Presence Health financials released – Health Care News
Presence Health, now in due diligence to be acquired by Ascension, is behind in its turnaround plan, the system’s management told bond investors in a call Thursday, Modern Healthcare reports.
Presence CEO Michael Englehart said the Catholic-sponsored system lost some of its operational turnaround momentum because of the merger talks with Ascension and the announced divestiture of two downstate hospitals to OSF HealthCare.
Those deals were announced about one week apart; Ascension’s blockbuster deal to acquire Chicago-based Presence was unveiled on Aug. 22.
In presentation slides for the call, Englehart reported that Presence is $24 million behind in its turnaround, or about a full quarter’s worth of improvements.
“We continue to charge ahead and to be confident in executing our turnaround plan,” he noted.
In a statement Thursday, a Presence spokesman said the health system is “catching up on two other (turnaround) initiatives resulting from the resources required to successfully manage the OSF and Ascension transactions this summer.”
Missing turnaround goals can pose problems for acquisition targets.
Earlier this month, Partners HealthCare Chief Financial Officer Peter Markell was quoted in the Boston Business Journal that Partners was rethinking its proposed plan to acquire Care New England, Rhode Island’s second-largest hospital system.
Markell said Partners wanted to see a viable turnaround plan before going forward with the merger given Care New England’s $46 million operating loss through nine months ended June 30 and a recent bond rating downgrade.
For the six months ended June 30, Presence posted operating income of $11 million, which was $14 million short of the turnaround plan, the company noted.
That was a very thin margin on revenue of $1.3 billion in the first half.
Englehart launched the system’s turnaround plan in April, 2016, following a $186 million operating loss in 2015. Presence narrowed the operating loss to $40 million in 2016.
Ascension, the nation’s largest not-for-profit hospital company, has agreed to acquire Presence and operate it in a joint venture called Amita Health that Ascension already has with Adventist Midwest Health in Chicago’s northwest suburbs.
Catholic-sponsored Ascension based in St. Louis owns 141 hospitals nationally and had 2016 revenue of $21.9 billion.
This story originally appeared on the website of Crain’s sister publication Modern Healthcare.