Community Health Systems this year expects to sell more than the 12 hospitals that are already up for sale, Chief Financial Officer Larry Cash told analysts Wednesday at the Wells Fargo Securities Healthcare Conference in Boston.
Cash said the troubled hospital giant is getting interest in additional hospitals. And after examining its portfolio of 159 hospitals, it likely will see “other transactions” before the end of the year, he said.
Cash's presentation to Wells Fargo analysts was webcast.
He said talks are progressing in selling the previously announced 12 hospitals as part of five transactions. Not-for-profit hospital systems are among the prospective buyers, he said.
CHS is not disclosing which hospitals it is negotiating to sell. But the company said that combined they generate annual revenue of about $1.45 billion and expect to yield net proceeds of $850 million. The proceeds will be used to reduce overall indebtedness, Cash said.
In April, CHS completed the spinoff of 38 mostly small and rural hospitals into a new public company, Quorum Health Corp. That divestiture brought about $1.2 billion in net proceeds, money that also was used to reduce debt.
In May, Franklin, Tenn.-based CHS sold its share of a four-hospital joint venture for $445 million to Universal Health Services.
In response to an analyst's question, Cash said CHS hopes to reduce its debt by the end of 2017 to about 5.5 times EBITDA vs. the 6 times at which it currently stands.
Plunging earnings complicated by continued low margins at Health Management Associates hospitals that CHS purchased for $3.9 billion in 2014 has caused CHS' stock price to plummet.
The stock that traded at $60 a share a year ago closed Tuesday at $10.90.
Cash said CHS intends to use its capital to open additional patient access points in its hub markets. For example, CHS has 57 free-standing surgery centers and expects to acquire more by the end of the year, he said.
Though CHS' 159 hospitals are scattered over 22 states, slightly more than 50% of its revenue comes from the 83 hospitals it operates in Tennessee, Florida, Pennsylvania, Texas and Indiana, Cash said.
The nation's second-largest investor-owned hospital company posted a $1.43 billion loss, or $12.90 per share, from continuing operations in the second quarter as it took a non-cash write-down of goodwill on the sinking value of hospitals it had acquired over the years.
Its depressed stock price has attracted new investors.
This year Tianqiao Chen, a Chinese billionaire who made his initial fortune in online gambling, accumulated 11.4 million shares of CHS stock and is now the company's largest shareholder.
His investment, through affiliate Shanda Media, was labeled as passive in regulatory filings. But activist investors have made noise in the healthcare sector this year.
That includes at physician staffing giant Team Health, where CEO Mike Snow Tuesday announced his retirement five months after hedge fund Jana Partner demanded and received three board seats to promote operational reforms at the company.
