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Community Health Arm to Divest AllianceHealth Deaconess

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Community Health Systems, Inc. (CYH - Free Report) recently announced that one of its units has signed a definitive agreement to sell 291-bed AllianceHealth Deaconess hospital in Oklahoma City, OK along with other related businesses to a subsidiary of INTEGRIS Health. The transaction is expected to close in the third quarter of 2018, subject to customary regulatory approvals and closing conditions.

Post the sale, the leading operator of general acute care hospitals would be able to continue its operation across the seven hospitals in Oklahoma. The hospital to be put on sale is among the additional planned divestitures, discussed on the company’s first-quarter 2018 earnings call.

Earlier this year, the company’s subsidiaries also completed their sale of 60-bed Byrd Regional Hospital and its associated assets to the subsidiaries of Allegiance Health Management;  85-bed Tennova Healthcare – Jamestown in Jamestown, TN and its associated assets to the subsidiaries of Rennova Health, Inc.; three Tennessee hospitals including 225-bed Tennova - Dyersburg Regional in Dyersburg, 150-bed Tennova-Regional Jackson in Jackson and 100-bed Tennova Volunteer Martin in Martin alongside their associated assets to West Tennessee Healthcare. All three transactions were effective Jun 1, 2018.

The company has been consistently divesting hospitals for strengthening its portfolio as well as generating funds to manage its costs. It is selling its non-core assets and currently focusing on its core business. Notably, Community Health sold as many as 30 hospitals last year.

The company’s divestitures are allowing it to focus on the most sustainable markets for better growth. The divestments would also help the company reduce its debt. The company has been effectively lowering its debt over the past few years. It has decreased its debt by 16.3% over the last three years. It expects that the hospital divestitures would be able to generate $1.3 billion of gross proceeds in 2018. A lighter portfolio of hospitals will enable Community Health to manage its corporate cost proactively.

Shares of this Zacks Rank #3 (Hold) player have gained 2.68% in the past three months, underperforming the industry’s growth of 4.71%.


 

Stocks to Consider

Better-ranked stocks from the medical industry include WellCare Health Plans, Inc. (WCG - Free Report) , Anthem, Inc. (ANTM - Free Report) and Humana Inc. (HUM - Free Report) .

WellCare provides managed care services for government-sponsored health care programs. The company sports a Zacks Rank #1 (Strong Buy) and managed to pull off an average four-quarter positive surprise of 51.70%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem and its arms operate as a health benefits company in the United States. Holding a Zacks Rank #2 (Buy), the company came up with an average trailing four-quarter earnings surprise of 7.22%.

Humana operates as a health and well-being company in the United States. It carries a Zacks Rank of 2 and delivered an average four-quarter beat of 6.16%.

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