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H2C INDUSTRY INSIGHTS: CAPITAL MARKETS

Trends, Mergers, and Industry News 

Week of February 5, 2024

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

  • UMass Memorial, Milford Regional Advance Agreement. Milford Regional Medical Center and UMass Memorial Health have signed a definitive agreement for a corporate affiliation. The organizations will now seek regulatory approval.

  • Regulatory Scrutiny.

    • The FTC is suing Novant Health (NC) in a move to block its $320 million acquisition of two hospitals from Community Health Systems (TN). The FTC is concerned the acquisition poses a risk of increased prices and diminished incentives for investing in quality and innovative care.

    • The FTC has begun a review of UPMC's plans to acquire Washington Health System. The FTC has been challenging mergers in which the deal would give one healthcare organization 30% of the market.

    • The Massachusetts Health Policy Commission has called for further review of the proposed clinical affiliation between Dana-Farber Cancer Institute, Beth Israel Deaconess Medical Center, and Harvard Medical Faculty Physicians.

    • Missouri AG Andrew Bailey has penned a letter complicating a proposed merger between Liberty (Mo.) Hospital and the University of Kansas Health System, stating that “clear conflicts” exist between Missouri and Kansas law.

  • Certificate of Need. The University of Vermont Medical Center (UMV) submitted a certificate-of-need application, seeking approval to buy its Fanny Allen campus for $17.3 million. UMV currently leases the 22-acre campus from Covenant Health.

  • Rehabilitation Joint Venture. Mercy Health (AK) and Lifepoint Health (TN) have completed a joint venture agreement to operate Rogers Rehabilitation Hospital, a 140-bed facility in Arkansas, which is now named Mercy Rehabilitation Hospital Northwest Arkansas.

  • New System Launch. Hills & Dales Healthcare (MI) and United Healthcare Partners (MI) have finalized their merger to launch Aspire Rural Health System, a three-hospital system. The two entities signed a nonbinding letter of intent in November.

Trends & Mergers: Higher Education

Not-for-Profit Higher Education Trend: Program and Job Cuts (1)

Higher Ed Not-for-Profit Headlines

  • The Current Trend. Several institutions have announced program and job cuts as a result of ongoing financial pressures and enrollment challenges.

    • University of New Hampshire: plans to cut up to 75 employees in IT, the campus art museum, and the health and wellness clinic, among others

    • University of North Carolina at Greensboro: identified 19 programs to eliminate, necessitated by low enrollment

    • Queens College: laid off 26 full-time faculty members in response to a mandate by the City of University of New York system administrators to release enhanced deficit reduction plans

    • Youngstown State University: intends to cut the art education, geography, music composition, jazz studies, and public and professional writing programs due to low enrollment, eliminating 13 faculty positions

    • Goddard College: moving online driven by enrollment issues, student modality preferences, and rising costs, resulting in a dozen layoffs

    • Connecticut State Colleges and Universities: offering employee buyouts to encourage retirement with projected savings of $45.9 million

    • University of Chicago: enacted a hiring freeze due to a $239 million budget deficit

  • Reversal of Post-Pandemic Trends (2). The number of people employed by colleges and universities had been rebounding since the pandemic, up 1.7% in fall 2022 compared to fall 2020. The increase was driven mostly by growth at four-year public and private institutions. The end of one-time COVID-related funds and continued challenges in enrollment and labor will pressure institutions to prudently manage expenses in 2024.

  • FAFSA Delays. The U.S. Department of Education announced it won’t transmit information from students who filled out the FAFSA to colleges until the first half of March, further shortening the timeline for institutions to make financial aid offers.

  • State Financial Aid. State lawmakers awarded about $14.9 billion in student financial aid in AY 2021-2022, a 1% increase compared to the year before. This increase is amid a time when full-time equivalent undergraduate enrollment dropped by 2.6% from the prior year.

  • Alleged Bias. The U.S. Education Department has added several colleges and universities to its list of institutions it is investigating for alleged discrimination based on shared ancestry. Recent additions include George Mason University, the University of North Carolina at Chapel Hill, the University of Virginia, San Diego State University, Arizona State University, Northwestern University, and Yale University.

  • Financial Aid Antitrust Settlements. Eight of 17 institutions have now reached preliminary settlement agreements in a federal financial aid antitrust lawsuit. The aggregate known settlements is over $151 million.

  • Partnerships. Arizona State University announced a partnership with OpenAI, giving students and faculty access to OpenAI’s most advanced iteration of ChatGPT. LaGuardia Community College announced a partnership with Airbnb to offer short-term housing solutions.

  • Merger Announcement. The University of Redlands (CA) announced a merger with nearby Woodbury University, following the signing of a letter of intent in early December. Both universities are small liberal arts institutions in the greater Los Angeles area. Redlands has been involved in two other mergers in the last five years.

  • Forbearance Agreement. Lake Erie College (OH) entered into a forbearance agreement with lenders after falling short of its days’ cash on hand covenant it made when it sold municipal bonds to finance campus facilities projects. Forbearance is considered a default event.

(1) Inside Higher Ed “2024 Begins With Wave of Job Cuts” on January 25, 2024

(2) Inside Higher Ed “Higher Ed Workforce Rebounding From Pandemic” on January 23, 2024

Key Rate Updates

Source: U.S. Department of the Treasury, Bond Buyer, Investment Company Institute, Bloomberg and Refinitiv/TM3. Data as of February 2, 2024.


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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