SSG Advises St. Christopher’s Hospital for Children in its Sale to Tower Health and Drexel University
SSG Capital Advisors, LLC (“SSG”) acted as the investment banker to Philadelphia Academic Health System, LLC (“PAHS”) and its operating subsidiaries St. Christopher’s Healthcare, LLC and affiliated physician practice groups (“St. Christopher’s” or the “Hospital”) in the sale of substantially all of St. Christopher’s assets to an affiliate of Tower Health (“Tower”) and Drexel University (“Drexel”). The sale was effectuated through a Chapter 11 Section 363 process in the U.S. Bankruptcy Court for the District of Delaware. The transaction closed in December 2019.
Based in Philadelphia, Pennsylvania, St. Christopher’s is a fully accredited children’s hospital providing world-class pediatric care in a child-friendly and family-oriented environment. St. Christopher’s is widely regarded as one of the best children’s hospitals in the nation, having won numerous awards for exceptional pediatric and emergency care. Among many other services, the Hospital operates a Level I Pediatric Trauma Center, a Level III Neonatal Intensive Care Unit, and a Verified Pediatric Burn Center.
Historically, the Hospital has achieved strong financial performance with consistent patient volume. However, starting in January 2018, St. Christopher’s cash flow was used to support the losses of Hahnemann University Hospital (“Hahnemann”), another wholly-owned subsidiary of PAHS. By July 2019, St. Christopher’s began facing liquidity constraints as a direct result of funding Hahnemann’s operating losses and was forced to seek relief under Chapter 11 of the U.S. Bankruptcy code along with PAHS and its other operating subsidiaries.
SSG was retained to explore the strategic alternatives available to PAHS, St. Christopher’s, Hahnemann, and the physician practice groups associated with each hospital. Shortly thereafter, SSG conducted an expedited marketing process and solicited offers from potential strategic and financial parties. After an extensive marketing process and discussion with potential interested parties, Tower Health and Drexel University’s $50 million bid for St. Christopher’s was determined to provide the estate and all stakeholders with not only the best recovery, but also the preferred outcome for the future for such a critical children’s hospital. Tower Health and Drexel will work with the physicians, medical professionals, students, residents, fellows, and staff of St. Christopher’s to continue their vital work on behalf of the children and families of Philadelphia.
SSG’s special situations expertise and healthcare experience enabled stakeholders to maximize value, preserve jobs, and maintain a vital children’s hospital in Philadelphia during a complex and highly publicized sale process.
Tower Health is a fast-growing regional and integrated healthcare provider system that offers healthcare and wellness services to a population of 2.5 million people. With more than 14,000 team members, Pennsylvania based Tower Health consists of Reading Hospital in West Reading; Brandywine Hospital in Coatesville; Chestnut Hill Hospital in Philadelphia; Jennersville Hospital in West Grove; Phoenixville Hospital in Phoenixville; Pottstown Hospital in Pottstown; as well as other services and facilities.
Drexel’s College of Medicine currently educates more than 2,000 future physicians, residents, biomedical scientists and health professionals. It is part of Drexel University, a leading center for higher learning in Philadelphia.
Other professionals who worked on the transaction include:
• Allen D. Wilen, Ronald Dreskin and Dion Oglesby of EisnerAmper LLP, Chief Restructuring Officer and financial advisors to Philadelphia Academic Health System, LLC and its operating subsidiaries;
• Jeffrey C. Hampton, Mark Minuti, Adam H. Isenberg, Monique Bair DiSabatino and Aaron S. Applebaum of Saul Ewing Arnstein & Lehr LLP, counsel to Philadelphia Academic Health System, LLC and its operating subsidiaries;
• Albert Mezzaroba of Genova Burns LLC, Independent Director to Philadelphia Academic Health System, LLC and its operating subsidiaries;
• Linda McDonough of 50 Words, LLC, strategic communications advisor to Philadelphia Academic Health System, LLC and its operating subsidiaries;
• Joanne M. Judge and Robert Lapowsky of Stevens & Lee, counsel to Tower Health;
• Stephen A. Cozen of Cozen O’Connor, counsel to Drexel University;
• Jean C. Hemphill, Vincent J. Marriott III and Tobey M. Daluz of Ballard Spahr LLP, counsel to Drexel University;
• Andrew H. Sherman and Boris I. Mankovetskiy of Sills Cummis & Gross P.C., counsel to the Official Committee of Unsecured Creditors;
• Thomas M. Horan of Fox Rothschild LLP, counsel to the Official Committee of Unsecured Creditors;
• Christopher J. Kearns, Andrew Cowie and H. Haywood Miller of Berkeley Research Group, LLC, financial advisor to the Official Committee of Unsecured Creditors;
• Deborah A. Reperowitz and Gretchen M. Santamour of Stradley Ronon Stevens & Young, LLP, counsel to MidCap Financial, LLC;
• Gregory F. Pesce of Kirkland & Ellis LLP, counsel to Tenet Healthcare Corporation and Conifer Health Solutions, LLC;
• Laura Davis Jones of Pachulski Stang Ziehl & Jones, counsel to Tenet Healthcare Corporation and Conifer Health Solutions, LLC;
• Stuart M. Brown of DLA Piper, counsel for Harrison Street Real Estate Capital; and
• David Smith and Richard A. Barkasy of Schnader Harrison Segal & Lewis LLP, counsel of the Pennsylvania Department of Health.