Tag Archives: Divestiture Plan

CHS Records $2B Loss in 4Q

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CEO Wayne Smith says the company’s turnaround is making progress, even as shareholders take it on the chin, losing nearly $18 per share in the fourth quarter of 2017.

Community Health Systems, Inc. lost more than $2 billion in the fourth quarter of 2017, nearly $18 per share, owing to converging challenges that include plummeting revenues and lower hospital volumes, the company reported.

Franklin, Tennessee–based CHS said net operating revenues for the three months ended December 31, 2017, totaled $3 billion, a 31.6% decrease, compared with $4.4 billion for the same period in 2016.

Net operating revenues for all of 2017 totaled $15.3 billion, a 16.7% decrease, compared with $18.4 billion for the same period in 2016.

Despite the sea of red ink, CHS CEO Wayne T. Smith was upbeat, and said the company’s turnaround effort is making headway.

“We are pleased with our progress in the fourth quarter and expect to carry that momentum through 2018, as we execute strategies that we believe will strengthen our core business and drive improved results,” Smith said in prepared remarks.

“During the fourth quarter, we completed our 2017 announced divestiture plan and we intend to continue to optimize our portfolio in 2018 to help pay down debt and refine our portfolio to stronger markets,” Smith said.

Smith said that for 2018, CHS remains “committed to growth initiatives to advance our competitive position, including expanding our transfer and access program across our networks, launching Accountable Care Organizations, and strategically expanding outpatient services.”

According to a filing from CHS:

  • Net operating revenues totaled more than $3 billion in the fourth quarter and were adversely impacted by a $591 million increase in contractual allowances and provision for bad debts.
  • Net loss attributable to CHS stockholders was $2 billion, or nearly $18 per share, compared with net loss of $220 million, or nearly $2 per share (diluted) for the same period in 2016.
  • Adjusted EBITDA was $409 million.
  • Cash flow from operations was $156 million, compared with $327 million for the same period in 2016.
  • Operating results for the fourth quarter reflect a 19.2% decrease in total admissions, compared with the fourth quarter of 2016. Same-hospital admissions fell 1.7% and adjusted admissions decreased .9% over the same period.
  • Operating results for all of 2017, reflect a 14% decrease in total admissions when compared with 2016.
  •  Hurricanes Harvey and Irma resulted in a $40 million loss of net operating revenues, owing to evacuations and population disruptions before the storms, and recovery efforts afterward.
  • As part of its efforts to pay down outstanding debts, CHS sold 30 hospitals in 2017, and continues to negotiate other divestitures in 2018.
  • CHS recorded non-cash impairment expense totaling $1.7 billion in the fourth quarter, from an impairment charge of $1.4 billion on the value of goodwill for the CHS’s hospital reporting unit and impairment charges of $341 million to reduce the value of assets at hospitals that CHS has sold, plans to sell, and at underperforming hospitals.

 

CHS to sell additional hospitals worth $2B in revenue

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https://www.beckershospitalreview.com/hospital-transactions-and-valuation/chs-to-sell-additional-hospitals-worth-2b-in-revenue.html

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Franklin, Tenn.-based Community Health Systems completed its 30-hospital divestiture plan Nov. 1. Now, the company expects to sell another group of its hospitals with combined revenue of $2 billion, Chairman and CEO Wayne Smith said during a third quarter earnings call.

To improve its finances and reduce its heavy debt load, CHS put a turnaround plan into place last year. As part of the initiative, the company announced in early 2017 that it intended to sell off 30 hospitals. In August, CHS extended its divestiture plan. The company said it would sell a group of hospitals with combined revenue of $1.5 billion in addition to the 30 hospitals already announced.

With the sales last week of Highlands Regional Medical Center in Sebring, Fla., and Merit Health Northwest Mississippi in Clarksdale, Mr. Smith said the 30 hospital divestitures are complete, and the company is once again expanding its divestiture plan.

“We are now pursuing sale transaction of hospitals accounting for at least $2 billion of net revenue, which has increased from $1.5 billion last quarter,” Mr. Smith said.

Mr. Smith said the company has signed several letters of intent for the hospitals in the next group of divestitures, accounting for more than $1.2 billion in net revenue.

“Our goal is to emerge from this process with a sustainable group of hospitals that are positioned for long-term success and growth,” he said.

With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of this year, from $14.8 billion in the same period of 2016.

The company ended the most recent quarter with a net loss of $110 million on revenues of $3.67 billion. That’s compared to the third quarter of 2016, when the company posted a net loss of $79 million on revenues of $4.38 billion.

Chinese billionaire Tianqiao Chen makes big stock buy in CHS, brings stake to 22.1%

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The purchases were made through Chen’s various Shanda affiliates, documents showed.

Chinese billionaire Tianqiao Chen is once again raising eyebrows in the healthcare sector, after significantly increasing his stake in struggling healthcare organization Community Health Systems, which is based in Franklin, Tennessee.

According to a filing with the Securities and Exchange Commission, now owns 22.1 percent of CHS‘ outstanding shares of common stock after buying up roughly 9.8 million additional shares over the last week. The price per share varied from $6.1 to $8 per share.

The purchases were made through Chen’s various Shanda affiliates, documents showed.

The big stock buy will inevitably be viewed by at least some as a move to take a bigger interest in the struggling company, something that has been speculated about in the past when Chen first came on the scene and bought a large block of stock in the company last year.

A spokesperson for Shanda Group issued the following statement. “Shanda maintains a good relationship with the CYH management team and intends to engage with them regarding business and operations, and the status of CYH’s ongoing turnaround strategy.”

CHS has been in the news lately as it forges ahead with its ambitious divestiture plan to offload 30 hospitals in hopes of alleviating its billions-large debt load and tightening up its operations. So far the company has sold 20 of those hospitals and has plans in the works to unload the remaining ten. It has also said in a recent earnings call that they are entertaining plans to sell even more, but no definitive details have been released.