Community Health Systems, Inc. (CYH) recently announced that subsidiaries of the company have successfully sold their ownership interest in Carolina Pines Regional Medical Center and related outpatient services to Capella Healthcare.
The divesture was required under the terms of an agreement with the Federal Trade Commission (FTC) after Community Health Systems acquired Health Management Associates (HMA) in January last year.
As part of its approval from the FTC for the $7.6 billion HMA acquisition, Community Health is required to sell hospitals and related outpatient facilities in Alabama and South Carolina.
2014 has been pretty eventful for this hospital health care services provider, having announced quite a few divestitures. The company announced agreements to sell Riverview Regional Medical Center and Dallas Regional Medical Center to Prime Healthcare Services.
Further, it announced the sale of Harris Hospital to White County Medical Center of Searcy, AR. All these divestures are expected to complete early 2015.
Besides divestitures, Community Health Systems also remained active on the acquisition front. Apart from Health Management Associates, the company acquired Sharon Regional Medical Center, Natchez Regional Medical Center and Gaffney Medical Center.
Also, during 2014, the company announced a long-term lease of 421-bed Munroe Regional Medical Center in Ocala, FL. The acquisitions are expected to add up to $40 million in annual revenues for the company.
We feel that the company’s strategy to divest its small hospital assets will help it to focus on large hospitals in growing non-urban areas. On the other hand, strategic acquisitions will improve company’s penetration, which will improve its competitive position against the likes of Adeptus Healthcare (ADPT), Acadia Healthcare (ACHC) and HCA Holdings (HCA).
Currently, Community Health Systems has a Zacks Rank #3 (Hold).
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