Tensions between Naples, Fla.-based, publicly traded hospital chain Health Management Associates and its largest shareholder, Glenview Capital Management, have hit a fever pitch, as Glenview executives have proposed ousting Health Management's current board of directors.
In a filing with the Securities and Exchange Commission, New York City-based Glenview wrote a letter to other Health Management shareholders, saying it wanted to remove and replace the current board with "eight highly qualified, independent, newly elected directors."
The hedge fund blasted the for-profit operator's current financial structure and healthcare culture, saying it has lagged behind other major competitors and has left "significant room for improvement."
"For over a decade, despite the best efforts of well-intentioned individuals at the company, HMA has fallen short in their financial returns delivered to shareholders, their financial management and focus, our shared aspirational goals on regulatory compliance and the pursuit of a stable and effective leadership team," the filing reads. "Culturally, we believe that an overemphasis on aggregate growth at the expense of per share value creation and optimal return on capital has led to a substandard strategic and financial approach."
Glenview asked other shareholders to vote on the measure, which would bring in eight new board members. All new potential board members would all have hospital/healthcare experience as a CEO, CFO or COO and strong corporate finance backgrounds, among other skills, according to the filing.
In response, Health Management Vice President of Communications MaryAnn Hodge provided the following comment:
"HMA's board of directors recently engaged Morgan Stanley to assist with its ongoing consideration of strategic alternatives and opportunities available to HMA. HMA's board of directors is reviewing Glenview's filings and will respond in due course."
The past month for Health Management and Glenview has been rocky. In May, Health Management approved a poison pill, which essentially prevents the hostile takeover of a publicly traded company by a large shareholder. Glenview is the biggest shareholder of the for-profit hospital company with roughly 37.8 million shares, or 14.6 percent of Health Management's stock.
Health Management has also undergone major changes, announcing CEO Gary Newsome will retire from the chain July 31 and scaling back benefits for its 42,000 employees. It also announced it is working with two companies — banking firm Morgan Stanley and law firm Weil, Gotshal & Manges — to help manage the situation.
The recent news has led many financial analysts to speculate Health Management is nearing a takeover by another for-profit hospital chain or a private equity firm.
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