Quorum Health records $348M net loss, considers adding more hospitals to sale pipeline

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Brentwood, Tenn.-based Quorum Health Corp.'s 2016 financial results were rocky, as admissions declined and impairment charges took a toll on the company's bottom line.

The 36-hospital system, which is a spin-off of Franklin, Tenn.-based Community Health Systems, reported operating revenues of $2.14 billion in 2016, down slightly from $2.19 billion in 2015. The dip in revenues was attributable, in part, to lower patient volume. Quorum said admissions decreased 3.1 percent year over year. When adjusted for outpatient activity, admissions were down 2.3 percent in 2016 compared to the year prior.

After factoring in a year-over-year increase in expenses, including one-time impairment charges of $22.8 million, Quorum ended 2016 with a net loss of $347.7 million, compared to a net income of $1.3 million in the year prior.  

Quorum is focused on restructuring its portfolio to improve its financial performance. The company sold Sandhills Regional Medical Center in Hamlet, N.C., and Barrow Regional Medical Center in Winder, Ga., in the fourth quarter of last year, and it has several other deals in the works.

During an earnings call in November, Quorum President and CEO Thomas D. Miller said the company planned to sell six hospitals in addition to Sandhills Regional and Barrow Regional. In an earnings statement released Wednesday, Mr. Miller said Quorum has inked a definitive agreement for the sale of one hospital, and that transaction is expected to close by the end of the first quarter of 2017. He said the company expects to enter into a definitive agreement for the sale of another hospital by the end of the first quarter and has signed letters of intent covering four additional hospitals. The company will use the proceeds from these transactions to pay down its secured debt.

In its quest to restructure its portfolio, Mr. Miller said the company may add more hospitals to the sale pipeline. "We are evaluating potential divestitures of additional hospitals with negative and low single digit EBITDA margins," he said.

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