...Slow Deleveraging Post HMA: Community Health Systems, Inc. (CHS) acquired rival hospital operator Health Management Associates (HMA) in a 2014 deal that added about $7.0 billion of debt to CHS's capital structure. Since the close of the transaction, growth in EBITDA has been hampered by some operational issues at the HMA hospitals and ongoing government investigations and lawsuits. This has delayed the pace of deleveraging; total debt/EBITDA is about 6.2x, versus 5.2x prior to the acquisition. Solid Strategic Rationale: The acquisition had a sound strategic basis because it enhanced the geographic scope of CHS's business while adding considerable scale. Fitch Ratings believes operational issues at the HMA hospitals were in part the result of HMA management distraction in the months leading up to the acquisition. Fitch expects CHS to make improvements in areas such as physician recruitment, which should improve organic growth and expand margins at the HMA facilities. Recently Improving Volume...
