Alhambra-based health care provider Astrana Health Inc. has agreed to purchase the majority of Palms-based Prospect Medical Holdings’ managed care platform from Birmingham, Alabama-based Medical Properties Trust for about $745 million. The deal also includes Foothill Regional Medical Center, a 177-bed acute care hospital in Tustin.
According to the Nov. 8 deal announcement, Astrana expects to fund the purchase using a combination of cash on hand and a $1.09 billion, 364-day senior secured bridge commitment provided by Charlotte, North Carolina-based Truist Bank and New York-based JPMorganChase.
The transaction remains subject to regulatory approval and other closing conditions and is expected to close in the middle of next year.
Prospect Medical, a private equity-backed firm that operates 16 hospitals and related health care provider services in often underserved communities in Southern California, Connecticut, Pennsylvania and Rhode Island, entered into a sale-leaseback deal in July 2019 with Medical Properties Trust that was valued at $1.55 billion. The deal covered all of Prospect Medical’s real estate holdings. Prospect used the cash infusion to cover existing long-term debt.
Now, five years later, Medical Properties Trust decided to unload the properties to Astrana Health. The bulk of the $745 million price tag will be used to repay debt obligations.
As for Astrana Health, this deal represents one of its largest acquisitions. The company, which changed its name from Apollo Medical Holdings in February, serves over 12,000 providers that in turn serve more than 1.1 million people across the nation in value-based care arrangements, where providers are paid according to their ability to meet patient health care outcome targets.
Its subsidiaries and affiliates include management services organizations, affiliated independent practice associations (IPAs), accountable care organizations and other care delivery entities.
The deal also gives Astrana direct ownership of its first full-service acute care hospital.
