Investor buys 6.8% of CHS before stock price dip

Close to 7% of Community Health Systems' outstanding shares were purchased by Saba Capital Management, which made the purchase as a passive investment, according to a Securities and Exchange Commission filing.

Saba's shares may have taken a shellacking, having been made Oct. 31, the day before the Franklin, Tenn.-based CHS reported double-digit decreases in net operating revenue, and in earnings before interest, taxes, depreciation and amortization.

On the day of Saba's investment, CHS' share price closed at $5.90 per share only to fall off a cliff the next day and the two days after, closing Nov. 3 at $4.40, roughly where it was trading at midday Thursday. That's a 25% decline in value.

New York-based Saba's passive 6.8% ownership of 7.8 million shares stands in contrast to the 22.1% activist ownership of 25.4 million shares by Tianqiao Chen's Chinese firm Shanda Media.

Both Saba and CHS declined to comment on this story.

CHS, with its Fort Wayne, Ind., subsidiary, Lutheran Health Network, is suing Lutheran's former CEO for allegedly breaching his contract by using confidential information to lure competitor Indiana University Health to the Fort Wayne area.

Meanwhile, Quorum Health Corp., a CHS spinoff, reported a decrease in net operating revenue in the third quarter year-over-year and a larger net loss in the same period. Net operating revenue for the quarter ended Sept. 30 decreased 12%, or $44.6 million, to $499.3 million, compared with $543.9 million for the same period in 2016. The net loss in the quarter stood at $29.2 million compared with a loss of $7 million a year earlier.

Investors apparently liked the Quorum earnings release, which included a statement that it would continue to sell hospitals. Quorum's stock price was trading a whopping 19% higher midday Thursday.

Paul Barr

Paul Barr, a healthcare journalist since 2004, is responsible for Project Japan’s feature stories. Barr most recently was a senior editor for Hospitals & Health Networks, but before that worked six years at Project Japan as news editor and two years as a reporter. In 2016 he won a Jesse H. Neal award for best single story, and in 2015 was a finalist for best series. Prior to 2004, he covered financial matters for various publications. Barr has a bachelor’s degree in economics and master’s degrees in journalism and business from the University of Illinois.

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