The ink has dried on another Tenet Healthcare divestiture deal, this time the sale of two central California hospitals to nonprofit system Adventist Health.
The $550 million deal includes Sierra Vista Regional Medical Center, Twin Cities Community Hospital, their affiliated physician practices and other related operations. It was announced just last month (see the original story below) and closed at 12:01 a.m. Friday, according to a release from Adventist.
The hospitals have now been rebranded as Adventist Health Sierra Vista and Adventist Health Twin Cities and have joined the system's Central Coast Service Area, Adventist said. The handover does not affect patient care or accepted insurance.
“It was truly a privilege to round on patients this morning, an invigorating experience with an incredible team of clinicians,” Adventist Health CEO and President Kerry Heinrich said in the announcement. “I am grateful for the opportunity to expand our mission to the Central California Coast. We are committed to providing access to the full continuum of care that our patients deserve and is absolutely essential to the community.”
Adventist Health now comprises 28 hospitals. It reported $5.4 billion of total revenue during its most recent fiscal year.
Eleze Armstrong, who was CEO of Twin Cities Community Hospital and prior to that chief operating officer for Sierra Vista Regional Medical Center, has stepped into the interim CEO position for both hospitals, per Adventist.
For-profit Tenet previously said it expects after-tax proceeds of about $450 million and an estimated pretax book gain of about $275 million as a result of the sale. The concurrent revenue cycle services agreement will see Tenet's Conifer Health Solutions cover over $3.5 billion of Adventist's net revenue.
Tenet has been on a hospital selling spree as of late. Today's announcement comes just two days after it closed a four-hospital, $975 million selloff to UCI Health. And at the top of February, it announced the close of a $2.4 billion sale of three South Carolina hospitals to Novant Health.
During its most recent earnings call, which preceded the Adventist deal's announcement, Tenet executives hinted at one or more hospital sales during the coming year that could bring the company more than $1 billion in funds. CEO Saum Sutaria, M.D., told investors that the company would be willing to listen to pitches for the right price.
Feb. 29
Tenet Healthcare has cut a deal to sell two California hospitals and their related operations to Adventist Health for about $550 million, the for-profit announced Thursday morning.
The sale, which is subject to regulatory approvals and closing conditions, is expected to close this spring. It brings Tenet after-tax proceeds of about $450 million and an estimated pretax book gain of about $275 million.
The deal lands alongside a revenue cycle services agreement between Adventist and Tenet subsidiary Conifer Health Solutions. The arrangement will cover more than $3.5 billion of Adventist’s net revenue.
“Adventist Health is a prominent healthcare system with a commitment to compassionate care and serving the communities of [California’s] San Luis Obispo County,” Saum Sutaria, M.D., chairman and CEO of Tenet Healthcare, said in an announcement. “Furthermore, our revenue cycle services partnership will enable our organizations to apply new innovations to optimize the patient experience.”
The assets changing hands are Sierra Vista Regional Medical Center, Twin Cities Community Hospital, their affiliated physician practices and other related operations, all of which are located on the central California coast. Together, they generated about $337 million in revenues and $25 million of pretax income across 2023.
In its own announcement, nonprofit Adventist Health said the purchase will broaden its geographic diversification and noted large employers in the area such as California Polytechnic State University.
“We are excited to increase our footprint to the beautiful Central Coast of California,” Kerry L. Heinrich, president and CEO of Adventist Health, said in a release. “We are committed to partnering with Sierra Vista Regional Medical Center and Twin Cities Community Hospital to expand services, and we will work together to serve our mission of increasing the availability of care for communities in this region.”
Adventist Health currently operates 26 hospitals and over 400 clinics, according to its website. It reported $5.4 billion of total revenue and a $557 million net loss during its 2022 fiscal year.
Tenet Healthcare now comprises 58 acute and specialty care hospitals, has interests in over 480 ASCs and surgical hospitals and runs roughly 160 other outpatient facilities. It brought in $20.5 billion of net operating revenues and $611 million of net income in 2023.
The for-profit hasn’t been shy about its interest in divesting hospitals for the right price. The company recently shared news that its $2.4 billion sale of three South Carolina hospitals to Novant Health had closed and that it had cut a new deal with UCI Health to sell four others for $975 million.
During its most recent earnings call, Tenet executives also hinted at one or more hospital sales that could bring the company over $1 billion of funds to improve its leverage position.