Community Health Systems Announces Definitive Agreement to Sell North Carolina Hospital to Duke Health

Rhea-AI Summary

Community Health Systems (NYSE: CYH) has announced a definitive agreement to sell Lake Norman Regional Medical Center, a 123-bed facility in Mooresville, N.C., along with related businesses to Duke Health for approximately $280 million. The transaction is subject to net working capital and other adjustments, with an expected closing in the first quarter of 2025, pending regulatory approvals and closing conditions. This divestiture was previously mentioned during the Company's third quarter 2024 earnings call as part of potential future sales.

Positive

• Sale of Lake Norman Regional Medical Center for $280 million strengthens cash position
• Strategic divestiture aligns with previously announced optimization plans

Negative

• Reduction in company's healthcare facility portfolio and potential revenue stream
• Loss of market presence in Mooresville, North Carolina area

Insights

Financial Analyst

The $280 million sale of Lake Norman Regional Medical Center represents a significant transaction for Community Health Systems, contributing to their ongoing divestiture strategy. This deal, at approximately $2.28 million per bed, appears favorable considering the company's market cap of $496 million. The transaction will substantially improve CYH's balance sheet and provide additional liquidity. While losing future revenue streams from this facility, the strategic benefit of debt reduction and operational streamlining outweighs the long-term revenue impact. Duke Health's involvement as the buyer adds credibility to the valuation, suggesting a fair market price for the asset. This sale aligns with management's previously announced strategic initiatives to optimize their portfolio and strengthen financial position.

Healthcare Industry Analyst

This divestiture reflects the ongoing consolidation trend in the healthcare sector, where smaller regional hospitals are being acquired by larger health systems. Duke Health's expansion into the Mooresville market demonstrates their strategic focus on growing their presence in North Carolina's rapidly developing Lake Norman region. The 123-bed facility provides Duke with an established infrastructure and immediate market access. For CYH, this sale represents a continuation of their portfolio optimization strategy, focusing on markets where they can maintain stronger competitive positions. The timing of the closure in Q1 2025 allows for a smooth transition and regulatory approval process, which is important for maintaining operational stability and patient care standards.

FRANKLIN, Tenn.--(BUSINESS WIRE)-- Community Health Systems, Inc. (NYSE: CYH) announced today that a subsidiary of the Company has signed a definitive agreement to sell 123-bed Lake Norman Regional Medical Center in Mooresville, N.C., and related businesses, to Duke Health for approximately $280 million, subject to certain net working capital and other adjustments.

The transaction is expected to close in the first quarter of 2025, subject to regulatory approvals and closing conditions.

The hospital included in this transaction is among the additional potential divestitures discussed on the Company’s third quarter 2024 earnings call and subsequent public appearances.

About Community Health Systems, Inc.

Community Health Systems, Inc. is one of the nation’s largest healthcare companies. The Company’s affiliates are leading providers of healthcare services, developing and operating healthcare delivery systems in 39 distinct markets across 15 states. The Company’s subsidiaries own or lease 69 affiliated hospitals with more than 11,000 beds and operate more than 1,000 sites of care, including physician practices, urgent care centers, freestanding emergency departments, occupational medicine clinics, imaging centers, cancer centers and ambulatory surgery centers. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol “CYH.” The Company’s headquarters are located in Franklin, Tennessee, a suburb south of Nashville. More information about the Company can be found on its website at www.chs.net.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241211838755/en/

Media Contact:

Tomi Galin

Executive Vice President, Corporate Communications, Marketing and Public Affairs

(615) 628-6607

Investor Contacts:

Kevin Hammons

President and Chief Financial Officer

(615) 465-7000

Anton Hie

Vice President – Investor Relations

(615) 465-7012

Source: Community Health Systems, Inc.

FAQ

How much is Duke Health paying for Lake Norman Regional Medical Center (CYH)?

Duke Health is paying approximately $280 million for Lake Norman Regional Medical Center, subject to certain net working capital and other adjustments.

When will the CYH sale of Lake Norman Regional Medical Center to Duke Health close?

The transaction is expected to close in the first quarter of 2025, subject to regulatory approvals and closing conditions.

What assets are included in the CYH sale to Duke Health?

The sale includes the 123-bed Lake Norman Regional Medical Center in Mooresville, N.C., and related businesses.

Was this CYH hospital sale previously announced?

The hospital sale was among the additional potential divestitures discussed during Community Health Systems' third quarter 2024 earnings call and subsequent public appearances.