By Soyoung Kim and Jessica Toonkel
NEW YORK (Reuters) - Private equity firm GTCR LLC is exploring a potential sale of Capella Healthcare, a hospital operator that may be valued at a little less than $1 billion, two people familiar with the matter said on Wednesday.
The Chicago-based buyout firm GTCR has hired Bank of America Merrill Lynch (BAC) to seek a buyer and is in conversations with larger hospital operators about a deal, according to the people, who wished to remain anonymous because they are not permitted to speak to the media.
Potential buyers could include Brentwood, Tennessee-based Lifepoint Hospitals Inc (LPNT), Franklin, Tennessee-based IASIS Healthcare and Scottsbluff, Nebraska-based Regional Care Inc, one of the people said.
Representatives for GTCR, Bank of America, Regional Care, Lifepoint and IASIS did not immediately respond to requests for comment.
Capella Chief Executive Dan Slipkovich, in an emailed statement to Reuters, said the company "must be open to exploring all opportunities" but declined to comment on a sale process.
"We continue to evaluate numerous options for the future as the healthcare environment evolves," Slipkovich said.
GTCR first invested in Capella in 2005, according to Capella's website. The company operates 14 hospitals in rural areas of the United States including Arkansas and Tennessee.
Capella has more than $100 million in earnings before interest, tax, depreciation and amortization and could be valued at between $800 million and $1 billion in a sale, the people said. The sale process is still in the early stages, they said.
Hospital operators are increasingly looking to grow through acquisitions as they seek to gain leverage in negotiations with health insurers and reinforce their presence in local markets, and as they brace for diminishing payments from government programs such as Medicare and Medicaid.
In July, Community Health Systems Inc (CYH), the second-largest for-profit U.S. hospital operator, announced plans to acquire Health Management Associates (HMA) for $3.9 billion. That agreement is being reviewed by HMA's new board of directors.
(Editing by Gary Hill and Matthew Lewis)