CYH COMMUNITY HEALTH SYSTEMS INC

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Executive Summary

Community Health Systems (CYH) completed the sale of four Arkansas hospitals (Northwest Medical Center - Bentonville, Northwest Medical Center - Springdale, Northwest Medical Center - Willow Creek Women's Hospital, and Siloam Springs Regional Hospital) and associated outpatient centers to Freeman Health System for $110 million in cash, subject to post-closing working capital adjustments. The transaction resulted in a pro forma pre-tax loss on sale of $55 million ($48 million after tax), and the divested operations generated approximately $415 million in annual revenue (3.3% of CYH's 2025 total revenue of $12.485 billion). The sale reduces CYH's hospital count from 64 to 60 affiliated hospitals and provides cash proceeds of ~$107 million net of transaction expenses, which will increase cash and cash equivalents to approximately $819 million on a pro forma basis.

Actionable Insight

Key Facts

• Completed sale of 4 Arkansas hospitals to Freeman Health System for $110 million in cash
• Purchase price after estimated working capital and finance lease assumption was $110 million, subject to post-closing adjustment
• Pro forma pre-tax loss on sale of $55 million ($48 million after tax)
• Divested operations generated ~$415 million in annual revenue (3.3% of CYH's total 2025 revenue of $12.485 billion)
• Net cash proceeds of ~$107 million after $3 million in transaction expenses
• Pro forma cash and cash equivalents increase to ~$819 million from $712 million
• CYH retains 60 affiliated hospitals post-divestiture (down from 64)
• Seller provided $78,614 credit for chiller repairs and $500,000 credit for environmental matters
• 3-year non-compete covenant within 40-mile radius of the hospitals
• Transition services agreements for IT, billing, and clinical operations post-closing

Financial Impact

Sale proceeds of $110 million cash; pro forma loss on sale of $55 million pre-tax ($48 million after tax); divested revenue of ~$415 million annually (3.3% of total); cash balance increases by ~$107 million net

Risk Factors

• Post-closing working capital adjustment could reduce net proceeds
• Loss of $415M in annual revenue may pressure future earnings comparisons
• Retained liabilities for pre-closing operations (medical malpractice, regulatory, tax) could result in future cash outflows
• Transition services agreements create operational complexity and potential disputes
• Environmental credits ($500K) may not fully cover remediation costs

Market Snapshot

Documents Analyzed

This report is based on 7 SEC documents filed with EDGAR.

US Market Status