Novant Health is buying East Cooper Medical Center in Mount Pleasant as part of a deal for three Tenet Healthcare hospitals on the South Carolina coast, the two companies announced Friday.

Novant, a not-for-profit health system based in Winston-Salem, North Carolina, will pay about $2.4 billion in cash for East Cooper, Hilton Head Hospital in Beaufort County and Coastal Carolina Hospital in Jasper County, along with affiliated physician practices and other related hospital operations, according to the announcements.

“We’re excited about making this long-term investment for healthcare across our region,” said Carl S. Armato, Novant’s president and chief executive.

Armato said the deal extends a network that runs “from Wilmington to Conway and Myrtle Beach, and now Charleston, Hilton Head, and Hardeeville.”

“This investment is the next phase of a long-term vision to improve the health and wellness of communities across South Carolina,” he said.

What Novant is getting

East Cooper is the largest of the three hospitals. It had 140 licensed beds at the end of 2022, according to Tenet’s most recent annual report. Hilton Head Hospital had 93 and Coastal Carolina Hospital in Hardeeville had 44.

Together, the three hospitals and their related operations brought in about $552 million in revenue in the 12 months ended Sept. 30, Tenet said. They earned about $126 million before taxes and about $150 million in adjusted EBITDA, the measure of operating earnings Tenet reports.

Tenet’s ambulatory facilities in those markets, run by its United Surgical Partners International unit, are not part of the sale. Neither are Tenet’s other South Carolina hospitals, Piedmont Medical Center in Rock Hill and Piedmont Medical Center Fort Mill.

Why Tenet is selling

Tenet, based in Dallas, operates 61 acute care and specialty hospitals, and its USPI unit operates or has ownership interests in more than 480 ambulatory surgery centers and surgical hospitals, according to the company.

Tenet expects after-tax proceeds of about $1.75 billion and a pre-tax book gain of about $1.6 billion. It plans to use the money primarily to retire debt, the company said.

“Our three hospitals on the coast in South Carolina are well regarded by the communities they serve for the high-quality specialty services they deliver,” said Dr. Saum Sutaria, Tenet’s chairman and chief executive. “Novant is an innovative healthcare organization with a deep commitment to patient-centric care.”

The two companies will keep working together after the sale. Tenet’s Conifer Health Solutions subsidiary will provide revenue cycle management, the billing and collections work behind patient accounts, for the three hospitals under a new 15-year contract. Novant and USPI also plan to expand their ambulatory surgery partnership across the Carolinas, according to Tenet.

Novant’s reach

Novant reported operating revenue of $7.6 billion in 2022, according to its audited results. It had operating income of $68.2 million but a net loss of $222.8 million after $291.0 million in non-operating losses, including a $251.1 million investment loss.

In South Carolina, Novant already cares for patients through a recently established partnership with Conway Medical Center and through MedQuest Associates, its imaging company, which has served patients in the Upstate, Midlands, Pee Dee and Lowcountry, according to Novant.

Novant also pointed to patient safety ratings. It said The Leapfrog Group recently gave it the most “A” grades for patient safety in North Carolina.

Novant’s announcement said that once the deal is complete, it “will work with team members, medical staff, and other stakeholders to continue delivering quality care close to home.” Neither company said whether East Cooper’s name, leadership or staffing would change.

What comes next

The deal is expected to close early next year, subject to regulatory approvals and other customary conditions, the companies said. Tenet said it expects the sale to be completed in the first quarter of 2024. RBC Capital Markets advised Novant.

For Mount Pleasant patients, nothing changes yet. Until the sale closes, East Cooper remains a Tenet hospital.