Investor calls for Community Health Systems CEO Wayne Smith’s ouster in the wake of financial troubles

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One of the investors in Community Health Systems is calling for the ouster of its CEO due to ongoing financial troubles.

Community Health Systems has faced significant financial woes over the past year, and now one of its long-term investors is calling on the board to replace its CEO.

ASL Strategic Value Fund submitted a letter to CHS’ board of trustees to express concerns about recent financial reports. The group said it had reached out to the health system’s management without response prior to contacting the trustees.

CHS became a public company in 2000, and over those 17 years shareholders have lost 50% of the capital invested in it, ASL writes. Meanwhile, CHS CEO Wayne Smith earned a total of $350 million in that window, and top executives have received total compensation packages of more than $500 million, which ASL says is nearly the current market capitalization of the entire company.

The board of trustees owes it to shareholders to fire Smith and gain back some of the compensation paid out to these leaders, the letter said.

“Management’s previous missteps have resulted in billions of dollars of shareholder losses, all the while reaping tens of millions of dollars in compensation,” the group wrote. “The Board has a fiduciary obligation to hold management accountable and to maximize the value for the shareholders of this company.”

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The system has faced significant financial problems since it purchased a number of hospitals across the country and has sold off several of its acquisitions to pay down debt, including two in Washington state. CHS has divested 20 hospitals so far and has agreements in place to sell 10 more, it said in its 2017 quarter two financial reports.

In addition to these 30 hospitals, the system said parties had expressed interest in purchasing additional facilities. If those deals are made, CHS will bring in an extra $1.5 billion in revenue.

The company reported a total debt of $14.7 billion at the end of the second quarter, a decrease of about $100 million since the beginning of the year.

CHS has also been under fire internally because of its financial woes; physicians at some of the system’s hospitals blame the debt for poor patient satisfaction and high prices at its facilities.