CHS con­tin­ues to re­struc­ture as it strug­gles with debt

Modern Healthcare - - REGIONAL NEWS - —Alex Kacik

Franklin, Tenn.-based Com­mu­nity Health Sys­tems re­cently com­pleted the sale of nine hos­pi­tals, part of the trou­bled hos­pi­tal chain’s plan to di­vest

30 fa­cil­i­ties and off­load debt.

In this lat­est round, CHS sold hos­pi­tals in Louisiana, Penn­syl­va­nia, Texas and Wash­ing­ton. CHS an­nounced the di­vesti­ture plans in its first-quar­ter earn­ings re­port, post­ing a $177 mil­lion net loss, down from a $36 mil­lion profit over the same pe­riod last year. The sys­tem had $14.69 bil­lion in debt in the first quar­ter, down slightly from $14.79 bil­lion the quar­ter prior.

The sys­tem is still reel­ing from its $7.6 bil­lion ac­qui­si­tion of Health Man­age­ment As­so­ci­ates and its 70-plus hos­pi­tals. It spun off 38 of its hos­pi­tals into a sep­a­rate, in­de­pen­dent com­pany called Quo­rum Health Corp. last year and used some of the $1.2 bil­lion of net pro­ceeds to pay off debt and im­prove its debt-EBITDA ra­tio, CHS CEO Wayne Smith said.

“Our cur­rent di­vesti­ture plan will also al­low us to move to a port­fo­lio of hos­pi­tals that are bet­ter-po­si­tioned in our mar­kets with bet­ter vol­ume growth, higher EBITDA mar­gin, im­proved cash flow,” Smith said in the first-quar­ter earn­ings call. “This will also al­low us to di­rect fu­ture in­vest­ments in our most at­trac­tive mar­kets and re­gional net­works, which pro­vide a higher re­turn on cap­i­tal.”

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