Community Health (CYH) sells hospital, renews link with health network – January 4, 2023

With the start of the new year, Community Health Systems, Inc. (CYH extension Free Report) announced a couple of growth-related initiatives. These include the sale of Greenbrier Valley Medical Center and the renewal of the partnership with Health Net.

The 122-bed Greenbrier Valley Medical Center, located in Ronceverte, WV, was transferred to one of the units of Vandalia Health. The divested facility, along with its assets, medical clinic operations, and outpatient services, were included as part of the divestiture agreement that was signed in September 2022 and closed as 2023 began.

Community Health continues to remain active on the disposition front in recent years. Through these sales, CYH eliminates non-core assets and intensifies its focus on business areas that achieve higher returns.

Management believes that the completion of the divestitures could reduce the Company’s debt burden and related interest expense. Moreover, the same can also boost the Community Health’s money generating capabilities.

The divestitures can be said to be paying off for Community Health as its long-term debt reduced to $11,943 million as of September 30, 2022 from $12,109 million at the end of 2021. Debt refinancing activities reduced the interest expense in the first nine months of 2022 compared to the comparable period of the previous year.

Just one day before the Greenbrier Valley Medical Center divestment, CYH embarked on another growth-related move. It has agreed to renew ties with Health Net, a subsidiary of a well-known US healthcare provider Centene Corporation (CNC free report). Thereafter, Community Health’s full suite of services can be used continuously by current and future Health Net members enrolled in commercial, Medicare, and Medi-Cal plans.

A strong Community Health footprint, borne out by its large suite of hospitals and clinics, health plan, and growing physician network throughout the Central Valley, may have intrigued Health Net to continue choosing CYH to serve its regional members.

Community Health has relied on acquisitions and partnerships to strengthen its medical service offering, company size and nationwide presence. It has an effective telehealth platform, which CYH has built over the year with partnerships and technology investments.

The remote care platform will continue to provide a steady source of revenue to Community Health as new COVID-19 variants continue to emerge. This may force people to continue to prefer to receive much-needed health services from the comfort of their own homes.

Shares of Community Health are up 83.3% in the past three months compared to industry growth of 17%.


Image source: Zacks Investment Research

CYH currently has a Zacks Rank #5 (Strong Sell).

Actions to consider

Some of the best-ranked stocks in the medical space are STAAR Surgical Society (STAAA Free Report) e Lantheus Holdings, Inc. (LNT extension free report). While STAAR Surgical has a Zacks Rank #1 (Strong Buy), Lantheus currently has a Zacks Rank #2 (Buy). you can see the complete list of today’s Zacks #1 Rank stock here.

STAAR Surgical’s earnings topped Zacks’ consensus estimate in each of the past four quarters, averaging 61.05%. Zacks’ consensus estimate for STAA’s 2023 earnings suggests a 19% improvement, while the same for revenues indicates a 24.5% growth over their respective data reported a year ago.

Zacks’ consensus estimate for STAAR Surgical’s 2023 earnings moved 7.3% north over the past 60 days. The company’s shares are down 30.8% in the past three months.

Lantheus earnings topped Zacks’ consensus estimate in each of the trailing four quarters, averaging 51.09%. Zacks’ consensus estimate for LNTH’s 2023 earnings suggests a 10% improvement, while the same for revenues indicates 11.9% growth over their respective figures reported a year ago.

Zacks’ consensus estimate for Lantheus’ 2023 earnings moved 0.2% north over the past 30 days. LNTH shares are down 34.7% in the past three months.

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