CHS to sell Dade City hospital to Adventist Health

Community Health Systems will sell its 120-bed hospital in Dade City, Fla., to Adventist Health System.

The entities did not disclose the price of the agreement, but said the transaction is expected to close in the first quarter of 2018, pending regulatory approval and closing conditions. The hospital being sold, Bayfront Health Dade City, was listed in CHS' third quarter 2017 earnings call as one of its planned divestitures.

CHS completed an initial round of 30 hospital sales in November that was expected to net about $2 billion of gross proceeds used predominantly to pay down around $14 billion of debt. The Adventist deal is part of a second round of hospital divestitures worth about $2 billion in revenue, which the company expanded from a plan to sell hospitals worth $1.5 billion in revenue.

CHS reduced its debt to $13.9 billion in the third quarter, down from $14.8 billion in the third quarter of 2016. But analysts were skeptical that the organization could raise enough cash through asset sales to address its debt maturities and term loan G due in 2019.

"Even if they do this round of divestitures, there is not enough liquidity," said Sheryl Skolnick, director of research covering healthcare equities for Mizuho Securities. "They would have to do some restructuring."

CHS' net loss from continuing operations widened to $108 million on revenue of $3.67 billion in the third quarter from $77 million on revenue of $4.38 billion over the same period last year as they coped with hurricanes Harvey and Irma and continued to endure fewer admissions as well as mounting bad debt.

CHS owns five other Bayfront hospitals in Florida, according to its website. The sale includes physician clinic operations and outpatient services in addition to the hospital.

Adventist, which raised a $300 million line of revolving credit in May to fund growth opportunities, is the parent company of Florida Hospital and has 46 hospital campuses in nine states. In a statement, Linda Stockton, CEO of Bayfront Health Dade City, said Florida Hospital's experience will build on the hospital's history of success. "Finding a partner to allow a seamless medical care experience for our patients is important," she said.

The hospital will join Adventist's West Florida Division.