Community Health Systems, Inc. CYH has completed the sale of 60-bed Byrd Regional Hospital and its associated assets to the subsidiaries of the Allegiance Health Management. The transaction took place on Jun 1, 2018.
This move came in sync with the company’s planned divestitures, discussed on first-quarter 2018’s earnings call.
In addition, the company sold 85-bed Tennova Healthcare Jamestown in Jamestown, TN along with its associated assets to units of Rennova Health, Inc. The transaction was effective Jun 1, 2018.
Community Health has been consistently divesting hospitals in order to strengthen its portfolio. It is currently focusing on its core business by selling of non-core assets or those generating inadequate profitability. In 2017, the company sold as many as 30 hospitals as part of its portfolio rationalization efforts. Additionally, the company divested a hospital in Dade City and agreed to sell assets of Ocala, Florida Hospital in April 2018.
Community Health intends to divest hospitals this year, which accounted for $2 billion revenues and mid-single-digit EBITDA margin in 2017. These transactions are expected to generate $1.3 billion gross proceeds to possibly help manage the company’s costs.
Community Health expects to reduce its debts through these divestitures. In 2016, the debt level decreased 10% year over year followed by a 6% fall in 2017. Further, it was lowered 8.9% at the end of first-quarter 2018.
In the past six months, although this Zacks Rank #3 (Hold) company has underperformed its industry’s rally of 20.5% with a 3.6% gain of its share price value, favorable factors like price impact, strong divestitures, inorganic growth and a declining debt level are likely to help the stock bounce back going forward.
Stocks to Consider
A few better-ranked players from the medical industry are Tenet Healthcare Corporation THC, Anthem, Inc. ANTM and Humana Inc. HUM. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tenet operates as a diversified healthcare services company and carries a Zacks Rank #2 (Buy). The company came up with an average four-quarter positive earnings surprise of an astronomical 753.24%.
Anthem and its subsidiaries work as a health benefits company in the United States. With a Zacks Rank of 2, the company pulled off a positive trailing four-quarter beat of 7.22%.
Humana Inc. operates as a health and well-being company in the United States and is a Zacks #2 Ranked player. The company managed to deliver an average four-quarter positive surprise of 6.16%.
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