Triad Purchase Drives Profits at Community Health

Community Health Systems Inc. (NYSE: CYH) said Tuesday that its third quarter profit rose 28 percent due to its purchase of Triad Hospitals Inc in July. The purchase made Community Health Systems the largest U.S. investor-owned hospital chain with more than 130 hospitals in 28 states ("Largest Public Hospital Company in U.S. Created in $5.1 billion Deal," 3/20).

The Franklin, Tenn.-based company reported net income for the quarter ended Sept. 30, 2007 of $10.5 million or 11 cents per share on nearly $2.4 billion in revenues, a 110 percent increase. That compares to $8.2 million or 9 cents per share in the year-ago period on $1.1 billion in revenues.

Income from continuing operations rose 76 percent to $16.3 million or 17 cents per share in the quarter. And total admissions increased 71 percent from a year ago, primarily from hospitals acquired in 2006 and 2007.

The company said the quarter’s results were reduced by an after tax charge of 18 cents per share for the early extinguishment of debt related to the Triad acquisition.

Community also said the financial results include a change in estimate for the company’s allowance for doubtful accounts recorded in the third quarter of 2006. The change resulted in a $65 million increase in the company’s allowance for doubtful accounts on its September 30, 2006 balance sheet and a corresponding $65 million pre-tax increase to the provision for bad debt. The change reduced adjusted EBITDA by $65 million and income from continuing operations by $40 million or 42 cents per diluted share for the quarter ended September 30, 2006.