Steward paid $719M dividend to private equity owner prior to bankruptcy
Steward Health Care paid out a massive $719 million reward to its private equity owner, Cerberus Capital, despite failing to turn a profit.
According to a report from the Wall Street Journal, Steward paid the dividend in 2016, the same year it recorded a net loss of $300 million. Another $71 million went to Steward’s management team—including CEO Ralph de la Torre, MD—for a total of $770 million.
The money stemmed from a deal with the hospital chain’s landlord, Medical Properties Trust, the outlet said.
A spokesperson from Cerberus defended the payment, telling WSJ that Steward had “more than sufficient liquidity to make the dividend payments in 2016.” According to the report, this marked the only dividend Cerberus received from Steward during its tenure of ownership, which lasted from 2010 until May 2020.
An analysis from Cerberus conducted in April 2020 found Steward would need $750 million in funds over the next seven years for the business to operate. A month later, the company was sold to de la Torre and other physician investors.
Steward would continue to experience an annual loss of hundreds of millions over the next three years, before finally filing for Chapter 11 bankruptcy in May 2024. At that time, its debt totaled over $9 billion.
Reports of shady dealings
In July, the Boston Globe and the Organized Crime and Corruption Reporting Project released a report detailing how Steward executives allegedly paid roughly $7 million to intelligence firms tasked with spying on critics and political opponents, mainly in foreign countries.
That same month, CBS News revealed that Steward was under investigation by the U.S. Department of Justice (DOJ) for its ties to foreign governments, specifically the island nation of Malta, where Steward operated three state-run healthcare facilities.
In relation to that case, a whistleblower wrote in a recent letter to Congress that de la Torre bragged about slipping officials “brown bags” of cash, implying he would bribe the government of Malta.
In a statement to CBS News, a spokesperson for de la Torre denied that claim and said he did nothing illegal. No criminal charges have been filed against him or anyone at Steward.
The health system is currently selling off its hospitals and medical groups nationwide, as part of its ongoing Chapter 11 liquidation. At one time, Steward was the largest for-profit hospital network in the U.S., operating 31 facilities in eight states before filing for bankruptcy.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.