Tenet Healthcare Corporation and its subsidiary, United Surgical Partners International, announced that they have entered into a definitive agreement with the principals of SurgCenter Development (SCD) to acquire SCD.
Under the terms of the agreement, Tenet/USPI will:
- Acquire SCD’s ownership interests in 92 ambulatory surgery centers (ASCs) and other related ambulatory support services (collectively, the Portfolio)
- Includes formation of five-year partnership and development agreement between USPI and SCD to provide continuity for SCD platform and future de novo development projects
- Builds on USPI’s position as a leading ambulatory surgery platform and partner of choice for high-quality, multi-specialty physicians, including musculoskeletal, ENT and others
- Positions Tenet to generate strong financial returns, including attractive EBITDA margins and free cash flow
USPI and SCD’s principals will also enter into a five-year partnership and development agreement designed to provide seamless continuity and support for SCD’s facilities and physician partners over the coming years. Going forward, USPI also has the exclusive option to partner with SCD on de novo development projects over the life of the agreement.
Tenet/USPI will acquire SCD’s ownership interests in 92 ASCs and related ambulatory support services for approximately $1.2 billion. SCD owns a minority interest of approximately 39 percent on average in 86 of the ASCs and a majority interest of approximately 55 percent on average in six of the ASCs. Tenet plans to finance the transaction through the issuance of first-lien secured notes. The transaction is expected to close in the fourth quarter of 2021, subject to customary approvals and closing conditions.
Additionally, in the coming months, USPI plans to offer to acquire a portion of equity interests in the ASCs from physician owners for incremental consideration of up to approximately $250 million. Assuming successful completion of the acquisition of physician interests, Tenet will consolidate the results of the centers in which USPI holds a majority ownership position in its financial statements.
The centers to be acquired are located in 21 states, offering USPI expansion into high-growth regions in Arizona, Florida and Texas; adding density in relatively newer markets in Ohio, Indiana, Wisconsin and Maryland; and providing a scalable entry point in Michigan.
Following the addition of the Portfolio, USPI will have more than 440 facilities in 35 states.