Wayne Smith: CHS on track to overcome 'ugly' struggles
Jan 12, 2017, 12:12pm CST
Community Health Systems Inc. has never had a default or failed to live up to the terms of its debt, despite carrying a total of about $46 billion over the past 10 years.
That, Chairman and CEO Wayne Smith said during a presentation at a health care conference late Wednesday, bodes well for the company's ability to overcome its current struggles.
Wayne Smith is chairman and CEO of Community Health Systems Inc.
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Wayne Smith is chairman and CEO of Community Health Systems Inc.
Photo by Nathan Morgan | Nashville Business Journal
"As ugly as this appears right now … we'll work our way through this and out of this going forward," Smith said while discussing the company's debt maturity.
Hospital giant CHS (NYSE: CYH), one of Williamson County's largest employers and a cornerstone of Nashville's $40 billion health care industry, has seen its stock price plunge nearly 90 percent since June 2015, as the integration of Florida-based Health Management Associates has proven more challenging than the company expected. With $15 billion in long-term debt weighing on it, the company has spent the past several months shedding hospitals and other assets to raise money to pay down that debt, an effort Smith said is "on track" to succeed and should be complete this summer.
"We're on a track to reduce not only the size of our debt but also to reduce our [debt to earnings ratio] going forward," Smith told the audience at the J.P. Morgan Healthcare Conference in San Francisco.
"2016 has been a difficult year for us, as many of you all know," Smith said at the start of his presentation. "But we're extremely positive about our future. … We believe that we're doing the right things."
Beyond its own performance, CHS is also facing the same uncertainty as all of Nashville's hospital operators when it comes to the future of the Affordable Care Act and Republicans' plans to replace it. Smith – who called himself "a good Republican" at one point – said he doesn't know enough specifics to predict how a Republican Obamacare replacement might work, but believes any changes are unlikely to be implemented until after the mid-term elections in 2018.
Smith's presentation did not address the company's review of its options, including a potential leveraged buyout, which CHS confirmed in the fall but which the company has said is not guaranteed to result in an kind of transaction. CHS is scheduled to report its 2016 earnings next month.
