CHS selling spree goes on with Florida hospital sale
- Community Health Systems has signed a definitive agreement to sell the Florida-based 421-bed Munroe Regional Medical Center to Adventist Health System.
- The deal is part of the additional planned divestitures in 2018 that CHS leadership alluded to on the company's Q4 earnings call. The Brentwood, TN-headquartered hospital operator divested 30 hospitals in 2017 to help pare down a large debt load.
- The deal is expected to close in Q3 this year. Financial terms were not disclosed.
CHS is continuing its fire sale of hospitals in attempts to chip away debt.
The hospital operator began the spree in 2016 to focus on regional hubs and knock off blocks of its $15 billion debt at the time. It has slowly been eroding the debt load, ending 2017 with $13.8 billion in debt, a decrease from $14.7 billion at the end of 2016.
CHS is attempting to make $1.3 billion off of divestitures this year.
The debt situation has become such a burden that the system hired financial advisers to help restructure.
The company said in an SEC filing it has a four-point plan to move forward:
- Gain market share by increasing volumes and growing revenues;
- Increase productivity and operating efficiency to enhance profitability;
- Improve patient safety and quality of care; and
- Rationalize portfolio through select divestitures.
While the financial terms were not disclosed, a 421-bed facility is likely to draw a pretty penny. CHS has room to spare competition-wise in its Florida market, the state with the company's largest number of assets. Assuming the deal closes, CHS will have 18 hospitals in Florida, closely followed by 16 hospitals in Tennessee, 12 in Texas and 11 in Indiana.
For Adventist, the deal adds to its portfolio in the Florida market. The faith-based health system has its lion share of assets in the Sunshine State with 27 facilities.
CHS' first earnings call of the year will be held May 2, following the release of its Q1 filings May 1.
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