Transaction Will Allow Prospect to Retire Existing Debt; Sets Stage for Future Growth
LOS ANGELES–(BUSINESS WIRE)–Prospect Medical Holdings, Inc. announced today that Medical Properties Trust, Inc. (MPT) will invest $1.55 billion in Prospect through a sale-leaseback of the company’s real estate assets in California, Connecticut and Pennsylvania. Prospect’s properties in Rhode Island, New Jersey, and Texas are not included in the transaction. Prospect will use the funds to retire the company’s existing term-loan debt.
Prospect will continue to own and operate all its hospitals and ancillary operations in California, Connecticut, Pennsylvania, Texas and New Jersey as well as its Rhode Island joint venture. The transaction is expected to close in the second half of 2019, subject to customary closing conditions.
“This transaction allows us to unlock the value of those assets and focus our efforts on our core business – operating hospitals and implementing our Coordinated-Regional-Care population health model,” said Samuel S. Lee, Chairman of the Board and Chief Executive Officer of Prospect Medical Holdings, Inc. “In addition to strengthening Prospect financially, having MPT available for long-term capital provides us with a significant and experienced potential source of funding for improvements to our existing facilities as well as for future acquisitions and other growth opportunities.”
Lee added, “We believe this investment by MPT is a strong validation of our Coordinated-Regional-Care model and an endorsement of our ability to continue providing quality, compassionate, safe care at our hospitals and other facilities. At our current scale of approximately $3 billion of annual revenues, this transaction provides Prospect with the long-term platform necessary to improve and expand. We will intensify our focus and resources in our existing markets – where we can expand and drive more growth – to provide quality, cost-effective, coordinated care through our comprehensive network of hospitals, medical groups, and ancillary facilities.”
The MPT investment is in addition to the $200 million of investments in medical equipment, facility upgrades, and technologies that Prospect has made in its hospitals over the last three years. These investments support the company’s emphasis on clinical quality and have led to improvements at many of its hospitals. Most Prospect facilities either meet or perform better than the national average for Patient Safety Indicators. The company’s focus on improving the patient experience is validated by gains at most facilities in key measures reported by the Centers for Medicare & Medicaid Services.
Prospect has significantly invested in training the next generation of clinicians and pioneering medical breakthroughs in many communities, including through its academic medical affiliations with:
Prospect hospitals and medical groups have earned market and national quality awards for patient care and services including:
- 30 Five-Star Achievements by Healthgrades
- Specialty and Clinical Excellence Awards in Appendectomy, Cardiac, Critical Care, GI, Neuroscience, Orthopedics and Pulmonary by Healthgrades
- Top 5% in the Nation for Patient Safety by Healthgrades
- Five-star recipient for Cancer Program and Coronary Interventional Procedures (one of America’s 100 Best Hospitals for Coronary Intervention) by Healthgrades
- Medical groups awarded Elite Status by the America’s Physician Group (APG) in multiple markets
- Top 10 facilities for Medical Excellence by CareChex
- The Commission on Cancer/American College of Surgeons Outstanding Achievement Award (the highest national honor a cancer program can receive among over 1,500 accredited programs)
- 5-star status by CMS Star Rating Report
Additionally, the company’s hospitals achieved 90% participation in the most recent Agency for Healthcare Research and Quality (AHRQ) Survey on Patient Culture of Safety, scoring above the national average.
“We are delighted to enter into this long-term agreement with Prospect, and we hope to expand our relationship in the future as Prospect seeks additional growth opportunities,” said Edward K. Aldag, Jr., MPT’s Chairman, President and CEO. “Prospect and its management team have an innovative, proven approach to healthcare delivery and a unique understanding of running hospitals profitably in a state-based reimbursement environment. Like MPT, Prospect is committed to reinvesting in its hospitals and ensuring the communities it serves have access to the critical medical technology, equipment and services they need and deserve. We are pleased to invest with Prospect as we work to enhance the diversity of our portfolio across geography, operator relationships and service lines.”
About Prospect Medical Holdings, Inc.
Prospect Medical Holdings, Inc., a growing healthcare services company, offers a unique and innovative healthcare delivery model, known as Coordinated Regional Care, which emphasizes coordination of care and population health management, with an emphasis on preventive care. CRC helps coordinate quality care for patients through integrated networks of primary and specialty physicians, in affiliation with hospitals, clinics, other community-based providers and health plans. Prospect owns and operates 20 hospitals, as well as over 165 clinics and outpatient centers. Prospect also manages the provision of healthcare services for more than 500,000 members enrolled in its networks of over 11,000 primary care physicians and specialists. Prospect’s operations are located in California, Connecticut, New Jersey, Pennsylvania, Rhode Island and Texas. For more information, visit www.pmh.com.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a self-advised real estate investment trust formed to acquire and develop net-leased hospital facilities. The Company’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.