Steward Health Care to acquire IASIS Healthcare

Cornelia Mascio
Mag 20, 2017

Boston-based Steward Health Care said Friday it will become the largest private for-profit hospital operator in the United States after it buys a Tennessee-based health care company. Terms were not disclosed, but Bloomberg and the Wall Street Journal - citing people familiar with the transaction - valued the deal at about $2 billion. Becker's has reached out to Steward to verify the value of the deal and the article will be updated accordingly.

The acquisition will mean Steward Healthcare, along with IASIS, will have combined assets of 36 hospitals across the country and total revenues of $8 billion.

Steward announced the merger this morning and said it expects to seal the deal in the third quarter of 2017.

As part of the deal, Steward, already a major player in MA health care, will take on 18 hospitals now operated by IASIS - expanding its footprint across 10 states. It will acquire Iasis' 18 hospitals in six states: Arizona, Arkansas, Colorado, Louisiana, Texas and Utah.

The deal with the Tennessee hospital system means Steward will have 36 hospitals across 10 states, managed care operations in Arizona, Utah and MA, and projected revenues of nearly $8 billion in 2018.

Steward, backed by NY private equity firm Cerberus Capital Management, entered the MA health care market in 2010 when it bought the financially-distressed Caritas hospitals formerly run by the Archdiocese of Boston. The terms of the agreement specify that cash proceeds paid by MPT and other financing sources will be used to retire IASIS' senior secured term loans and unsecured notes. IASIS is backed by TPG Capital, another private equity firm.

"Since its formation almost 20 years ago, IASIS's mission has been to deliver high-quality, cost-effective healthcare to our patients and the communities we serve". "Steward's innovative approach to reducing health care cost and improving quality of service will further this mission".

Earlier this year, Steward bought eight hospitals in Ohio, Pennsylvania and Florida for more than $300 million. He said he expects "it will be business as usual while all of us work toward a seamless merger of our operations". "Our model shows how the industry can successfully shift toward a more cost-effective local, coordinated approach that puts patients first".

Steward closed its deal May 1 to acquire Wilson-based Easton Hospital.

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