In a significant development, Novant Health has announced it is abandoning its $320 million deal to acquire two North Carolina hospitals from Community Health Systems following a U.S. appeals court decision that temporarily blocked the transaction.
The Richmond, Virginia-based 4th U.S. Circuit Court of Appeals ruled 2-1 on Tuesday in favor of the U.S. Federal Trade Commission (FTC) to suspend the deal while the FTC challenged a lower court's decision that had allowed the acquisition to proceed.
Novant Health, headquartered in Winston-Salem, North Carolina, promptly responded by stating it would no longer pursue the purchase of the two Charlotte-area hospitals. In their statement, Novant expressed disappointment, saying, "We are steadfast in our belief that these facilities and their patients would have greatly benefited from joining Novant Health, but with the FTC's continued roadblocks we do not see a way to finalize this transaction."
The FTC and representatives from Franklin, Tennessee-based Community Health Systems did not immediately comment on the situation.
The FTC initially sued to block the transaction in January, arguing that the deal would lead to higher prices and diminished innovative care. In a contrasting decision on June 5, U.S. District Judge Kenneth Bell in Charlotte sided with the hospitals, stating that the public interest was not "best served" by halting Novant's proposed acquisition. Judge Bell noted that the merger "carries at least as much likelihood of competitive benefits as it does competitive harm."
Following this, the FTC appealed Bell's ruling to the 4th Circuit and requested a suspension of the transaction while the appeal was considered.
FTC Chair Lina Khan has emphasized that healthcare markets are a focal point in the Biden administration's antitrust enforcement strategy. A hearing in the FTC's administrative case against the hospital deal was scheduled for July 26.
The legal case is formally known as Federal Trade Commission v. Novant Health Inc and Community Health Systems Inc, 4th U.S. Circuit Court of Appeals, No. 24-1526.
