Shares of Quorum Health cratered Wednesday, losing more than half of their value, after investment firm Kohlberg Kravis Roberts said talks with the hospital operator have turned to exploring “a reorganization […] in which no assurances can be given that holders of […] common stock will receive any consideration.”
Fund managers under the KKR umbrella in December told the leaders of Brentwood-based Quorum they were willing to lead a recapitalization that would restructure the company’s big debt load and pay shareholders $1 per share. On Tuesday, KKR said such a buyout now looks to be off the table and that, if there is to be a deal, it will likely come with little or nothing for equity investors.
In a statement, Quorum executives said they continue to have “constructive discussions” with KKR and other debt and equity holders about restructuring the company’s finances, which have been weighed down by a $1.2 billion debt load for years.
“Our objective is to reach a consensual agreement that enables us to reduce debt and annual interest expense and enhance our ability to maximize value and invest in future growth,” the company said in an email statement. “We fully expect our hospitals and affiliates to continue normal operations throughout this process, and we remain focused on providing outstanding care and support to patients in the communities we serve.”
At about 1:30 p.m. Central, Quorum shares (Ticker: QHC) were trading at about 47 cents, down 57 percent from their Tuesday close. Volume was massive: More than 3 million shares had already traded versus a daily average of about 135,000.
KKR owns about 9 percent of the equity as well as about $280 million of the debt of Quorum, which was spun out of Community Health Systems with 38 hospitals in the spring of 2016. Another New York-based investor, York Capital Management, last September said it, too, wants big changes at the local company, which now owns 24 health centers.
This story first appeared in our partner publication the Nashville Post.