Community Health Systems Inc., the second-largest U.S. hospital system by revenue, plunged the most in almost a year after cutting its 2013 earnings forecast as admissions declined.
Community Health dropped 9.5 percent to $42.81 at 9:36 a.m. New York time. The shares fell as much as 11 percent for their biggest intraday loss since July 26. The Franklin, Tennessee-based company had risen 71 percent in the 12 months through yesterday.
Income from continuing operations will be $2.95 to $3.25 a share, the hospital operator said yesterday in a statement. Analysts were expecting profit of $3.65 a share, the average of 24 estimates compiled by Bloomberg. The company said second-quarter revenue was little changed at $3.24 billion.
Weaker patient volume and higher-than-anticipated bad debts are helping stall revenue growth, Community Health said. The company, which had been subpoenaed in 2011 by federal investigators seeking documents related to Medicare and Medicaid billing, also said it received an additional subpoena on July 9 relating to the same investigation.
“This is not good news and the stock will go down,” Sheryl Skolnick, an analyst at Stamford, Connecticut-based CRT Capital Group LLC, said in an interview yesterday. “It has significant implications. It’s going to be hard for Community to be seen as a buyer of” Health Management Associates Inc.
Health Management, a hospital operator considering strategic alternatives, reached its highest market value in six years earlier this month after Reuters reported that the company had attracted takeover interest from Community Health.
For the three months ending June 30, Community Health said that, on a same-store basis, adjusted admissions decreased 2.6 percent compared with the same period last year. The company owns, operates or leases 135 hospitals in 29 states.
Full second-quarter results will be released on July 29, the company said.