Troubled Community Health Systems is considering selling its entire business, according to various reports Friday.
Quoting anonymous sources “with knowledge of the matter,” Bloomberg said hospital giant CHS had enlisted advisers to consider options. Deliberations are in the early stages and there is no certainty of a deal, according to reports.
CHS' battered stock price surged on the rumors, closing up 16% Friday to $12.27 per share.
CHS spokeswoman Tomi Galen said CHS does not comment on rumors.
Earlier this month, Modern Healthcare reported that CHS plans to sell more than the 12 hospitals it has for sale, quoting CFO Larry Cash speaking at the Wells Fargo Securities Healthcare Conference in Boston.
Cash said they are 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.
The hospitals previously up for sale will likely be sold 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.
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 traded at $60 a share a year ago.
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.
