this is Tim I'll kick it off and maybe Kevin can wrap it up with putting into perspective with our total capex spend but we can really pleased over the last several quarters with our advancement of our access point strategy. We are giving you regular updates on our core day calls right now 13 freestanding eds with the three that we opened last year.
The three more in the pipeline that are scheduled to open. This year I'm also really bullish on our opportunities on the primary care side I'd be the traditional primary care and in our urgent care and walk in care centers I am seeing.
Some really good line of sight on where we can expand those access points and they are generally the relatively low cost.
Three points for us in our markets, so not really of capital intensive at all and then in our ASC front again really pleased with the work of our ambulatory surgery group here at the company in partnership with our hospital leadership teams surgeons in our markets.
Of the three more of those scheduled to come online. This year. So as we said in our remarks.
The very active pipeline, we work at every day.
Just I couldn't be more pleased with the status of the portfolio right now in terms of having these types of of development opportunities and physician partners, who want to join forces with us.
Thanks, Tim.
Really the kind of touched on the.
Key point, there was really related to our capital spending at these are not overly capital intensive type projects. So those are our pipeline of those.
Initiatives are all baked into our capital.
Guidance and projections and we also have some opportunity with leasing and so forth to accelerating and make sure that we get these access points.
Moving along quickly.
Your next question comes from Brian <unk> from Jefferies.
Hey, Good morning, guys I guess I'll just follow up on Frank's question. Tim you gave the sort of guidance, 15% EBITDA margin of six times lots of six times leverage medium term guidance.
How do you define medium term of I guess this is my first the first part of my question and then as we just think about the drivers right. I mean is this going to be mostly SW b or is this kind of like a shifting in the mix between outpatient inpatient and.
The service line mix is mixed changes and also what kind of capital do you think you need to spend to get to that target.
Hey, Brian This is Kevin I'll start off here. So in terms of medium term, we're kind of defining that as of two to four years.
Certainly not anticipate getting there in one year, but sooner than five years. So so we'll define that of two to four years.
And.
With regard to.
No.
I think of lot of it does come through our growth initiatives.
The margin expansion.
In terms of capital spending I think what you'll see and we've talked about this in the past is our capital as a percentage of net revenue has been somewhat diluted because of the divestitures.
Revenue Thats been in there as we get to 2021 in a year with <unk>.
Fewer divestitures.
And more of a normalized run rate on revenue.
And of just the core portfolio of hospitals Youll.
You'll see our capital spending as a percent of the net revenue of our Corp.
<unk> plus much more of like.
Normalized run rate.
And I think that the current four of $500 million.
That we're estimating the spend will get us everything we need to do this year.
Yeah, Brian This is Tim I'll add on to Kevin's comments.
We're preaching a lot of balanced in the organization right now is balanced in terms of where the margin expansion comes from sort of seeing opportunities on the cost side and also improving our our frankly our margin because we're backing into some fixed cost with incremental revenue expansion of so many of our markets. The the stronger portfolio of the investments.
We have made over the last couple of years since the incremental capacity.
The other part of the balance that we preach is looking at opportunities on both the outpatient and the inpatient side with our transfer center with our investments into service lines Medical staff development and driving the acuity and we think Thats key to our long term prospects.
As the go through strategic planning processes with our markets, we see tremendous opportunities to continue to leverage that.
Your next question comes from Ralph Giacobbe from Citi.
Great. Thanks can you can you give us perhaps a sense of how the year started just in terms of Covid core trends and then more recently just given weather across the south and particularly Texas I was hoping you give us a little bit of a sense of whether that there has been impact there and maybe frame what's the what that is.
Or how it could affect the first quarter and if I could squeeze in just one more quick one.
Can you give us a little bit of a sense of underlying assumptions baked in the guidance, specifically for volume and pricing either off of.
2020, or maybe that 2019 baseline. Thank you.
Rob This is Tim operating kick it off in terms of the Covid progression.
As I pointed out earlier, we had about 8000, I'm, sorry, 14000, COVID-19 positive admissions to our hospitals in the fourth quarter, which was a sizable increase over the third quarter, we were relatively.
And also a spared from wave one of the bulk of our markets. So as the share progressed, obviously, we felt the impact in the second quarter with the shutdown Nonetheless.
No elective revenue to speak of and vertical Covid cases, and the end of third quarter of the second wave, we were a little bit more impacted.
<unk> 8000 posts of top of Covid positive patients in that quarter.
We had a really good balance for the quarter of shared in our earnings release and our discussion with you guys last time that we had really strong reopening efforts underway. It didn't have nearly a serious of an impact on elective volumes, because frankly, our ability of variables to manage that dual track our programs still effectively.
