LifePoint signs $250 million deal with Medical Properties Trust, Springstone Health Opco’s Management Group

LifePoint Health Inc. will acquire a majority stake in Springstone Health Opco US Behavioral Partners management group. The deal values ​​the company at $250 million.

LifePoint Health, a Brentwood, Tenn.-based diversified healthcare operator, will pay $200 million to cover interest on debt that REIT Medical Properties Trust Inc. (NYSE: MPW) holds with US Behavioral Partners from a previous deal.

Medical Properties Trust will retain a minority stake in US Behavioral Partners. It will also retain ownership of the facilities US Behavioral Health operates after the deal closes, the release said.

The deal is expected to close in the first half of 2023, according to a news release.

LifePoint remained tight-lipped about the details and what this means for the future of the company and for US behavioral partners.

“We are excited at the prospect of welcoming Springstone to the LifePoint network,” Emily Serk, vice president of communications for LifePoint, said in an email. “However, this potential deal is still at a very early stage.”

Representatives for US Behavioral Partners and Medical Properties Trust did not respond to requests for comment.

In 2010, PE firm Welsh, Carson, Anderson & Stowe (WCAS) invested $100 million in the Louisville, Kentucky-based predecessor of US Behavioral Partners Springstone Inc.

Springstone Inc. focuses on building a system of de novo inpatient addiction and psychiatric hospitals and outpatient sites. In 2021, WCAS sold Springstone to Medical Properties Trust.

That deal had a price tag of $950 million. About $750 million went toward the acquisition of Springstone’s facilities, while about $200 million in debt financing went into the new operating company for Springstone, owned by Springstone management, US Behavioral Partners.

Today, US Behavioral Partners operates 18 drug addiction and psychiatric hospitals in Springstone and 35 outpatient locations in nine states.

“Adding the talented team to Springstone’s depth of experience and platform to deliver high-quality behavioral health care will accelerate our ability to expand these critically important services to communities that need them,” said David Dill, Chairman and CEO of LifePoint Health, in a release.

Before the deal, LifePoint owned and operated three behavioral health hospitals, which it acquired through its deal to acquire parts of Louisville, Kentucky-based Kindred Healthcare.

Following this deal with Medical Properties Trust and US Behavioral Partners, LifePoint will operate more than 60 hospital and community-based behavioral health units, as well as 21 hospital-based behavioral health facilities.

LifePoint, owned by private equity firm Apollo Global Management LLC, will have more than 315 health care sites that include community hospital campuses, rehabilitation hospitals and post-acute care facilities after the deal closes.

Medical Properties Trust said in a news release that the deal demonstrates its interest and ability to profitably acquire health care companies, run them for a period of time, separate them from their real estate assets and turn around the resulting operating companies.

Medical Properties Trust is also one of the few healthcare REITs with an interest in behavioral health, a space that is so fragmented and underdeveloped that it hasn’t seen much investment in the real estate aspect of the sector.

Recently, healthcare REITs with heavy exposure to the senior living and skilled nursing industries are looking at behavioral health — especially addiction treatment — as a major play for struggling facilities as well as a place for growth.

CareTrust REIT Inc. (Nasdaq: CTRE), which operates 228 senior-focused facilities in 29 states, has a deal with Landmark Recovery to convert some facilities into addiction treatment facilities. However, CEO David Sedgwick said the behavioral health industry “is very fragmented and immature in terms of institutional quality, governance and credit.”

Sabra Health Care REIT Inc. (Nasdaq: SBRA) began looking seriously into behavioral health in 2017. It is now investing $800 million in behavioral health as part of plans to diversify its portfolio.
Ventas Inc. (NYSE: VTR), one of the largest owners of U.S. healthcare real estate, has acquired a 72-bed hospital operated by Eating Recovery Center for $58 million.

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