Despite all the 2011 noise related to their failed attempt to buy Tenet Healthcare and the resulting lawsuit that put their admissions practices in the spotlight, Community Health Systems executives last week told Barclays analyst Adam Feinstein they are both confident in their ability to pursue other deals and comfortable with their debt load and timetables. CHS shares (Ticker: CYH) are down 50 percent this year.
Feinstein also was in on Brookdale Senior Living's investor day last week and says the company is focused on expanding the services offered at many of its facilities. That longer-term view has potential: Feinstein has reiterated his 'equalweight' rating and $20 price target. Rob Mains at Morgan Keegan also has reiterated his 'outperform' rating and $21 target. Brookdale (Ticker: BKD) closed Monday trading at $14.39.
Two prominent local stocks that have had forgettable 2011s caught the eye of some notable investors in the third quarter. Over at Seeking Alpha, Insider Monkey highlights Forbes columnist Ken Fisher's new $43 million interest in Gaylord Entertainment, which likely has paid off handsomely since Oct. 1. And the managers of the $3.7 billion Thornburg Value Fund thought Community Health Systems is "exactly the kind of company that the market has gotten nervous about in this environment" and thus worth buying at its lower levels. The fund's website suggests the stake also is worth almost $40 million.
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Hospital chain Community Health Systems has priced a $1 billion sale of debt due in 2019 at 8 percent. The proceeds of the offering will go to a buyback of the same amount of debt due in 2015 and now carrying an interest rate of 8.875 percent.
HCA HealthONE says it will submit an offer to take over the management of the city-owned Memorial Health System in Colorado Springs, Colo. The move was expected — the HCA joint venture was first said to be in talks a year ago — and puts Nashville's largest hospital chain in direct competition with Community Health Systems, which last year said it, too, is interested in managing the $500 million facility.
Community Health Systems has announced it will buy back $1 billion of debt that would have matured in 2015. The repurchase will give debt holders $1,047 for every $1,000 they hold and will expire Dec. 6. CHS finished the third quarter with $8.8 billion in long-term debt and a debt-to-equity ratio of 3.6.
Doug Simpson at Morgan Stanley has raised his earnings estimates for Community Health Systems following the company's third-quarter report, which was highlighted by weak admissions numbers. Simpson, who has maintained his 'equalweight' rating, now sees Franklin-based CHS earning $3.24 this year (up from $3.23) and expects the company to earn $3.51 in 2012. That's up from $3.46 per share. CHS shares (Ticker: CYH) are down slightly today. They have lost almost 50 percent of their value this year.
At BB&T Capital Markets, analyst Anthony Chukumba has lowered his rating on Dollar General shares to 'hold' from 'buy.' Dollar General shares (Ticker: DG) have climbed by a quarter to all-time highs since the August market low.
Community Health Systems earlier this month sold for $900,000 its stake in Cleveland Regional Medical Center outside Houston to Louisville-based New Directions Health Systems. The move — disclosed in the company's latest quarterly report — leaves CHS with 18 hospitals in Texas. Cleveland Regional, which is home to 107 beds and about 270 employees, has about $230 million in revenue but lost more than $12 million in its fiscal 2010.
New Directions also bought a shuttered hospital in Murfreesboro, Ark., last year.
Analyst Gary Lieberman at Wells Fargo has lowered his rating on shares of Community Health Systems to 'market perform' from 'outperform.' One of the main reasons is a slowdown in admissions, which the company said is due in part to the allegations made earlier this year by rival chain Tenet Healthcare. CHS shares (Ticker: CYH) closed down slightly Friday and are off 52 percent so far this year.