Apollo to Buy Hospital Chain LifePoint in $2.52 Billion Deal
July 24, 2018 by Zachary Tracer and Aziza Kasumov
Apollo Global Management LLC plans to buy hospital chain LifePoint Health Inc. for $65 a share, expanding the private-equity firm’s ambitions in rural health care.
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The deal values LifePoint at $2.52 billion, or $5.6 billion including debt and minority interest, the firms said in a statement on Monday. The price is a 36 percent premium to where LifePoint shares closed on July 20, before news of a potential takeover was reported.
LifePoint shares jumped 34 percent to $64.15 in premarket trading on Monday in New York.
LifePoint will be merged with RCCH HealthCare Partners, an Apollo-owned hospital company that runs 16 regional health-care systems in 12 states, according to its website. The combined company will operate under the LifePoint name.
The rural hospital business can be challenging, with facilities closing amid stagnant reimbursements and patient volumes. Yet the facilities are often a key source of care in their regions, and can be enticing for investors like Apollo.
LifePoint, based in Brentwood, Tennessee, is a major addition to Apollo’s health-care bet. The company operates 71 hospitals in nonurban areas across 22 states including Tennessee, Kentucky and North Carolina. The company has said it expects to generate about $6.4 billion in revenue this year.
Leerink Partners analyst Ana Gupte said the deal makes sense. “There will be quite a bit of synergy with RCCH and LifePoint Health,” Gupte said, adding that she couldn’t think of any challenger to Apollo’s bid at the moment.
LifePoint’s Chief Executive Officer William Carpenter will stay on to help lead the company. Carpenter owned 484,297 shares of LifePoint as of Feb. 28, according to a filing, representing 1.2 percent of the company’s stock.
The deal is expected to close in the next several months, the firms said in the statement.
Providers such as hospitals and doctors have been a nexus of consolidation in the health-care industry. The insurer UnitedHealth Group Inc. late last year agreed to buy DaVita Medical Group, and also acquired the surgery-center chain Surgical Care Affiliates. Earlier this year, private-equity firm KKR & Co. agreed to buy the hospital-staffing and surgical-center company Envision Healthcare Corp. for $5.57 billion plus debt.
Goldman Sachs Group Inc. served as LifePoint’s financial adviser, and White & Case LLP was its legal counsel. Barclays Plc and MTS Health Partners LP advised RCCH financially, and Akin Gump Strauss Hauer & Feld LLP, together with Paul Weiss Rifkind Wharton & Garrison LLP, guided the firm on legal issues.
