Investors punished Community Health Systems again Tuesday, driving down its stock price another 6% to $4.97 per share, as the hospital chain confirmed its dismal third quarter.
Shareholders knew the kind of losses they would face. Last week, Franklin, Tenn.-based CHS previewed its third quarter, estimating a loss from continuing operations before income taxes of $83 million, compared with profit from continuing operations of $121 million in the third quarter of 2015.
That precipitated a next-day selloff of CHS shares that drove the price down 50% to $5.23 per share.
CHS posted a net loss of $79 million in its official third-quarter release Tuesday, compared with net income of $52 million in the year-earlier quarter. The rural hospital operator has been crippled with debt and struggled to digest its 2014 acquisition of Health Management Associates.
“Our operating and financial performance in the third quarter was below expectations due to lower-than-expected volumes and higher-than-expected expenses in certain areas,” CEO Wayne Smith said in a release.
Revenue in the third quarter fell 9.6% to $4.38 billion from $4.85 billion in the same period last year. The lost revenue was mostly due to CHS spinning off 38 hospitals in April into a separate company called Quorum Health Corp.
That aside, the 159 hospitals retained by CHS saw admissions during the quarter decline 2% on a same-hospital basis, the company said.
Hedge fund billionaire Larry Robbins abandoned CHS earlier this year, and other investors have drastically reduced their stakes. That opened the door recently for Chinese online gambling magnate Tianqiao Chen, who now stands at CHS' largest shareholder.
Saddled with $15 billion of debt, CHS is exploring hospital divestitures, including the possible sale of the entire company. It is the second-largest investor-owned hospital company in the U.S. by hospital count, just behind HCA Holdings in Nashville, Tenn.
CHS is selling three hospitals in Mississippi and one in Florida to not-for-profit Curae Health of Clinton, Tenn., and plans to use the proceeds of the sale to reduce debt. All four hospitals were part of the HMA deal.
CHS also previously announced that it has four buyers for eight other hospitals on the block.
