Quorum rallies as anomaly in hospitals; Community Health declines, again; Linn Energy on upswing

By Colin Hanner

Chicago, Nov. 10 – On Thursday, sector-specific distressed-debt bonds continued to follow the shocks of U.S. president-elect Donald Trump’s election win, albeit with smaller gains and losses than the day before.

Yet, Quorum Health Corp. defied Wednesday’s downward moves by hospital groups and saw sweeping upward movement in its notes after announcing its third-quarter earnings announcement.

“Quorum was the outlier rallying,” a trader said, referring to the second-straight day of slumping for most other hospital groups.

Quorum’s 11 5/8% notes due 2023 – down 7 points during Wednesday’s trading – rebounded 10 points to reach 73, a trader said.

A market source said the same notes saw trading as high as 74.

Traders might have been looking at Quorum’s announcement that the company plans to finalize two asset sales by the end of the year.

“We have agreements for the sale of two facilities and expect to close on these transactions by year end,” said Quorum president and chief executive officer Thomas D. Miller in a release. “We will use the proceeds from these two sales to reduce our debt. We remain dedicated to reducing our leverage, improving profitability and increasing shareholder value.”

Net operating revenues for Quorum for the three months ended Sept. 30 totaled $543.9 million, a 0.1% increase from the same period in 2015, and income from operations for the same period was $17.5 million, an 11.7% decrease from the same period in 2015, the release said.

Adjusted EBITDA for the third quarter was $46.7 million, compared to $60.3 million for the same period in 2015.

Net loss attributable to Quorum for the third quarter was $7 million, or 24 cents per share, compared to $5.7 million, or 20 cents per share, for the same period in 2015.

Sickly CYH

Notwithstanding Quorum Health, hospital groups “continued to get beat up” on Thursday, as talk of a Republican White House and Congress and conservative majority Supreme Court worried traders that the Affordable Care Act would be scrapped under a Trump presidency.

Community Health Systems Inc. repeated declines in its distressed notes, including the 6 7/8% notes due 2022, which were down 3 points to 67, according to a market source.

The 7 1/8% notes due 2020 were down 3½ points to 70½, and the 8% notes due 2019 saw a 2-point decline to 77 6/8.

All in on Linn

On Tuesday, Houston-based oil and gas company Linn Energy, LLC requested court approval to close a gas processing plant in Ulysses, Kans., as well as purchase 49% interest in the plant from co-owner Santanta, LLC, a transfer estimated to save Linn $31.1 million over 10 years.

That asset sale, coupled with steadying oil prices on the week and a bullish post-election energy market, seemed to have traders in buy mode, especially on Thursday, as several of its notes saw movement.

The 7¾% notes due 2021 were up 2½ points to 33, according to a market source. Another market source had the same notes settling at 32½, and a trader had it more around 32.

From Monday, those notes are up around 3 to 3½ points from 29½.

Making that same move day-to-day were Linn’s 6½% notes due 2019, which were up 3 points to 32½ on Thursday on high-volume trading, a market source said.

Rounding out Linn were its 6½% notes due 2021, which were up 2½ points to 32½.

Energy and metals roll

A new name in the White House fell by the wayside in the oil sector on Thursday as the Organization of Petroleum Exporting Countries’ plan to roll out a supply cut deal was brought back to the forefront.

The International Energy Agency estimated that non-OPEC countries, including Russia, Brazil and Kazakhstan, would increase their barrel-per-day count by 500,000, a 110,000 increase from previous estimates.

That news kept movement somewhat moderate in oil and natural gas bonds compared to Wednesday’s big gains.

California Resources Corp.’s 8% notes due 2022 were up 1½ points to “70 to 70½” a market source said, adding that it held the gains that it had on Wednesday.

Geophysical service company CGG SA saw another increase in its 6½% notes due 2021, up ¾ point to 39, a market source said.

GenOn Energy’s 9½% notes due 2018 were up ¼ point to 74¼.

In coal, “some momentum [from Wednesday] was slowing down a bit,” a trader said, but Peabody Energy Corp. saw an uptick in its 6½% notes due 2020, which were up 3½ points to 58¼. Another market source had the notes finishing around a 58 handle.

The 10% notes due 2022 were trading to 84, a trader said.

Murray Energy Corp. was unchanged on the day, though active in its 11¼% notes due 2021, a trader said, settling in a 77 to 78 zip code.

Round up

The 10% notes due 2018 of Clear Channel Communication Inc., or iHeartMedia Inc., were “creeping higher” to 72½, a 1½-point upswing on Thursday.

A market source said that the notes traded as high as 74 1/8.

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