Bank of America Maintains Buy on Community Health Systems Following Acquisition Announcement

Bank of America has published a research report on Community Health Systems CYH after the company announced its Acquisition of MetroSouth Medical Center in Blue Island, IL. In the report, Bank of America writes, "According to AHD, the hospital had $150M in revenues and an operating loss of $11M in 2010. While no terms of the transaction were disclosed, we estimate the deal could be ~$0.07 (2% 2012) accretive once margins are raised to the company average over the next few years. CYH continues to accelerate its acquisition strategy and has now acquired 8 hospitals and $600M of revenue in 2011, bringing the total acquired revenue to $1.5B (13% of 2010 revenues) over the past two years. Acquisitions will continue to be a key part of the CYH story in 2012, with ongoing reimbursement and regulatory pressure. Notably, margin improvement at recent acquisitions continues to be underappreciated by the market, in our view." Bank of America maintains its Buy rating and $29 price objective on Community Health Systems, which closed Friday at $17.61.