California

Applies to certain "health care entities", which include:

• Health Systems;
• Health Care Facilities;
  • Including general acute care hospitals, nursing facilities, hospice facilities, ambulatory surgical centers, clinical laboratories, imaging facilities and others
• Physician Organizations;
  • Physician Organizations with fewer than 25 physicians are generally excluded
• Clinics;
  • Including clinics operated as a department of a hospital, community clinics, non-profit clinics, chronic dialysis clinics, rehabilitation clinics, or other specialty clinics
• Pharmacy Benefit Managers; and
• Health Insurers or other Third-Party Administrators.
  • Includes health care entities controlled or governed by insurers

As of January 1, 2026, additional health care investors are required to report transactions to OHCA, including:

• Private Equity Groups, Hedge Funds, Management Service Organizations (MSOs) and other newly formed entities.

Parties must provide notice for certain types of transactions, including:

• Where the proposed fair market value of the transaction is $25 million or more and the transaction concerns the provision of health care services;
• Where it is more likely than not to increase a health care entity’s annual revenue by at least $10 million or 20% of annual California-derived revenue;
• Involving the sale, transfer, lease, exchange, option, encumbrance, or other disposition of 25% or more of the total California assets of the submitting party;
• Involving a transfer of control, responsibility, or governance of a health care entity, in whole or in part;
• Resulting in an entity contracting with payers on behalf of consolidated/combined providers and is more likely than not to increase the annual California-derived revenue of any providers in the transaction by either $10 million or more or 20% of California-derived revenue;
• Involving the formation of a new health care entity, affiliation, partnership, joint venture, or parent corporation for the provision of health care services in California that is projected to have at least $25 million in California-derived annual revenue or controlled assets;
• Involving part of a series of related transactions for the same or related healthcare services occurring over the past 10 years involving the same health care entities or entities affiliated with health care entities (which will be analyzed as a single transaction); or
• Involving acquisition of a health care entity by another health care entity where the acquirer has consummated similar transactions within the past 10 years, with a health care entity that provides the same or related healthcare services (which will be analyzed as a single transaction).

The regulations provide that a “Material change transaction” does not include corporate restructurings or transactions that are entered into as part of the ordinary course of a health care entity’s business. 

Health care entities which are a party to a covered transaction must provide notice if they:

• Have average annual California health care services revenue of at least $25 million or own or control California assets of at least $25 million over the three most recent fiscal years;
• Have average annual California health care services revenue of at least $10 million over the three most recent fiscal years or own or control California assets of at least $10 million (if involved in a transaction with any health care entity satisfying the above $25 million threshold); or
• Are located in a designated primary care health-professional shortage area in California.

Parties must provide notice to the OHCA at least 90 days before closing.

The OHCA is required to notify the parties within 45 days of receiving a completed notice if it will not conduct a further analysis of the transaction, known as a Cost and Marketing Impact Review (“CMIR”), and within 60 days if it will conduct a CMIR.  The parties may appeal the OHCA’s decision to conduct a CMIR within 10 business days.

If the OHCA deems that a CMIR is required, OHCA has 90 days from making its final determination that such a CMIR is required to complete the CMIR, although it has the authority to extend this time period by up to 30 days.

OHCA will toll these waiting periods during any time period in which (1) OHCA has requested and is awaiting further information from the parties, and (2) review of the transaction by another state agency, federal regulatory agency, or court may impact OHCA’s determination.

The initial notice to be provided to the OHCA requires a substantial amount of information and supporting documentation, including:

• Description of organization, governance, operational structure (including ownership of or by a health care entity), tax IDs, and detailed information on all parties to the transaction;
• Detailed description of the current services provided by the health care entity and any post-transaction changes and impact on the public, including quality and equity measures;
• Description of prior mergers or acquisitions involved in the same or related health care services that were closed in the last 10 years; and
• Copies of documents (definitive agreements and term sheets, a copy of the HSR filing (if applicable), financial materials including certified financial statements and balance sheets, org charts, and details on the number of patients / enrollees per zip code, among others.

All filings are treated as public records, unless filers request and OHCA approves confidential designation for specific submissions. 

Documents that may be designated as confidential include marked-confidential versions of stock purchase agreements, compensation documents, contract rates, transaction valuation documentation, and résumés, as well as other documents that contain trade secrets whose release would harm the filer, are considered confidential by other agencies, are confidential by law, or would serve public interest by remaining confidential.

Applies to “retail drug firms”, which is broadly defined as pharmacy and drug retailer entities with one or more businesses or establishments located within California, including pharmacies, drug stores, mail order pharmacies, institutional pharmacies, and apothecaries.

The statute requires notice by parties to a transaction involving the direct or indirect acquisition of any voting securities or assets of a “retail drug firm” and if the transaction either:

• Requires notice under the HSR Act; or
• Involves more than 20 retail drug firm locations in California.

This is an either-or test – if the parties are submitting an HSR filing or acquiring more than 20 locations and the target meets the broad definition of a “retail drug firm” then a submission and notice to the CA AG is required.

Parties must provide notice to the CA AG at least one hundred-eight (180) days prior to closing.

The CA AG can seek an order staying or preliminarily enjoining the transaction if the CA AG cannot complete an “evaluation of the competitive effects of the acquisition” within the allotted 180-day period.

If the transaction requires notice under the HSR Act, the same form must be provided to the CA AG (along with the documentary material required under the HSR Act (e.g., Item 4 documents).

If the transaction does not require notice under the HSR Act, the notice requires a substantial amount of information and supporting documentation, including the following:

• Names and addresses of each acquiring party and the nature of its business operations during the past five years;
• A description of the business, including details on corporate structure, governance, or management;
• A list of all individuals who are or have been selected to become directors or executive officers;
• The source, nature, and amount of funding, including whether corporate stock or loans are involved and the and the identity of persons furnishing the consideration;
• Fully audited financial information for the past five years;
• Any plans or proposals to liquidate, sell, merge or consolidate the firm or any other material change in its business or corporate structure or management;
• Information required to assess the competitive effects of the proposed transaction, including effects on patients, consumers, and workers; and
• Information required to assess the economic and community impact of any planned divestitures or store closures.

The CA AG will charge the acquiring party a fee for the cost of the review and analysis of the required notice. The size of this filing fee is to be set by the CA AG based on the size of the transaction but will be capped at 0.00045% of the combined sales of the parties to the merger.

All filings will be kept as confidential or privileged, but the CA AG may share them with the DOJ, FTC, or other State AGs, as long as those entities also keep the filings confidential.

However, the statute also provides that the CA AG “may use the notice, documents, and information disclosed under to this section in a judicial action in state or federal court or an administrative action involving the merger or acquisition.”

The failure to provide written notice, amendment to a written notice, or other material required to be provided to the CA AG is deemed to be a violation of the statute.

The CA AG may be entitled to civil penalties of up to $20,000 per day for each day of noncompliance.

In addition, the CA AG may pursue legal remedies, including injunctive relief (e.g., enjoining the transaction) and attorneys’ fees and costs incurred in remedying the violation.