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Community Health Systems Inc.

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Community Health's second quarter results were disappointing. The company's high debt level, uncertainty over regulatory reforms and revenue concentration remain major concerns in the near term. Post Quorum spin-off, the company is now planning to sell another 12 hospitals by the end of this year, which will not only help in paying off debt but also drive future investments. Nevertheless, we believe that Community Health is well positioned to benefit from The Patient Protection and Affordable Care Act (ACA). Medicaid program expansions and synergies from the Health Management Associates (HMA) acquisition are the key catalysts. We also believe that strategic buyouts will drive the company’s penetration into the healthcare services market, which in turn, will enhance its competitive position as well as drive significant growth. However, inconsistent results and growing execution fears are the primary headwinds.


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