FRANKLIN, TN, Jan. 12, 2018 /CNW/ - Officials with Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), today announced an agreement with Kansas-based NueHealth LLC ("NueHealth") to form a joint venture (the "Joint Venture") and acquire seven ambulatory surgical centers from Meridian Surgical Partners of Brentwood, Tenn ("Meridian").
The joint venture, called MFC Nueterra Holding Company, LLC, will be majority-owned by Medical Facilities. Medical Facilities' portion of the US$46.5 million total purchase price will be funded by cash and a draw on its credit facility. The parties expect to close on or before March 2018, subject to customary closing conditions.
"NueHealth brings to this partnership significant national experience operating surgical centers and working with physician partners. Combining this expertise with our own skill at identifying high-quality and well-valued surgical centers creates a strong platform for growth," said Robert O. Horrar, President and CEO of Medical Facilities. "These initial seven surgical centers have an established presence in their communities, skilled physicians and an attractive payor mix. Through the joint venture, we have the ability to acquire additional ambulatory surgery centers and build synergies throughout the network."
Medical Facilities currently holds ownership interest in specialty surgical hospitals and ambulatory surgical centers in Arkansas, California, Indiana, Oklahoma and South Dakota. Through this transaction, the joint venture will acquire ownership interests in the following centers:
- Brookside Surgery Center (Battle Creek, Mich.)
- Central Arkansas Surgical Center (Russellville, Ark.)
- City Place Surgery Center (Creve Coeur, Mo.)
- Eastwind Surgical (Westerville, Ohio)
- Miracle Hills Surgery Center (Omaha, Neb.)
- Riverview Ambulatory Surgical Center (Kingston, Penn.)
- Two Rivers Surgery Center (Eugene, Ore.)
The centers provide medical procedures including orthopedic surgery, neurosurgery and pain management and combined have 26 operating/procedure rooms. For the 12 months ended September 30, 2017 the centers had net revenue of US$35.6 million with EBITDA1 margins in the mid-20's and are expected to be immediately accretive to the Company's current operations.
In aggregate, the Joint Venture will own approximately 53 percent equity interest in the centers. NueHealth, through a management services agreement with the Joint Venture, will provide day-to-day management and operations support to the centers, including accounting, materials management, payor contracting, benefits administration and billing and collections.
"We are pleased to be working with Medical Facilities to provide quality care to the patients in these communities," said Dan Tasset, Chairman of NueHealth. "Both of us are sensitive to the concerns of physician ownership groups and have experience helping them achieve their goals while delivering shareholder value. We look forward to extending this partnership further."
"I am excited about this opportunity for our employees and physician partners," said John Wilson, CEO of Meridian. "MFC and NueHealth offer a breadth of capabilities to drive the future growth of our surgery centers."
SOLIC Capital Advisors, LLC served as financial advisor to Meridian in connection with the transaction.
About Medical Facilities
Medical Facilities owns controlling interests in five specialty surgical hospitals located in Arkansas, Indiana, Oklahoma and South Dakota, as well as an ambulatory surgery center in California. The specialty hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including primary and urgent care. The ambulatory surgery center specializes in outpatient surgical procedures, with patient stays of less than 24 hours. In addition, Medical Facilities owns controlling interest in a diversified healthcare service company located in Oklahoma City that provides third-party business solutions to healthcare entities such as physician practices, facilities, and insurance companies. Medical Facilities is structured so that a majority of its free cash flow from operations is distributed to the holders of its common shares in the form of dividends. For more information, please visit www.medicalfacilitiescorp.ca.
NueHealth, LLC, is a privately held nationally trusted healthcare partner with more than 10,000 physicians and 25 health systems delivering approximately $776 million of consolidated revenue annually in 28 states. Our core business is comprehensive outpatient surgical care. Our market development is concentrated in four major regions, Mid-Atlantic, Florida, Texas and Mid-West. Since 1997, we have been successfully developing joint ventures with more than 150 high-value sites of service supported by over 2500 associates, including ASCs, MUVE™ hyper specialty joint replacement centers and specialty surgical hospitals. Our efforts have helped stabilize provider independence through wealth creation, ownership, and increased referral volume while successfully guiding them through the transition from fee for service to value based risk contracting. NueHealth has developed the industry's most comprehensive Ambulatory Center of Excellence platform that assists payors, health systems and providers in delivering an appropriate alternative to fee for service, high-cost care for fully insured members and self-insured covered lives.
Caution concerning forward-looking statements
Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend", or "continue" or the negative thereof or similar variations. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include those identified in Medical Facilities' filings with Canadian securities regulatory authorities such as legislative or regulatory developments, intensifying competition, technological change and general economic conditions. All forward-looking statements presented herein should be considered in conjunction with such filings. Medical Facilities does not undertake to update any forward-looking statements; such statements speak only as of the date made.
SOURCE Medical Facilities Corporation
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