During an Oct. 24 third quarter earnings call, Franklin, Tenn.-based Community Health Systems CFO Kevin Hammons reiterated the health system's commitment to selling $1 billion in hospital assets.
Here are seven things to know:
1. "We continue to make progress toward our $1 billion divestiture plan," Mr. Hammons said. "We anticipate the majority of the remaining transactions to complete this plan will likely be signed in the fourth quarter, with final closings carrying over into the first quarter of 2025."
2. The plan was first shared in February and reaffirmed again in July by CHS CEO Tim Tingtgen, who said the proceeds from the divestitures would "enable a variety of positive activities such as targeted investments in core markets, funding potential future acquisitions, and increased flexibility in debt management."
3. In August, CHS sold Tennova Healthcare — Cleveland (Tenn.) to Dalton, Ga.-based Hamilton Health Care System for $160 million.
4. Iredell Health System also acquired two CHS North Carolina hospitals, Davis Regional Psychiatric Hospital and Davis Regional Medical Center — both in Statesville, N.C. — on Oct. 1.
5. WoodBridge Healthcare, a nonprofit organization, received necessary approvals in mid-October to acquire CommonWealth Health, a three-hospital system, from CHS for $115 million. The hospitals are Regional Hospital of Scranton (Pa.), Scranton-based Moses Taylor Hospital and Wilkes-Barre (Pa.) General Hospital.
6. "For this billion-dollar book that we're trying to get completed here, it's going to average out to about a 10 times multiple," Mr. Hammons said. "These facilities will probably be high single-digit margin hospitals in a 10 multiple. One, it should help our leverage. Two, it should help our market profile going forward. That's pretty consistent with where our valuations have been over the past several years, at least on average where we've been in the 10 to 12 times multiple. We still feel very good about the multiple that we're getting and being able to get these across the finish line.
7. CHS saw an operating loss of $205 million (06.6% margin) in the third quarter of 2024, ended Sept. 30. It also reported $3.09 billion in total revenue, $3.3 billion for total expenses, $11.47 billion in long-term debt and saw a net loss of $391 million.