The latest wave with about 14000 again COVID-19 of inpatient and we did see some limitations in terms of having to to preserve our.
Capacity for Covid and patient care. We also had I think an increase in consumer reluctance to step into our hospitals for elective care of itself and the frankly all of it was best of deferred and wafer vaccination and whatever the case may be now with that being said in this quarter in particular, we're very focused on.
Our reopening gained plant that we deployed close successfully from the prior weighted.
Again right now we're on a pretty good run rate of getting the business back in we have had this major weather events happened in the past week in particular impacting a lot of our market, but the intra quarter. So thats. Good news that gives us an opportunity to continue to work with patients just like we have in the past with Covid, Although we've had the unfortunately canceled or deferred.
Sure, let me have anything to add in terms of the Covid response or results.
And the key covered it well I think.
The increase particularly in the fourth quarter.
And Ralph this is Kevin related to your question on guidance.
We're looking at this is.
In terms of coming up the guidance, we started with a kind of a bottoms up approach we looked at it from the top down a number of different scenarios.
And really due to the variability of.
Of what May happen is the result of Covid the.
Current spike.
We have seen the start off of the year and.
Uncertainty around when the vaccination.
We really have some some impact.
We gave a little wider range, there's really multiple.
So the scenarios of multiple variables, which relates to the related to the volume acuity and payer mix and it's difficult to kind of give the specific.
The range on any one of those variables without really considering all of them. So I think if you just think about the midpoint of the range and the way we're thinking about it there's multiple ways that you can get there with less volume and higher acuity or more volume and the lower acuity and still get to the same answer.
Okay.
Your next question comes from Kevin Fischbeck from Bank of America.
Okay, great. Thanks.
I was wondering how you were thinking about labor cost.
For the year.
Davidson.
Peeling or conflicting views on whether the labor shortages of Youre seeing.
Exacerbate as the year goes on.
People look to retire et cetera, or whether it will get better and you've got BW doses and quarantine anymore.
We do see the snapback of utilization are you expecting labor cost pressure or is that going be of sorts of margin expansion you're looking for.
Yes, we have and I'll start off here, Kevin we have.
I think Don.
An extremely good job of managing our labor costs.
The past year.
In terms of our productivity as well as in terms of taking care of our employees through the pandemic.
I think if we look forward.
Certainly some pressure right now on labor cost and as everyone's aware of the cost of.
The traveling nurses and so forth and just because of Covid. Some of the pressures of Thats put on we think that.
Would expect that to decrease over the course of the year as some of.
Of the pressures relieved on the system.
And overall I think we'll be able to manage through the the labor costs as well as continuing some of the.
Productivity programs that we have in place, which will offset as well as some of the labor pressures. The Kevin. This is Tim just to add to that.
Obviously mindful of the macro dynamics out there with the particularly nursing stocking clinical.
Clinical staffing resources.
We've always put the close eye on it and as the company even before Covid, we set up some internal of nurse recruitment functions using the company's resources to support key markets, where we've invested our capital and certainly need to have the ready supply of of nurses and clinicians to fill that capacity that served us well throughout the COVID-19 pandemic.
In general.
We focused on retention of our nurses always focused on recruiting and building a stronger pipeline over the long run ex <unk>.
Getting stuff for us we're doing some on campus nursing programs in select markets are part of matures. The college to really start with those nurses early in their journey and then bring them into our networks of care. So we'll watch that development over the next couple of years, but those of the types of partnerships that are new we also have some longstanding relationships with nursing program.
Across most of our communities, where we fund the scholarships are faculty position. So we're trying to stay on the front end of supporting the development of high quality of nurses.
And our last question comes from Andrew Mok from Barclays.
Hi, Good morning of cases declined from January peak. So I was hoping you could provide an update for how quickly of non COVID-19 utilization is re entering the hospital system and maybe comment that of any differences you're seeing between the commercial and Medicare populations.
Andrew This is Tim I'll go ahead and kick it off of them in terms of in terms of the rebound of this current wave as I said earlier cases peak of mid January we are already active in our redeployment plans just like we have in the subsequent waves or I'm, sorry previous waves of Covid I wastewater way too.
A little bit slower of a rebound in some of our communities I.
I think largely due to some sort of patient hesitancy of we're hearing a little bit more from our providers that patients are getting the vaccine and now a lot of weight for that vaccine to take effect. So we say that with the optimism that bringing patients back into the health care system.
<unk>, reducing the spread all of that would bode well for us in the the near to midterm, but the.
The same playbook is underway in terms of staying close with our patients and those patients of reschedule, we've worked with physician practices, our employed practices as well as independent practices to make sure that when we have capacity, we're working those schedules to get patients back in as quickly as they are comfortable doing so the other part I think thats important here.
