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Community Health Divests Unit to Focus on Core Business

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Community Health Systems, Inc. CYH recently announced that it has completed its pending divestiture of the 238-bed AllianceHealth Deaconess hospital in Oklahoma City, OK and its related businesses to a unit of INTEGRIS Health. The sale also consists of physician clinic operations and outpatient services. The effective date of the transaction is Oct 1, 2018.

The company’s affiliates continue to operate seven hospitals in Oklahoma. This transaction is part of the company’s strategic divestments that have been discussed during its first as well as second-quarter earnings call.

Community Health has been consistently selling out hospital units for strengthening its portfolio as well as generating funds to manage its costs as well as reduce debts. The company is actually divesting its non-core assets to focus on its core business. Notably, it sold as many as 30 hospitals in 2017.

Earlier this year, Community Health’s units also completed the sale of 60-bed Byrd Regional Hospital and its associated assets to the subsidiaries of Allegiance Health Management;  85-bed Tennova Healthcare – Jamestown in Jamestown, TN and its associated assets to the subsidiaries of Rennova Health, Inc.; three Tennessee hospitals including 225-bed Tennova - Dyersburg Regional in Dyersburg, 150-bed Tennova-Regional Jackson in Jackson and 100-bed Tennova Volunteer Martin in Martin alongside associated assets to West Tennessee Healthcare.

The company has also inked deals to sell the two-hospital Sparks Health System and related businesses, expected to close during the fourth quarter of the current year.

These divestitures have helped it lower its debt by 16.3% over the past three years. Moreover, it expects the hospital divestitures to generate $1.3 billion of gross proceeds in 2018.

The company’s business streamlining poises it well for growth and promises higher returns as well.

Shares of this Zacks Rank #3 (Hold) company have plunged 63% in a year's time against the industry’s rally of 44.3%.  

Stocks to Consider

Better-ranked stocks from the medical sector are WellCare Health Plans, Inc. WCG, Anthem, Inc. ANTM and Molina Healthcare, Inc MOH.

WellCare provides managed care services for government-sponsored health care programs. The company sports a Zacks Rank #1 (Strong Buy) and managed to pull off an average four-quarter positive surprise of 53.89%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Anthem and units operate as a health benefits company in the United States. Holding a Zacks Rank #2 (Buy), the company came up with an average trailing four-quarter earnings surprise of 6.65%.

Molina offers Medicaid-related solutions to meet health care needs of low-income families as well as individuals. The stock has a Zacks Rank of 1. In the past four quarters, the company delivered a whopping average beat of 164.17%.

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