Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
July 30, 2013 01:00 AM

Community Health Systems to buy HMA

Beth Kutscher
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Story updated at 10:30 a.m. ET

    After weeks of speculation that Community Health Systems was interested in a deal, the Franklin, Tenn.-based hospital chain reached an agreement to pay $3.9 billion to buy Health Management Associates.

    Community will acquire all of HMA's outstanding shares with a mix of cash and stock. Including the assumption of HMA's debt, the companies valued the deal at $7.6 billion. By their count, the union would bring 206 hospitals in 29 states under Community's leadership--making the combined company the largest for-profit system in the country by hospital count.

    The price represents a 25% premium over HMA's unaffected share price before the Naples, Fla.-based company adopted a shareholder rights plan on May 24 to fend off activist shareholder Glenview Capital Management.

    In introducing the deal, Community's President and CEO Wayne Smith praised HMA's “very attractive portfolio” of hospitals and “complementary” geographic footprint, which will allow it to form regional health networks similar to what it has done with eight-hospital Commonwealth Health in Pennsylvania.

    HMA has been under pressure from Glenview since May, when the hedge fund filed for regulatory approval to acquire up to 75% of the company. But Glenview has said all along that it didn't plan to move forward with its own acquisition and is currently in the midst of a consent solicitation process to replace HMA's nine-member board.

    But William Schoen, who has chaired HMA's board since 1986, said on a conference call introducing the deal that the two systems started discussions around a tie-up in late 2012. He also described the deal as the culmination of a strategic review process that looked a range of options.“This is a case of the whole being greater than its parts,” he said.

    The deal requires antitrust as well as state and local approvals, as well as the approval of 70% of HMA's shareholders. Smith said on the call that there is wide overlap in each system's shareholders, and HMA investors own about 60% of Community's stock. Glenview itself owned 9.6% of Community's shares as of March 31.

    Community and HMA have overlaps in 15 states. Larry Cash, Community's CFO, declined to comment on the possibility of divestitures on the call.

    HMA also announced that its second-quarter earnings would reflect a 12% increase in observation stays and a 6.7% decline in same-hospital admissions, as well as a 2.4% drop in adjusted same-hospital admissions, which takes outpatient activity into account.

    The embattled company also disclosed that it recently received an additional subpoenas from HHS' inspector general's office regarding its emergency room operations and physician relationships.

    Under the deal, shareholders of HMA could also see a contingent value right of about $270 million, or up to $1 per share, depending on the resolution of government investigations.

    HMA also said that departing CEO Gary Newsome would be replaced on an interim basis by the company's Eastern Group President John Starcher Jr., effective Aug. 1. Newsome previously announced he would leave the company in order to take a leadership position in Uruguay with the Church of Jesus Christ of Latter-day Saints.

    The negative news on earnings and ongoing investigations echoed similar disclosures from Community Health Systems.

    Community this morning also reported its second-quarter results, including what Smith described as its “first significant earnings miss since the third quarter of 2006,” reflecting a 5.7% decrease in same-facility admissions and 2.6% decrease in adjusted admissions compared to the same period last year.

    Follow Beth Kutscher on Twitter: @MHbkutscher

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of 030821-Regionals-Highmark_WEB_i.jpg
    Highmark Q1 net income rose 250% on investment gains
    merger - money - puzzle
    Newly combined Advocate Health sees net gains in first post-merger report
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing