Reports have surfaced that GTCR, a Chicago-based private equity firm that currently manages $8 billion in assets, is looking to sell Franklin, Tenn.-based Capella Healthcare.
Two unnamed sources "familiar with the matter" told Reuters that GTCR executives have hired Bank of America Merrill Lynch to search for potential buyers for the publicly traded Capella. The early short list allegedly includes three other for-profit hospital operators: Brentwood, Tenn.-based LifePoint Hospitals, Franklin, Tenn.-based IASIS Healthcare and Brentwood, Tenn.-based RegionalCare Hospital Partners.
Reuters originally reported that Scottsbluff, Neb.-based Regional Care Inc., a third-party healthcare plan administrator, was one of the potential buyers. However, in an email, Regional Care Inc. Vice President of Operations Carol Kuhn said she does not "believe we are in the market for hospital systems." In a phone call, Jeff Atwood, vice president of communications for RegionalCare Hospital Partners, a system with eight hospitals, confirmed that Reuters most likely meant to report their company as a potential buyer, but he said they could not comment or speculate on the Capella situation. As of 3 p.m. CDT, Reuters still listed Regional Care Inc. as the potential buyer.
Diane Huggins, vice president of corporate communications at LifePoint, said in an email that LifePoint is unable to provide any information regarding the Reuters article, and LifePoint does not comment on "development activities."
Officials at GTCR and IASIS did not respond to requests for comment.
In an emailed statement, Capella Co-Founder, Chairman and CEO Dan Slipkovich neither confirmed nor denied if Capella was up for sale. The statement read: "We are constantly evaluating opportunities — like all smart healthcare systems across the country — to strengthen our company and our hospitals for the coming years. Healthcare is changing significantly, so we continue to work closely with GTCR, our equity sponsor, on how we best position Capella for that new environment."
The statement went on to read: "Our focus at the hospital level is no different, as we evaluate opportunities in every community. The future of healthcare is about collaboration and innovation. That's what we're doing wherever we serve — building the strongest possible regional networks for our communities to fulfill our primary focus: delivering the highest quality of care and preparing for the changes of reform."
In August, Capella reported it lost $6.5 million in the second quarter of this year, the fifth consecutive quarter in which the hospital operator posted a loss. Admissions across Capella's 13 acute-care hospitals and one behavioral health center were down 2.6 percent in the second quarter. Inpatient surgeries fell 3.9 percent. In 2012, Capella reported $105.2 million in adjusted EBITDA. The sources from the Reuters report said any sale of Capella could be worth between $800 million and $1 billion, or about 8x EBITDA.
Mr. Slipkovich and Tom Anderson, vice chairman of the board, co-founded Capella in May 2005. The company partnered with GTCR, which invested $200 million initially and has since invested another $200 million. Capella acquired its first four hospitals from Nashville, Tenn.-based Hospital Corp. of America in November 2005.
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