Quorum Health Corp (NYSE:QHC)
Quorum Health Corp (NYSE:QHC) has reached an agreement with UPMC Susquehanna for the sale of two Pennsylvania hospitals. The transaction builds on a similar agreement signed last month for the divestiture of two hospitals in Tennessee.
Quorum Health Divestiture Spree
UPMC Susquehanna plans to expand its portfolio with the acquisition of Quorum Health’s 70-bed Sunbury Community Hospital. The 47-bed Lock Haven Hospital will also join the company’s network as part of the transaction. The divestiture should close by September 30, 2017.
The sale of the two hospitals does not come as a surprise. Quorum Health Corp (NYSE:QHC) has resorted to acquiring and divesting hospitals as part of its turnaround plan. Last month it signed a definitive agreement with SSH Tennessee LLC for the sale of 45-bed Henderson County Community Hospital in Tennessee and 45-bed McKenzie Regional Hospital. The transaction, subject to customary regulatory approvals, is set to close in August.
The divestiture spree has not affected Quorum Health Systems sentiments among institutional investors. Sixty-three institutional holders have increased the positions in the stock over the past three months. The stock has attracted 19 new institutional investments totaling 1.7 million shares.
Insider trades are also building up as a further indication that the management team’s actions are bolstering the company’s long-term prospects. Regulatory filings indicate that senior vice president and chief medical officer Koury Shaheed acquired 8,500 shares of the company’s stock valued at $30, 260
Chief Executive Officer, Miller Thomas Daniel, strengthened his stake in the company with the acquisition of 185,600 shares valued at $527,250.
Healthcare Reform Sparks Concern
Quorum Health Corp (NYSE:QHC) faces uncertainty as talk of healthcare reform continues to gain momentum. The company’s turnaround plan could come under pressure depending on the breadth and depth of the expected reforms.
The company’s performance is tied to eight hospitals – all of which have ties to Medicaid. The Trump administration is proposing a reduction in Medicaid funding that could reach $800 million. Height Securities analysts, Shrey Verma, believes the proposed cuts could significantly hurt Quorum Health Systems payment streams.
“With the exception of two hospitals, we find that QHC’s top hospitals have significant exposure to the Medicaid program such that changes envisaged under the House-passed American Health Care Act (AHCA) could strain payment streams from Medicaid,” Verma in a statement .
Quorum Health Corp (NYSE:QHC) stock was down by 1.03% in Thursday’s trading session to end the day at $3.83 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.