| Item 1.01 | Entry into a Material Definitive Agreement. |
On July 24, 2023, certain subsidiaries (the “CHS Selling Entities”) of Community Health Systems, Inc. (the “Company”), entered into an Asset Purchase Agreement (“Purchase Agreement”) with Florida Health Sciences Center, Inc., a Florida non-profit corporation and certain of its affiliates (collectively, “Purchaser”). Pursuant to the Purchase Agreement, and subject to the terms and conditions set forth therein, Purchaser has agreed to acquire substantially all of the assets, and assume certain liabilities, from the CHS Selling Entities related to the following acute care hospitals (and certain related businesses): (i) Bravera Health Brooksville in Brooksville, Florida, (ii) Bravera Health Spring Hill in Spring Hill, Florida and (iii) Bravera Health Seven Rivers in Crystal River, Florida (the transactions contemplated by the Purchase Agreement, the “Transaction”). The total purchase price payable by Purchaser to the CHS Selling Entities at the closing of the Transaction is estimated to be approximately $280 million in cash, exclusive of anticipated purchase price adjustments for net working capital and the amount of capital leases assumed by Purchaser. Total cash consideration to be received, inclusive of these items, is estimated to be approximately $290 million.
The Purchase Agreement contains various representations, warranties and covenants made by the parties. The Purchase Agreement also provides for indemnification by the parties with respect to breaches of representations, warranties and covenants by such parties, as well as with respect to certain other indemnifiable matters specified in the Purchase Agreement.
The closing of the Transaction is subject to the satisfaction or waiver of certain closing conditions set forth in the Purchase Agreement, which includes the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as consent from Hernando County, the lessor, for assignment of the lease to operate certain of the hospitals. Consummation of the Transaction is currently expected to occur in the fourth quarter of 2023.
The Purchase Agreement may be terminated by either party under certain circumstances set forth in the Purchase Agreement, including if the Transaction is not consummated on or before December 29, 2023.
The Purchase Agreement provides that, at closing, the parties, and/or their respective affiliates, will enter into certain ancillary agreements, including transition services agreements under which certain CHS Selling Entities and/or an affiliate(s) thereof will provide certain information technology and operational transition services to Purchaser for a period of time following the closing.
The foregoing summary of the Transaction and the terms and conditions of the Purchase Agreement is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference. The representations, warranties, and covenants contained in the Purchase Agreement were made solely for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, may have been qualified in the Purchase Agreement by confidential disclosure schedules (which disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the Purchase Agreement), may be subject to limitations and contractual risk allocation mechanisms agreed upon by the parties to the Purchase Agreement, and may be subject to standards of materiality that differ from what an investor may view as material, and thus should not be relied upon as necessarily reflecting the actual state of facts or conditions.
On July 24, 2023, the Company issued a press release announcing the entry of the parties into the Purchase Agreement. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. These forward-looking statements are based on the Company’s current beliefs, understandings and expectations. These forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied include: (i) the parties to the Purchase
