Hospital management company Tenet Healthcare announced plans to spin off revenue cycle management subsidiary Conifer Health Solutions as its own publicly traded company.
The initiative, slated to be completed by the first half of 2021, is being undertaken after an unsuccessful effort to sell the division to a willing acquirer. The Dallas, Texas company said that it received nine bids and three final offers for the company, but the acquisition options did not value the company appropriately.
Conifer will spin off in what Tenet has termed a “debt-for-debt exchange,” which will push debt onto the new company, while lowering debt for Tenet.
While the deal is not subject to a shareholder vote, Tenet will need to receive regulatory approval for the spinout.
“Conifer has unmatched experience and scale in offering revenue cycle management solutions for healthcare providers and a proven track record of delivering high-touch, high-value services to clients,” Tenet CEO Ronald A. Rittenmeyer said in a statement.
“Pursuing a tax-free spin-off is an important step forward in Conifer’s evolution, and we believe the business is well-positioned to capitalize on its growth opportunities as a standalone company.”
Tenet initially announced plans to divest from Conifer back in 2017 as part of a larger effort to shed costs and reduce its hefty debt load through a restructuring which involves laying off workers and cutting off underperforming business segments. Rittenmeyer said the company is in the midst of a cost cutting initiative, which would remove about $450 million in annual expenses by the end of the year.
Alongside the announcement of the spinoff plans, Tenet said that Conifer Health CEO Stephen Mooney would be leaving the company and replaced on an interim basis by COO Kyle Burtnett. Mooney had led Conifer since the company’s formation back in 2008.
Picture: tuk69tuk, Getty Images