69.5 F
Los Angeles
Saturday, Feb 4, 2023

El Segundo-Based Operator of St. Vincent Medical Center Declares Bankruptcy

Patrick Soon Shiong
Richard Adcock

The nonprofit operator of St. Vincent Medical Center in Los Angeles, managed by billionaire Patrick Soon-Shiong’s NantWorks, has declared bankruptcy.

Verity Heath System of California Inc., which recently moved its headquarters from Redwood City to El Segundo, filed for bankruptcy on Aug. 31 in Los Angeles federal court.

The health care system operates six acute care hospitals in the state, including the 162-year-old St. Vincent hospital, of Westlake, and St. Francis Medical Center of Lynwood.

As of Friday, the hospital chain had nearly 7,400 employees to care for roughly 850 patients in facilities that were 50-percent occupied, according to the federal bankruptcy filing.

The Chapter 11 filing stated that Verity Health has more than $1 billion in pension liabilities and bond debt. It’s accrued another $500 million in unsecured debt from vendor contracts, pension obligations and management fees.

Verity’s losses run roughly $175 million a year on a cash flow basis, according to the filing.

Its hospitals have also been up for sale. Cain Brothers, a division of KeyBanc Capital Markets, has reached out to 110 potential buyers on behalf of Verity since July, and received 11 indications of interest.

Biotech mogul Soon-Shiong, who also recently purchased the Los Angeles Times, bought a majority stake in Verity’s management company in 2017, hoping to breathe life into the hospital chain.

NantCapital, the investment arm of Soon-Shiong’s NantWorks conglomerate of companies, provided Verity Health $40 million in unsecured debt financing, in two $20 million unsecured notes, the court documents said.

Apart from St. Vincent and St. Francis hospitals, Verity Health System owns O’Connor Hospital, St. Louise Regional Hospital, Seton Medical Center and Seton Medical Center Coastside, in Northern California. It also runs a physician network and medical foundation, with doctors’ offices and urgent care clinics.

The company hired Richard Adcock in January as chief executive to help turn around the hospital system.

Verity Health was founded by the Daughters of Charity of St. Vincent de Paul, Province of the West, to support the mission of the Catholic Church to aid the sick and poor. In 2015, the Catholic charity shifted its operations to New York hedge fund BlueMountain Capital, which sold a controlling interest in its operating company to Soon-Shiong.

Health business reporter Dana Bartholomew can be reached at dbartholomew@labusinessjournal.com. Follow him on Twitter @_DanaBart.

Featured Articles

Related Articles