M&A Activity Report Q3 2019

17 Oct


M&A Activity Report Q3 2019

27 Change of Control Transactions

2019 Q3 Change of control transactions

Target Beds: Average 180; Median 100

Target Rev. ($’s MM): Average $242; Median $70

Total Number of Announced Transactions 2013 – Q3 2019

2019 Q3 Total change of control transactions 2013-present

Number of Announced Hospital Change of Control Transactions 2009 – Q3 2019

2019 Q3 Number of Announced change of control transactions

Q3 2019 recorded 27 announced transactions, exceeding the trailing four-quarter average for the first time since Q1 2018. Following the first half of 2019, which trailed only 2009 for the lowest first-half transaction volume in the past decade and was 42% off from the average first-half volume of 51 announced transactions over the past decade, the Q3 2019 transaction volume has pulled back just above the all-quarter average of 25 announced transactions per quarter.

No publicly-traded hospital operator announced a hospital divestiture in the quarter, although CHS and QHC completed transactions in Q3 2019 that had been announced in the preceding quarters. Q3 2019 marks the first quarter with no publicly-traded announced divestitures since Q1 2016

The most active state during Q3 2019 was Pennsylvania, with five transactions, followed by three in both Kentucky and Maryland.

There was one announced mega-merger in the quarter, as GraniteOne Health and Dartmouth-Hitchcock Health finalized terms of their merger to create a $2.7B system in New Hampshire and Vermont, and are now seeking regulatory approval which is estimated to take between six to 18 months

Following a protracted process, the University of Louisville Hospital agreed to acquire KentuckyOne’s Louisville assets from CommonSpirit Health, with the transaction expected to close by November 2019

Day Kimball Hospital (Putnam, CT) joined private equity-backed Prospect Medical Holdings and will retain its not-for profit status (the only not-for-profit hospital in Prospect’s 20-hospital portfolio)

QHC completed the sale of Watsonville Community Hospital to Halsen Healthcare Group following the Parajo Valley Community Health Trust executing its right of first refusal to acquire the hospital before ultimately opting out of the sale

Surgical hospital operator Nobilis Health closed three surgical hospitals in Texas as part of bankruptcy proceedings

HCA announced a letter of intent to acquire Meadows Regional Medical Center (Vidalia, GA), growing HCA’s presence in Georgia to 10 hospitals.

        • HCA was the only publicly-traded for-profit hospital to announce a transaction during the quarter.

Other News

Several systems are in affiliation discussions or the preliminary stages of a potential merger:

        • South Shore Health System (South Weymouth, MA) announced discussions with Well Force, the parent of Tufts Medical Center and Lowell General Hospital
        • Local commission voted 3-2 in favor of a resolution to explore the sale of New Hanover Regional Medical Center (Wilmington, NC)
        • Lafayette (LA) General Hospital letter of intent to join Ochsner
        • Sisters of Charity Health System letter of intent to transfer Mercy Medical Center (Canton, OH) to the Cleveland Clinic Health System, with the Clinic committing to maintaining Mercy Medical Center’s Catholic identity. Following the transaction, Sisters of Charity Health System will have one remaining hospital, St. Vincent Charity Medical Center in Cleveland.
        • Beaumont Health announced an expansion into Ohio with a letter of intent to acquire Summa Health (Akron, OH)
        • Carris Health expects to add Swift County-Benson Health Services to its Minnesota network of critical access hospitals
        • Tenet Health submitted a proposal to Desert Healthcare District to purchase Desert Regional Medical Center (Palm Springs, CA), which Tenet currently operates under a lease agreement
        • OSF Healthcare announced entering into exclusive discussions to add both Little Company of Mary Hospital and Health Centers (Evergreen Park, IL) and Perry Memorial Hospital (Princeton, IL) to its health system
        • Divine Savior Healthcare (Portage, WI) executed a letter of intent to become the ninth hospital in the Aspirus health system
        • Essentia Health announced a letter of intent to transfer Clearwater Valley Hospital and Clinics (Orofino, ID) and St. Mary’s Hospital and Clinics (Cottonwood, ID) to Kootenai Health
        • Community Hospital Corporation announced a letter of intent to acquire and operate certain assets of Huntsville (TX) Memorial Hospital collaboratively with the Walker County Hospital District