As part of its downsizing efforts, Tenet Healthcare Corp. said Tuesday that it had agreed to sell four hospitals in Arkansas for $134 million in cash to Triad Hospitals Inc.
The sale comes on the heels of Tenet's announcements last week that it would sell six other hospitals in Florida, Missouri, Tennessee and Pennsylvania. In all, the 10 hospitals to be sold would net about $600 million to the Santa Barbara-based company, with proceeds earmarked for general corporate purposes, including debt repayment, analysts said.
"This cash infusion will strengthen the balance sheet," said Frank Morgan, a health-care analyst with Jefferies & Co. in New York.
"It looks like they are getting pretty good prices."
In March, Tenet announced plans to shed 14 of its 114 hospitals nationwide, a departure from the firm's aggressive growth strategy a few years ago. Sales of at least two additional hospitals are expected soon, and the plan includes the closure of two other facilities, including Santa Ana Hospital Medical Center. Tenet, the nation's second-largest hospital chain, operates 40 hospitals in California.
Tenet is restructuring in the wake of numerous government probes that have hurt the company's reputation and finances. The chain is under investigation for certain Medicare billings and the way some of its hospitals recruit doctors.
Last month Tenet paid $54 million to settle federal allegations that doctors at its hospital in Redding performed unnecessary heart surgeries.
Since the investigations were launched a year ago, Tenet's stock has lost about two-thirds of its value. The company's shares closed up 14 cents Tuesday to $16.19 in New York Stock Exchange trading.
Under the deal for the four Arkansas hospitals announced Tuesday, Triad would pay $134 million in cash and assume $8 million of Tenet's debt. Plano, Texas-based Triad operates 49 hospitals in 17 states.