CHS shares continue downward spiral, hit all-time low

Shares of Franklin, Tenn.-based Community Health Systems closed Tuesday at $4.23, their lowest price ever. 

CHS has struggled with a heavy debt load and plunging share prices for months. The 127-hospital chain's shares have declined more than 20 percent in the past year.

CHS ended the third quarter of 2017 with a net loss of $110 million on revenues of $3.67 billion. That's compared to the same period of the year prior, when the company reported a net loss of $79 million on revenues of $4.38 billion.

To improve its finances and reduce its heavy debt load, CHS put a turnaround plan into place in 2016. As part of the initiative, the company announced plans this year to sell off 30 hospitals. 

In August, CHS extended its divestiture plan. The company said it would sell a group of hospitals with combined revenue of $1.5 billion in addition to the 30 hospitals already announced. After completing its original 30-hospital divestiture plan earlier this month, CHS once again expanded its divestiture plan and is now looking to sell hospitals with combined revenue of $2 billion. 

With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of this year, from $14.8 billion in the same period of 2016.

Last week, Fitch Ratings downgraded CHS' debt to "CCC" from "B." Fitch said the downgrade reflects the company's high leverage, weak operating trends and execution risk surrounding CHS' divestiture and repositioning plan.

"Fitch thinks that CHS has adequate access to capital to fund day-to-day operations. However, there are significant longer-term concerns with the liquidity profile," said the debt rating agency. "Fitch expects CHS to maintain compliance with the maintenance covenants at the end of 2017, but thinks there is a likelihood that the company will violate the covenants in 2018."

More articles on healthcare finance:

South Dakota hospital to lose Medicare contract: 4 things to know
How CHS, Tenet, UHS, LifePoint and HCA fared in Q3
CHI sees operating loss narrow to $77.9M, says merger with Dignity still in the works 

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