Apollo Global Management Inc. booked a $1.6 billion gain for its 2013 buyout fund by selling its majority stake in rural hospital chain LifePoint Health to another Apollo fund.
The firm’s eighth flagship fund completed the sale to its ninth last month for $2.6 billion, after investing a total of $975 million in Brentwood, Tennessee-based LifePoint, according to a quarterly report obtained by Bloomberg. Other investors put up some of the money.
LifePoint was among several private equity-backed health-care firms that received government relief last year amid mounting costs from the pandemic, drawing criticism from lawmakers who said the cash should have come from investors, not taxpayers. The hospital chain was one of the biggest beneficiaries, with a $1.64 billion lifeline that included almost $650 million in grants and $991 million in loans.
“Private equity’s growing reach into our health-care system is concerning precisely because private equity’s mission to reap enormous profits often stands in direct conflict with the Hippocratic Oath,” U.S. Representative Bill Pascrell, a New Jersey Democrat, said in an emailed statement. “We need greater transparency and more cutting oversight of these private-equity firms.”
LifePoint needed taxpayer support to stay open and protect jobs, said spokeswoman Michelle Augusty, noting that it repaid the government loans ahead of schedule.
“All grant aid we received has been applied to LifePoint’s communities and only partially offset the $1.1 billion in extraordinary expenses and lost revenue that we incurred” because of the pandemic, she said.
Apollo wasn’t the only private-equity firm to orchestrate an uncommon exit from a for-profit hospital chain this year. Cerberus Capital Management and Leonard Green & Partners sold their remaining interests to insiders at the health-care companies they had backed, rather than selling to an industry competitor or pursuing an initial public offering.
Cerberus made roughly $800 million on its investment in Boston-based Steward Health Care, after paying $246 million in 2010 for what started as a chain of struggling Catholic hospitals.
As for Apollo, the buyer came from within.
The firm turned to its $24.7 billion flagship buyout fund that finished raising money in 2017. In April, the fund agreed to put up $2 billion alongside $600 million from other investors to buy LifePoint from the 2013 pool.