September 26, 2017
Tenet Healthcare Corp. has decided to divest its hospital business, and analysts say HCA may be a potential buyer.
Dallas-based Tenet has been suffering from financial and legal problems for a few years. Last year, it paid out $514 million in a settlement over a whistleblower lawsuit involving kickback allegations in 2016.
In August, the company’s CEO Trevor Fetter announced his resignation, amidst grumbling from unhappy investors and a second quarter rise in the provision for doubtful accounts to $371 million.
Many analysts believe Tenet’s portfolio might be a good fit for HCA, which is one of the nation’s largest for-profit healthcare systems. Tenet currently owns 460 outpatient facilities and 77 acute-care hospitals and is the third-largest for-profit healthcare company, behind HCA and Community Health Systems. Nashville-based HCA has been actively scooping up competitor-owned facilities over the past several months, more than a handful from CHS.
Other analysts disagree about a happy marriage between HCA and Tenet. They say a potential acquisition would be complicated not only by Tenet’s debt load, but antitrust issues, which points to the portfolio being split among multiple buyers.
A proxy fight is also a possibly. Two board members who represented a New York-based hedge fund with an 18% stake, resigned abruptly. Analysts say this move could signal a coming proxy fight over Tenet.
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