CHS and Woodbridge end $120 million deal in Pennsylvania
Proceeds from the sale of the three hospitals was to have gone towards paying down an estimated $11B debt.
Skyline of Scranton, Pennsylvania
Photo: Denis Tangney Jr/Getty Images
Community Health Systems has announced there is no longer a deal to sell three hospitals in Pennsylvania to Woodbridge Healthcare.
The divestiture was expected to go through this quarter. Instead, on November 22, the for-profit CHS and nonprofit WoodBridge Healthcare mutually agreed to terminate the purchase agreement that was signed on July 30, according to CHS.
WoodBridge had intended to acquire Commonwealth Health System from subsidiaries of CHS in a $120 million transaction that included three hospitals, ambulatory surgery centers, emergency departments, imaging centers, walk-in clinics, laboratories and other assets. The three hospitals included Regional Hospital of Scranton, Moses Taylor Hospital in Scranton and Wilkes-Barre General Hospital in Wilkes-Barre.
The termination was due to WoodBridge's inability to satisfy the funding requirements because of certain developments affecting the expected proceeds available to WoodBridge from the issuance of publicly offered tax-exempt and taxable bonds, CHS said.
CHS said it would evaluate future options for Commonwealth Health in light of the termination of this transaction.
WHY THIS MATTERS
In selling the three hospitals, CHS had planned to exit the state of Pennsylvania and use the funds to help pay down debt.
CHS had an estimated $11 billion in debt on its balance sheet as of October 30, according to Seeking Alpha.
In Q3, Community Health Systems reported a net loss of $355 million, its worst performance in the last ten quarters, causing an estimated 20% stock drop, according to the Seeking Alpha report. Losses "spiraled out of control and bankruptcy remains a real threat," the Oct. 30 report said.
THE LARGER TREND
On Friday, Nov. 22, Community Health Systems announced it would sell ShorePoint Health Port Charlotte in Port Charlotte, Florida, and ShorePoint Health Punta Gorda, in Punta Gorda, Florida, and certain ancillary businesses to subsidiaries of Adventist Health System Sunbelt Healthcare Corporation for $265 million in cash.
Due to the effects of Hurricane Helene and Hurricane Milton, the Punta Gorda hospital has indefinitely suspended inpatient operations, CHS said.
The transaction is expected to close in the first quarter of 2025.
"This transaction is among the additional potential divestitures discussed on the company's third quarter 2024 earnings call and in subsequent public appearances," CHS said.
Community Health Systems, based in Franklin, Tennessee, operates in 39 distinct markets across 15 states. CHS subsidiaries own or lease 69 affiliated hospitals.
Email the writer: SMorse@himss.org
