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Novant Health to buy Tenet Healthcare South Carolina hospitals for $2.4 billion

by John R. Fischer, Senior Reporter | November 30, 2023
Business Affairs
Coastal Carolina Hospital (Photo courtesy of Hilton Head Regional)
To repay debt retirement, Tenet Healthcare will sell three of its South Carolina hospitals to Novant Health for approximately $2.4 billion in cash.

The providers include Coastal Carolina Hospital in Jasper County, Hilton Head Hospital in Beaufort County, East Cooper Medical Center in Charleston County, affiliated physician practices, and other related hospital operations. When accounting for taxes, net proceeds from the sale are estimated to be approximately $1.750 billion.

While it will continue to own ambulatory facilities operated by its subsidiary United Surgical Partners International (USPI) in these areas, Tenet will continue providing services to the hospitals, with USPI facilitating revenue cycle management, as part of a new and expanded 15-year contract.

“Integration of these three hospitals into their network will bring benefits for generations to come. Our new partnership in revenue cycle management and expanded collaboration in ambulatory surgical services will support consumer-centric healthcare,” said Dr. Saum Sutaria, chairman and CEO of Tenet Healthcare, in a statement.

Over the last year, the hospitals together earned approximately $552 million in revenue (approximately $126 million in pre-taxes), as of September 2023. Their Adjusted EBITDA is approximately $150 million, excluding an interest expense of approximately $1 million, litigation and investigation costs of approximately $3 million, and a depreciation and amortization expense of approximately $20 million.

Tenet expects a book gain of approximately $1.6 billion as a result of the sale, which is subject to customary regulatory approvals, clearances, and closing conditions. With the net proceeds, the company will pay off the principal of bonds or notes it has received.

Earlier this year, Tenet announced that it would sell its 49% stake in San Ramon Regional Medical Center, in California, to John Muir Health, which holds the other 51% ownership rights.

In November, the Federal Trade Commission sued to block the deal, saying that it would allow John Muir Health to raise prices there and at its other two hospitals by reducing its competition in the area for certain services.

The South Carolina sale is expected to be completed in the first quarter of 2024.

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