Ardent Health Services to be Acquired by Ventas for $1.75 Billion

Creates Growth Platform in Attractive U.S. Hospital Real Estate Market

Ventas to Retain Owned Real Estate and Separate Operations into Company Led by Ardent Management Team

CHICAGO--Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) announced today that it has signed a definitive agreement to acquire privately-owned Ardent Medical Services, Inc. (with its affiliates “Ardent Health Services”), a premier provider of health care services and one of the ten largest for-profit hospital companies in the U.S., for $1.75 billion in cash. The transaction is expected to be immediately accretive to Ventas’s normalized funds from operations (“FFO”) per share by $0.08 to $0.10 in the first full year after close.

“This transaction builds upon our excellent track record of executing innovative and value-creating opportunities, and solidifies our leadership position in healthcare real estate”

Ardent Health Services is owned by private equity funds managed by Welsh, Carson, Anderson & Stowe. Based in Nashville, Tennessee, Ardent Health Services and its subsidiaries own and operate leading health systems in major markets in the U.S. Ardent Health Services currently generates approximately $2 billion in annual revenues with over 50 percent of its revenue derived from commercial (private) payors.

Concurrent with the closing of the transaction, Ventas intends to separate Ardent Health Services’ hospital operations from its owned real estate and sell the hospital operations to one or more newly formed entities (collectively, “Ardent”) owned by current management of Ardent Health Services, other equity sources, and up to 9.9 percent owned by Ventas. Ventas and Ardent will enter into pre-agreed long-term triple-net leases with an expected going in cash yield exceeding 7 percent and annual escalators estimated at 2.5 percent. The EBITDARM to rent coverage ratio for the purchased facilities is expected to be approximately 2.9x in year one.

Ventas will own ten high-quality hospitals (and related real estate) operated by Ardent under the names BSA Health System in Amarillo, Texas, Hillcrest HealthCare System in Tulsa, Oklahoma and Lovelace Health System in Albuquerque, New Mexico. These assets include acute care, heart, rehab and women’s health hospitals, comprising approximately 3.2 million square feet and 2,045 beds.

“This transaction builds upon our excellent track record of executing innovative and value-creating opportunities, and solidifies our leadership position in healthcare real estate,” said Ventas Chairman and Chief Executive Officer Debra A. Cafaro. “The addition of Ardent’s platform, which includes high-quality assets with significant market share in three key markets, and a highly-regarded hospital management team, creates a strong avenue for growth in the attractive hospital real estate market. The transaction also increases our diversification by property type and operator. We look forward to partnering with Ardent’s seasoned management team as a best-in-class operator to grow its business.”

David T. Vandewater, President and Chief Executive Officer of Ardent, said, “We have built a leading U.S. hospital franchise, currently focused on three key markets with incredible growth potential. The current management team and Ardent employees are excited about this agreement with Ventas and we look forward to expanding Ardent and capitalizing on the significant growth opportunities we see in the immense, highly fragmented U.S. hospital market. With this strong capital and operating partnership, we can expand while continuing to serve patients and our communities.”

Transaction Benefits

  • Accretive Transaction/Leverage Neutral. This transaction is expected to be immediately accretive to Ventas’s normalized FFO per share by $0.08 to $0.10 (cash) in the first full year after close on a leverage neutral basis. Ventas’s going in cash unlevered yield on the Company’s aggregate net investment is expected to exceed 7 percent. Ventas will maintain its strong credit profile and balance sheet, and there is no expected change to the Company’s credit rating or outlook.
  • Increases Ventas’s Presence in Attractive Industry. The $1 trillion U.S. hospital market (by revenues) is benefiting from attractive dynamics, including an increase in U.S. hospital expenditures, increasing emergency room visits and admissions, a growing 65 and over population, and more than 10 million newly insured individuals. With Ventas’s support, Ardent will be well positioned to drive future consolidation opportunities in a highly fragmented market. The Medicare Payment Advisory Commission (MedPAC) has recommended a 3.25 percent increase in Medicare rates for acute-care services for fiscal year 2016.
  • Provides Follow On Investment Opportunities. Ventas expects to participate in Ardent’s future hospital acquisitions. Ardent has a robust pipeline of attractive revenue-enhancing investment opportunities in its portfolio, in addition to a visible external growth pipeline.
  • Adds High-Quality Hospital Portfolio with >50 Percent Commercial (Private) Payor Mix and Substantial Market Share. Ardent is a top ten for-profit hospital operator in the U.S. with high-quality hospital systems with strong payor and provider relationships and substantial market share in three key markets. Over 50 percent of Ardent’s revenue base is derived from private pay commercial payors.
  • Ardent Will Continue to be Run by an Exceptional, Tenured Management Team. Ardent’s best-in-class management team will continue to lead the company, and its strong employee base will remain in place. Ardent will remain headquartered in Nashville with no expected changes to its current operations.
  • Enhances Diversification. The transaction enhances Ventas’s rental revenue diversification by property type and operator. U.S. acute care hospitals will represent approximately 6 percent of Ventas’s pro forma net operating income (“NOI”).
  • Extends Proven Track Record of Fueling Operator Growth. Ventas has a successful track record of identifying and growing scalable operating platforms as evidenced by the dramatic growth of Lillibridge Healthcare Services and Atria Senior Living since investment by Ventas. The Ardent acquisition adds a best-in-class operator and will expand Ventas’s industry leadership across healthcare segments.

Approvals, Timing and Funding 
The transaction is subject to the satisfaction of certain specified closing conditions, including receipt of regulatory approvals, and is expected to close mid-year 2015.

Ventas expects to fund the transaction on a leverage neutral basis with proceeds from previously announced dispositions and loan repayments, bank debt and long-term debt and equity capital sources.

About Ventas 
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of more than 1,600 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, skilled nursing facilities, hospitals and other properties. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. More information about Ventas and Lillibridge can be found at and

About Ardent Health Services 
Ardent Health Services invests in quality health care. In people, technology, facilities and communities, Ardent makes considerable investments, producing high quality care and extraordinary results. Based in Nashville, Tenn., Ardent’s subsidiaries own and operate acute care health systems in three markets – Amarillo, Texas; Tulsa, Okla. and Albuquerque, N.M. – that include 14 hospitals and three multi-specialty physician groups. For more information, go to