Health Management Associates’ ratings will not be immediately affected by a shareholder vote to replace the company’s board, ratings agency Fitch Ratings said in a statement released Monday.
HMA is the parent company of Knoxville-based hospital operator Tennova Healthcare.
“Fitch will review the ratings when there is better clarity on whether the shareholders are likely to approve the acquisition agreement with Community Health Systems (Community), as well as details of any plan by the new board to manage an operational turn-around of the company,” Fitch said.
Franklin, Tenn.,-based Community Health has struck a deal to buy Naples, Fla.-based HMA for a cash and stock deal valued at $7.9 billion, including assumption of debt.
Fitch Ratings also said it does not expect the new HMA board or the proposed sale to Community Health “to result in an event of default or acceleration of Health Management’s outstanding debt.”
HMA on Friday announced that a shareholder vote replace the company’s board had been certified. A majority of shareholders also approved the appointment of eight new board members nominated by HMA’s largest shareholder, hedge fund Glenview Capital Management.
The new board members are Steven Epstein, Mary Taylor Behrens, Kirk Gorman, Stephen Guillard, Joann Reed, John McCarty, Steven Shulman and Peter Urbanowicz.
Glenview, which is run by investment guru Larry Robbins, has been campaigning for months to replace the HMA board.
Glenview has said the Community Health purchase offer establishes a floor price and a new board should be able to negotiate a better deal.
Fitch Ratings questions whether a high purchase price is viable.
Community Health’s offer is “consistent with other transactions recently announced in the for-profit hospital space, most notably Tenet Healthcare Corp.’s planned acquisition of Vanguard Health Systems for $4.3 billion,” Fitch said.
The ratings agency added that negotiating a higher price “could be complicated by Health Management’s recently weak operating trends and regulatory issues.”
In its most recent financial report, Health Management said hospital admissions fell 6.7 percent in the second quarter.
Last month, Fitch place HMA’s ratings on “Negative Watch” following Glenview’s proxy solicitation to replace the board.
Click here for the Fitch Ratings website.
Click here for the HMA announcement.