Health Management Associates HMA
HMA's incumbent board destroyed 25% of independent value before rushing a sale to Community Health Systems; Glenview's Fresh Alternative board protects the deal and recovers upside.
Thesis
Glenview Capital is running a consent solicitation to replace the entire Board of Health Management Associates (HMA) in August 2013, five days after HMA's directors announced a rushed sale to Community Health Systems for roughly $13.78 per share ($10.50 cash plus $3.28 in CYH stock plus a $0-$1 CVR). Under the sitting board, HMA has posted a 9% year-over-year EBITDA decline, a 30% earnings decline, received four new regulatory subpoenas, and — per the board's own presentation — seen independent value fall from $11.04 to $8.23. Glenview argues the deal was negotiated under duress and left material value on the table. Its proposed Fresh Alternative — eight healthcare turnaround, compliance and finance veterans chaired by Steven Shulman, supported by Alvarez & Marsal management — would strengthen the Community Proposal, improve compliance to shrink CVR penalties, and rebuild independent value as a hedge should the deal fail regulatory approval.
SCQA
HMA, a large for-profit US hospital operator, has agreed to sell itself to Community Health Systems for approximately $13.78 per share ($10.50 cash plus $3.28 in CYH stock plus a $0-$1 contingent value right).
Under the incumbent board, HMA posted a 9% EBITDA decline, 30% earnings drop, four new subpoenas, and per its own filing saw independent value fall from $11.04 to $8.23 — evidence the sale was negotiated in duress.
Glenview urges shareholders to execute its consent solicitation to remove all incumbent directors and install a Fresh Alternative slate of eight healthcare turnaround, compliance and finance veterans chaired by Steven Shulman.
A revitalized board would strengthen the variable CYH-stock and CVR components of the deal; illustratively, recapturing $85M of legal and process costs at 8.3x EBITDA equates to roughly $2.62 per share of recoverable value.
The three reasons
- 1
Incumbent Board oversaw 9% EBITDA decline, 30% earnings drop and 4 new subpoenas in 2013
- 2
Board admits independent value fell from $11.04 to $8.23 — deal negotiated under duress
- 3
Fresh Alternative of 8 healthcare turnaround and compliance veterans can strengthen the Community deal
Primary demands
- Replace entire HMA Board via consent solicitation with Glenview's 8-member Fresh Alternative slate chaired by Steven Shulman
- Install turnaround, compliance and finance experts to strengthen the pending Community Health Systems acquisition
- Restore financial transparency and public Q&A with shareholders during the pending strategic review
- Improve regulatory/compliance posture to minimize the $0-$1 CVR penalty exposure and protect the equity consideration
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (5)
Notes
Consent solicitation (not a standard proxy contest) timed between the July 25 HMA board presentation and the pending ~December shareholder vote on the Community Health Systems acquisition. Cleverly argues that replacing the board does NOT block the deal — it strengthens the variable CYH-stock and CVR components. Uses the board's own $11.04→$8.23 value statement against them (self-incrimination rhetoric) and frames the August vote as 'principles and values' vs. December's 'dollar values' vote. Fresh Alternative slate includes a future-HMA-chair Steven Shulman and Alvarez & Marsal's Peter Urbanowicz. Stake not disclosed in the deck itself (Glenview was widely reported ~14.6% but that is not stated here). Author attribution to Larry Robbins comes from disclaimer on page 22 listing him alongside Glenview entities; the document is presented corporately.