Cogent Healthcare yesterday announced a merger with like-sized Ohio-based Hospitalists Management Group, a transaction that creates the largest privately held hospitalist company in the country.
The deal, company executives say, fuses former competitors in order to create a usiness that can better capture the ballooning demand for their services.
“Each of us had to kind of lay our spears down and really talk about how we could bring these two highly compatible cultures together,” said Stephen Houff, CEO of the new Cogent-HMG, of the deal-making process.
Previously, Cogent and HMG were competing in the mid-sized hospital market, though each had a focus that stretched in another direction — Cogent targeting larger and HMG going after smaller providers. As a combined company, the two can pursue the entire market at a time when health care providers of all sizes are thinking about how they can become part of integrated care networks (accountable care organizations) to meet the demands of a post-health care reform industry. That’s important, according to chairman Gene Fleming, because many hospitals are considering outsourced hospitalist partners as part of their ACO strategies.
“We’re still on the very front end of meeting the demand in the marketplace,” Fleming said. “This gives us a much bigger platform from which to address that market.”
HCA officials and their attorneys have entered discussions with a New Hampshire foundation about a possible settlement of a legal case that will decide the ownership status of Portsmouth Regional Hospital. HCA bought the $500 million (revenue) facility in 1985, a move that created The Foundation for Seacoast Health. That foundation says it should have been able to exercise its right to buy back the center during a 1999 HCA reorganization. Two courts have agreed and, unless a deal is struck, HCA's appeal will be heard in early May.
"We've said all along that a settlement is in the best interest of the community, and we continue to believe that. HCA has been part of the Seacoast for the past 28 years, committed to improving the health and well-being of its residents. We look forward to continuing that positive partnership."
A few days after several of his lieutenants booked profits of more than $3 million on their stock holdings, LifePoint Hospitals Chairman and CEO Bill Carpenter on Wednesday did some selling of his own. Carpenter unloaded almost 9 percent of his more than 640,000 shares, pocketing some $2.2 million.
Citing sources familiar with the company, the two say the offering is oversubscribed and predict shares will be sold for $30 to $31. (The company had predicted $27 to $30). At $31 a pop, the IPO would grow by $143 million and raise $4.42 billion.
HCA is expected to reveal the share price after markets close today.
Three executives at LifePoint Hospitals have in the past week lightened their holdings in the Brentwood-based company. Most active was Scott Raplee, president of operations, who exercised almost 100,000 options before selling the resulting shares as well as some 36,000 more. The transactions netted Raplee, 44, more than $2.4 million. Also selling into the market were Chief Legal Officer Paul Gilbert and Chief Accounting Officer Michael Coggin. Their moves generated profits of about $500,000 and $120,000, respectively. Shares of LifePoint (Ticker: LPNT) are up about 7 percent this year and are at their highest level since the spring of 2007.
HCA is expected to price its initial public offering after markets close today, with shares hitting the market on Thursday. The company's return to the public markets — which is expected to raise about $35 billion if the company sells 124 million shares at the midpoint of its $27 to $30 range — would be the largest-ever private-equity backed IPO.
In anticipation of the offering, the hospital chain's new holding company, HCA Holdings filed an amended registration statement this morning.
Community has consistently sustained much stronger performance even while digesting massive acquisitions like Triad in 2006, which nearly doubled its revenue. This is not lost to investors, which bid Tenet’s stock up 67% to the highest level since 2007 after the company received the buyout offer from Community [...] Tenet will be hard-pressed to convince its shareholders that Community’s bid does not offer the highest potential value, especially since no other buyers have come forward with a better bid.