Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Community Health to Divest Texas Hospital to HCA Healthcare

Community Health Systems, Inc. CYH recently announced that its subsidiaries inked a deal with HCA Healthcare, Inc HCA to sell 103-bed Weatherford Regional Medical Center in Texas and its associated assets to the latter. The transaction, which is subject to customary regulatory approvals and closing conditions, is expected to close in the winter of 2017.

Upon completion of the transaction, Weatherford Regional will become part of HCA’s Medical City Healthcare in the Dallas-Fort Worth Metroplex.

Weatherford Regional has a longstanding tradition of caring for its community and is expected to complement HCA Healthcare’s existing provider network in North Texas. The addition of Weatherford Regional to HCA Healthcare’s Medical City Healthcare family is likely to improve patients’ overall medical access in the Fort Worth area.

Community Health’s significant divestitures have helped it manage and control its debt level, which has in turn boosted investors’ confidence in the stock. This is evident from the 71% rise in its stock price year to date compared with the gain of 16% for the Zacks categorized Medical-Hospital industry.

The company’s high level of long-term debt has always been an area of concern. It has been  implementing portfolio rationalization and deleveraging strategies to reduce debt. One of the strategies is divesting hospitals and non-hospital businesses which neither belong to the company’s strategically beneficial service areas, nor are complementary to its business strategy due to lower operating margins.

The company’s long-term debt declined 0.7% in 2015 and 107% in 2016. It further decreased 0.7% at the end of the first-quarter 2017. Consequently interest expenses have also come down from $972 million at the end of 2014 to $962 million at the end of 2016.

We expect Community Health to further lower its debt level through strategic divestures and gain more appreciation from the shareholders’ on the back of its portfolio rationalization initiatives.

Zacks Rank and Stocks to Consider

Community Health has a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the medical sector include Anthem, Inc ANTM and Wellcare Health Plans, Inc WCG. Both of the stocks sport a Zacks Rank #1 (Strong Buy). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank stocks here.

Anthem delivered positive surprises in all of the last four quarters with an average beat of 8.3%.

Wellcare Health also delivered positive surprises in all of the last four quarters with an average beat of 59.23%.

More Stock News: 8 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.

A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WellCare Health Plans, Inc. (WCG): Free Stock Analysis Report
 
Anthem, Inc. (ANTM): Free Stock Analysis Report
 
Community Health Systems, Inc. (CYH): Free Stock Analysis Report
 
HCA Holdings, Inc. (HCA): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research