Community Health Systems will exit Pennsylvania with the sale of three hospitals in the Keystone State to Woodbridge Healthcare.
The for-profit health system announced Tuesday that it has entered into a definitive agreement with Woodbridge to sell the 369-bed Wilkes-Barre General Hospital, 186-bed Regional Hospital of Scranton and the 122-bed Moses Taylor Hospital in a deal valued at $120 million.
The company expects the sale to close in the fourth quarter, pending regulatory approvals.
CHS leaders discussed the system's plans for divestitures during its second-quarter earnings call last week. Kevin Hammons, the system's chief financial officer, told investors that it's aiming to generate $1 billion through multiple transactions.
Those funds will be used to pay down debts, Hammons said.
That said, this push hasn't been a particularly smooth road. In June, Novant Health backed down on a plan to buy two CHS hospitals in a $320 million deal following a challenge from the Federal Trade Commission (FTC).
While a federal district court rejected the challenge earlier that month, the FTC secured a win from the appeals court, which granted the agency an injunction that prevented the two from consummating the merger while the appeals process played out.
Investors asked CHS executives about the juxtaposition of its ambitions around divestitures and regulators' interest in stepping into deals in the healthcare space. Hammons said during the second-quarter earnings call that North Carolina-based Novant was aiming to buy two hospitals in the Tarheel State, which invited scrutiny.
That is encouraging providers to look to outside markets when thinking about deals, Hammons said.
"So we really don't see any headwinds on being able to complete the other deals that we're currently working on," he said.