St. Luke’s CFO calls acquisition of money-losing Grand View Health in Bucks County a ‘heavy lift’

St. Luke’s University Health Network’s pending acquisition of Bucks County’s Grand View Health will be a “heavy lift” financially, given the substantial losses at the nonprofit hospital in Sellersville, St. Luke’s chief financial officer Scott Wolfe told municipal bond investors Wednesday.

As part of its plan to turn around the finances of Grand View, St. Luke’s is asking bondholders to release $17.2 million in a reserve fund that would be used to make debt payments if Grand View falls short on cash. Grand View had a 25% operating loss in the first seven months of fiscal 2025.

“This is a significant lift for us,” Wolfe told bondholders. He said Grand View needs $30 million to $40 million in investment in the next few years. That includes $17 million to $20 million for the installation of a new electronic medical record that will put Grand View on the same platform as the rest of St. Luke’s.

Wolfe said the money in the reserve fund is needed to make a turnaround of the small, independent system possible. “They are burning cash at a pretty fast rate,” and “will be a little lighter on cash than we anticipated a few months ago,” he said.

St. Luke’s is hoping to receive bondholder consent Friday. St. Luke’s and Grand View reached their merger agreement at the end of last year. In addition to bondholder consent, the deal awaits regulatory approvals. It could be completed by July 1, Wolfe said.

Grand View has 207 licensed beds, up from 168 two years ago, before it opened a new patient pavilion for nearly $200 million in 2023. The new building used to have Penn Medicine branding on the side, but that relationship covering trauma and other services has ended, given the St. Luke’s deal, Grand View’s CFO Arthur Anderson said.

Penn’s former relationship with Grand View gave it the first chance to acquire the system, but it chose not to, Anderson said. Instead, Penn is acquiring Grand View competitor Doylestown Health. That deal is awaiting regulatory approvals.

Bethlehem-based St. Luke’s acquisition of Grand View would allow the nonprofit to extend its Bucks County business southward to reach deeper into the Philadelphia suburbs. St. Luke’s already owns a hospital in Quakertown. Its network of 10 hospitals stretch as far north as Stroudsburg, Pa., and includes one in New Jersey across the Delaware River from Easton.

St. Luke’s had a $42.7 million operating profit in the six months ended Dec. 31 on $1.9 billion in revenue. In an unusual move, Grand View recently posted financial results for the seven months ended Jan. 31. They showed a $40 million operating loss on $161 million in revenue.