Two hospital chains that changed hands only last year announced their merger on March 22. RegionalCare Health Partners Inc., based in Brentwood, Tennessee, and Capella Healthcare, Inc., located in nearby Franklin, will form RCCH Health Partners when the deal closes in the second quarter. The combined system will have 18 hospital campuses in 12 states with more than 13,000 employees, 2,000 affiliated physicians and $1.7 billion in revenue.
Only last July, Capella Healthcare was sold by GTCR to Medical Properties Trust, Inc. (MPT) and Capella management for approximately $900 million. In November, Apollo Global Management (NYSE: APO) paid an undisclosed price for RegionalCare, which was then a portfolio company of Warburg Pincus.
MPT will recieve $390 million for its equity investments and loans hat were made as part of MPT’s 2015 transactions with Capella. The company will also receive $210 million in prepayment of two mortgage loans for two hospitals, in Russellville, Arkansas and Lawton, Oklahoma. MPT will retain an approximate $100 million loan for a hospital property in Olumpia, washington, that is expected to be converted to a sale and leaseback arrangement. Finally, MPT and Apollo will each invest up to $50 million in unsecured notes issued by RegionalCare.
RegionalCare’s Board Chair and CEO Marty Rash will become Executive Board Chair of the new company, and Michael Wiechart, currently Capella Board Vice Chair, President and CEO, will move into the President and CEO chair.
Despite the close proximity of both companies’ headquarters, their healthcare holdings don’t overlap. Capella’s 10 acute-care and specialty hospitals are located in Arkansas, Oklahoma, Oregon, South Carolina and Washington. RegionalCare’s eight hospitals are in Alabama, Arizona, Connecticut, Iowa, Montana, Ohio and Texas.