As I said earlier is we're seeing some weekly improvements in our revenue and our volume. This week, we did have a little bit of a setback with the weather event that hit the sunbelt.
The frankly, we're not quite built for that in this part of the country in the other than our southern markets, but for the most part still.
Still doing that same game plan of keeping track of what's canceled I'm looking at extending scheduled on the Saturdays and in many cases to be convenient for patients and providers to make up for what the weather impact of put upon us Kevin anything else debt.
The thing I would add and I think he captured the low there is at this point, we've not seen any real change in the patient mix.
As the procedures start to come back to you.
Yes.
I will now turn the call over to Mr. Tim Leach for closing remarks.
Thank you, Mike we would like to thank everyone for spending time with US today I would like to once again express how grateful we are to all of our employees physicians provider of regional President and hospital leadership team, who have all been at the forefront of this pandemic and we remain committed to providing exceptional care.
All of the communities we serve.
And I also wanted to express my gratitude to our company's leadership team for demonstrating the ability to effectively plan and execute upon all of our opportunities throughout the past several quarters, which concluded with the strong finish to 2020.
This concludes our call for today, we look forward to updating you on our progress throughout 2021 and once again, if you have any questions you can always reach us at 65465 7000.
Thanks, again and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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Ladies and gentlemen, thank you for standing by and welcome to community Health systems fourth quarter and year end 2020 earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
The question during the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded.
If you require any further assistance please press star zero.
With the I'll like to hand, the conference over to your Speaker today, Mr. Ross Comeaux, Vice President of Investor Relations. Thank you. Please go ahead.
Thank you Mike Good morning, and welcome the community Health systems fourth quarter, and 2020 year end conference call. Joining me today on today's call of our Tim Headset, Chief Executive Officer, Dr. Lynn Simon is the president of clinical operations, and Chief Medical Officer, and Kevin Hammons, Executive Vice President and Chief financial.
Sure.
Before we get started I would like to remind everyone that the conference call may contain certain forward looking statements Inc.
All statements that do not relate solely to the 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.
Our annual report on form 10-K, and other reports filed with the price to the Securities and Exchange Commission.
As a consequence actual results may differ significantly from those expressed in any forward looking statements in today's discussion and we do not intend to update any of these forward looking statements yesterday afternoon, we issued a press release with our financial statements and definition of the calculations of adjusted EBITDA and adjusted EPS for those of you listening to.
The live broadcast of this conference call a supplemental slide presentation has been posted to our website, we will refer to those slides. During this earnings call. All calculations. We will discuss also exclude gain or loss from early extinguishment of debt impairment expense as well of gains or losses on the sale of businesses.
Income and expenses from government and other legal legal settlements and related costs expense from the settlement of professional liability claims for which the third party insurance obligations to ensure the company for the underlying loss is being litigated expenses from settlement of legal expenses related to the cases covered by the CVR expenses related to <unk>.
Floyd termination benefits and other restructuring charges change in valuation allowances recorded for promissory notes change in estimate from professional liability claims accrual.
With that said I'd like to turn the call over to Tim Henson Chief Executive Officer. Thank you, Rob and good morning, everyone and welcome to our fourth quarter and year end 2020 conference call two.
2021 of the hero like no. Other COVID-19 has had a profound impact on our lives and the pandemic has certainly impacted the health care industry.
Im incredibly proud of the essential care provided for the communities. We serve the professionalism of compassion of our frontline health care workers and for the leadership resourcefulness and considerable effort of our hospital and corporate teams that support them.
We were laser focused on managing Covid throughout 2020, but we were also able to move other important strategic priorities forward.
Because of the as we enter 2021 with meaningful opportunities in front of us in the sense of excitement regarding the future.
Let me start with just a few comments about our experienced during the pandemic.
We provide of care for more than 25000, COVID-19, inpatient admissions last year.
The majority of the adult patients wearing our hospitals during the back half of the year with more than 14000, Covid inpatient admissions in the fourth quarter alone.
The volume increased each month throughout the quarter essentially peaking in the January.
In turn this negatively impacted the elective volumes and non Covid health care demand as well as certain expense categories.
During the course of the pandemic. In addition to support from the Cares Act for the hospital industry, we believe our ability to recover from the negative impact of COVID-19 has been due to three factors.
First we implemented a dual track operating philosophy in which we prioritize care for COVID-19 patients, but we also committed to rapidly restoring and maintaining other essential health services.
Our hospital teams were very proactive regarding the reopening of services balancing the demands of the bulk of Covid and non COVID-19 patients care in a safe and effective manner.
