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Community Health Prices Senior Secured Notes Worth $2.2B
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Community Health Systems, Inc. (CYH - Free Report) recently announced that it has issued 6.25%, $2.2 billion Senior Secured Notes, due 2023. The offering was upsized by $450 million.
Community Health efforts to manage debt and balancing its capital structure have been appreciated by shareholders. In 2016, the company lowered its long-term debt by 11% over 2015 to $14.8 billion and expects to reduce it by another 14% to $12.9 billion by year-end 2017. Year to date, the stock has gained 60% compared with 20% increase by the Zacks categorized Medical-Hospital industry.
Community Health also undertakes divestures for proper debt management. During the fourth quarter, the company sold many of its operating units. In Dec 2016, it inked a deal to sell two Washington hospitals, the 214-bed Yakima Regional Medical & Cardiac Center and the 63-bed Toppenish Community Hospital to Sunnyside Community Hospital & Clinics. In the same month, it completed the sale and leaseback of 10 medical office buildings for $163 million to HCP, Inc. (HCP). Last November, the company signed a definitive agreement to sell Rockwood Health System and its associated assets to MultiCare Health System. In Jan 2017, the company sold 80% ownership interest in its Home Health division to a subsidiary of Almost Family for $128 million.
Coming back, Community Health plans to utilize the net proceeds from the aforesaid offering to primarily purchase the issuer’s 5.125% Senior Secured Notes, due 2018. Through these efforts, the company aims to redeem all the 2018 Notes that have not been purchased after the tender offer. Community Health also intends to repay $1.023 billion aggregate principal amount of certain term loans outstanding under its amended and restated credit facility. The remainder, if any, will be used by the company to pay fees and expenses related to general corporate purposes.
However, the company’s balance sheet remains highly leveraged. Based on its current divestiture plans and note issuances, it also expects senior secured net leverage ratio at the end of 2017 to be approximately 3.2 times the previous year. Such high debt level is expected to exert pressure on the margin due to higher interest expenses.
Zacks Rank and Stocks to Consider
Community Health presently carries Zacks Rank #3 (Hold).
HCA Holdings delivered positive surprises in all of the last four quarters with an average beat of 10.16%.
Inogen delivered positive surprises in three of the last four quarters but with an average negative surprise of 49.08%.
Avinger delivered positive surprises in two of the last four quarters with an average beat of 4.35%.
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Community Health Prices Senior Secured Notes Worth $2.2B
Community Health Systems, Inc. (CYH - Free Report) recently announced that it has issued 6.25%, $2.2 billion Senior Secured Notes, due 2023. The offering was upsized by $450 million.
Community Health efforts to manage debt and balancing its capital structure have been appreciated by shareholders. In 2016, the company lowered its long-term debt by 11% over 2015 to $14.8 billion and expects to reduce it by another 14% to $12.9 billion by year-end 2017. Year to date, the stock has gained 60% compared with 20% increase by the Zacks categorized Medical-Hospital industry.
Community Health also undertakes divestures for proper debt management. During the fourth quarter, the company sold many of its operating units. In Dec 2016, it inked a deal to sell two Washington hospitals, the 214-bed Yakima Regional Medical & Cardiac Center and the 63-bed Toppenish Community Hospital to Sunnyside Community Hospital & Clinics. In the same month, it completed the sale and leaseback of 10 medical office buildings for $163 million to HCP, Inc. (HCP). Last November, the company signed a definitive agreement to sell Rockwood Health System and its associated assets to MultiCare Health System. In Jan 2017, the company sold 80% ownership interest in its Home Health division to a subsidiary of Almost Family for $128 million.
Coming back, Community Health plans to utilize the net proceeds from the aforesaid offering to primarily purchase the issuer’s 5.125% Senior Secured Notes, due 2018. Through these efforts, the company aims to redeem all the 2018 Notes that have not been purchased after the tender offer. Community Health also intends to repay $1.023 billion aggregate principal amount of certain term loans outstanding under its amended and restated credit facility. The remainder, if any, will be used by the company to pay fees and expenses related to general corporate purposes.
However, the company’s balance sheet remains highly leveraged. Based on its current divestiture plans and note issuances, it also expects senior secured net leverage ratio at the end of 2017 to be approximately 3.2 times the previous year. Such high debt level is expected to exert pressure on the margin due to higher interest expenses.
Zacks Rank and Stocks to Consider
Community Health presently carries Zacks Rank #3 (Hold).
Some better-ranked stocks from medical sector include HCA Holdings, Inc. (HCA - Free Report) , Inogen Inc. (INGN - Free Report) and Avinger, Inc. (AVGR - Free Report) . While Inogen sports Zacks Rank #1 (Strong Buy), the other two stocks hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HCA Holdings delivered positive surprises in all of the last four quarters with an average beat of 10.16%.
Inogen delivered positive surprises in three of the last four quarters but with an average negative surprise of 49.08%.
Avinger delivered positive surprises in two of the last four quarters with an average beat of 4.35%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>