Apollo Global Management, a private equity group behind 18-hospital RCCH HealthCare Partners, is in talks to acquire Community Health Systems' assets, according to Reuters.
The story does not detail whether Apollo has an interest in buying all of CHS or just select hospitals.
Struggling CHS confirmed Monday that it has retained advisers to explore strategic options. CHS owns 159 hospitals. It is shedding hospitals to reduce debt and improve operating performance.
Larry Cash, CHS' chief financial officer, said earlier this month that it has letters of intent to sell 12 hospitals to five different buyers. CHS has not disclosed the names of the hospitals nor the prospective buyers.
CHS spokeswoman Tomi Galen declined to comment on a potential sale to Apollo. A RCCH HealthCare Partners spokesman could not be reached for comment.
Apollo entered the hospital business last year by acquiring RegionalCare Hospital Partners from Warburg Pincus, then nearly doubling the size of its hospital holdings with the May acquisition of Capella Healthcare. The deal was valued at $550 million. RCCH HealthCare Partners is based in Brentwood, Tenn.
In reports Monday, numerous securities analysts who cover CHS questioned whether a buyer would want to swallow CHS whole with its $15 billion of debt and dismal financial performance in the past year.
Franklin, Tenn.-based CHS is coming off a loss from continuing operations in the second quarter of $1.43 billion, or $12.90 per share, after taking a noncash write-down of goodwill on the sinking value of hospitals it had bought over the years, including those acquired in the disastrous 2014 acquisition of Health Management Associates.
CHS has yet to fully integrate the 61 hospitals left from the acquisition into its operations. Excluding the one-time adjustments, adjusted earnings before interest, taxes, depreciation and amortization in the second quarter fell to $563 million compared with $769 million in the year-earlier quarter. Revenue also declined, by 6% to $4.6 billion.
CHS has been selling off hospitals in big blocks since late last year. Earlier this summer, CHS raised $1.2 billion by spinning off 38 mostly small and rural hospitals into a separate public company, Quorum Health Corp. It also sold its portion of a joint venture in four Las Vegas hospitals for about $445 million.
CHS' Cash said this month that the chain was looking at selling more than the 12 hospitals on the block. And he said this summer that the chain could easily sell a total of 30 hospitals.
That was before management huddled with financial advisers last week to undertake a strategic review of its holdings.