Ascension Health, the nation's largest Catholic health system, will scale back a stake in Accretive Health with the revenue-cycle technology company's planned initial public offering.
Ascension ready to collect with Accretive's IPO
Accretive Health, Chicago, said in regulatory filings last week the company plans to sell roughly 6.67 million shares and its shareholders, including St. Louis-based Ascension, plan to sell an equal amount, at an expected price of $14 to $16 per share.
The sale of Ascension's shares, at least 689,000, would raise $9.6 million to $11 million, though the system's exact profit on the sale cannot be determined without the price paid for the shares being sold, which is not disclosed. Strong demand during the IPO could increase Ascension's sale by 103,350 shares, which would boost total revenue from the sales to $11.1 million to $12.7 million.
Nonetheless, Ascension could see much of that revenue as profit and the system may return to the market within a year to sell more of its stake, according to the filing.
Ascension spokesman Steve LeResche said the system declined to comment during a quiet period.
Ascension received roughly 3.5 million shares from Accretive in late 2004 and purchased approximately 1.3 million more for 1 cent per share between 2007 and March of this year, under terms of a warrant agreement.
Ascension, which owns 75 hospitals, was Accretive's first customer and the not-for-profit health system received stock and warrants for its startup, laboratory and consulting services, the filing said.
Ascension purchased another 2.6 million shares in 2007 for about $5.5 million, or $2.09 per share. The system will also exercise its right to buy another 812,500 shares for $15 prior to the public offering.
Any gain from the sale would be a relatively minor addition to Ascension's sizable investment income. Ascension's income from investments for the six months that ended in December was $728 million, financial records show.
The revenue-cycle company is among the investments under management by the Roman Catholic health system's venture capital arm.
Ascension holds a 10% stake and remains Accretive's largest customer; Ascension accounted for $307.5 million, or 60.3%, of the company's 2009 net service revenue, the filing said.
But that stake is expected to decline with the public offering, and Ascension could sell additional stock one year after the company goes public. Accretive said in its filing it will return to regulators in one year with a notice of resale for stock that Ascension acquired by exercising its warrants and its 2007 purchase, or roughly 4.7 million shares.
Among Accretive's top executives, Mary Tolan, president and CEO, will sell shares worth roughly $17.6 million to $20.1 million. Etienne Deffarges, executive vice president, will sell shares worth $6.5 million to $7.4 million. Chief Financial Officer John Staton is expected to sell shares worth $1.8 million to $2.1 million. And Senior Vice President Gregory Kazarian will sell shares worth about $1.7 million to $1.9 million.
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