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Community Health (CYH) to Divest Two NC Hospitals for $320M

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Community Health Systems, Inc. (CYH - Free Report) recently agreed to divest two hospitals in North Carolina (“NC”) to Novant Health subsidiaries. The deal is valued at around $320 million.

The assets included in the deal consist of a 123-bed acute care hospital in Mooresville, Lake Norman Regional Medical Center and Davis Regional Medical Center in Statesville. The latter facility is currently in the process of transitioning to an inpatient behavioral health unit from a general acute care facility.

The deal is expected to close later this year. The company does not shy away from shedding non-core assets to focus more on profitable resources. This is expected to improve its same-store metrics and cash flows.

Community Health also boasts a strong inorganic growth history, by targeting hospitals where management can add value through specialty medical service expansion, economies of scale, additional investment in new technology and improved process management.

While the company is expected to continue developing its portfolio through acquisitions and divestments of non-core operations, it is also expected to focus investments on enhancing its outpatient services and inpatient capacity. It is also likely to build additional care access points to boost volumes.

Price Performance

Community Health’s shares have gained 40.3% in the year-to-date period compared with the 4.2% rise of the industry it belongs to.

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Zacks Rank & Key Picks

Community Health currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Avanos Medical, Inc. (AVNS - Free Report) , Harrow Health, Inc. (HROW - Free Report) and BioLife Solutions, Inc. (BLFS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Avanos Medical’s 2023 earnings predicts 1.8% year-over-year growth. AVNS beat earnings estimates in all the past four quarters, with the average being 11%.

The consensus mark for Harrow Health’s 2023 earnings indicates a 119.7% year-over-year increase. Furthermore, the consensus estimate for HROW’s revenues in 2023 suggests 52.7% year-over-year growth.

The Zacks Consensus Estimate for BioLife Solutions’ 2023 earnings suggests 83.3% year-over-year growth. Also, the consensus mark for BLFS’ revenues in 2023 suggests 20.9% year-over-year growth.

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