CHS to sell 17 hospitals to drive down debt
Franklin, Tenn.-based Community Health Systems is in talks to sell hospitals and other assets to help trim its debt load, said CEO Wayne Smith during a third-quarter earnings call Wednesday.
"We're not pleased with our performance in the third quarter," said Mr. Smith. The company ended the most recent quarter with a net loss of $79 million, compared with a $52 million profit in the same period of 2015.
However, CHS' financial challenges preceded the third quarter of this year, which Mr. Smith recognized during the earnings call. "We have not been satisfied with our performance over the past few quarters," he said.
Mr. Smith highlighted many of the changes CHS has been through in recent years, including the spinoff of Quorum Health Corp. and the acquisition of Naples, Fla.-based Health Management Associates' 71 hospitals in 2014. Although CHS expects these changes to benefit the company in the long term, they have presented some challenges in the short term.
Adding to CHS' troubles is its hefty debt load of about $15 billion. The company has recently inked agreements aimed at driving down that amount. On Sept. 29, CHS disclosed it had signed a definitive agreement to sell four hospitals to Clinton, Tenn.-based Curae Health. Last month, CHS signed a definitive agreement to sell a controlling interest in CHS Home Health to Louisville, Ky.-based Almost Family, a provider of home health nursing services.
During the third-quarter earnings call, Mr. Smith disclosed CHS is working on seven additional divestiture transactions to further reduce its debt. The transactions include selling 17 hospitals, as well as home care and nonhospital real estate, which CHS anticipates will generate $1.2 billion in working capital. CHS expects the transactions to close between the fourth quarter of 2016 and the second quarter of 2017, according to Mr. Smith.
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