Topics
More on Operations

CHS will unload 2 more hospitals as revenue continues to drop

Transactions are expected to be completed sometime this year, boosting the sale price by $320 million.

Jeff Lagasse, Editor

Community Health Systems is set to unload two more hospitals than originally planned, bringing the total number to 12, according to a transcript of a second-quarter earnings call.

The sale, originally expected to be $530 million, will now total $850 million, representing about $1.45 billion in annual revenue -- up from the $1 billion that was projected before the two extra hospitals were added.

The transactions are expected to be completed sometime this year, and while the names of the hospitals have not been disclosed, CEO Wayne Smith said during the earnings calls that each is underperforming; earnings before interest, taxes, depreciation and amortization are low, mired in the single digits.

[Also: CHS to divest 10 'low-performing' hospitals as it continues to shed financially struggling facilities]

In early 2014, CHS purchased Health Management Associates for nearly $4 billion, acquiring 60 hospitals in the process. Some of which were divested in April of this year when CHS parted ways with Quorum Health Corp., a group of 38 rural hospitals. CHS CFO Larry Cash said Wednesday that the HMA hospitals are performing poorly when compared to CHS' 92 core facilities, with 3 percent declines in revenue, surgeries and admissions during the second quarter.

CHS shares dropped 13 percent on Tuesday to $10.60 per share, with earnings falling far below Wall Street estimates. The company reported adjusted second-quarter earnings of 9 cents on revenue of $4.59 billion, far short of the 56 cents a share on revenue of $4.54 billion originally projected by FactSet analysts.

Overall, CHS' revenue was $4.6 billion for the quarter, down 6 percent. 

Twitter: @JELagasse