CHS may not be acquiring hospitals anytime soon

Franklin, Tenn.-based Community Health Systems continues to reorganize its portfolio, offloading hospitals in multiple markets, but it remains unclear when the for-profit system will be in a position in which it can acquire hospitals again, executives said during the Wells Fargo Healthcare Conference.

CHS has sold 29 hospitals since 2020, including the Aug. 1, 2024, sale of Tennova Healthcare-Cleveland (Tenn.) to Dalton, Ga.-based Vitruvian Health. The system has not bought a hospital in the last eight years, but has added beds to existing facilities.

"Portfolio rationalization is really an ongoing process," CFO Kevin Hammons said. "As much as I would like to say we're in the later innings of that process — and I believe we are, at least based on the level of activity over the last couple of years — I don't know that it ever stops."

The 71-hospital system's long-term debt stands at about $11.5 billion, with its debt exposure likely driving its M&A strategy. 

"We're now at a point where we want to start looking at acquisition opportunities, though it's still a little early in the game," Mr. Hammons said. "Our balance sheet hasn't been in a position to fully support that recently, but if the right opportunity came along, we could consider rolling some proceeds into a strategic acquisition." 

CHS said it has explored some hospital acquisitions but hasn't found the right candidate yet. 

The system plans to sell three Pennsylvania hospitals this year, which would mark its exit from the state. Nonprofit organization WoodBridge Healthcare is expected to acquire the hospitals — Regional Hospital of Scranton, Moses Taylor Hospital and Wilkes-Barre General Hospital — for $120 million in late 2024, pending regulatory approvals and closing conditions. 

"We have a couple additional deals in flight that we expect to at least get announced by the end of the year. And we think the billion-dollar target that we set out is right in line with where we think we'll be in the near term," Mr. Hammons said.

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