--- title: "Dividends, fees and loans: what Prospect paid its owners" language: en canonical: https://dossiertwist.com/dossiers/prospect-medical-holdings/dividends-and-loans/ as_of: 2026-10-15 keywords: ["Prospect Medical Holdings","Leonard Green & Partners","Samuel Lee","David Topper","Medical Properties Trust","Ivy Holdings","Chamber Inc.","Prospect CharterCARE","Crozer Health","Waterbury Hospital","Eastern Connecticut Health Network","Roger Williams Medical Center","Our Lady of Fatima Hospital","Chapter 11","sale-leaseback","dividend recapitalisation","Hospital Conversions Act","PHP Holdings","Astrana Health","NOR Healthcare Systems"] --- # Dividends, fees and loans: what Prospect paid its owners **Question.** How much did Prospect pay its owners between 2010 and 2021, and how was it financed? **Answer.** According to a nonprofit research report based on a Prospect submission, PMH paid Leonard Green a $1 million annual management fee; the Rhode Island Attorney General says a 2012 dividend was funded by a bond issue, and PYA reports that the 2018 dividend of about $457 million came from about $1.12 billion of new debt. Estimates of the total taken by Leonard Green, Samuel Lee, David Topper and other holders range from more than half a billion dollars to over $650 million. The Rhode Island Attorney General's consultant found that dividends of about $500 million and losses of $603 million left a stockholders' deficit of $1.06 billion by 2020. ## Management fees - Analysis: A January 2020 report by a nonprofit research group, based on a Prospect submission to Connecticut's Office of the Attorney General, lists the payments to Leonard Green and other owners as a $1 million annual management fee for 2011–2019 ($9,000,000), a $4,441,000 fee for the December 2010 merger, a $100,000,000 dividend in November 2012 and a $457,000,000 dividend in February 2018, a total of $570,441,000. These are the report's totals compiled from a company submission; other accounts give different totals for different periods and payment types. The Rhode Island Attorney General's 2021 decision records that the ten-year management services agreement signed in 2010 was, according to the parties, no longer being charged and would be terminated after the 2021 transaction. [src-040] [src-003] ## The 2012 and 2013 dividends - Analysis: The Rhode Island Attorney General's 2021 decision, citing PMH's audited fiscal-2013 statements, states that in 2012, under Leonard Green's control, PMH paid Leonard Green and other shareholders, principally Samuel Lee and David Topper, a $188 million dividend funded by a bond issue; a 2020 investigative report likewise describes $188 million paid to Leonard Green and its investors in two rounds of dividends financed with high-yield bonds. The 2020 nonprofit research report gives a $100 million dividend in November 2012, and the retained records do not reconcile the two amounts. The Connecticut Attorney General's draft complaint states that PMH paid $88 million to Leonard Green in 2013. The Rhode Island Attorney General's 2024 decision states that when PMH entered Rhode Island in 2014 it assured the regulator that the 2013 dividend was a one-time payment with no similar distributions planned for the foreseeable future, and calls reliance on that assurance misplaced in light of the 2018 distributions. These are statements of two attorneys general in a draft pleading and a regulatory decision; PMH's 2013 financial statements are not retained. [src-003] [src-094] [src-040] [src-088] [src-081] ## The 2018 dividend recapitalisation - Analysis: According to the Rhode Island Attorney General's 2021 decision, relying on reports by its consultants PYA and James P. Carris, PMH took on $1.12 billion of debt in fiscal 2018 and its board authorised a $457 million dividend from the proceeds in a leveraged dividend recapitalisation, whose principal beneficiaries were Leonard Green, Topper and Lee; a footnote in the same decision describes the board-approved distribution as $458 million in February 2018. PYA's April 2021 report to the Rhode Island Department of Health, drawn from PMH's audited statements, adds that the debt also refinanced earlier credit facilities, pre-funded about $40 million of subsidiaries' pension obligations and paid option holders and working capital, and that at September 30, 2018 PMH had an equity deficit of about $623 million, $7.7 million of cash (about one day of expenses) and about $208 million drawn on its revolver. The Attorney General found, from the audited statements as analysed by the Attorney General's consultants, that the dividend equalled about 60 days of operating expenses and was paid when PMH had cash for about one day, and that in fiscal 2018 PMH's net loss exceeded $240 million, its liabilities exceeded its assets by more than $620 million and its unfunded pension liabilities were about $260 million. [src-003] [src-088] [src-033] - Analysis: Several accounts state that the dividend was first planned at about $600 million and reduced to $457 