Community Health explodes post-earnings; Quorum Health follows; pharma mixed, Valeant, Intelsat up

By Colin Hanner

Chicago, Feb. 21 – With a three-day weekend in the rearview mirror, the distressed market was rekindled on Tuesday, as companies jumped on solid earnings, particularly a hospital group that carried momentum from the previous session.

Franklin, Tenn.-based hospital operator Community Health Systems, Inc. announced its fourth quarter earnings on Tuesday, beating market expectations and lifting several series of distressed issues with it.

“They reported some better numbers, some optimism for 2017, and the bonds were flying,” a trader said.

Community Health-spinoff Quorum Health Corp. rallied off the positive news and were up on just a few trades on the day, a market source said.

In the pharmaceutical sector, trading was mixed, though Valeant Pharmaceuticals International, Inc. led with gains in two sets of its notes.

Mallinckrodt Pharmaceuticals and Concordia International Corp. fell on the day.

With an earnings announcement expected to be on the horizon, satellite telecommunications company Intelsat SA “rallied a bit” in both its Jackson- and Luxembourg-held notes, several traders said.

Murray Energy Corp. was unchanged after posting a gain as a whole last week, iHeartCommunications, Inc. was unchanged in one of its distressed issues and several one-off names, including Neiman Marcus Group, Inc., traded tight on the first session of the shortened week.

Community Health soars

It was positive earnings that built on the momentum that Community Health brought into the weekend, after the company had announced it would divest eight hospitals across three states in an effort to bring down its debt load.

Similar rhetoric for the rest of the year lifted distressed bonds across the board for the company on Tuesday, traders said.

The 6 7/8% notes due 2022 were up 7½ points to 83 5/8, a market source said, while another trader said they were up 7 points to 83½.

The 7 1/8% notes due 2020 followed with “around [a] 6” point uptick to 91¼, a trader said.

Coming in a bit higher were the 8% notes due 2019, which were up 6½ points to 97, a trader said. Another trader said the notes finished around 97½.

And rounding out the notes were the 5 1/8% notes due 2021, which were up 2½ points to 97. A market source said the notes were up by the same margin to 97¼.

According to the company’s earnings, Community Health announced earnings-per-share of 46 cents and revenue of $4.47 billion, beating expectations by both accounts.

Speaking to the effort of the company to bring down its current debt load, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, offered a look ahead for the hospital operator.

“Significant progress has been made in our work to divest certain hospitals and other operations, enabling a reduction in our debt and the opportunity to reshape our portfolio into a stronger, more sustainable organization,” Smith said an investor conference call. “Moving forward in 2017 and beyond, we are intently focused on efficiency improvements in our operations, strategic initiatives that enhance growth in our markets, and portfolio optimization that reduces our total debt.”

On the day, Community Health’s stock was up $2.33, or 33.77%, to $9.23.

Fellow hospital operator Quorum Health’s 11 5/8% notes due 2023 were up 1½ points to 95½, a trader said, though said there were only three trades done.

Pharma mixed

Following similar upsurges to its equity stock, Valeant Pharmaceuticals’ distressed notes both jumped by the same margin on the session.

The 5 7/8% notes due 2023 were up 1 point to 80, while the 6 1/8% notes due 2025 mirrored gains and finished with a 79 1/8 handle, a trader said.

Mallinckrodt Pharmaceuticals bucked the upward movement of Valeant and traded down ¼ point in its 4¾% notes due 2023, which finished with an 86¼ handle, a trader said.

And Concordia International’s 9½% notes due 2022 were down 1½ points to 44½, a market source said.

Intelsat rallies

For the better part of the past few weeks, Intelsat bonds have fluctuated back-and-forth, but were up solidly across several issues on the day, traders said.

Intelsat Jackson Holdings SA’s 7¼% notes due 2019 were as “high as 90,” a trader said, though another trader said the notes were up ¾ point to 90¼.

And for Intelsat Luxembourg Holdings SA, movement was similar.

The 8 1/8% notes due 2023 were up 1 point to 39½, a market source said.

A trader said the 7¾% notes due 2021 were up almost 1½ points in intraday trading to 40½, while another trader said the same notes were up 1 point to the same handle.

Coal mixed

Murray Energy’s distressed notes traded down on Friday’s session, though they had been up most of the session prior.

On Tuesday, they did not move.

The 11¼% notes due 2021 finished with an 82 handle on the session, a trader said.

And, after announcing plans to redeem two series of notes – the 7¾% second-lien notes and 8% 1.5-lien notes – Cliffs Natural Resources Inc.’s 6¼% notes due 2040 were down 2½ points to 87¼, a trader said.

Distressed mixed bag

The retail sector was lifted by positive earnings coming out of Macy’s Inc., and that extended to a set of Neiman Marcus Group’s distressed notes.

Neimen’s 8% notes due 2021 were up “a couple of points” to 59, a trader said. The notes traded with a 56½ handle on Friday.

Media company iHeartCommunications’ 14% notes due 2021 were unchanged at 40, the trader said.

Offshore shipper Navios Maritime Holdings, Inc.’s 7 3/8% notes due 2022 were up ½ point to 74¾, a market source said.

Rent-A-Center Inc.’s 4¾% notes due 2021 were up ½ point to 81.

Independent power producer Talen Energy Corp.’s 4.60% notes due 2021 were up ¾ point to 82 5/8.

And W&T Offshore, Inc.’s 8% notes due 2019 were down ½ point to 76 1/8.

© 2015 Prospect News.
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