More for-profit hospitals are landing in the hands of private equity firms. On July 23, LifePoint Health, Inc. (NASDAQ: LPNT) announced its acquisition by private equity firm Apollo Global Management (NYSE: APO) for $5.6 billion. It will be merged with Apollo’s portfolio company, RCCH HealthCare Partners.
The deal takes LifePoint Health private, although the combined company will operate under the LifePoint Health name and will be led by LifePoint’s current chairman and CEO, William F. Carpenter III.
The combined company will have 84 non-urban hospitals in 30 states, pro forma 2017 revenues of more than $8 billion, as well as 7,000 affiliated physicians, approximately 60,000 employees and more than 12,000 licensed beds.
Upon closing, LifePoint shareholders will receive $65.00 per share in cash for each share of LifePoint common stock they own, resulting in a LifePoint enterprise value of approximately $5.6 billion, including $2.9 billion of net debt and minority interest. The purchase price represents a premium of approximately 36% to LifePoint’s closing share price on July 20, 2018, the last trading day prior to the announcement.
Fitch Ratings placed LifePoint Health’s outstanding bond ratings on rating watch negative, saying the the acquisition will be a leveraging transaction. However, it still awaits details regarding the transaction’s financing and/or LifePoint’s post-closing capitalization.
Apollo acquired RegionalCare Hospital Partners from Warburg Pincus in November 2015 for an undisclosed price. At the time, RegionalCare operated eight non-urban hospitals (1,027 beds) in Alabama, Arizona, Connecticut, Iowa, Montana, Ohio and Texas.
In March 2016, RegionalCare acquired the hospital operations of Capella Healthcare, Inc. from private equity firm GTCR for $550 million. GTCR formed Capella in 2005 to acquire acute care hospitals in rural and suburban markets. In July 2015, Medical Properties Trust (NYSE: MPW) acquired the company’s real estate assets for $900 million in cash.
At the time of its sale to RegionalCare, Capella was one of the 10 largest for-profit hosptial companies in the United States with seven hospitals and an aggregate 1,169 beds.