Apollo-owned RCCH HealthCare to acquire LifePoint Health in $5.6 billion merger

LifePoint office in Brentwood, TN. Credit: Google Street View

LifePoint Health and RCCH HealthCare Partners, which is owned by private equity firm Apollo Global Management, plan to merge, the two companies announced Monday.

The deal is worth $5.6 billion, including $2.9 billion in LifePoint net debt and minority interest, and, upon closing of the transaction, LifePoint shareholders will receive $65.00 per share in cash for each share of LifePoint common owned, LifePoint said in a statement.

The definitive agreement was unanimously approved by the LifePoint Board of Directors. The newly combined system will be privately owned and will operate under the LifePoint Health name and will be lead by current LifePoint chairman and CEO William Carpenter III. It will maintain headquarters in Brentwood, Tennessee where the two separate companies were already anchored.

According to LifePoint, the new entity will tout pro forma 2017 revenues of more than $8 billion as well as 7,000 affiliated physicians, approximately 60,000 employees and more than 12,000 licensed beds. If the deal closes as expected, the new LifePoint will include 84 non-urban hospitals in 30 states, regional health systems, physician practices, outpatient centers and post-acute service providers, and will be positioned as the sole community healthcare provider in the majority of the regions served. 

"LifePoint and RCCH are aligned in our missions and commitment to ensuring that non-urban communities across the country have access to quality care, close to home," Carpenter said. 

RCCH CEO Martin Rash added that the new organization's "size and scale will be impactful" for patients, partners, clinicians and employees.

While mergers can be a potential boon for the systems involved, other large scale attempts have met resistance over the past year. Most recently, the Massachusetts Attorney General voiced concern about a mega merger involving Lahey Health and Beth Israel Deaconess Medical Center, citing cost control and access to care concerns. Workers protested in California over the proposed merger of Dignity Health and Catholic Health Initiatives. A spokesperson for the union involved said the workers were worried about wage cuts and layoffs should the deal go through.

Despite hiccups with certain planned transactions, merger and acquisition activity has been running at full speed in 2018. According to data compiled and reported by Bloomberg in March, 2018 has started off with the biggest bang in a decade.

Roughly $156 billion in deals were by the end of March including pharma giants like Sanofi, GlaxoSmithKline and Celgene, and a pending acquisition of Shire by Takeda Pharmaceutical Company valued at $45 billion. That deal would propel 2018's year-to-date over $200 billion, setting up a record breaking first quarter unrivaled in at least 12 years.

The RCCH LifePoint transaction is expected to be completed over the course of the next several months, subject to customary closing conditions.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com