Orlando Health has offered to buy Steward Health Care's three "Space Coast" Florida properties, including three hospitals and a medical practice, for $439 million, according to a court document filed Wednesday.
Bankrupt Steward Health Care and Orlando Health have entered into a binding asset purchase agreement to sell Rockledge Regional Medical Center, Melbourne Regional Medical Center, Sebastian River Medical Center. The proposed deal also includes Steward Medical Group Practices in East Central Florida.
According to the court document, filed in U.S. bankruptcy court in the southern district of Texas, Steward designated Orlando Health a “stalking horse bidder,” which is the first to negotiate a purchase agreement with a debtor in bankruptcy. The bidder sets a minimum price and protects the debtor from low bids.
The purchase agreement for Steward's northern Florida assets is for $439.42 million in cash, according to the court document.
Orlando Health’s bid will be subject to higher or better-qualified bids received by August 26, at which time a bankruptcy court-approved auction may occur, according to a press release from Steward Health Care.
“The emergence of Orlando Health, a premier health system with extensive operations in and around Florida, as the leading qualified bid committed to purchasing these assets reinforces the attractiveness of these best-in-class assets,” said Mark Rich, president of Steward Health Care in a statement. “We look forward to reviewing any additional bids that are received between now and August 26th, and are encouraged by Orlando Health’s vote of confidence in our Northern Florida operations.”
Earlier this month, Orlando Health also entered into a definitive agreement to purchase majority interest in Brookwood Baptist Healthcare, located in central Alabama.
Orlando Health is a 3,400-bed system that includes 17 hospitals, 10 free-standing emergency rooms and nine Hospital Care at Home programs.
"We have seen repeatedly that when Orlando Health enters a new area, patient care improves, relationships with physicians and team members grow stronger and surrounding communities benefit,” said David Strong, president and CEO, Orlando Health in a statement. “We believe we can recreate these same results for patients, team members, physicians and the communities in which these hospitals are located.”
The transaction is subject to customary closing conditions, including Bankruptcy Court and regulatory approval and is expected to close in the fourth quarter should Orlando Health emerge as the winning buyer at the auction.
Steward Health Care, based in Dallas, filed for Chapter 11 bankruptcy in May and has been going through a lengthy and arduous process to shed its assets in several states. The for-profit health system runs 31 hospitals in several states.
Earlier this week, the health system Steward Health Care has agreed to sell its physicians network, Stewardship Health, to Rural Healthcare Group, which is owned by a private equity group.
The embattled health system signed a definitive agreement to sell Stewardship, one of the largest primary care provider organizations in the country, for a proposed purchase price of $245 million, according to court documents filed in federal bankruptcy court Aug. 12. RHG, an affiliate of PE firm Kinderhook Industries, will buy Stewardship through Brady Health Buyer, a company set up by Kinderhook to complete the transaction, according to court documents.
Two weeks ago, Steward Health Care said it has made "significant progress" on deals to sell five Massachusetts hospitals to enable the facilities to remain open under new operators.