SSG Capital Advisors acted as investment banker to Philadelphia Academic Health System (PAHS) and its operating subsidiaries St. Christopher’s Healthcare and affiliated physician practice groups in the sale of substantially all their assets to an affiliate of Tower Health and Drexel University.
The sale was processed 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, St. Christopher’s is a fully accredited children’s hospital providing pediatric care in a child-friendly and family-oriented environment. 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, 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 potentially 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 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.
