Orlando Health has offered to buy bankrupt Steward Health Care's properties on Florida's Space Coast for $439 million, according to court documents filed Wednesday.
Qualified and binding purchase agreements include Rockledge Regional Medical Center and Melbourne Regional Medical Center in Brevard County, and Sebastian River Medical Center in Indian River County. The transaction also includes several Steward medical clinics in those areas.
According to the documents, Steward designated Orlando Health the “stalking horse bidder,” which is the bidder that will first negotiate a purchase agreement with the bankruptcy debtor. The bidder will set a minimum price and protect the debtor from low bids.
Bidding will be held if higher bids are received by Aug. 26. A bankruptcy court-approved auction, if required, will take place Aug. 29. A sale hearing has been postponed from its original date and is now scheduled for Sept. 10.
“We look forward to reviewing any additional bids we receive between now and Aug. 26 and are encouraged by the confidence Orlando Health has placed in our North Florida operations,” Steward President Marc Rich said in a news release.
The sale price is subject to adjustment based on a series of factors in the purchase agreement. The transaction is subject to bankruptcy court and regulatory approval and is expected to close by the end of the year.
Steward's eight Florida hospitals are set to be included in a second round of sales in the bankruptcy proceedings. Steward also owns Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County, and the Florida Medical Center in Broward County.
Steward purchased Brevard Hospital from Westhoff Health System and Sebastian River Hospital from Community Health System. Sebastian River completed an $80 million expansion in June 2020.
Orlando Health, a private, not-for-profit chain with 17 hospitals in Florida, has been busy expanding its footprint: Last week, it inked a $910 million deal to become managing partner of Brookwood Baptist Health in Alabama, which includes five hospitals and associated clinics.
Dallas-based Steward Health filed for Chapter 11 bankruptcy protection in May and is in the midst of a lengthy and sometimes contentious process to sell assets in several states. The private, for-profit health system has struggled to sell many of its assets, including five hospitals in Massachusetts.
After months of uncertainty, Massachusetts Gov. Maura Healey on Friday announced a plan to rescue five hospitals in the state run by bankrupt chains.
Healy said the company will take control of St. Elizabeth Medical Center in Boston through eminent domain to ease the transition to new ownership. He said a tentative agreement has been reached to sell the remaining Steward facilities to a local nonprofit health care provider.
Healy said the state is using eminent domain because the landowner, Apollo Global Management, is delaying the transaction.
The state plans to offer Apollo $4.5 million for St. Elizabeths Medical Center, which Healy said is “fair market value,” before a takeover order for the facility is issued.
Steward's other two facilities, Kearney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, are set to close by the end of this month after receiving no viable offers. The closures have sparked an outcry from health care workers and local residents who worry patients will have longer wait times and their health will deteriorate.
Despite the protests, Mr Healy has refused to stop the closure of these hospitals, blaming Mr Steward and claiming that their conditions were so poor that other operators would not be able to take them on.
“This is the fault of the stewards and the actions of the stewards that have ruined them,” she said.
Steward has postponed a court hearing on the sale of a Massachusetts hospital until Aug. 22.
Earlier this week, Steward announced a deal to sell its 5,000-doctor Stewardship Physician Network for $245 million to Nashville-based Rural Healthcare Group, which is owned by private equity firm Kinderhook Industries.
The deal has drawn strong criticism from Massachusetts officials, including Sen. Elizabeth Warren, who wrote to X that the state has already lost two hospitals “to private equity's plundering of stewards.”
Steward said in court documents that it has more than $9 billion in liabilities, including $1.2 billion in loans, $6.6 billion in rental obligations, about $1 billion in unpaid bills and $290 million in unpaid wages and benefits.
This report used information from NPR affiliate WBUR in Boston.
