TORONTO, July 15, 2016 /CNW/ - Medical Facilities Corporation ("Medical Facilities" or the "Company") (TSX: DR), today announced that it has entered into a letter of intent to acquire, in stages, an indirect 83 percent interest in Unity Medical and Surgical Hospital ("Unity"), a physician-owned medical and surgical hospital located in Mishawaka, Indiana.
Unity Medical and Surgical Hospital is a 50,000 square foot, 29-bed Medicare-certified facility with four surgical and two special procedure suites focused on providing orthopedic, ophthalmology, podiatry, pain management, and spine surgery. It is one of the top performing hospitals in the U.S. with service scores in the top five percent, as determined by a national survey of patient care conducted by HCAHPS on behalf of the Centers for Medicare & Medicaid Services, released in July 2016. The letter of intent is subject to conditions, including settlement of definitive documentation and satisfactory completion of due diligence. Subject to satisfaction of the outstanding conditions, the acquisition is expected to be completed by the end of July, 2016, and would be funded by available cash and a draw on the Company's credit facility.
The hospital's operations are 86 percent owned by Physicians ASC Management ("PAM"). Under the terms of the letter of intent, the Company would purchase a 72 percent interest in PAM (representing an indirect 62 percent ownership interest in the hospital) for $26.63 million, and all but four percent of the remaining ownership interest in PAM can be purchased over three years (2017, 2018 and 2019, on the annual anniversaries of the initial closing) at a price determined by the fair market value of the hospital, calculated at the end of the prior calendar year. The remaining ownership (both directly in Unity and through PAM) will be held by practicing physicians at Unity.
The Company also announced that it has purchased an 84 percent indirect interest in Unity's real estate for US$27 million, though a limited partnership in which the Company has an indirect 84 percent limited partnership interest; the other limited partner is Rainier Realty Investments LP. The acquisition was funded from available cash and a $20 million draw on the Company's credit facility.
About Medical Facilities
Medical Facilities owns controlling interests in four specialty surgical hospitals located in Arkansas, 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 urgent and primary care, and derive their revenue from the fees charged for the use of their facilities. 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.
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
For further information: Britt T. Reynolds, Chief Executive Officer, Medical Facilities Corporation, 615.732.6052, [email protected]; Craig MacPhail, Investor Relations, NATIONAL Equicom, 416.586.1938, [email protected]