Board to evaluate bidders for Fla. hospital

The Citrus County (Fla.) Hospital Board will meet Wednesday to weigh five proposals from four suitors looking to take over struggling Citrus Memorial Health System.

The Inverness, Fla., hospital first tapped valuation firm VMG Health to assess the medical center's financial health in October 2012. Soon after, Citrus—saddled with $80 million in debt and $30 million in underfunded pension liabilities—tapped M&A consultant Josh Nemzoff to find a partner.

Four bidders are vying for the 198-bed hospital: HCA, Nashville; RegionalCare Hospital Partners, Brentwood, Tenn.; Tampa General Hospital; and Health Management Associates, Naples, Fla., which submitted two proposals (PDF).

HMA's takeover bid, valued at $293 million, is the highest. It includes a purchase price of $120 million and a capital investment of $50 million.

HCA's bid, valued at $291 million, offers a purchase price of $133 million and a capital investment of $35 million.

HMA also proposed structuring the deal as a joint venture, in a transaction that would be valued at $238 million.

Both investor-owned chains have at least one hospital within 22 miles of Citrus Memorial. Nemzoff noted in his presentation that antitrust concerns might be one consideration for the board.

Tampa General, the only not-for-profit bidder, proposed a merger where no cash would change hands. For RegionalCare, its proposed $252 million deal would mark its first foray into Florida.

Citrus Memorial was one of six hospitals that saw its credit rating downgraded by Moody's Investor Services in the first quarter of this year, and the only one downgraded by more than one notch.

The ratings agency cited trouble with integrating new health information technology systems as well as an ongoing legal dispute regarding the hospital's governance.

Fitch Ratings also downgraded the hospital's debt in the second quarter.

Follow Beth Kutscher on Twitter: @MHbkutscher