million after Moody's warned that the transaction would lead to a downgrade: a nonprofit research report describes a proposed $1.2 billion loan that was restructured, the Connecticut Attorney General's draft complaint describes a planned $600 million distribution to private shareholders and executives, and a 2020 investigative report gives the same figures. The 2018 board materials and Moody's communication are not retained. The Connecticut draft complaint states that $90 million of the $457 million went to Lee, and a December 2023 letter from the chair and ranking member of the Senate Budget Committee, citing CBS News, also states that PMH's head made about $90 million from the debt-funded dividend. These are allegations and reported figures; Lee's response to them was not found in the retained records. [src-081] [src-094] [src-040] [src-005] ## The 2019 cash infusion and downgrade - Analysis: The Rhode Island Attorney General records that on January 25, 2019 the sponsor and part of management contributed $41 million in cash, citing Moody's observation that at the end of the first quarter of fiscal 2019 Prospect had no free cash and $20 million available under its asset-based credit line. The Attorney General's consultants report, from PMH's audited fiscal-2019 statements, that PMH paid shareholders a further $44 million that year, almost matching the $41 million that shareholders contributed for a new electronic medical records system. PYA characterised the Leonard Green funds' contribution as in substance a shareholder loan for short-term liquidity that was returned through dividends, and recorded the testimony of John Baumer and Alyse Wagner that apart from the initial 2010 investment of about $151 million in Ivy Holdings the funds had invested no further money; the Attorney General stated that apart from about $25 million contributed in 2019 and returned within a year, Leonard Green never invested its own money in PMH. The funds were described as near the end of their life and obliged to liquidate their investments. [src-003] - Analysis: A 2020 investigative report, quoting former chief financial officer Steve Aleman, describes the January 2019 payment instead as an emergency $41 million loan from Leonard Green, Lee and Topper to remove the auditor's going-concern doubts and avoid breaching loan covenants; other records call it a capital contribution. The report states that a Prospect lawyer accused Aleman of making false and defamatory statements to the publication, that Aleman's lawyer denied it and that Aleman confirmed that the comments were accurate. In March 2019, according to the Attorney General, Moody's Investors Service downgraded PMH to B3, citing very high financial leverage and a shareholder-friendly financial policy; the Moody's publication itself is not retained. [src-094] [src-003] ## Cumulative estimates - Analysis: The cumulative figures depend on who counts and over what period. The Rhode Island Attorney General's 2021 decision concludes from PMH's audited statements that from 2012 to 2020 Leonard Green, Lee and Topper paid themselves more than half a billion dollars in cash from debt placed on PMH while it recorded cumulative losses of $603 million for fiscal 2015–2020; the Attorney General's consultant Carris stated that dividends of about $500 million and the losses left a stockholders' deficit of $1.06 billion. A 2020 investigative report counted $645 million of dividends after Leonard Green's purchase, about $386 million to Leonard Green investors and the firm, $128 million to Lee, $94 million to Topper and $37 million to other executives, plus $14 million of fees to the fund; a 2026 follow-up estimated that Topper received that share through the Topper family trust and that Leonard Green and the founders together took $658 million in fees and dividends in the decade after 2010. These are journalists' estimates, not audited figures. The Connecticut Attorney General's draft complaint, attached to a proof of claim and not adjudicated, gives $645 million of dividends to the main investors and management in recent years, including $128 million to Lee and $131 million to other executives. The Senate Budget Committee letter of December 2023 states that Leonard Green exited completely in 2021 and that over about a decade it and other owners extracted $658 million in fees and dividends, a figure that differs from the others because of period and payment definitions. In a press release on the June 20, 2024 decision the Rhode Island Attorney General said that in 2018–2019 Lee, Topper and Leonard Green extracted hundreds of millions of dollars to the detriment of the hospitals. Leonard Green and Prospect told the 2020 report, in written statements through a jointly retained public-relations firm, that they had kept their commitments, abided by the law, provided good patient care and invested hundreds of millions of dollars, saving many failing hospitals and preserving thousands of jobs. For the 2026 report Leonard Green declined to respond to