Franklin, Tenn.-based Community Health Systems expects to offload two Florida hospitals and one North Carolina hospital in the first quarter for about $540 million in gross proceeds, executives said during the company’s fourth-quarter earnings call on Feb. 19.
CHS plans to sell ShorePoint Health Port Charlotte (Fla.) and certain assets of ShorePoint Health Punta Gorda to Altamonte Springs, Fla.-based AdventHealth for $265 million in cash. The deal is expected to close in the first quarter, subject to regulatory approvals and closing conditions.
The for-profit system also plans to sell Lake Norman Regional Medical Center in Mooresville, N.C., to Duke University Health System. Durham, N.C.-based Duke aims to purchase the 123-bed hospital and its related assets for about $280 million.
“These transactions reflect attractive double digit multiples, on trailing EBITDA, leading to further de-leveraging,” CFO Kevin Hammons said. “In addition to these previously announced transactions, we continue to advance discussions on additional divesters that we expect to announce in the near future, also at very attractive multiples. These pending and expected transactions should generate more than $1 billion in total proceeds, which we expect to lead to meaningful deleveraging and increase shareholder value at year end.”
In October, CHS also completed the sale of Davis Regional Psychiatric Hospital and Davis Regional Medical Center in Statesville, N.C., to Iredell Health System. Effective Jan. 31 CHS divested its 50% interest in Merit Health Biloxi (Miss.) to Gulfport, Miss.-based Memorial Health System. The sales are part of the health system’s $1 billion divestiture plan.
“As we continue to delever, we are getting to positive free cash flow, able to get our debt down and lower our cash interest,” Mr. Hammons said. “Even if we aren’t at the mid-teen margins, being positive on those other things will generate sufficient cash flow and sufficient EBITDA to continue to progress and make the investments that we need.”
