CHS sells two hospitals to HCA Healthcare, reports higher-than-expected first quarter earnings
Deal with HCA is expected to close this summer as system strives to cover $1.2 billion debt.
Tomball Regional Medical Center in Tomball, Texas
Community Health Systems, which has been shedding hospitals at a breakneck pace in response to financial difficulties, is selling two hospitals to Nashville-based HCA Healthcare for an undisclosed amount, in a deal that's expected to close this summer.
The two hospitals are Tomball Regional Medical Center, a 350-bed hospital in the Houston area, and South Texas Regional Medical Center, a 67-bed hospital in Jourdanton, Texas, south of San Antonio. HCA has a strong presence in both areas. South Texas Regional Medical Center will be acquired through HCA's partnership with Methodist Healthcare Ministries.
HCA co-owns Methodist Healthcare System of San Antonio along with Methodist Healthcare Ministries. It includes eight hospitals and two freestanding emergency rooms. In Houston, HCA boasts a network of 10 hospitals, eight surgery centers and two freestanding ERs.
[Also: Struggling CHS to sell off home health, hospice division for $128 million]
CHS has been steadily selling off hospitals and other medical properties in order to raise $1.2 billion needed to pay down its debt. In February the company sold eight hospitals located in Florida, Ohio and Pennsylvania, to Steward Health Care for an undisclosed price. And the system sold 10 medical office buildings to real estate company HCP Inc. for $163 million just before Christmas. Earlier in December, CHS announced its intention to sell two hospitals in Washington for $45 million, adding to the 17 hospitals that were already on the block as of November.
The system has been struggling since 2014, when it went forward with a $7.3 billion acquisition of Health Management Associates. Patient volumes at former HMA hospitals had been on the downturn, and the resultant increase in doctor recruitment has strained the company's resources.
In March, Chinese BIllionaire Tianqiao Chen said in a filing with the Securities and Exchange Commission that he intends to work with the CHS management team on business and strategy aimed at turning around the struggling system.
On Monday, CHS announced its earnings for the first quarter of this year. Its revenue for the quarter was $4.49 billion, slightly higher than some analysts' estimate of $4.33 billion. That translated to $0.08 per share, beating Wall Street's projections of $0.06 per share.
Twitter: @JELagasse
