Regional Health Properties and SunLink Health Systems have announced a definitive merger agreement, under which the latter will merge with and into Regional.
The merger, which has been unanimously approved by the boards of directors of both companies, is contingent upon the approval of shareholders from both Regional and SunLink, regulatory approvals, and customary closing conditions satisfaction.
Regional Health Properties chairman and CEO Brent Morrison said: “This merger will create a combined company with a stronger balance sheet and greater scale.”
As part of the agreement, SunLink shareholders will receive one share of Regional common stock and one share of Series D Preferred Stock for every five SunLink common shares, excluding dissenting shares and those to be cancelled per the merger terms.
The transaction is poised to alter the ownership structure, with shareholders of SunLink projected to own approximately 43% of the combined entity.
SunLink reported $17.6m in total assets and was free of long-term debt as of 31 December 2024.
Regional anticipates achieving pre-tax cost synergies of around $1m by the end of fiscal 2026 and expects that further operating synergies could be realised post-merger.
The board of the merged company will be bolstered by the addition of two industry experts, C. Christian Winkle and Scott Kellman.
The completion of the merger is expected in the second quarter of 2025.
Harpeth Capital serves as the financial advisor, and Troutman Pepper Locke serves as the legal advisor to Regional.
SunLink has engaged Smith, Gambrell & Russell as its legal advisor for the transaction.
SunLink chairman and CEO Robert Thornton, Jr., said: “SunLink has been seeking a merger partner that would benefit from our complementary pharmacy business, cash and balance sheet that has no debt.
“We believe the combination of SunLink with Regional, whose assets consist of established skilled nursing and senior living facilities, offers the opportunity for increased value to both the SunLink and Regional shareholders.”