Second we continuously monitored and adjusted operational activities throughout the year in real time to ensure effective cost management and third we worked hard to provide the necessary support and resources for our medical staff and employees, who again has been very courageous and committed during the challenges of the pandemic.
The physician alignment of what's particularly important this year and we are grateful for our strong partnerships between our hospital from their medical staff and they worked together to care for patients, especially following various shelter in place orders and required shutdowns of certain medical services.
While managing the pandemic. We also continued to execute across our most important priority from strategy throughout the year.
We completed our formally announced the advantage of our plan with proceeds coming in above our expectations.
Investments in our core portfolio of sort of promising return can we identified more opportunities for network expansion.
Many of our company wide initiatives continue to advance our cap value for example, our accountable care organizations or Acos continue to perform very well and partnership with nearly 5000 providers across our markets. We care for approximately 250000 Medicare fee for service patient with the focus on quality and.
Volume.
We have continued to increase our share of savings from the program each year since its inception.
Our telehealth program continues to provide convenient virtual access to our providers with more than 500000 telehealth visits in 2020.
And our transfer center expanded again, delivering more admissions from non CHS hospitals of patients requiring higher and higher levels of care are transferred into our facilities.
Our strategic margin improvement program produced strong results from significant savings and we are confident it will generate incremental results going forward as well.
In 2020, we significantly improved our capital structure due to a number of successful transactions.
In summary, as a result of our focused execution across both operational and strategic priorities. The company had a strong finish to the year, our 2024th quarter same store net revenue increased four 5% adjust.
Adjusted EBITDA EBITDA was $614 million in the quarter up from $447 million last year.
Excluding the pandemic relief fund adjusted EBITDA was $461 million up 3% over the prior year quarter.
While showing sequential improvements in admissions and adjusted admissions Covid continued to impact our volumes during the fourth quarter, particularly on the surgery line at more patient of deferred care because of Covid cases in the community served.
Looking forward the strategic opportunities that should produce growth on both the inpatient and outpatient sides of the business.
Our portfolio of hospitals is now primarily concentrated in sunbelt states with attractive demographics higher population growth and economic opportunity.
A stronger portfolio of coupled with high return investment positions the company for growth going forward.
Across our core portfolio, we are continuing to utilize the detailed planning process in each market that leverages multiple data sources, along with market intelligence. The pinpoint and then prioritize the most effective investment strategy within each particular market. This enables effective allocation of capital and other resources to drive growth.
Through this process, we've added 250 incremental debt towards the smaller of the past few years and 50, new surgical and procedural suites is.
These capital investments have helped meet demand and bolstered positive volume trends in markets like Birmingham, Tucson, Naples, Knoxville, Northwest, Arkansas, Huntsville, Fort Wayne and others. In 2020, we opened a new micro hospital in Tucson, and our replacement hospital in La Porte, Indiana, We will open another replacing.
The hospital in Fort Wayne later, this year and add another de Novo hospital in Tucson in early 2022.
We continue our emphasis on the development of service lines, thereby further increasing our acuity levels on the inpatient side.
And our investments on the outpatient side are designed to expand entry points into our networks, providing more convenient out of hospital care environments and to satisfy the evolving consumer expectation about the availability and accessibility of health care services.
In 2020, we opened three new ambulatory surgery centers and three new freestanding emergency departments.
More asc's freestanding eds urgent care centers, along with further expansion of our physician practice locations are in the pipeline and other active development.
With our stronger portfolio, we are on a path of successfully developing growth both acute care services and our ambulatory networks moving forward.
Health care consumers and continues to be in sharp focus and of development area for the company. We continue to implement digital tools that help us interact with our patients and these interactions help close gaps in care elevate kept appointment rate and improved patient communication and experience as well as the quality and telehealth, which I mentioned.
And before continues to be an opportunity for further development.
We have also been focused on leveraging processes and technologies that connect patients from one care setting to the net which helps them navigate across network services and further builds brand loyalty.
Going forward our hospital leadership teams are enthusiastic about the opportunities in their markets.
And our corporate teams continue to support strategic clinical and operational initiatives designed to enhance the patient care and increased market share. So that we continue to provide enhanced value for our patients and the communities we serve.
We are focused on driving incrementally higher net revenue EBITDA and EBITDA margin and proving positive free cash flow and lowering our leverage in the medium term, we are targeting 15% plus EBITDA margins and reducing our leverage below six times.
As we advance all of these strategies in 2021, we are doing so at a stronger in EBIT more resolute the organization our portfolio of strong and our entire organization is excited about the future I could not be more proud of our CHF today responding to the needs of patients throughout the pandemic, while also achieving mark to.
