A federal bankruptcy judge on April 17 approved an agreement by El Segundo-based Verity Health System of California Inc. to sell its St. Vincent and St. Francis medical centers and two Northern California hospitals to KPC Group for $610 million.
U.S. Bankruptcy Court Judge Ernest Robles approved an asset purchase agreement for KPC’s Strategic Global Management to acquire the 163-year-old St. Vincent Medical Center in Westlake and the 74-year-old St. Francis Medical Center in Lynwood.
The agreement also included the sale of Verity Holdings, St. Vincent Dialysis Center, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.
Terms call for the 384-bed St. Francis to be sold for $420 million, the 381-bed St. Vincent to be sold for $120 million and the Seton properties to be sold for $70 million.
The agreement was filed in U.S. Bankruptcy Court in Los Angeles early this year seeking competing bids in an auction of the hospital properties. But since no other proposed bids exceeded KPC Group’s original $610 million bid — a so-called stalking horse bid — no auction was required, and the sale was finalized.
The Verity Health System board approved the KPC bid April 15. The court-approved bid will be submitted to the California attorney general for approval.
“Today marks an important milestone for KPC Health’s bid to acquire four Verity Health hospitals,” said Kali Chaudhuri, chairman of the privately owned Riverside-based KPC Group and KPC Health, based in Santa Ana, in a statement. “We look forward to working with Verity Health on a successful acquisition and welcoming these important community hospitals into our integrated healthcare system.”
The hospitals are among six that Verity Health purchased in 2015 from the financially strapped Daughters of Charity Health System, a Catholic nonprofit that ran safety-net hospitals for underserved patients.
Verity Health then moved its headquarters from Redwood City to El Segundo and declared Chapter 11 bankruptcy in August. It was previously managed by Integrity Healthcare, which is owned by Los Angeles billionaire Patrick Soon-Shiong.
Verity’s losses ran roughly $175 million a year on a cash-flow basis, according to the company’s bankruptcy filing.
KPC Group claims more than $10 billion in assets, including hospitals, clinics, schools, commercial real estate properties and agricultural research centers, according to its website.
KPC Health runs seven full-service medical centers in Orange, Riverside and San Bernardino counties. The company is also acquiring seven acute care hospitals and two skilled nursing facilities in Kansas, Utah, Mississippi, Arizona, Louisiana and Texas.
Its pending Verity Health acquisitions will bring its medical holdings across the nation to 20 hospitals and skilled nursing facilities.
“KPC remains very optimistic about the future of these hospitals, their employees, and the value they bring to delivering quality health care to many California communities,” Peter Baronoff, chief executive of KPC Health, and managing director of the KPC Group, said in a statement.