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Community Health to Divest Yakima & Toppenish Hospitals
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Community Health Systems, Inc. (CYH - Free Report) recently announced that its subsidiaries have entered into a definitive agreement with Sunnyside Community Hospital & Clinics. Per the deal, the former will sell two Washington hospitals, a 214-bed Yakima Regional Medical & Cardiac Center and a 63-bed Toppenish Community Hospital to the later for $45 million.
Community Health remains focused on inorganic growth through strategic initiatives. To this end, the company frequently opts for mergers, acquisitions as well as divestures. Management believes that shedding small assets should help the company focus more on core business and in turn, generate higher returns. This transaction is one of the seven deals discussed during the company’s third quarter 2016 earnings call.
However, the company’s heavy debt burdens have made shareholders wary. This is evident from the fact that despite its efforts on de-levering its balance sheet through several divestures, the shares of the company have not witnessed favorable price movement this year. The stock has lost 79.3% year to date compared with the Zacks categorized Hospitals industry’s decline of 8.8%.
YTD PRICE CHART
Coming back, the transaction, which is presently subject to customary regulatory approvals, is expected to be completed in the second quarter of 2017. Community Health is a highly levered company and hence, like its many other divestures, the proceeds from this transaction will also be used to pay off debt in order to deleverage its balance sheet.
The Yakima and Toppenish hospitals have been productive resources for the company and are well positioned for success in the future. Hence, the scale of operations of these hospitals is likely to be further enhanced under Sunnyside Community Hospital & Clinics, which is another big regional player. .
Last month, Community Health’s subsidiaries inked a deal with MultiCare Health System to divest Rockwood Health System and its associated assets to the later for $425 million. The transaction is expected to be closed in the first quarter of 2017 upon fulfillment of customary closing conditions.
Earlier, Community Health’s affiliates had agreed to divest four hospitals and their associated assets to the subsidiaries of Curae Health, Inc. Apart from divestures, spin-offs are preferred by Community Health. In Apr 2016, the company completed the spin-off of Quorum Health Corporation.
Zacks Rank and Stocks to Consider
The company presently carries Zacks Rank #5 (Strong Sell). The company missed expectation in three of the last four quarters with an average miss of 69.49%.
However, investors can look at some better-ranked stocks from the medical sector like WellCare Health Plans Inc. , Magellan Health Inc. and Humana Inc. (HUM - Free Report) .
Magellan delivered positive surprises in three of the last four quarters with an average beat of 42.58%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare delivered positive surprises in all of the last four quarters with an average beat of 40.01%. The company also has a Zacks Rank #1.
Humana delivered positive surprise in three of the last four quarters with an average beat of 1.94%. It carries a Zacks Rank #2 (Buy).
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Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Community Health to Divest Yakima & Toppenish Hospitals
Community Health Systems, Inc. (CYH - Free Report) recently announced that its subsidiaries have entered into a definitive agreement with Sunnyside Community Hospital & Clinics. Per the deal, the former will sell two Washington hospitals, a 214-bed Yakima Regional Medical & Cardiac Center and a 63-bed Toppenish Community Hospital to the later for $45 million.
Community Health remains focused on inorganic growth through strategic initiatives. To this end, the company frequently opts for mergers, acquisitions as well as divestures. Management believes that shedding small assets should help the company focus more on core business and in turn, generate higher returns. This transaction is one of the seven deals discussed during the company’s third quarter 2016 earnings call.
However, the company’s heavy debt burdens have made shareholders wary. This is evident from the fact that despite its efforts on de-levering its balance sheet through several divestures, the shares of the company have not witnessed favorable price movement this year. The stock has lost 79.3% year to date compared with the Zacks categorized Hospitals industry’s decline of 8.8%.
YTD PRICE CHART
Coming back, the transaction, which is presently subject to customary regulatory approvals, is expected to be completed in the second quarter of 2017. Community Health is a highly levered company and hence, like its many other divestures, the proceeds from this transaction will also be used to pay off debt in order to deleverage its balance sheet.
The Yakima and Toppenish hospitals have been productive resources for the company and are well positioned for success in the future. Hence, the scale of operations of these hospitals is likely to be further enhanced under Sunnyside Community Hospital & Clinics, which is another big regional player. .
Last month, Community Health’s subsidiaries inked a deal with MultiCare Health System to divest Rockwood Health System and its associated assets to the later for $425 million. The transaction is expected to be closed in the first quarter of 2017 upon fulfillment of customary closing conditions.
Earlier, Community Health’s affiliates had agreed to divest four hospitals and their associated assets to the subsidiaries of Curae Health, Inc. Apart from divestures, spin-offs are preferred by Community Health. In Apr 2016, the company completed the spin-off of Quorum Health Corporation.
Zacks Rank and Stocks to Consider
The company presently carries Zacks Rank #5 (Strong Sell). The company missed expectation in three of the last four quarters with an average miss of 69.49%.
However, investors can look at some better-ranked stocks from the medical sector like WellCare Health Plans Inc. , Magellan Health Inc. and Humana Inc. (HUM - Free Report) .
Magellan delivered positive surprises in three of the last four quarters with an average beat of 42.58%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare delivered positive surprises in all of the last four quarters with an average beat of 40.01%. The company also has a Zacks Rank #1.
Humana delivered positive surprise in three of the last four quarters with an average beat of 1.94%. It carries a Zacks Rank #2 (Buy).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>