Erlanger Hospital Baroness Campus. Credit: Erlangerhealth.

StoneBridge Healthcare has provided a letter of intent (LOI) to acquire Erlanger Health System in Tennessee, US for a total consideration of f $475m.

The Erlanger Health System operates six medical hospitals and seven emergency departments, including a children’s hospital and a Level I Trauma Center.

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It is affiliated with the University of Tennessee College of Medicine Chattanoga.

According to StoneBridge, the healthcare system has faced financial issues that have been worsened by the pandemic.

The proposed transaction value of $475m is expected to allow the health system to pay off all of its liabilities and have ‘substantial reserves’ of cash remaining.

Furthermore, StoneBridge offered to a make a significant investment in order to financially stabilise Erlanger to enable the health system to continue its services in Hamilton County and the surrounding communities.

StoneBridge plans to invest $275m over the next four years for capital improvements at Erlanger, as well as fully fund the $80m employee pension fund shortfall.

StoneBridge Healthcare CEO Joshua Nemzoff said: “StoneBridge has been tracking the situation at Erlanger for over a year and we believe that now is the time for us to act and offer our assistance to Erlanger, safeguarding its legacy as a vital institution for the region.

“In order for Erlanger to survive and thrive against these systems, they need significant resources. StoneBridge Healthcare can help. We have the expertise, the resources, and the financial strength to provide all of the things that Erlanger needs to compete and succeed.”

The LOI is not subject to financing contingency and a binding agreement is set be finalised following comprehensive due diligence, added StoneBridge.

In 2018, Erlanger agreed to purchase Murphy Medical Center in North Carolina, marking its first hospital outside of Tennessee.