Community Health (CYH) Unit Declares Pricing of Senior Notes
Community Health Systems, Inc. CYH unit Community Health Systems, Inc. ("CHS") announced the pricing of its public offering of senior secured notes worth $1,535 million. The notes carry an interest rate of 5.250% and are scheduled to mature in 2030. The offering is subject to certain closing conditions.
The sale of the notes is projected to be consummated on or around Feb 4, 2022.
Inside the Headlines
CYH intends to use the funds raised from the above-mentioned notes for the redemption of all its remaining 6.625% Senior Secured Notes due 2025. It also has plans to pay related fees and costs.
Community Health is steadily issuing senior notes to enhance its financial flexibility without affecting its liquidity position, which only proves its financial prudence.
By capitalizing on the low-interest rate environment, CYH is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, Community Health’s operational strength should enable it to service debt uninterruptedly, maintaining the stock’s creditworthiness. In the first nine months of 2021, CYH’s interest expenses reduced by 14.5% year over year to $666 million.
Net debt of Community Health represents 102.2% of its capital, higher than the industry’s average of 86.2%. At third quarter-end, CYH had only $1.3 billion of cash and cash equivalents. Its long-term debt was recorded at $11.9 billion as of Sep 30, 2021.
Although its high leverage ratio raises its financial risk, we hope that Community Health has sufficient capabilities to meet its current obligations.
Zacks Rank and Price Performance
With a market capitalization of $1.79 billion, shares of this currently Zacks Rank #3 (Hold) player have gained 34.3% in a year’ time, outperforming its industry’s growth of 29.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Moreover, its key positives, such as an aging population, addition of facilities, growing demand for healthcare services, declining expenses and accretive acquisitions will likely drive the stock going forward.
Better-Ranked Players
Some better-ranked stocks in the Medical space are PaciraBioSciences, Inc. PCRX, Tenet Healthcare Corporation THC and Molina Healthcare, Inc. MOH, all holding a Zacks Rank #2 (Buy) at present.
PaciraBioSciences, based in Parsippany, NJ, is a specialty pharmaceutical company focused on developing, commercializing and manufacturing proprietary pharmaceutical products, primarily for use in hospitals and ambulatory surgery centers. PCRX beat on earnings thrice in the last four quarters and missed the mark once, delivering an earnings surprise of 1.6%, on average.
Tenet Healthcare is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states. THC is expected to beat on earnings in all the trailing four quarters, the average being 58.19%.
Headquartered in Long Beach, CA, Molina Healthcare is a multi-state managed care organization, participating exclusively in government-sponsored healthcare programs. In the last four quarters, Molina Healthcare beat on earnings twice and missed the mark on the other two occasions, with the average surprise being 4%.
Shares of PCRX have lost 5.7% in a year’s time while the stocks of THC and MOH have gained 54.6% and 26%, respectively.
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