CHS continues to trim debt with sale of 4 hospitals
- Community Health Systems, which struggled to make ends meet in recent years, put four more hospitals on the block to chip away at its debt, Modern Healthcare reported.
- The buyer, nonprofit Curae Health, will acquire 95-bed Merit Health Gilmore Memorial in Amory, MS, 112-bed Merit Health Batesville in Batesville, MS, 181-bed Merit Health Northwest Mississippi in Clarksdale, MS, and 126-bed Highlands Regional Medical Center in Sebring, FL, for an undisclosed sum.
- Meanwhile, Chinese billionaire Tianqiao Chen bought 929,800 additional shares of CHS stock, giving him total of 15.5 million shares and a 13.8% stake in the Franklin, TN-based health system, according to Modern Healthcare.
In a Thursday statement, CHS CEO Wayne Smith said the four hospitals “will benefit from alignment with a smaller organization specializing in the operation of rural hospitals.” Headquartered in Clinton, TN, Curae operates three hospitals in Alabama. The deal still requires regulatory approval, but is expected to close in the fourth quarter.
CHS’ struggles are due to lower earnings and low margins at hospitals owned by Health Management Association, which CHS purchased in 2014 for $7.6 billion. Earlier this year, the health system spun off 38 hospitals into an independent company named Quorum Health and sold its share in a four-hospital joint venture. The hospital chain has a number of other hospitals up for sell as well.
The parade of divestitures has led to speculation about the future of CHS’ Smith, who has led the hospital chain since 1997, growing it from 36 hospitals and about 100 employees to more than 200 hospitals and 3,000 employees, according to the Nashville Business Journal. The company has acknowledged talks with financial sponsors and hinted at the possibility of a sale.
In Thursday’s release, Smith stressed that the company is “highly invested” in the success of its hospitals and determining how to “best position them for the future.”
Chen — who made his fortune in online gambling — paid $9.5 million, or $10.27 per share, for the CHS stock, roughly a quarter of what it traded for a year ago, when it went for $40 a share. He is now CHS’ largest shareholder.
- Modern Healthcare CHS sells four rural hospitals in debt-reduction effort
- Modern Healthcare Chinese billionaire buys more CHS stock
- Nashville Business Journal As CHS considers a sale, future uncertain for CEO Wayne Smith