CHS re­jects $2.4 bil­lion buy­out bid for its hos­pi­tals in Fort Wayne

Modern Healthcare - - REGIONAL NEWS - —Dave Barkholz

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.

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