Aggress on our greatest strategic and operational priorities throughout the year as a result of I remain confident that we are continuing to position and strengthen the company to build long term value for all of our stakeholders with that let me turn the call over to Kevin.
Thank you, Tim and good morning, everyone.
As Tim described 2020 was a transformational year for the company.
As we navigated the global pandemic made considerable strategic progress.
We finished the year strong.
Today, I'm going to walk through some details from the fourth quarter and the full year as well as some other recent financial highlights.
During the fourth quarter on a consolidated basis net operating revenues came in at $3 billion of $119 million.
Down five 1% from the prior year due to divestitures.
On a same store basis.
Net revenues increased four 5%.
This was comprised of the nine 5% decreasing adjusted admission and of 15, 5% increase in net revenue per adjusted admission.
Similar to last quarter, our net revenue per adjusted admission benefited from increased acuity higher rates and better per.
Adjusted EBITDA of $614 million of 37, 4%.
During the quarter and included in that EBITDA, We recorded 153 million of pandemic relief fund.
Similar to the third quarter, our hospital leadership teams executed well with good expense management across a number of categories, including salaries wages and benefits, which were 90 basis points lower year over year on a same store basis.
Purchased services and other expenses, which were 100 basis points lower year over year kind of same store basis.
Our strategic margin improvement program continues to deliver cost reductions with additional savings from this program planned for 2021 and beyond.
During the fourth quarter. However, our supply cost continued to be negatively impacted by COVID-19, increasing 60 basis points year over year on the same store basis, owing to increased pharmaceutical PPE lab and testing supplies expense related to the pandemic.
So actually the cash flow cash flows provided by operations of <unk> $76 million from the fourth quarter of 2020. This.
This compares to cash flow from operations of $194 million during the fourth quarter of 2019.
Looking at the quarter over quarter decrease cash interest payments were approximately $73 million higher than the fourth quarter of 2020 due to the in parts of the timing of payment the.
The company paid of professional liability claims of approximately $50 million during the fourth quarter.
The company repaid approximately 75 million day.
During the recent quarter related to Medicare accelerated payments from pandemic relief fund due to divestitures.
And other increases and decreases in cash flows were offsets.
For full year 2020, our cash flows provided by operations of our $2 2 billion.
This compares to cash flow from operations of $385 million.
During the full year of 2019.
The increase from 2020 cash flows over the prior year was attributable to the company receiving approximately $1 1 billion of Medicare accelerated payments. The company also received approximately $705 million in provider relief grants under the cares Act.
The company was able to defer approximately $140 million of payroll tax as a result of the cares Act.
And the other increase.
The increases and decreases from generally offsets, including improved cash from a our collection.
Collections and working capital management.
Turning to Capex for the year, we invested a similar amount of capital despite of our divestitures. Our capex for full year 2020 was $440 million or three 7% of net revenue compared to $438 million or three 3% of net revenue in the prior year.
As Tim mentioned, we continue to invest capital into our core.
For our portfolio to strengthen our markets and as we look forward, we have a good pipeline of additional high growth opportunities.
As it relates to liquidity at the end of the fourth quarter. The company had $1 7 billion of cash on the balance sheet.
At December 31, the company had no outstanding borrowings and approximately $679 million of borrowing base capacity under the ABL with the ability to increase the up to $1 billion.
Switching to the cares act and pandemic relief funds during.
During 2020, we received approximately $705 million through.
The public health and social services Emergency fund in both general and targeted distribution.
We recognized into income of approximately $153 million of relief funds from the cares Act during the fourth quarter and approximately $601 million for the full year.
The remaining $104 million is currently on our balance sheet is the deferred liability.
We anticipate being able to recognize the substantial portion of that in 2021.
In terms of our divestiture program. We are pleased to have completed in the form of appliances.
From the transactions completed in the fourth quarter, we generated approximately $300 million of incremental proceeds.
We continue to receive inbound interest from regarding potential transactions and we will continue to assess the benefit of any future sales.
Moving to the balance sheet and capital structure, we made significant improvements during the year at.
At the end of the fourth quarter, we had approximately $12 2 billion of long term debt and no near term maturities.
On the capital structure side, we executed a number of recent transactions.
As a reminder, in the third quarter, we executed an open market debt repurchase program.
During which we used $143 million of cash to purchase of $261 million of debt.
In late October we launched the cash tender offer which ultimately allowed us to use $78 million of cash to repurchase $87 million of debt.
And in December we executed an exchange utilizing $400 million of cash and 10 million shares of company stock to retire $700 million of debt.
Combined these transactions captured approximately $340 million.
Of discount on our debt retirement.
Following these transactions, we extended approximately $5 seven.
Billion dollars of debt.
