Ardent Health Partners' (ARDT) divestment of the St. Francis Campus to The University of Kansas Health System shows that the company believes its resources are better off deployed in opportunities with a higher return on investment, UBS said in a Wednesday note.

The move seems to be part of the company's broader strategy to evaluate if its assets align with its long-term plans, UBS analysts said. Even though Ardent has improved the hospital's financial performance over the past decade, asset is generating returns "meaningfully" below the company's overall corporate average, according to the note.

Ardent said that this particular market poses structural challenges to improving margins, including "unfavorable payor dynamics and sub-optimal competitive positioning," the analysts noted.

After the transaction closes by year-end, Ardent noted that its EBITDA margin will increase by around 40 basis points, and it will look for opportunities to use the capital to boost long-term shareholder value, the analysts said.

UBS has a buy rating on the stock, with a price target of $13.50.

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