CHS sees profit plummet, plans to sell 10 more hospitals to drive down debt

Franklin, Tenn.-based Community Health Systems' saw earnings drop significantly in the first quarter of fiscal year 2016.

CHS said revenues increased 1.8 percent year over year to nearly $5 billion in the first quarter of FY 2016. However, the hospital operator saw operating income drop nearly 87 percent to $12 million.

Total admissions were down 2.6 percent in the first quarter compared to the same period the year prior. When adjusted to include outpatient activity, admissions increased 0.7 percent year over year.

CHS recently completed its spinoff of Quorum Health Corp., which includes 38 hospitals across 16 states as well as CHS' hospital management and consulting business. Chairman and CEO Wayne T. Smith said CHS intends to use net proceeds of $1.2 billion from the QHC spinoff to reduce debt. He also said CHS plans to drive down debt further through 10 other divestitures this year. After those transactions are completed, the proceeds should reduce CHS' debt by about $530 million.

"As we refine our portfolio into what we anticipate will be a more sustainable, higher-margin group of hospitals, our resources and future investments can be targeted into markets where we have the greatest opportunity to achieve performance improvement in our operations and financial results," said Mr. Smith.

CHS ended the first quarter with net income of $11 million, down 86 percent from $79 million in the same period a year earlier.

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