H2C INDUSTRY INSIGHTS: CAPITAL MARKETS
Trends, Mergers, and Industry News
Week of September 25, 2023
Trends & Mergers: Healthcare
Select Healthcare System M&A Newly Announced Deals
Source: Hospital and health system public releases; Becker’s Hospital Review
M&A Updates & Sector Headlines
Children’s Hospital Affiliation. Children’s Hospital of Philadelphia (“CHOP”) and Lehigh Valley Health Network have entered a formal affiliation agreement to build upon their strong existing relationship. The agreement will create a formalized process to direct patients to the appropriate level of care at CHOP or Lehigh Valley’s Reilly Children’s Hospital.
AHA Writes the FTC and DOJ. The American Hospital Association (“AHA”) send a 23-page letter to the Federal Trade Commission and Department of Justice requesting they not finalized their currently proposed adjustments to their merger guidelines, which in the opinion of the AHA do not provide meaningful guidance for hospital mergers and do not reflect the true intent of anti-trust law.
UF Health and Flagler Close. UF Health (the University of Florida’s academic medical center) completed its acquisition Flagler Health+ that was previously announced in May 2023. Flagler, a 335-bed hospital located in St. Johns County, will now operate under the new name “UF Health St. Johns”.
Senior Living Divestiture. Doylestown Health (PA) has finalized the sale of its Pine Run retirement community to Presbyterian Senior Living, a non-profit with a four-state footprint. The retirement community was sold for $80.6 million.
Froedtert and ThedaCare. The two Wisconsin health systems signed a definitive agreement to merge into a single 18-hospital system that was previously announced April 2023. The systems hope to close and launch the new system at the start of 2024.
Trends & Mergers: Higher Education
Not-for-Profit Higher Education Trend: Enrollment Strategies
Overview. Following years of enrollment losses, a trend accelerated by the COVID-19 pandemic, colleges and universities are evaluating new enrollment strategies to attract high school graduates.
Direct Admissions: To help meet enrollment benchmarks, one strategy colleges and universities are beginning to explore is “direct admissions’ models. The objective of a direct admissions model is to proactively offer seats to high school students who meet pre-determined academic thresholds without them having to apply.
The University System of Georgia’s governing board approved a ‘direct admissions model’ in its recent strategic plan with the goal of increasing in-state enrollment by roughly 11,300 in the next five years.
The University of Tennessee Board of Trustees approved a ‘guaranteed admissions policy’ to in-state high school students who finish in the top 10% of their high school graduation class or achieve a 4.0 or higher GPA.
Ten of the state of Michigan’s 15 public universities are participating in the Michigan Assured Admission Pact. Starting in fall of 2024, these universities will admit in-state high school graduates with a cumulative GPA of 3.0 or higher.
Stability. Large, state institutions including the University of Alabama, Oklahoma State University, and Arizona State University, among others are projecting record enrollment for the 2023 fall semester. The positive news follows a spring semester that saw sector-wide enrollment hold steady according to the National Student Clearinghouse Research Center.
Conclusion. As prospective students remain concerned about rising costs, as well as growing skepticism about the value of a four-year degree, colleges and universities must evaluate, and adjust if needed, their enrollment strategies to ensure they are able remain competitive in the fast-changing landscape of higher education.
Higher Ed Not-for-Profit Headlines
Student Loan Forgiveness. The Biden administration announced it will forgive about $37 million in student loans for more than 1,200 borrowers who attended the University of Phoenix between September 2012 and December 2014.
Methodology. Despite methodology changes to this year’s U.S. News and World Report Best College rankings to include social mobility measures, the top 10 remained largely unchanged with just one addition, Brown University, joining the list.
DACA. A federal judge in Texas ruled the Deferred Action for Childhood Arrivals program unlawful last week but did not call for an immediate end to the policy or its protections. Around 141,000 college students were eligible for or enrolled in DACA in 2021.
Budget Gap. The California State University system board approved raising tuition 6% annually for the next half-decade. As a result, Cal State expects to generate an additional $840 million, but well short of remedying the system’s looming $1.5 billion deficit.
Data Breach. The University of Minnesota confirmed that three decades’ worth of sensitive information about applicants, students and employees were accessed in a data breach. The university is now facing six lawsuits from individuals whose personal information was obtained in the data breach and who claim the university didn’t properly protect their personal information or promptly notify them of the breach.
FAFSA Mandates. Michigan, Pennsylvania and Massachusetts are all considering making completion of the FAFSA a high school graduation requirement. This year alone, at least four states have taken up FAFSA
requirements — Indiana, Oklahoma, Nebraska and Connecticut. industry.
Testing. Florida’s public university system authorized use of an SAT and ACT alternative, the Classic Learning Test (CLT), in admissions. Only 24,300 students have received CLT exam scores since its founding in 2015 as the test has mostly been used by religious colleges. The decision takes effect immediately.
Key Rate Updates
Source: U.S. Department of the Treasury, Bond Buyer, Investment Company Institute, Bloomberg and Refinitiv/TM3. Data as of September 22, 2023.
The information presented herein was obtained from resources believed to be reliable and accurate, but H2C Securities Inc. does not guarantee the accuracy or completeness or assume a responsibility for any loss which may result from the action by any person upon such information. Such information is subject to change without notice and is not intended as a recommendation, offer, or solicitation with the respect to the purchase or sale of any security.
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H2C Capital Markets Team
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William B. Hanlon III