Novant Health ended its 16-month pursuit of a $320 million deal to acquire two North Carolina hospitals from Community Health Systems after a federal appellate court on Tuesday dealt it a harsh blow.
The U.S. Court of Appeals for the Fourth Circuit hit Novant's proposed acquisition of Mooresville-based Lake Norman Regional Medical Center when a panel voted 2-1 to grant the Federal Trade Commission's motion to stop that proposal pending appeal. Lake Norman Regional Medical Center was one of two hospitals Novant sought to purchase from Community Health Systems, along with Statesville-based Davis Regional Medical Center.
Related: Community Health Systems to exit North Carolina
A Novant spokesperson said the health system doesn't see a way to finalize the deal given the FTC's "continued roadblocks." Winston-Salem, North Carolina-based Novant announced plans in February 2023 to acquire the two hospitals from Franklin, Tennessee-based Community Health Systems.
"The communities served by these facilities deserve better than the fate they’ve been dealt by the FTC, so we will look for other ways to support patients and clinicians in these communities," the spokesperson said.
The FTC provided no comment and Community Health Systems did not respond to a request for comment.
The regulatory agency filed its injunction request in the Fourth Circuit last week after U.S. District Court Judge Kenneth Bell denied multiple requests to stop the acquisition of both hospitals, saying the benefits of keeping them open and adding services outweighed competitive concerns. However, FTC's request to the appellate court did not object to Novant's acquisition of Davis Regional Medical Center.
The FTC sued to block the deal in January, arguing it would drive up costs and have a negative impact on market competition in the area.
Fourth Circuit Judge J. Harvie Wilkinson dissented, saying the FTC was acting too aggressively. “If the proposed transaction were a merger between two behemoths, I would feel differently," Wilkinson wrote.
Novant, which reported $231.8 million in first-quarter net income, operates 19 hospitals and more than 800 other locations across the Carolinas. It has looked to expand its footprint in recent years and in February acquired three South Carolina hospitals from Dallas-based Tenet Healthcare for $2.4 billion.
