CHS rejects $2.4 billion buyout bid for its hospitals in Fort Wayne
Community Health Systems has rejected a $2.4 billion buyout offer for its eight Fort Wayne, Ind., hospitals, saying the proposal was inadequate by at least $1 billion.
CHS was first approached about a potential buyout in November by 10 doctors who formed a group called Fort Wayne Physicians to negotiate a deal, CHS said.
The proposed offer of $2.4 billion was significantly below the valuations that 30 other hospitals that CHS is selling have fetched so far, CHS said in a statement.
CHS Chief Financial Officer Thomas Aaron said the system is getting about 12.5 times earnings before interest, taxes, depreciation and amortization for its divestitures.
With annual EBITDA estimated by J.P. Morgan at about $350 million at the eight Fort Wayne hospitals, the $2.4 billion offered falls more than $1 billion short.
The Fort Wayne hospitals, known as the Lutheran Health Network, are CHS’ most profitable. They generate annual revenue of about $1.1 billion, J.P. Morgan estimates.
Struggling CHS has been divesting hospitals and other assets to reduce debt of $15 billion. The hospital company, the nation’s second-largest investor-owned system with 155 hospitals, posted a net loss of $1.7 billion in 2016.