Community Health May Be Planning Sale

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Shares of Community Health Systems Inc. (NYSE: CYH) retreated on Monday after making a sizable gain in Friday’s session. On Friday it was announced that the company might be pursuing an option to sell, and shares jumped by about 16% at that time. But it appears that investors may have overestimated and now shares are pulling back.

The company officially announced early Monday morning that it is exploring a variety of options with financial sponsors, as well as other potential alternatives, although the news had been leaked on Friday.

Keep in mind that these discussions are at a very preliminary stage and there is no timeline established for this review. There can be no certainty that the exploration will result in any kind of transaction.

Community Health finished by saying that it does not expect to make further public comment regarding these matters while the exploration process takes place.

Wayne T. Smith, board chair and chief executive of Community Health Systems, commented on the situation:

Community Health Systems’ primary focus continues to be on delivering high-quality health services in the communities where we operate. Our management team is completely committed to efforts that advance clinical excellence, operational and financial performance and growth strategies that will benefit our organization and the customers we serve.

At the current price level, the company has a market cap of $1.3 billion. The 50-day moving average is right around where shares are trading currently, while the 200-day moving average is up at $14.64.

So far in 2016, Community Health has underperformed the broad markets, with the stock down about 44%, excluding Monday’s move. Over the past 52 weeks, the stock is actually down closer to 70%.

Shares of Community Health were last trading down about 5% at $11.64, with a consensus analyst price target of $13.82 and a 52-week trading range of $9.66 to $41.07.