Franklin, Tennessee-based Community Health Systems' continued to shake up of its portfolio, announcing Monday that it will sell an 80 percent ownership interest in its home health division to regional provider Almost Family for $128 million.
The transaction is part of an ongoing effort by CHS to slim down its portfolio and use the proceeds to pay down the company's debt.
Almost Family is a regional provider of home health services that operates 74 branches and 15 hospice facilities in 22 states. When the deal closes in the fourth quarter this year, Almost Family will have grown its network to 340 branches across 26 states with an annual revenue exceeding $800 million.
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In an attempt to maintain control over their financial future, CHS threw up six-month "poison pill" block against anyone acquiring a controlling block of their stock while they continue to explore the full or partial sale of the company.
Chinese billionaire Tianqiao Chen recently increased his holdings in CHS shares to 9.9 percent, according to the Wall Street Journal, who also reported that CHS shares lost 48 percent of their value this year.
The company has been unloading low-performing rural hospitals in recent months, announcing in August it would sell two more hospitals than originally planned, bringing the total number to 12, according to a transcript of a second-quarter earnings call.
The sale, originally expected to be $530 million, was expected to total $850 million, representing about $1.45 billion in annual revenue -- up from the $1 billion that was projected before the two extra hospitals were added.
CEO Wayne Smith said during the earnings calls that each was underperforming, with earnings before interest, taxes, depreciation and amortization mired in the single digits.
CHS did net $1.2 billion from its spinoff of nearly 40 small or rural hospitals earlier this year, but that transaction is now under legal scrutiny, after a class-action lawsuit was filed in U.S. District Court for the Middle District of Tennessee on behalf of those that purchased the common stock of CHS spin-off Quorum Health Corp.
The complaint alleges that Quorum and certain of its executive officers made false and misleading statements, and/or failed to disclose to investors that many of Quorum's hospitals were underperforming at the time of the spin-off as well as other "indicators of impairment" that were present at the time. It also alleges Quorum failed to inform investors about the issues, rendering Quorum's public statements "materially false and misleading."