Franklin-based Community Health Systems is selling three Virginia hospitals in the final stretch of the health system’s divestiture plan to pay off its bad debt.
CHS has agreed to sell the assets of 300-bed Southside Regional Medical Center in Petersburg, 105-bed Southampton Memorial Hospital in Franklin and 80-bed Southern Virginia Regional Medical Center in Emporia to subsidiaries of Cincinnati-based Bon Secours Mercy Health, who already has a big presence in the state.
According to Modern Healthcare Metrics data, Southside Regional was generating a 2.1 percent operating margin with $4 million in operating income in fiscal year 2019. Southampton Memorial posted a negative 33 percent margin with losses of $13.2 million in 2018, and Southern Virginia Regional lost $11.2 million on $24 million in revenue in its most recent fiscal year.
The transaction is expected to close by the end of 2019. Based on other CHS hospital sales this year — which valued its facilities on average at $169,000 per bed — CHS stands to take in about $82 million on the 485-bed sale.
Of note, a 76-bed West Virginia hospital CHS sold last year owes the health system more than $651,000, according to the hospital’s bankruptcy filings. A CHS subsidiary has sued Mingo Health Partners for the money, which was used on surgical implants and supplies as well as billing and IT services.
CHS shares (Ticker: CYH) climbed 3 percent Monday to close at $4.60. The stock has more than doubled since hitting its 2019 low in late August.
This story first appeared in our sister publication the Nashville Post