questions, Lee could not be reached for comment and Topper answered “no comment”. [src-003] [src-094] [src-089] [src-081] [src-005] [src-025] - Analysis: In January 2025 Senators Grassley and Whitehouse of the Senate Budget Committee issued a report which, as PMH's chief restructuring officer summarised it, focused on Leonard Green's 11-year majority ownership and alleged that Leonard Green executives took home hundreds of millions of dollars in dividends and preferred stock redemptions while care deteriorated and the system took on unsustainable debt and lease obligations; the report itself is not retained. According to a 2026 investigative report, Leonard Green disputed the Senate report's conclusions and Prospect has denied any misconduct or negligent care. [src-002] [src-089] ## Prospect's finances after the payouts - Analysis: PMH's audited statements for fiscal 2015 to 2020, as summarised by the Rhode Island Attorney General's consultant, show net revenue rising from $1.3 billion to $2.73 billion while operating income fell from $108.3 million to $15.6 million and long-term debt, excluding finance leases, rose from $451 million to nearly $1.6 billion; PMH paid about $478 million of interest over the period. PYA's summary shows net income of $34.3 million in fiscal 2017 and net losses of $244.2 million in 2018, $297.7 million in 2019 and $99.6 million in 2020, on revenue of $2.91 billion, $2.89 billion, $2.85 billion and $2.73 billion, with equity moving from $67.3 million in 2017 to deficits of $622.3 million, $970.1 million and $1,059.6 million. At September 30, 2020 total liabilities of $3,102,004,000 exceeded total assets of $2,042,389,000; liabilities to Medical Properties Trust, net of the current portion, were $1,290,556,000 and the accumulated deficit was $1,124,577,000. [src-003] - Analysis: The consultant calculated that PMH's debt-to-equity ratio turned negative from fiscal 2018 and that its quick ratio was below 1.0 in every year from fiscal 2015 to 2020; the decision cites testimony by Leonard Green partner Alyse Wagner as pointing the other way on liquidity (“Contra Wagner”), but the content of that testimony is not shown in the public decision. Pandemic funding supported PMH's cash in 2020: about $276 million of CARES Act Medicare advance payments, repayable to CMS, and about $183 million of Provider Relief Fund payments. At September 30, 2020 PMH reported cash of about $387 million, of which about $120 million reflected deferred payables, and about $211 million available under its line of credit. [src-003] - Analysis: In a forward-looking assessment on April 26, 2021, the Attorney General's financial consultant James P. Carris concluded that PMH's liabilities exceeded its assets by more than $1 billion, that it had six-year cumulative losses of more than $600 million while its owners had taken more than $500 million in dividends, that management relied on debt and a $200 million credit line, that the TRS note was due in July 2022 with most real estate already sold to Medical Properties Trust, and that a liquidity crisis could be expected within 18 to 24 months. Beginning on January 11, 2025 PMH and its affiliated debtors filed voluntary Chapter 11 cases in the Northern District of Texas. In its 2024 analysis the Attorney General's consultant Veralon reported from PMH's audited statements net losses of $342 million in fiscal 2019 and $183 million in fiscal 2022, net margins between -3.3% and -14.6% and EBITDA margins of 2.7–4.6% over fiscal 2019–2022, accounts payable and accrued liabilities of $264.3 million, $383.0 million and $311.0 million at fiscal year-ends 2019–2021 and a current ratio that had not exceeded 1.0 since the end of fiscal 2020; it described PMH's financial condition as tenuous and recorded that management had to manage cash daily and decide which vendors to pay. [src-003] [src-002] [src-088] ## Sources - [src-040] Research source · src-040 - [src-003] Rhode Island Attorney General decision on the Chamber Inc. / Ivy Holdings Inc. Hospital Conversions Act application, Office of the Rhode Island Attorney General, 2021-06-01 - [src-094] Media source · src-094 - [src-088] Rhode Island Attorney General decision on the Centurion Foundation Hospital Conversions Act applications, with the November 14, 2024 amendment, Office of the Rhode Island Attorney General, 2024-06-20 - [src-081] Connecticut Office of the Attorney General proof of claim no. 2592 with draft complaint, State of Connecticut, Office of the Attorney General, 2025-07-09 - [src-033] Court record source · src-033 - [src-005] Letter of the chair and ranking member of the U.S. Senate Budget Committee to Leonard Green & Partners, Prospect Medical Holdings and Medical Properties Trust, Office of Senator Chuck Grassley, U.S. Senate, 2023-12-06 - [src-089] Media source · src-089 - [src-025] Rhode Island Attorney General release on conditions imposed on the proposed hospital ownership change, Office of the Rhode Island Attorney General, 2024-06-20 - [src-002] Court record source · src-002