Orlando Health has agreed to purchase Tenet Healthcare’s 70% majority stake in Brookwood Baptist Health in Birmingham, Alabama, for approximately $910 million in cash (after-tax proceeds of approximately $790 million).
Brookwood Baptist Health consists of five hospitals in central Alabama with more than 1,700 beds, more than 70 primary and specialty care clinics, approximately 1,500 affiliated physicians and more than 7,300 employees. It was formed in 2015 following a merger agreement between Tenet and Baptist Health System.
Orlando Health, a nonprofit, is a 3,487-bed system that includes 17 hospitals, 10 freestanding emergency rooms and nine hospital-at-home care programs. Four more hospitals and six freestanding emergency rooms are under development. It will manage the day-to-day operations of Brookwood Baptist Health in partnership with Baptist Health System. Baptist Health System will remain part of the partnership and remain a faith-based organization.
“We are pleased to have Orlando Health join Brookwood Baptist Health as a majority and managing partner. They have a proven track record of delivering high-quality health care services and are well-positioned to invest in our community. We are excited to welcome them to Birmingham and to jointly support the faith-based mission of Brookwood Baptist Health,” Amy Allen, president and CEO of Baptist Health System, said in a statement.
Thibaut van Marcke, who currently serves as senior vice president of Orlando Health’s Southeast Region and president of Orlando Health’s Dr. P. Phillips Hospital, will lead Orlando Health’s efforts in Alabama.
The transaction is expected to close in the fall of 2024, subject to regulatory approval. Upon closing, the system’s name will be changed to Baptist Health.
Under the agreement, Tenet’s Dallas-based subsidiary Conifer Health Solutions will sign a new and expanded 10-year contract to provide revenue cycle management services for Birmingham hospitals and related operations.
In April 2024, Tenet announced the completion of the sale of its four Orange County and Los Angeles County hospitals and related operations to UCI Health. Tenet also completed the sale of its two San Luis Obispo hospitals and related operations to Adventist Health.
For the 12 months ended June 30, 2024, publicly traded Tenet (NYSE: THC) said its equity interest in the Brookwood Baptist Health joint venture generated pre-tax income of approximately $12 million and Adjusted EBITDA less non-controlling interests of approximately $60 million, excluding interest expense of approximately $2 million and depreciation and amortization expense of approximately $46 million. The company estimates it will record a pre-tax accounting gain of approximately $375 million as a result of this anticipated transaction.
