Investor raises CHS stake to 22%
- Tianqiao Chen, through the Shanda Group, recently purchased 9.8 million additional shares in Community Health Systems (CHS), raising his equity stake to 22.1%, Modern Healthcare reported.
- The move positions Chen to potentially become an activist investor in the company. Chen has historically been a passive investor with CHS.
- CHS has lowered its value by almost 90% since 2015, Axios reported the same day the Chen investment was disclosed.
Whether Chen incorporates himself into CHS' operations or not, the hospital operator has seen its share of better days.
In a comment to Modern Healthcare on Tuesday, Shanda stated, "Shanda maintains a good relationship with the [CHS] management team and intends to engage with them regarding business and operations, and the status of [CHS'] ongoing turnaround strategy."
CHS in its Q2 earnings earlier this month announced its net loss attributable to stakeholders was $137 million and CEO Wayne Smith disclosed the organization was pursuing additional divestitures to the 30 hospitals it had planned for this year.
Since the acquisition of Health Management Associates, the hospital operator has racked up almost $15 billion in debt. The company had also lost $1.7 billion last year. In addition, the company saw its consolidated uncompensated care increase from 26.2% to 29% in Q2, compared to the same time period in 2016.
In the earnings call, it was also disclosed CHS will try to focus on restructuring to divest certain assets and focus on growth markets, as well as continue to expand its freestanding emergency department and urgent care facility strategies.
The ultimate goal is to place sustainable hospitals in growth markets and reduce debt by 2018, but experts have called into question whether the organization will be able to right the ship before deciding to declare bankruptcy. While highly speculative, CHS' story will continue to be watched throughout the remainder of the year.
- Modern Healthcare Chen raises his CHS stake to 22.1%, may turn activist
- Axios The collapse of Community Health Systems
- Healthcare Dive CHS underperforms in Q2, looks to more divestitures
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