Franklin, Tenn.-based Community Health Systems' financial leverage will increase modestly from spinning off Quorum Health Corp., according to Moody's Investors Service.
"The increase in leverage comes from loss of EBITDA associated with the operations that will be spun-off and the estimated debt repayment that Community could make with dividend proceeds received in the transaction," said Moody's.
The transaction will not have an immediate impact on CHS' credit ratings, and its negative rating outlook remains unchanged, according to Moody's.
CHS plans to combine 38 hospitals and its hospital management and consulting business into Quorum Health Corp. The transaction is expected to close in the second quarter of 2016.
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