In December we extended our 2023 first lien bonds up to 2027 and 2029 of net in January we extended $1 8 billion second lien notes due 2029 and $1 1 billion first lien notes.
2031.
In the past year, we have paid off over $1 $1 billion of debt lowered our leverage by approximately one five turns and reduced annual cash interest run rate by approximately $190 million.
On slide 13 of our supplemental slide presentation. We have included our pro forma debt maturity profile.
This slide includes the refinancings I just mentioned.
Also following these transactions we call of the remaining $125 million of 2020 unsecured debt and we will fund the purchase of these notes with available cash later this month.
Adding all this together during the past few quarters, we have significantly extended debt maturities and lowered our annual cash interest. Our next maturity now is not due until June 2014.
Now I will walk through our full year 2021 Guy.
Net operating revenues are anticipated to be between $11 7 billion to $12 5 million.
Adjusted EBITDA is anticipated to be between one six the one 8 billion.
Which does not include the potential recognition of additional pandemic relief funds net.
Net income per share is anticipated to be zero to <unk> 60 per share based on weighted average diluted shares outstanding of $129 million to 130 million shares cash.
Cash flow from operations is forecasted at $600 million to $750 million, excluding the repayment of <unk>.
Medicare accelerated payments cash.
FX is expected to be between $400 million to $500 million in.
And cash interest is expected to be $830 million to $840 million.
In terms of 2021, we expect.
The expense savings from our strategic margin improvement program to build throughout the year with more significant cost reductions in the back half of 2021.
As such in terms of EBITDA performance for the year, we expect the cadence of EBITDA to generally increase sequentially during the year with our fourth quarter being our strongest EBITDA quarter of the year.
Ross I'll now turn the call back over to you.
Tim and Kevin at this point, Mike we're ready to open up the call for questions. We'll limit everyone to one question today, but as always you can reach the 614 hundred 65 7000.
And as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or cash key please standby, while we compile the Q&A roster.
Your first question comes from Frank Morgan from RBC capital markets.
Good morning, Great job guys. When you think about this sub <unk> leverage target over the intermediate term.
Are you getting there or is that more of a function of margin expansion because of media margin to get pretty close to the mid teens right now or is there something really of more on the the cash flow satellite longer term view of Capex.
And I guess on the subject of Capex I just wanted to verify our excuse me just cash flow I want to verify that the.
Three hospitals that have already closed on January one.
Is that already in your guidance and I think you said there was one more hospital there that had and just curious if that was factored in either of the procedure of the EBITDA.
Thanks.
Sure Craig This is Kevin I'll start off here.
As we think about getting below six times levered.
We certainly expect to continue to grow our EBITDA and naturally grow into.
Our capital structure and believe that we will get there.
A lot of organic growth as well as some additional EBITDA margin.
Growth so as we think about some of the capital we're spending the additional access points and growth opportunities. We have in our markets with our core portfolio believe we'll get there will also be generating.
The positive free cash level as we move out into the future.
That there are opportunities for some debt reduction through cash flow generation as well with respect to the guidance the hospitals.
We did close already those are all factored into our guidance at this point.
Your next question comes from Josh Raskin from net from the research.
Hi, Thanks, good morning could.
Could you just give an update on your outpatient development I think.
I heard three afcs and three freestanding eds. This year, maybe perhaps put that in the context of the $400 million to $500 million of Capex. That's expected this year.
Hey, Josh this is Tim I'll kick it off and maybe Kevin can wrap it up with putting into perspective with our total capex spend.
Really pleased over the last several quarters with our advancement of our access point strategy. We are giving you regular updates on our quarterly calls right now 13 freestanding eds with the three that we opened last year three more in the pipeline that are scheduled to open. This year I'm also really bullish on our opportunities on the primary care side.
The traditional primary care and in our urgent care and walk in care centers I am seeing some really good line of sight on where we can expand those access points and regenerative of relatively low cost.
The point for us in our market, so not really of capital intensive at all and then in our ASD front again really pleased with the work of our ambulatory surgery group here at the company in partnership with our hospital leadership teams surgeons in our markets.
We have the three more of those scheduled to come online. This year. So as we said in our remarks.
Very active pipeline, we work at every day.
I couldn't be more pleased with the status of the portfolio right now in terms of having these types of development opportunities and physician partners, who want to join forces with us.
And I think Tim.
Just kind of touched on the.
The key point, there was really related to our capital spending is these are not overly capital intensive type projects. So those are our pipeline of those.
The initiatives are all baked into our capital.
Guidance and projections and we also have some opportunity with leasing and so forth to accelerating and make sure that we get these access points.
Moving along quickly.
