CHS to Sell 3 Pennsylvania Hospitals to Woodbridge Healthcare for $120 Mn

The hospitals involved in the transaction are Wilkes-Barre General Hospital, Regional Hospital of Scranton, and Moses Taylor Hospital.

US-based Community Health Systems (CHS) has finalized an agreement to sell three Pennsylvania hospitals to Woodbridge Healthcare in a deal valued at $120 million. 

The hospitals involved in the transaction are Wilkes-Barre General Hospital, Regional Hospital of Scranton, and Moses Taylor Hospital.

The sale encompasses Wilkes-Barre General Hospital, which has 369 beds; Regional Hospital of Scranton, which has 186 beds; and Moses Taylor Hospital, which has 122 beds. 

The transaction is expected to close in the fourth quarter of 2024, contingent upon regulatory approvals.

CHS's CFO, Kevin Hammons, highlighted the strategic intent behind this sale. In a statement during the second-quarter earnings call, Hammons noted, “We are targeting to raise $1 billion through several transactions. These funds will be allocated towards reducing our debts.”

What Led to the Move?

This divestiture is part of CHS's broader strategy to streamline its operations. However, the path to divestiture has not been without obstacles. 

In June, Novant Health's planned acquisition of two CHS hospitals for $320 million faced a setback. The Federal Trade Commission (FTC) challenged the deal, resulting in a court injunction that halted the merger during the appeals process.

Despite these regulatory hurdles, CHS remains optimistic. Hammons addressed investors' concerns regarding the impact of regulatory scrutiny on the company’s divestiture plans. 

He remarked, “North Carolina-based Novant was aiming to acquire two hospitals in the Tarheel State, which attracted scrutiny. This has led providers to consider deals in other markets.”

Hammons expressed confidence in completing other ongoing transactions, saying, “We do not foresee significant challenges in finalizing our other planned deals.”

The funds generated from the sale of the Pennsylvania hospitals is expected tp bolster CHS's financial standing by addressing existing debt. This move also aligns with CHS's broader strategy to reconfigure its portfolio and enhance financial stability.

The transaction with Woodbridge Healthcare is a strategic step for CHS as it narrows its focus and adjusts its operational footprint. By divesting these hospitals, CHS aims to optimize its resources and strengthen its position in the healthcare market.

Recent Developments

In related news, Ascension Illinois agreed to sell nine hospitals and four additional care sites to Prime Healthcare. The transaction, expected to close in the first quarter of 2025, will see Prime Healthcare invest $250 million into upgrading the facilities' systems, technology, and other capital improvements. 

Notably, the hospitals involved will incur no debt as part of this deal. Prime Healthcare, the fifth-largest for-profit health system in the United States, plans to retain nearly all current staff and expand services based on community needs.