Sparks, Summit Likely To Have New Owner In 2014
by November 13, 2013 9:07 pm 143 views
Sparks Health System in Fort Smith and Summit Medical Center in Van Buren are on track to have a Tennessee-based owner in early 2014.
The relatively new Board of Directors of Health Management Associates – the parent company of Sparks and Summit – announced early Wednesday (Nov. 13) that it supports the $7.6 billion acquisition offer from Community Health Systems. Barring any regulatory checks, the deal is expected to close in the first quarter of 2014.
Naples, Fla.-based HMA – the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren – also reported Wednesday a more than $96.6 million loss in the third quarter thanks to more than $120 million in one-time accounting charges.
The quarterly financials were below the consensus estimate of analysts who watch the company. The consensus per share earnings were 15 cents per share rather than the loss of 37 cents per share. Also, the analysts projected quarterly revenue to hit $1.7 billion. The company reported revenue of $1.676 billion.
Accounting charges tied to interest rate swap and adjustments related to the swap was a hit of $18.9 million. Costs related to change of control, severance agreements and merger review totaled $102.9 million. Without the costs, the company would have posted earnings per share of 1 cent.
The company is also paying back to the federal government $31 million for Medicare and Medicaid payments erroneously received between July 1, 2011 and June 30, 2013.
THE BUYOUT DEAL
The $7.6 billion deal from Franklin, Tenn.-based Community Health was approved by an HMA Board that was ousted in a proxy fight pushed by New York City-based Glenview Management.
On Sept. 25, the newly installed HMA Board announced a review of the offer. Glenview had previously said the $13.78 per share offer was too low. The HMA Board now believes the deal is good for HMA shareholders.
“After conducting an extensive review in conjunction with our legal and financial advisors, we are confident that this transaction provides maximum value to HMA stockholders and represents the best path forward for the Company,” Steve Shulman, Chairman of the Board, said in a statement.
Between Aug. 16 and Wednesday, the new Board met 11 times and held 18 committee meetings to review HMA operations and the acquisition offer. According to the statement, the acquisition study by several third-party firms determined “that a large initial investment would be necessary to build out HMA’s information and clinical capabilities, among other things, and a successive long road to incremental value would not outweigh the benefits of accepting CHS’s offer.”
HMA operates 71 hospitals in 15 states with approximately 11,000 licensed beds.
Community Health Systems is almost double the size of HMA, and its hospital portfolio includes eight facilities in Arkansas. Those include four in Northwest Arkansas – Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women’s Hospital.
“This transaction will broaden our footprint into new geographic markets, allow us to form stronger networks and improve access to care, and strengthen our position for greater benefit and success under health care reform,” said Wayne Smith, chairman, president and CEO of Community Health. “All of which, when combined with expected meaningful synergies available to us through our infrastructure and systems, will enhance value for our shareholders, employees, physicians and the communities we serve. We look forward to continuing our work with HMA’s associates and physicians to ensure a smooth and effective transition.”
Shares of HMA (NYSE: HMA) closed Tuesday at $12.53. During the past 52 weeks the share price has ranged from a $17.28 high to a $7.25 low.