Medical City Plano has acquired Trinity Regional Hospital Sachse (“Trinity” or the “Hospital”), a 32-bed acute care facility that opened two years ago in an up-and-coming suburb of Dallas, for approximately $41 million plus other liabilities. The transaction was approved by the U.S. Bankruptcy Court for the District of Texas, Dallas Division following a competitive auction process conducted by SC&H Capital, a leading investment bank specializing in M&A advisory for middle-market companies. The transaction closed on January 31, 2024.
The facility is now officially renamed Medical City Sachse, a campus of Medical City Plano, part of the Medical City Healthcare system, which is a wholly owned subsidiary of HCA Healthcare, Inc. This acquisition enables the facility to continue providing uninterrupted care for the community, backed by the strength, resources, and expertise of Medical City Healthcare. All current employees have been warmly welcomed to the Medical City Healthcare family.
SC&H Capital was engaged pre-bankruptcy in January of 2023 to work in conjunction with MeadowLark Advisors, Trinity’s restructuring team, to identify a buyer able to recapitalize operations and improve physician alignment to better serve the needs of the Sachse community. The construction of the Hospital was financed via a series of municipal bonds committed from multiple investors, however, immediately before closing, one of those investors withdrew their commitment. The developer decided to move forward with the project despite lacking adequate capital and a comprehensive operational plan. As a result, the hospital struggled with physician recruitment, patient volumes, and fully achieving accreditation for its tertiary care spaces (ICU) given its need for minor reconfigurations. Additionally, the real estate the hospital sits on was subject to an above-market ground lease.
Despite these hurdles, SC&H was successful in generating several letters of intent and a potential stalking horse bidder, however, all offers called for an asset purchase free and clear of all liens and encumbrances and the land to be included in the purchase. At that point, the board of directors decided to have MeadowLark Advisors continue their restructuring efforts using an additional tranche of funding from one of the bondholders. SC&H communicated the plan to the market and key prospects remained interested but insisted both the facility and land had to be a part of the acquisition.
SC&H continued to work with MeadowLark Advisors and kept prospects apprised of the restructuring efforts being made including revisions to and certification of the ICU, additional physician alignment, and efforts towards bringing the land into the hospital. After Trinity decided to file chapter 11, SC&H reached back out to the marketplace and generated 3 qualified bids, all well below what creditors were prepared to accept. However, through competitive pressure at the auction, Medical City Plano was designated the winning bidder with a bid valued at close to 5 times their opening bid.
