Community Health Systems is selling off an Alabama hospital and its associated sites to Huntsville Hospital Health System for $450 million, the systems announced Tuesday.
The deal for Crestwood Medical Center is set to close during this year’s second quarter, subject to customary closing conditions. The price tag is also subject to adjustment for net working capital and finance leases to be assumed by Huntsville.
Crestwood Medical Center is a 180-bed acute care hospital located in its to-be owner’s home turf of Huntsville, Alabama, which the system noted has seen 16% population growth within the past five years. About 1,000 people work at the medical center, which will continue its normal operations through the transaction with no changes to its services or medical staff privileges. Also included in the deal is a freestanding emergency department in Harvest, Alabama, and other clinics, ambulatory sites and other outpatient assets.
Huntsville Hospital Health System is a 14-hospital system with a footprint stretching across northern Alabama and into southern Tennessee. It’s the second-largest system in its home state, employing more than 20,000 people.
The system described its deal as a continued investment in its local community.
“As our community continues to grow, we listen carefully to patient experiences and expectations,” Jeff Samz, president and CEO of the nonprofit Huntsville Hospital Health System, said in a release. “Our community wants and deserves options for more locally coordinated services and care. Acquiring Crestwood allows us to coordinate and align healthcare resources across the community.”
Justin Serrano, Crestwood Medical Center’s CEO, added that joining Huntsville Hospital Health System “will amplify the significant benefits that can be realized with locally-coordinated care in Huntsville.”
This week’s deal was previewed in Community Health Systems’ most recent earnings call, and is the latest in a string of selloffs from the hospital chain—which most recently includes three hospitals in Pennsylvania for a total purchase price of roughly $35 million (plus some lease liabilities that bring the valuation near $50 million), a $600 million majority stake in a Clarksville, Tennessee, hospital and a roughly $190 million sale of outreach lab services.
Executives said the deals have helped push the company into positive free cash flow and will help deleverage its books. They’ve also hinted at inbound interest for additional assets at strong multiples that will be considered on a case-by-case basis.