CHS' Portfolio Reset Is Largely Complete as Divestitures Reshape Finances

The health system has sold 35% of its hospitals since 2019, but will selectively target deals aimed at further deleveraging going forward.

After years of aggressive hospital sales, Community Health Systems (CHS) is pulling back on its sweeping portfolio reset to be more selective with future M&A activity.

In the company’s recent earnings call, leadership made clear that the divestiture strategy that has been at the forefront in recent years has materially reshaped CHS’s financial profile, reducing revenue scale but improving leverage and liquidity.

The Franklin, Tennessee-based system for-profit has sold 35% of its hospitals since 2019 as part of an effort to pay down debt and stabilize margins. That strategy continued in 2025, contributing to lower reported revenue but a strengthened balance sheet.

CEO Kevin Hammons told investors the company no longer feels compelled to execute large blocks of transactions.

“We’re very comfortable with our portfolio as it stands,” Hammons said, adding that CHS intends to “remain opportunistic regarding further asset sales” and will pursue transactions that “allow us to materially deleverage.”

That tone marks a shift from prior years, when hospital sales were a recurring and expected part of CHS’ quarterly results. The financial tradeoff of the strategy is evident in the organization’s most recent earnings report.

For the fourth quarter of 2025, CHS reported net operating revenues of $3.11 billion, down from $3.27 billion in the year-ago period. Full-year revenue totaled $12.49 billion, a slight decline from $12.63 billion in 2024, reflecting the impact of completed hospital sales.

Adjusted EBITDA was $395 million in quarter, compared to $428 million over the same period the previous year, and $1.53 billion for 2025, versus $1.54 billion in 2024.

However, CHS’ balance sheet is also stronger. Management said net leverage improved from 7.4x at year-end 2024 to approximately 6.6x at year-end 2025, reflecting debt reduction supported by divestiture proceeds and cash flow.

CFO Jason Johnson highlighted that once CHS’ $450 million deal to sell Crestwood Medical Center to Huntsville Hospital Health System is completed, the company’s net debt will continue to drop, from $11.4 billion at the end of 2024, to $10.1 billion at year-end 2025, to $9.2 billion following the divestiture.

Looking ahead to 2026, CHS is projecting net revenue between $11.6 billion and $12 billion, and adjusted EBITDA of $1.34 billion and $1.49 billion, noting that completed and pending divestitures will reduce both revenue and EBITDA in the coming year.

Executives acknowledged the earnings effect of continued sales.

“Any such additional transactions, if completed during 2026, would reduce net revenue and EBITDA for the year, and the associated proceeds would enable the company to further reduce net debt and leverage,” Johnson said.

While revenue has contracted with the asset base, leadership emphasized that same-store trends remain positive, arguing the core portfolio is performing more consistently.

CHS now appears to be focusing on operational execution with a slimmer footprint rather than continued reshaping on a larger scale.