Hospital M&A activity has remained stable in the past few years, and based on preliminary results for 2024, it seems like the market kept the same pace. With only a couple of days before Christmas, there have been 67 Hospital deals announced, a marginal difference from the 75 announced in 2023 and 68 in 2022. Much of the activity has been driven by divestment from health systems, such as Tenet Healthcare, or from the bankruptcy proceedings of Steward Health Care. However, there was still a mix of health system mergers, community hospitals seeking larger partners, and deals in the international market. We plan to dig through the numbers and details in our upcoming Health Care Services Acquisition Report, but for now, here’s a list of the top five U.S.-based Hospital deals of the year.
1.) In early August, Tenet Healthcare sold a 70% stake in Alabama-based Brookwood Baptist Health, which is comprised of five hospitals, affiliated physician practices and other related operations, for $910 million in cash, implying a total value of $1.3 billion for the health system. Brookwood Baptist Health is a joint venture with Baptist Health System, another health system based in San Antonio, Texas.
The buyer is Orlando Health, which has been extremely active in the hospital M&A market in the past few years.
Tenet has divested 11 hospitals this year, including the five in this deal, most of which resulted in the year’s largest transactions (see below).
By cutting down on its portfolio size, Tenet has improved its financial health. In its Q3:24 earnings release, the company further raised its 2024 outlook. The company said that its “adjusted EBITDA in third quarter 2024 was $978 million compared to $854 million in third quarter 2023, reflecting strong same-hospital admissions growth, strong ambulatory net revenue per case growth, favorable payer mix, and increased Medicaid supplemental revenues in Michigan, partially offset by higher medical fees as well as the impact of hospital divestitures.”
According to the release, Tenet generated $5.1 billion in net operating revenue in Q3:24.
2.) UCI Health, the clinical enterprise of the University of California, Irvine, and the only academic health system in Orange County, purchased four short-term acute care hospitals from Tenet Healthcare for $975 million. The hospitals make up Tenet’s Pacific Coast Network. Some local reports give us an idea of the challenges the hospitals were facing. According to the Orange County Register, employees went on a picket strike at some of the hospitals in this deal, including Fountain Valley, Los Alamitos and Lakewood hospitals in June 2021, alleging the facilities had left some workers without health insurance while the company received billions in federal COVID-19 relief funds.
3.) A new joint venture created by Medical Properties Trust and an investment fund affiliated with an undisclosed institutional asset manager acquired five hospitals in Utah leased by an affiliate of CommonSpirit Health. Medical Properties Trust will hold 25% of the joint venture, while the investment fund will purchase a 75% stake for $886 million, fully validating MPT’s underwritten lease base of approximately $1.2 billion. No other details were disclosed about the hospitals, but we’ll report back once Medical Properties Trust releases its annual report.
4.) Adventist Health, a faith-based, integrated health delivery system that operates the largest rural health network in California, acquired Sierra Vista Regional Medical Center and Twin Cities Community Hospital from Tenet in California for $550 million. The former is the largest hospital in San Luis Obispo County and a 162-bed facility that has served the community since 1959. Specializing in neurosurgery, orthopedics, obstetrics, perinatology, neonatology, pediatrics, cancer care and various medical, surgical, and outpatient services, it houses the largest Level III Neonatal Intensive Care Unit in the region, the only dedicated pediatric unit in the county, and serves as the designated trauma center.
The second hospital, Twin Cities Community Hospital, is a 122-bed facility and has served Northern San Luis Obispo County since 1977. It specializes in emergency care, obstetrics, orthopedics, digestive disorders, wound care, and various medical, surgical, and outpatient services.
Combined, the hospitals generated $337 million in revenue and $38 million in adjusted EBITDA, according to SEC filings from Tenet.
5.) In October, Summa Health was acquired by Health Assurance Transformation LLC for $485 million in cash. Summa Health is one of the largest integrated healthcare delivery systems in Ohio. It encompasses a network of hospitals, community medical centers, a health plan, an accountable care organization, a multi-specialty physician organization, research and the Summa Health Foundation.
According to the company’s annual report, it generated approximately $1.86 billion in total revenue in 2023, and according to the company’s 2023 financial audit, its EBITDA was approximately $22.6 million.
The purchase price of $485 million, when added to Summa Health’s current cash, will enable the health system to eliminate $850 million in existing debt. Health Assurance Transformation was founded by General Catalyst in 2023 and focuses on acquiring and operating health systems nationwide.
To see the entire list of Hospital M&A activity from 2024 and more, check out our LevinPro HC database of more than 35,000 transactions.
