The City of Tallahassee has released more insight into the valuation of the FSU-TMH sale. Earlier this month, city missioners voted to pass a motion to negotiate a price tag with Florida State for the value of Tallahassee Memorial Healthcare. Now, findings from that have been revealed in the city’s agenda for their next meeting.
The agenda states the value of TMH is between $26M-$584M. The City retained Ankura Consulting Group, LLC, an independent global advisory firm specializing in healthcare valuations, real estate advisory services, and transaction analysis.
The agenda says they looked to determine the value of City-owned hospital assets, including the land, buildings, and fixed improvements, to inform the proposed transfer of ownership to Florida State University.
It states that each method Ankura used isolates the worth of the Citys tangible assets, land, buildings, site improvements, and certain equipment, independent of TMHs ongoing operations.
The valuations show that when accounting for debt assigned to TMH, the valuations range from $26M-$220M; when not accounting for debt valuations range from $109M-$584M.
Below are the six industry-standard valuation methodologies used:
Sales Comparison Approach: Analyzed recent sales of comparable hospital campuses and medical facilities to infer a value for the Citys assets, with adjustments made for property size, condition, and location. Cost Approach: Estimated what it would cost today to replace the Citys hospital facilities and infrastructure with comparable improvements, adjusted for depreciation and land value. Historical Investment Appreciation: Traced the Citys capital investment in hospital assets from 1979 forward, escalating those values to current dollars to reflect the inflation-adjusted value of what the City built and owns. Book Value Approach: Examined the recorded asset value of the hospital property net of long-term debt, providing an accounting-based perspective of the Citys equity position. Market Approach – Revenue: Analyzes the hospitals historical and projected revenues to estimate asset value based on TMHs revenues and how comparable hospitals have been valued in recent transactions. Total operating revenue is multiplied by an industry-derived multiple that reflects market perceptions of scale, service mix, and payer composition. This approach forecasts the value a market participant might attribute to the hospitals ability to generate sustained revenue, providing context for how the broader healthcare market prices operational performance rather than underlying physical assets. Market Approach – Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): Evaluates the hospitals earnings before interest, taxes, depreciation, and amortization to determine asset value based on TMHs EBITDA and market multiples derived from comparable hospital transactions. By analyzing normalized EBITDA, adjusted for non-recurring or extraordinary items, the method forecasts the hospitals ongoing capacity to generate operating cash flow. This approach emphasizes profitability, efficiency, and financial sustainability from an operational perspective, offering insight into how market participants value the hospital as a going concern rather than the City-owned land and facilities.
Below is a chart of the findings by Methodology:
The agenda goes on to say, while debt is typically included in equity calculations, staff have confirmed that in the proposed agreement between TMH and FSU, the current outstanding debt of $364M will remain TMHs obligation and will not transfer to FSU.
These findings will be discussed at next Wednesday’s meeting, October 22nd. The meeting will begin at 6:00 p.m. This is the second public meeting being held regarding the potential sale. The first was held on October 1st.
Last month, FSU and TMH announced that a new deal had been reached regarding the school taking over the assets of TMH that the City of Tallahassee currently owns. The deal states that TMH’s 75-acre property, 2 million sq. foot hospital building, and related assets will be transferred from the City of Tallahassee to FSU, under a new 40-year lease.
Want to see more local news? Visit the WTXL ABC 27 Website.
Stay in touch with us anywhere, anytime.