Quorum sees net loss more than double, targets up to $215M in hospital divestitures

Brentwood, Tenn.-based Quorum Health ended the first half of 2018 with a net loss, but the company aims to improve its financial position by restructuring its portfolio.

The 28-hospital system, a spinoff of Franklin, Tenn.-based Community Health Systems, said operating revenues decreased 9 percent year over year to $959.5 million in the first six months of 2018. The decline was largely attributable to Quorum operating seven fewer hospitals in the first half of this year than in the same period of 2017. The company has sold or closed 10 hospitals since the spinoff from CHS in April 2016.

Quorum said a $15.8 million increase in funds from the California Hospital Quality Assurance Fee program partially offset the decline in revenue.

The company's finances were negatively affected by several one-time charges in the first half of this year. Quorum recorded $39.8 million of impairment charges in the six-month period ended June 30, and incurred costs of $17.1 million related to the closure of one hospital. The company also reported an $8.1 million loss on the sale of two hospitals and $6 million in severance related to headcount reductions.

After factoring in expenses and one-time charges, the company ended the first six months of 2018 with a net loss of $124.4 million, compared to a net loss of $57.8 million in the same period a year earlier.

Quorum is focused on restructuring its portfolio to improve financial performance. Since the company began selling off hospitals in 2016, it has received $84.8 million in net proceeds from divestitures. Quorum used the bulk of those funds — $74.9 million — to pay down its debt.

Quorum is currently targeting an additional $165 million to $215 million in asset sales by the end of 2019. As of Aug. 8, the company has signed letters of intent to divest six facilities and a definitive agreement to sell one hospital. Those potential transactions represent net cash proceeds of about $115 million.

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