We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Community Health to Sell Unit for Streamlining Operations
Read MoreHide Full Article
Community Health Systems, Inc. (CYH - Free Report) recently announced that its affiliate has entered into an agreement to divest 480-bed Bayfront Health St. Petersburg in St. Petersburg, FL and its related assets to a unit of Orlando Health. Subject to closing conditions, the deal is expected to culminate by the end of third-quarter 2020.
Orlando Health will take control of the long-term lease and operations of the hospital. However, the lease transfer is dependent on the consent of the St. Petersburg City Council.
This deal is one of the potential divestitures discussed by the company on its first-quarter earnings call.
The move is in line with the company’s strategy to focus on its core businesses that comprise large hospitals.
Debt Woes
Reeling under debt load, Community Health resorted to portfolio rationalization strategy. All these sell-offs are part of its massive debt-restructuring initiative to improve its highly leveraged balance sheet. Shedding small assets helps it concentrate on its core business that involve large hospitals, which in turn, promise higher returns. In 2019, the company completed divesting 12 hospitals.
In January this year, it concluded the divestiture of three Virginia hospitals, namely 300-bed Southside Regional Medical Center in Petersburg, 105-bed Southampton Memorial Hospital in Franklin and 80-bed Southern Virginia Regional Medical Center in Emporia along with their associated assets to the subsidiaries of Bon Secours Mercy Health, Inc.
Additionally, uncertainties surrounding its ability to cover interest expenses persist. The times interest earned ratio for the company, which measures its interest paying ability, stands at 0.5%, comparing unfavorably with the industry’s average of 2.7%.
Investors lost confidence in the company, which resulted in its share price depreciation and a 95% plunge in market capitalization from $6.2 billion recorded in 2014 to $0.3 billion now.
Community Health’s divestments made over the last couple of years have streamlined its business portfolio. Based on this, it expects same-store metrics and cash flow to improve. The sale of units is also going to lower its leverage ratios.
One of its peers, Tenet Healthcare Corp. (THC - Free Report) , has also been disposing some of its non-core and unprofitable facilities from its business portfolio to repay debt and maintain financial liquidity.
Shares of this Zacks Rank #3 (Hold) company have gained 15.9% in a years’ time against its industry’s decline of 30.8%.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Community Health to Sell Unit for Streamlining Operations
Community Health Systems, Inc. (CYH - Free Report) recently announced that its affiliate has entered into an agreement to divest 480-bed Bayfront Health St. Petersburg in St. Petersburg, FL and its related assets to a unit of Orlando Health. Subject to closing conditions, the deal is expected to culminate by the end of third-quarter 2020.
Orlando Health will take control of the long-term lease and operations of the hospital. However, the lease transfer is dependent on the consent of the St. Petersburg City Council.
This deal is one of the potential divestitures discussed by the company on its first-quarter earnings call.
The move is in line with the company’s strategy to focus on its core businesses that comprise large hospitals.
Debt Woes
Reeling under debt load, Community Health resorted to portfolio rationalization strategy. All these sell-offs are part of its massive debt-restructuring initiative to improve its highly leveraged balance sheet.
Shedding small assets helps it concentrate on its core business that involve large hospitals, which in turn, promise higher returns. In 2019, the company completed divesting 12 hospitals.
In January this year, it concluded the divestiture of three Virginia hospitals, namely 300-bed Southside Regional Medical Center in Petersburg, 105-bed Southampton Memorial Hospital in Franklin and 80-bed Southern Virginia Regional Medical Center in Emporia along with their associated assets to the subsidiaries of Bon Secours Mercy Health, Inc.
Additionally, uncertainties surrounding its ability to cover interest expenses persist. The times interest earned ratio for the company, which measures its interest paying ability, stands at 0.5%, comparing unfavorably with the industry’s average of 2.7%.
Investors lost confidence in the company, which resulted in its share price depreciation and a 95% plunge in market capitalization from $6.2 billion recorded in 2014 to $0.3 billion now.
Community Health’s divestments made over the last couple of years have streamlined its business portfolio. Based on this, it expects same-store metrics and cash flow to improve. The sale of units is also going to lower its leverage ratios.
One of its peers, Tenet Healthcare Corp. (THC - Free Report) , has also been disposing some of its non-core and unprofitable facilities from its business portfolio to repay debt and maintain financial liquidity.
Shares of this Zacks Rank #3 (Hold) company have gained 15.9% in a years’ time against its industry’s decline of 30.8%.
This solid price performance even outshines the stock movements of Universal Health Services Inc. (UHS - Free Report) and MEDNAX, Inc. (MD - Free Report) , as both have lost 29.1% and 28%, respectively, over the same time frame. Each company currently has the same Zacks Rank as Community Health. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>