Kenny Rozenberg's healthcare group sells nursing subsidiary for hundreds of millions of dollars
Kenny Rozenberg's healthcare group sells nursing subsidiary for hundreds of millions of dollars
The American nursing home company Centers Health Care, owned by businessman Kenny Rozenberg and his partner Daryl Hagler, has signed a deal to sell its subsidiary Centers Plan For Healthy Living (CPHL) to health services and insurance giant Elevance Health. Rozenberg, the controlling-owner of El Al, has also seen his wealth grow over the past year due to the rising price of the Israeli airline’s stock that has benefitted from many international airlines suspending their flights to and from Israel since October 7.
The American nursing home company Centers Health Care, owned by businessman Kenny Rozenberg and his partner Daryl Hagler, has signed a deal to sell its subsidiary Centers Plan For Healthy Living (CPHL) to health services and insurance giant Elevance Health, in a deal valued at hundreds of millions of dollars. Rozenberg is the controlling shareholder (47%) of El Al, Israel's national airline, which has reported record results this year, with a market value reaching an all-time high of 3.16 billion shekels (approximately $850 million).
Elevance Health, a publicly traded company based in Indiana with a market capitalization of $115 billion, reported to the U.S. Securities and Exchange Commission (SEC) that the deal has been finalized and is now awaiting various regulatory approvals to complete it. However, it did not disclose how much it is paying for the company. According to industry insiders, the deal is worth at least hundreds of millions of dollars, and could be as high as around one billion dollars. Rozenberg's spokesperson declined to comment on the matter.
According to documents filed with the SEC by the acquiring company, the deal was expected to close by the end of the third quarter, or by the end of September, subject to regulatory approvals, including those from the U.S. Federal Trade Commission. As these approvals have yet to be obtained, the completion of the acquisition has been slightly delayed. Centers Plan for Healthy Living (CPHL), operating in New York State, provides healthcare, medical, and nursing services to older adults who do not reside in nursing homes, with the goal of extending their stay in their homes and communities, rather than transitioning to nursing homes or other medical facilities. The company has a contract with the State of New York under which it provides services to Medicaid beneficiaries—a joint federal-state health insurance program for low-income individuals and people with disabilities.
CPHL is the largest player in the sector, serving 57,000 clients. Its contract with the State of New York for the provision of services from 2022 to 2026 was valued at $16 billion. Elevance Health's subsidiary, also operating in this sector, is the second largest with 53,000 patients and a contract worth $13 billion for the same period. Following the acquisition, Elevance Health will control 38% of the Medicaid patient market in New York State.
The nursing home company, which over time has evolved into a healthcare and medical services empire, is the source of Rozenberg's fortune. He began his independent business career nearly 30 years ago when he purchased a small nursing home in the Bronx, New York, in 1995. Today, Centers Health Care is a network of 38 nursing homes and also owns one of New York State's largest ambulance companies, hotels, real estate, and CPHL, which it is about to divest. Centers Health Care is a privately held company, but its value can be estimated in the billions of dollars, given the current deal to sell one of its subsidiaries to Elevance Health.
Elevance Health provides health services and health insurance to over 100 million people across most of the U.S. Founded in 1944 as Anthem, the company rebranded in mid-2022 and is publicly traded on the New York Stock Exchange with a market capitalization of $115 billion. The company has no controlling shareholder, and a majority of its shares (74%) are held by U.S. institutional investors and giant funds such as Vanguard, BlackRock, State Street, and Fidelity. Elevance employs over 102,000 people.
Rozenberg acquired control of El Al in 2020 through a stock offering, which essentially saved the airline from collapse following the COVID-19 crisis. His total investment so far is estimated at approximately 840 million shekels, including additional options he holds. Since October 2023, El Al's market value has surged by more than 110%, and the value of Rozenberg's shares is now around 1.5 billion shekels.
Many International airline companies suspended their flights to and from Israel, following the outbreak of the Gaza war in response to the massacre carried out by the Hamas terrorist organization, which killed 1,600 Israeli civilians, along with missile threats from Hezbollah, the terrorist organization controlling southern Lebanon, and Iran's missile attacks on Israel. As a result of these flight suspensions, El Al's market share on the most profitable routes to North America grew to about 90%, leading to record-breaking results: in the three quarters since the war began—from the fourth quarter of 2023 to the second quarter of 2024—the company reported a net profit of $266 million, after having lost $650 million over the previous ten years.
A lawsuit filed by the State of New York in June 2023 against Rozenberg and Hagler casts a shadow over the operation of Rozenberg's nursing homes. The ongoing litigation alleges that the two individuals embezzled $83 million in state funds intended for the medical care of residents in their nursing homes. The lawsuit details a pattern of behavior in which the company created substandard working conditions in several nursing homes across the state to cut costs, leading to harm to residents, including serious injuries and fatalities.
The lawsuit also references the acquisition of control over El Al, alleging that Rozenberg acquired control of the airline through a $103 million loan from his partner, Hagler, without any documentation of the loan or its repayment terms. The lawsuit further notes that the loan did not accrue interest. A spokesperson for Rozenberg's company refuted these allegations at the time.
