Bigger Doesn’t Mean Better in Every Deal
The for-profit hospital space kept up its merger and acquisition spree in July, with the announcement from Community Health Systems Inc. (NYSE: CYH) that it would pay a total of $7.6 billion for Health Management Associates Inc. (NYSE: HMA). The deal had been rumored ever since the acquistion of Vanguard Health Systems Inc. (NYSE: VHS) by Tenet Healthcare Corporation (NYSE: THC) for $4.3 billion, announced just a month earlier.  (See The Health Care M&A Monthly, July 2013.) 
Reactions from industry analysts were decidely more cautious, however, for several reasons. First, HMA management and its largest shareholder, Glenview Capital  Management, LLC, had been waging a public battle over control of the board. Glenview, with a 14.6% stake in HMA, was threatening to launch a proxy battle.
Second, Community Health had just reported a sharp decline in Q2 profits, citing a 5.1% drop in patient admissions and higher-than-expected bad debts. HMA also reported weak operating performance in Q2, new investigations and CEO Gary Newsome’s ……Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today