New Hanover Regional Medical Center Assets Acquired by Novant Health

1 Mar

Case studies

New Hanover Regional Medical Center Assets Acquired by Novant Health

Transaction Announcement

Ponder & Co. is pleased to announce that Novant Health has acquired the assets of New Hanover Regional Medical Center (“NHRMC”) following a public evaluation process that began in September 2019. The agreement with Novant Health was unanimously recommended by a Partnership Advisory Group (“PAG”) selected to represent the community, medical staff and NHRMC Board of Trustees. It received final approval from the NHRMC Board of Trustees and New Hanover County Board of Commissioners. As part of the Novant affiliation, the UNC School of Medicine committed to expanding its Wilmington branch campus, establishing outreach clinics in underserved areas with pediatric specialists for complex care, and advancing research initiatives in health equity, opioid addiction, and social determinants of health. The transaction consisted of a $1.5 billion purchase price and routine and strategic capital commitments totaling $3.1 billion. Novant also assumed NHRMC’s management agreement with Pender Memorial Hospital.

About New Hanover Regional Medical Center

NHRMC is a 769-bed County-owned hospital in Wilmington, NC serving a seven-county service area with a medical staff of over 600 providers. The system also includes two acute care hospitals, rehabilitation, and behavioral health facilities. Although a component unit of New Hanover County, NHMRC neither paid nor received tax support from the County. Rated A+/A1 with stable outlook by Standard & Poor’s and Moody’s Investor Service, respectively, NHRMC exhibited a strong history of financial performance but had significant exposure to declining reimbursement through changes to the Sole Community Hospital and 340B drug discount programs. These risks threatened the system’s strategic pillars of access, value, and health equity and lead NHRMC to investigate several alternative affiliation structures before partnering with Novant to open new opportunities for collaboration and growth as well as additional medical education and clinical capabilities through an expansion of NHRMC’s relationship with UNC Health and UNC School of Medicine.

Ponder’s Role

Ponder was jointly engaged by New Hanover County and NHRMC to serve as transaction financial advisor. Ponder advised the PAG and County on the considerations of various affiliation structures, including spinning off from the County as an independent NewCo and maintaining status quo governance, and evaluated the degree to which each structure would meet the certain financial and capital needs of the County and NHRMC. The comprehensive and competitive partnership search process yielded six proposals from leading regional and national health systems. Ponder assessed the ability of the health system finalists to satisfy the financial elements of NHRMC’s strategic plan and the respondents’ ability to afford their proposed financial consideration and capital commitments. Ponder also led the development and completion of the funds flow memorandum and closing statements based on the asset purchase agreement. Importantly, the process focused closely on the needs of the community resulting in health equity commitments, a segregated amount/foundation for behavioral health, a new academic medical center affiliation, commitments to employees and a range of other community-focused commitments.

About Ponder & Co.

Ponder & Co. provides M&A and Capital Advisory services to more than 150 non-profit hospital and healthcare system clients. Ponder has completed more than 200 M&A engagements involving acute and specialty hospitals, senior health and housing facilities, long-term acute care facilities, ambulatory surgery centers and behavioral health facilities. Transactions have ranged from $10 million to $1.5 billion in value.

Ponder’s M&A advisory services include:

  • Strategic option assessments
  • Business valuations and fairness opinion
  • Partnerships, joint ventures and strategic alliances
  • Board and special committee assignment
  • Mergers, acquisitions and divestitures
  • Real estate transaction services