CHS stock plunges after announcing debt swap plan

Shares of Franklin, Tenn.-based Community Health Systems closed Oct. 30 at $3.82, down 16.6 percent from the day prior.

The decline came the day after the 102-hospital chain released its third-quarter earnings results and plans for a debt swap.

CHS revenues declined 5.9 percent in the third quarter of 2019. The company's third-quarter loss totaled $17 million, which was a significant improvement from the $325 million loss it reported in the third quarter of 2018.

Though the company's loss narrowed in the most recent quarter, CHS is still carrying a long-term debt load of nearly $3.3 billion.

On Oct. 29, CHS announced plans to offer $700 million in new senior secured notes due in 2027 and up to $1.9 billion in senior unsecured notes due in 2028 in exchange for its $2.6 billion worth of outstanding senior unsecured notes due in 2022.

Investors are likely concerned about the proposed debt swap plan because it would increase how much CHS pays in interest, according to The Motley Fool. Eight percent of CHS' revenue currently goes toward interest expense, according to the report.

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