Medical Properties Trust Announces Prospect’s Binding Agreement to Sell Managed Care Business to Astrana Health

Rhea-AI Summary

Medical Properties Trust (MPT) announced that Astrana Health has entered into a binding agreement to acquire Prospect's managed care business for approximately $745 million, plus the assumption of certain liabilities. MPT expects to receive about $200 million in total proceeds from this transaction, with the majority expected in the first half of 2025 and a $50 million payment by 2027. The deal, signed on November 8, is subject to regulatory approval and other closing conditions.

Positive

• Expected to receive $200 million in cash proceeds
• Transaction provides significant liquidity for MPT

Negative

• Majority of proceeds won't be received until first half of 2025
• $50 million payment delayed until 2027

Insights

Financial Analyst

This strategic transaction marks a significant development for Medical Properties Trust's (MPW) recovery efforts with Prospect. The $200 million expected proceeds represent a meaningful cash injection for MPW, which has been grappling with tenant challenges. The structured payment timeline, with the bulk of proceeds expected in H1 2025 and $50 million by 2027, provides some visibility on future cash flows.

The deal's total value of $745 million for Prospect's managed care platform demonstrates the underlying value of these assets. However, the extended timeline for receipt of proceeds means MPW will need to manage its liquidity carefully in the interim. This transaction could help stabilize MPW's relationship with Prospect and potentially improve the REIT's risk profile, though the delayed payment schedule suggests continued near-term challenges.

MPT Expects Approximately $200 Million in Cash Proceeds

BIRMINGHAM, Ala.--(BUSINESS WIRE)-- Astrana Health, a leading provider-centric healthcare company based in California, entered into a binding agreement on November 8 to purchase the majority of Prospect’s managed care platform for approximately $745 million and the assumption of certain liabilities. After satisfaction of obligations to the managed care platform’s senior creditor and other liabilities, MPT expects to receive approximately $200 million in total proceeds. The majority of this cash is expected to be received in the first half of 2025, while a $50 million payment is expected by 2027. The transaction remains subject to regulatory approval and other closing conditions.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospital real estate with 402 facilities and approximately 40,000 licensed beds in nine countries and across three continents as of September 30, 2024. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), expected re-tenanting of vacant facilities and any related regulatory approvals, expected outcomes from Steward’s Chapter 11 restructuring process, and the terms of the agreement described in this press release. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the risk that the outcome and terms of the bankruptcy restructuring of Steward will not be consistent with those anticipated by the Company; (ii) the risk that the Company is unable to successfully re-tenant the Steward portfolio hospitals, on the terms described herein or at all; (iii) the risk that previously announced or contemplated property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all; (iv) the risk that MPT is not able to attain its leverage, liquidity and cost of capital objectives within a reasonable time period or at all; (v) MPT’s ability to obtain debt financing on attractive terms or at all, as a result of changes in interest rates and other factors, which may adversely impact its ability to pay down, refinance, restructure or extend its indebtedness as it becomes due, or pursue acquisition and development opportunities; (vi) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us; (vii) the ability of our tenants and operators to operate profitably and generate positive cash flow, remain solvent, comply with applicable laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract patients; (viii) the risk that we are unable to monetize our investments in certain tenants at full value within a reasonable time period or at all, (ix) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; and (x) the risks and uncertainties of litigation or other regulatory proceedings.

The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our most recent Annual Report on Form 10-K and our Form 10-Q, and as may be updated in our other filings with the SEC. Forward-looking statements are inherently uncertain and actual performance or outcomes may vary materially from any forward-looking statements and the assumptions on which those statements are based. Readers are cautioned to not place undue reliance on forward-looking statements as predictions of future events. We disclaim any responsibility to update such forward-looking statements, which speak only as of the date on which they were made.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241108666805/en/

Drew Babin, CFA, CMA

Head of Financial Strategy and Investor Relations

Medical Properties Trust, Inc.

(646) 884-9809

dbabin@medicalpropertiestrust.com

Source: Medical Properties Trust, Inc.

FAQ

How much will MPT receive from Prospect's managed care business sale to Astrana Health?

MPT expects to receive approximately $200 million in total proceeds from the sale.

When will MPT receive the proceeds from Prospect's managed care business sale?

The majority of the proceeds are expected in the first half of 2025, with a $50 million payment expected by 2027.

What is the total value of the Prospect managed care business sale to Astrana Health?

The total value is approximately $745 million plus the assumption of certain liabilities.