UPDATE: Leonard Green-led ownership collected $658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends

Since 2010, Leonard Green & Partners and other owners collected $658 million in dividends and fees from Prospect Medical Holdings, despite the company facing severe operating challenges, underfunded pensions, and low quality ratings from the Centers for Medicare and Medicaid Services. A significant $457 million debt-financed dividend paid in 2018 contradicted previous assurances given to Rhode Island regulators that no further distributions were planned. During the same period, Prospect's EBITDA fell from $142 million in 2015 to $17 million in 2018, and its pension fund funded ratio dropped from 68.3% in 2016 to 60.7% in 2018.

• Between 2010 and 2020, the Leonard Green-led ownership group extracted $658,441,000 in fees and dividends from Prospect Medical Holdings, with at least $400 million going to Leonard Green & Partners and its affiliates.
• A $457 million dividend paid in 2018 violated commitments made to the Rhode Island Office of the Attorney General and the State Department of Health in 2014, where Prospect had assured regulators that there were no plans for similar future distributions.
• Prospect Medical Holdings experienced a sharp decline in financial health between 2015 and 2018, with EBITDA dropping 88% from $142 million to $17 million and cash on hand falling from $65.9 million to $7.7 million.
• The company's pension obligations were significantly underfunded, with $260 million in unfunded retirement benefit obligations as of September 30, 2018, and a funded ratio that decreased from 68.3% in 2016 to 60.7% in 2018.
• Despite the financial instability, in 2018 Prospect issued $1.2 billion in debt to refinance existing debt and reduce pension liability, but allocated only $40 million to the pension while paying a $457 million dividend to owners.

APA

O’Grady, E. (2020). UPDATE: Leonard Green-led ownership collected $658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf

Chicago

O’Grady, Eileen. UPDATE: Leonard Green-led ownership collected $658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends. Private Equity Stakeholder Project, 2020. https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf.

Wikipedia

{{cite report |last1=O’Grady |first1=Eileen |title=UPDATE: Leonard Green-led ownership collected $658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends |publisher=Private Equity Stakeholder Project |date=May 2020 |url=https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2020update, author = {O’Grady, Eileen}, title = {{UPDATE: Leonard Green-led ownership collected \$658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends}}, institution = {Private Equity Stakeholder Project}, year = {2020}, month = may, url = {https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }