US-based healthcare company Astrana Health has agreed to acquire Prospect Health, which operates a network of hospitals, outpatient centres, and physician practices, for up to $745m.
The deal includes Prospect’s licensed healthcare service plan (Prospect Health Plan), and medical groups in California, Texas, Arizona and Rhode Island (Prospect Medical Groups).
It also includes Prospect Medical Systems, RightRx pharmacy, and Alta Newport Hospital, operating as Foothill Regional Medical Centre, with 177 licensed beds.
The transaction is expected to be completed in mid-2025, subject to regulatory approval and satisfaction of other customary closing conditions.
Astrana intends to fund the transaction using a combination of cash on hand and a $1.09bn senior secured bridge commitment provided by Truist Bank and JP Morgan.
Astrana president and CEO Brandon Sim said: “The acquisition of Prospect would represent the combination of two organizations with decades-long histories of enabling independent providers and coordinating the delivery of high-quality care for all.
“We believe that our organisations share a common culture of patient centricity and a shared mission to provide high-quality care tailored to local communities.
“This strategic transaction will significantly expand our provider network and enhance our ability to offer increased access, quality, and value for our members.
“We believe this acquisition continues to solidify Astrana as our nation’s leading healthcare delivery platform, enabling us to deliver technology-driven, longitudinal, and patient-centred care to an estimated combined 1.7 million members across the country.”
Prospect is an integrated care delivery system with a network of around 3,000 primary care providers and 10,000 specialists in Southern California, Texas, Arizona, and Rhode Island.
The company is expected to generate around $1.2bn in revenue with an expected adjusted EBITDA of around $81m for the twelve months ending 31 December 2024.
In addition to the acquisition, Astrana intends to invest in Prospect and its infrastructure, to further improve access and quality of care for patients in local communities.
JP Morgan Securities served as the exclusive financial advisor, and Russ August & Kabat as the legal advisor for Astrana, on this transaction.
Guggenheim Partners served as a financial advisor, Morgan Stanley & Co. as lead financial advisor, and Sheppard, Mullin, Richter & Hampton as legal advisor to Prospect.
Prospect CEO Jim Brown said: “We are excited at the opportunity to partner with Astrana to build a larger, stronger, and more coordinated care delivery network which we expect will benefit our communities by increasing access, quality, value, and efficiency.
“We believe the strong cultural alignment, cohesive missions, and clear financial and operational synergies between our companies make Astrana the ideal partner for us.
“We look forward to working together to further our joint mission of delivering high-quality, affordable, and accessible care for all.”
