01—Abstract
Summary
Summary of the 8-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Tenet Healthcare Corporation (NYSE: THC) announced on February 29, 2024 a definitive agreement to sell two California hospitals, Sierra Vista Regional Medical Center and Twin Cities Community Hospital, along with certain related operations, to Adventist Health for $550 milliona in cash (after-tax proceeds of approximately $450 million).
The transaction is not subject to a financing contingency, is subject to customary closing conditions including Hart-Scott-Rodino clearance, and is anticipated to close in the spring of 2024. Purchase price adjustments for working capital and other items are customary. For the year ended December 31, 2023, the divested hospitals and related operations generated revenues of approximately $337 millionb, pre-tax income of approximately $25 million, and Adjusted EBITDA of approximately $38 million, excluding depreciation and amortization expense of approximately $13 million.
The company estimates recording a pre-tax book gain of approximately $275 millionc on the transaction. Alongside the sale, Tenet's Conifer Health Solutions subsidiary will enter into a contract to provide hospital and physician revenue cycle services to Adventist Health.
The company describes this relationship as covering over $3.5 billiond in net revenue. The 8-K is furnished under Item 7.01 and filed under Item 8.01, with the press release attached as Exhibit 99.1.
02—Key points
Key Highlights
- Agreed sale of Sierra Vista Regional Medical Center and Twin Cities Community Hospital, plus related operations, to Adventist Health for $550 million in cash
- Approximately $450 million in after-tax proceeds expected from the transaction
- Estimated pre-tax book gain of approximately $275 million upon closing
- Divested operations generated approximately $337 million in revenues and approximately $38 million in Adjusted EBITDA for 2023
- Conifer Health Solutions to provide revenue cycle services to Adventist Health, covering over $3.5 billion in net revenue
- No financing contingency; closing subject to customary conditions including Hart-Scott-Rodino waiting period expiration
- Transaction anticipated to close in the spring of 2024
03—Questions
Frequently Asked Questions
What is being sold and to whom?
Tenet is selling two hospitals in California, Sierra Vista Regional Medical Center and Twin Cities Community Hospital, along with certain related operations, to Adventist Health for $550 million in cash.
What financial impact is expected from the sale?
The company estimates a pre-tax book gain of approximately $275 million and after-tax proceeds of approximately $450 million.
How large are the divested operations?
For the year ended December 31, 2023, the hospitals and related operations generated revenues of approximately $337 million, pre-tax income of approximately $25 million, and Adjusted EBITDA of approximately $38 million, excluding depreciation and amortization of approximately $13 million.
What is the Conifer Health Solutions role in the deal?
Conifer Health Solutions, Tenet's subsidiary, will enter into a contract to provide hospital and physician revenue cycle services to Adventist Health, which the company describes as covering over $3.5 billion in net revenue.
When is the transaction expected to close and what could delay it?
The transaction is anticipated to close in the spring of 2024. Completion is subject to closing conditions, including expiration or termination of the Hart-Scott-Rodino waiting period and other regulatory or governmental filings and approvals.
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