Your next question comes from Brian <unk> from Jefferies.
Hey, good morning, guys I guess I'll just.
Follow up on Frank's question, Tim you gave the sort of guidance, 15% EBITDA margin six months, let the six times leverage medium term guidance.
How do you define medium term of it yes. It is my first the first part of my question then as we just think about the drivers right. I mean is this going to be mostly SD will you be or is this kind of like the shifting in the mix between outpatient inpatient and.
Yes. The service line mix is mix changes and also what kind of capital do you think you need to spend to get to that target.
Hey, Brian This is Kevin I'll start off here. So in terms of medium term, we're kind of defining that as of two to four years.
Certainly not anticipating getting there in one year, but sooner than five years. So we will define net of two to four years.
And.
With regard to.
Sure.
I think of lot of it does come through our growth initiatives.
The margin expansion.
In terms of capital spending I think what Youll see and we've talked about this in the past is our capital as a percentage of net revenue has been somewhat diluted because of the divestitures.
Revenue that's been in there as we get to 2021 in a year with <unk>.
Fewer divestitures.
And more of a normalized run rate on revenue.
And of just the core portfolio of hospitals Youll.
You'll see our capital spending as a percent of the net revenue of our Corp.
But much more lives.
Normalized run rate.
I think that the current $4 million to $500 million debt.
We're estimating the spend will get us everything we need to do this year.
Hey, Brian and Thats, the Tim I'll add on to Kevin's comments.
We're putting a lot of balanced in the organization right now is balanced in terms of where the margin expansion comes from still seeing opportunities on the cost side and also improving our our frankly our margin because we're backing into some fixed cost with incremental revenue expansion of so many of our markets the stronger portfolio of the investment.
We've made over the last couple of years since the incremental capacity.
The other part of the balance that we preach is looking at opportunities on both the outpatient and the inpatient side with our transfer center with our investments into service lines Medical staff development and driving the acuity and we think the key to our long term prospects.
As we go through strategic planning processes with our markets, we see tremendous opportunities to continue to leverage that.
Your next question comes from Ralph Giacobbe from Citi.
Great. Thanks can you can you give us perhaps the sense of how of the year started just in terms of Covid core trends and then more recently just given the weather across the south and particularly Texas I was hoping you can give us a little bit of a sense of whether that theres been impact there and maybe frame, what's the what that standard.
It could affect the first quarter and if I could squeeze in just one more quick one.
Can you give us a little bit of a sense of underlying assumptions baked in the guidance specifically for volume and pricing either off of 2020 or maybe that 2019 baseline. Thank you.
Rob This is Tim oscillator to kick it off in terms of the Covid progression.
As I pointed out earlier, we had about 8000 of I'm, sorry, 14000 of Covid positive admissions for our hospitals in the fourth quarter, which was the sizable increase over the third quarter, we were relatively.
Opex spared from wave one of the bulk of our market. So as the year of aircraft. Obviously, we felt the impact in the second quarter with the shutdown Nonetheless.
No a lot of revenue.
And vertical of Covid cases, and into the third quarter and the second way, we were a little bit more impacted I think of about 8000 kilos of top of Covid positive patients in that quarter.
We had a really good balance for the quarter as we shared in our earnings release and our discussion with you guys last time that we had really strong reopening efforts underway. It didn't have nearly as curious of an impact on elective volume because frankly, our affiliates, we're able to manage the dual track programs still effectively for the.
The latest wave with about 14000, again, Covid impatient and we did see some limitations in terms of having two two to preserve our capacity for Covid and patient care. We also had I think an increasing consumer reluctance to step into our hospitals for lack of care has felt frankly.
First the deferred and wafer vaccination and whatever the case may be now with that being said in this quarter in particular, we're very focused on.
The opening game plant that we deployed so successfully from the prior waves.
Again right now we're on a pretty good run rate of getting the business back in we have had this major weather event happened in the past week in particular impacting a lot of our markets, but intra quarter. So thats. Good news that gives us an opportunity to continue to work with patients just like we have in the past with Covid, Although we've had the unfortunately canceled or deferred.
Sure Lindsay anything to add in terms of the Covid response or results.
Thank you covered it well.
The increase particularly in the fourth quarter.
And Ralph this is Kevin related to your question on guidance.
How we're looking at this is.
In terms of coming up the guidance, we started with a kind of a bottoms up approach when we looked at it from the top down a number of different scenarios.
And really due to the variability of.
What may happen as the result of Covid.
The current spike that we have seen to start off of the year.
Uncertainty around when the vaccination.
They really have some some impact.
We gave a little wider range, there's really multiple.
And I'd say scenarios of multiple variables with the related related to the volume acuity and payer mix and it's difficult to kind of give the specific.
