Fitch: HMA's Credit Not Punctured in Board Firings

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Although shareholders recently voted to oust the board of directors at Naples, Fla.-based Health Management Associates, the for-profit hospital company's credit ratings likely will not be affected immediately, according to a Fitch Ratings news release.

Last week, Health Management's largest shareholder, New York City-based hedge fund Glenview Capital Management, announced that a majority had voted to remove and replace the company's current board of directors with Glenview's eight nominees. Health Management confirmed its new board members last Friday.

Fitch analysts said it will review Health Management's "BB-" credit ratings as more details emerge regarding the company's pending merger with Franklin, Tenn.-based Community Health Systems. At the end of July, CHS agreed to acquire Health Management for $3.9 billion in cash and assume $3.7 billion of Health Management's debt. Fitch said the offer represents a multiplier of 8.2x Health Management's EBITDA in the last 12 months, similar to Dallas-based Tenet Healthcare Corp.'s pending acquisition of Nashville, Tenn.-based Vanguard Health Systems (7.9x EBITDA in the last 12 months).

The transaction still requires several regulatory approvals, and at least 70 percent of Health Management shareholders will have to vote in favor of the merger. Before Health Management and CHS agreed to their deal, Fitch put Health Management's credit ratings on "rating watch negative" due to the company's poor volumes, lagging operating trends, leadership transitions and government investigations.

More Articles on Health Management Associates:
Mountain States Health Alliance Names Alan Levine CEO
HMA's Tennova to Cut 75 Jobs
HMA Meets Poor Projections, Q2 Profit Tumbles 80%

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