Image by StockSnap from PixabayAlthough Community Health Systems Inc. (NYSE: CYH) missed its earnings target in the first quarter of 2026, executives expressed enthusiasm about the company’s recent efforts to grow its ambulatory surgery center (ASC) portfolio.
Before diving into the Tennessee-based health system’s financial results during an April 21 earnings call, Community Health Systems CEO Kevin Hammons noted his company recently made some “significant investments in ambulatory surgery centers in our core markets.”
Those investments include the pending purchase of a majority ownership stake in the Surgical Institute of Alabama – Community Health Systems’ largest acquisition since 2016 – and the recent purchase of a majority interest in South Anchorage Surgery Center in Alaska. The company also opened two de novo ASCs in Birmingham and Foley, Alabama, during the first quarter.
“These targeted investments extend CHS’s ability to provide outpatient surgical care in the most advantageous way for our patients while delivering excellent outcomes, optimizing the surgical experience for our physician partners and driving future growth for our health systems,” Hammons said on the call.
Across Community Health Systems’ broader portfolio, however, a variety of factors contributed to worse-than-anticipated quarterly results. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $309 million “was on the low end of our internal expectations,” Hammons said, and that figure was down 17.8% compared to the prior-year period.
Net operating revenues were about $2.97 billion in Q1 2026, according to the company, with a net loss of about $58 million.
As far as a financial split, outpatient accounted for about 50.5% of Community Health Systems’ net operating revenue, on par with the previous year’s same quarter (when outpatient accounted for 50.7% of net operating revenues).
Chief Financial Officer Jason Johnson said a major challenge was that two key metrics – patient volumes and payer mix – came in below expectations, “including noteworthy softness in elective procedures such as hips and knees.” Those headwinds, combined with negative contribution from recently divested operations, led to margin compression for Community Health Systems.
The volume and payer mix challenges that the company experienced in the first quarter “reflect a temporary disruption in demand for health care services in our markets, largely driven by consumer fears related to geopolitical instability and increased cost of living,” Hammons said. He also cited “ongoing aggressive practices used by the managed care companies” as a contributing factor.
Later, in response to an analyst’s question, Hammons said the volume pressures weren’t concentrated in any particular markets but were seen more among people with commercial and Affordable Care Act exchange coverage.
Looking ahead, Community Health Systems is maintaining its previously announced full-year adjusted EBITDA outlook of $1.34 billion to $1.49 billion, Johnson said.
Although new developments have emerged since the company made that prediction – including ASC investments with a combined price tag of $85 million – Community Health Systems doesn’t have “sufficient data” to adjust the outlook at this early in 2026, the CFO explained.
