Astrana Health to acquire Prospect Health for $745M

Astrana Health (ASTH) announced that it and its affiliated professional entities have entered into a definitive agreement to acquire Prospect Health, which consists of certain businesses and assets relating to Prospect Health System, including its California licensed health care service plan, medical groups in California, Texas, Arizona and Rhode Island, management service organization, pharmacy, and Alta Newport Hospital dba Foothill Regional Medical Center, a fully accredited acute care hospital with 177 licensed beds. Prospect is an integrated care delivery system which facilitates and coordinates the delivery of high-quality clinical care for all. With a network of around 3,000 primary care providers and 10,000 specialists across Southern California, Texas, Arizona, and Rhode Island, Prospect is enabling providers to deliver payer-agnostic, patient-centered care to approximately 610,000 members across Medicare Advantage, Medicaid, and Commercial lines of business. Astrana plans to make significant investments in Prospect and its infrastructure in order to further enhance access and quality of care for patients in local communities. Under the terms of the agreement, subject to satisfaction of customary conditions, Astrana plans to acquire the Prospect businesses and assets for a purchase price of $745M. Astrana expects to fund the transaction using a combination of cash on hand and a $1.095B 364-day senior secured bridge commitment provided by Truist Bank and J.P. Morgan. Prospect is expected to generate approximately $1.2B in revenue with expected adjusted EBITDA of approximately $81M for the twelve months ending December 31. Astrana’s acquisition of Prospect is expected to close in the middle of 2025, subject to regulatory approval and other customary closing conditions. J.P. Morgan Securities is serving as exclusive financial advisor to Astrana, and Russ August & Kabat is serving as legal advisor for Astrana. Morgan Stanley & Co. is serving as lead financial advisor to Prospect, and Sheppard, Mullin, Richter & Hampton is serving as legal advisor to Prospect. Guggenheim Partners is also serving as a financial advisor to Prospect.