Krista Giovacco at Bloomberg has an update on the state of Community Health Systems' dealings with much of Wall Street as it looks to wrap up its purchase of Health Management Associates. The Franklin-based company is now looking to sign the paper on a new term loan of almost $3 billion — with an interest rate 50 basis points lower than previously expected — and plans to issue less debt than under its previous plan.
The leaders of a large Ohio hospital system have pulled out of talks to sell to Community Health Systems and the Cleveland Clinic and are seeking other buyers, reports Crain's Cleveland Business. The strategic partnership between Franklin-based CHS and the Cleveland Clinic had yielded a preliminary deal to buy Akron General Health System last August. But Crain's reports that Akron General CEO Dr. Thomas Stover said talks have ended due to disagreements between CHS and the Cleveland Clinic.
"In an e-mailed statement, Community Health Systems spokeswoman Tomi Galin said her company and the Clinic haven’t agreed how the joint venture would be structured. Subsequently, Akron General notified Community Health System it would explore other opportunities."
Stover tells Crain's Akron General plans to open talks with other possible buyers but isn't saying who they might be. The Akron deal would have been the first major acquisition between CHS and the Cleveland Clinic since the two launched a partnership last March as a consulting arrangement to share clinical and operational data.
The alliance did not involve any equity, but CHS president and CEO Wayne Smith said in May the two organizations had been contacted by several hospital leaders looking to sell.
Community Health Systems is bringing to market almost $4.6 billion of new senior notes, the proceeds of which will help it buy Health Management Associates. The package is larger and slightly different than the plans CHS executives outlined a few days ago. The debt — some of its secured, some not — will mature in 2021 and 2022.
Darren Lehrich at Deutsche Bank says investors should look past the weak fourth-quarter volumes at Community Health Systems — they were off 7 percent — and focus instead on the upside from the Accountable Care Act, which could reach $170 million this year, and the cost benefits of buying Health Management Associates. Even though he has lowered his price target to $58 from $62, Lehrich has reiterated his 'buy' rating. CHS shares (Ticker: CYH) opened Wednesday trading at $43.12.
The researchers at Citigroup has done something we recall seeing only once before: Citing a lofty valuation, they've lowered their rating on shares of Acadia Healthcare to 'neutral' from 'buy' — albeit with the caveat that they're raising their price target to $49 from $43. Shares of Acadia (Ticker: ACHC) opened this morning at $48.50.
Community Health Systems executives are taking another step toward wrapping up their acquisition of Florida-based Health Management Associates by revamping and growing the company's credit facilities. Among the changes are a boost in the main revolver to $1 billion from $750 million, the extension of some term loan maturities to 2021 from 2017 and a new $2.26 billion term loan.
Health Management Associates executives said Monday that government investigators have decided to join plaintiffs in four whistleblower lawsuits — filed in Georgia and Florida — alleging the company has broken reimbursement laws and had inappropriate financial relationships with some doctors. The feds have said they intend to do the same with four other cases. The news will mean some extra work for the legal department at Community Health Systems, which is in the process of buying HMA. But it also looks likely to save Franklin-based CHS some money: The companies' sale agreement calls for CHS to pay up to $1 per share depending on the outcomes of various investigations into HMA's admission and reimbursement practices.
Shares of Community Health Systems are trading at their lowest levels since January (Ticker: CYH) but there appear to be at least a few investors who believe they will bounce back in the near future. Mike Yamamoto at OptionMonster.com reports that a large number of January $39 calls were bought this week, which would begin to pay off after a climb of about 7 percent.
- BRASWELL, ROBERT
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- GARRETT, TIMOTHY M EXECUTOR; GARRETT, ANN BIGGER ESTATE; GARRETT, JOHNNY C EXECUTOR; GARRETT, JOHNNY C IV EXECUTOR
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