The range on any one of those variables without really considering all of them. So I think if you just think about the midpoint of the range and the way we're thinking about it there's multiple ways that you can get there with less volume and higher acuity or more volume and the lower acuity and still get to the same answer.
Okay.
Your next question comes from Kevin Fischbeck from Bank of America.
Okay, great. Thanks.
Wondering how you were thinking about labor cost.
For the year.
Davidson.
Beating or conflicting views.
Net of labor shortage that we're seeing.
Will exacerbate as the year goes on.
As people look to retire et cetera.
Or whether it will get better as the.
We don't need nurses and quarantine anymore.
See the snapback of utilization are you expecting labor cost pressure or is that going to be of sorts of the margin expansion you're looking for.
We have and I'll start off here, Kevin we have.
I think done an.
An extremely good job of managing our labor costs.
The past year.
In terms of our productivity.
As well as in terms of taking care of our employees through the pandemic.
I think if we look forward.
Certainly some pressure right now on labor cost and as everyone's aware of the cost of.
Yes.
Traveling nurses and so forth.
And just because of Covid some of the pressures of Thats put on we think that.
I would expect that to decrease over the course of the year as some of the pressures relieved on the system.
And overall I think we'll be able to manage through the labor costs as well as <unk>.
Continuing some of the.
Productivity programs that we have in place, which will offset as well as some of the labor pressures. It. Kevin. This is Tim just to add to that obviously.
Obviously mindful of the macro dynamics out there with the particularly nursing stocking clinical.
Clinical staffing resources.
We've always put the close eye on it as the company even before Covid, we set up some internal of nurse recruitment functions using the company's resources to support key markets, where we've invested our capital and certainly need to have a ready supply of nurses and clinicians to fill that capacity that sort of as well throughout the COVID-19 pandemic.
In general.
All of these focused on retention of our nurses always focused on recruiting and building a stronger pipeline over the long run.
The exciting stuff for us that we are doing some on campus nursing programs in select markets a partner, which serves the college to really start with those nurses early in their journey and then bring that into our networks of care. So we'll watch that development over the next couple of years, but those of the types of partnerships that are new we also had some long standing relationships with nursing.
Our brands across most of our communities, where we fund scholarships or faculty positions. So we're trying to stay on the front end of supporting the development of high quality nurses.
And our last question comes from Andrew Mok from Barclays.
Hi, Good morning of cases declined from January peaks I was hoping you could provide an update for how quickly of non COVID-19 utilization is re entering the hospital system and maybe comment on any differences you're seeing between the commercial and Medicare populations.
Andrew This is Tim I'll go ahead and kick it off in terms of in terms of the rebound of this current wave as I said earlier cases peak of mid January.
We're already active in our redeployment plans just like we have in the subsequent waves or I'm, sorry previous waves of Covid wastewater way too a little bit slower of a rebound in some of our communities.
I think largely due to some kind of patient hesitancy of we're hearing a little bit more from our providers that patients are getting the vaccine and not want to wait for that back to you to take effect. So we say that with the optimism that bringing patients back into the health care system.
Vaccinated, reducing the spread all of that would bode well for us in the the near to mid term, but at the.
The same playbook is underway in terms of staying close with our patients and those patients have rescheduled we've worked with physician practices, our employed practices as well as independent practices to make sure that when we have capacity, we're working those schedules to get patients back in as quickly as they are comfortable doing so the other part I think thats important here.
As I said earlier is we're seeing some weekly improvements in our revenue and our volume. This week, we did have a little bit of a setback with the weather event that took the sunbelt.
The frankly, we're not quite built for that in this part of the country and other in our southern markets, but for the most part still.
Still doing that same game plan of keeping track of what's canceled I'm looking at extending scheduled on the Saturdays and in many cases to be convenient for patients and providers to make up for what the weather impact of put upon us Kevin anything else debt.
The thing I would add and I think you captured it well there is at this point, we've not seen any real change in the patient mix.
As the procedures start to come back in.
Yes.
I will now turn the call over to the strategic for closing remarks.
Thank you, Mike we would like to thank everyone for spending time with US today I would like to once again express how grateful we are to all of our employees physicians provider of regional President in hospital leadership team, who have all been at the forefront of this pandemic and we remain committed to providing exceptional care.
All of the communities, we serve and I also wanted to express my gratitude to our company's leadership team for demonstrating the ability to effectively plan and execute upon all of our opportunities throughout the past several quarters, which concluded with the strong finish to 2020.
This concludes our call for today, we look forward to updating you on our progress throughout 2021 and once again, if you have any questions you can always reach out the $6 five first 657000.
Thanks, again and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.