Tenet Healthcare to Offload 70% Stake in Brookwood Baptist Health for $910 Mn

Brookwood Baptist Health will continue as a joint venture with Baptist Health System. Tenet anticipates after-tax proceeds of about $790 million from the sale.

Tenet Healthcare, based in Dallas, has announced the sale of its 70% majority stake in Birmingham, Alabama's Brookwood Baptist Health to Orlando Health for approximately $910 million in cash.

This deal includes five hospitals and associated physician practices and operations.

The transaction covers Brookwood Baptist Medical Center, Princeton Baptist Medical Center, Walker Baptist Medical Center, Shelby Baptist Medical Center, and Citizens Baptist Medical Center.

Moreover, Brookwood Baptist Health will continue as a joint venture with Baptist Health System. Tenet anticipates after-tax proceeds of about $790 million from the sale.

The Financial Deal

As part of the agreement, Tenet’s subsidiary Conifer Health Solutions will enter a new and expanded 10-year contract to provide revenue cycle management services for the Birmingham hospitals and related operations.

“We’re grateful for the partnership with Baptist Health System, which has enabled us to collectively enhance the high-quality, compassionate care that Brookwood Baptist Health offers,” said Saum Sutaria, MD, chairman and CEO of Tenet Healthcare.

Addiitonally, Tenet reported that its equity interest in the Brookwood Baptist Health joint venture generated a pre-tax income of approximately $12 million and an Adjusted EBITDA less non-controlling interest of around $60 million over the 12 months ending June 30, 2024.

This excludes interest expenses of about $2 million and depreciation and amortization expenses of around $46 million. The company estimates it will record a pre-tax book gain of approximately $375 million from this transaction.

The deal is expected to close this fall, pending customary regulatory approvals, clearances, and closing conditions.

The integration of Brookwood Baptist Health into Orlando Health’s network is anticipated to bolster healthcare services for the Birmingham communities.

Earlier this year, in March, Tenet sold two hospitals and related operations in San Luis Obispo County, California, to Adventist Health for approximately $550 million.

This transaction aligns with Tenet's ongoing strategy to streamline operations and focus on core assets, enhancing financial flexibility and shareholder value.