15 details on USPI's $1.2B acquisition of SurgCenter

Dallas-based United Surgical Partners International, a subsidiary of Tenet Healthcare, on Nov. 8 announced its plan to acquire SurgCenter Development for about $1.2 billion by the year's end.

Fifteen details on the transaction and USPI's long-term strategy:

ASC acquisitions

1. The acquisition includes ownership interest in 92 ASCs across 21 states, including high-growth regions in Arizona, Florida and Texas.

2. Sixty-five of the ASCs are "mature centers" and 27 have either opened within the last year or will perform their first cases in 2022, Tenet said in the news release.

3. Eighty percent of the surgery centers specialize in musculoskeletal care, such as spine and total joint procedures — key opportunities for outpatient growth.

4. Towson, Md.-based SurgCenter owns a minority interest of about 39 percent on average in 86 of the ASCs and a majority interest of about 55 percent on average in six of the ASCs.

5. USPI plans to acquire equity interests in the ASCs from physician owners for about $250 million.

6. Since 2009, USPI has acquired 67 ASCs from SurgCenter, which has developed more than 200 centers in its 28-year history.

7. After the transaction closes, USPI will have more than 440 surgical facilities in 35 states, further pulling ahead of its competitors and cementing its position as the largest ASC chain in the U.S.

A new ASC development partnership

8. USPI and SurgCenter will enter into a five-year development agreement to provide continuity for SurgCenter's facilities and physician partners. Throughout the agreement, USPI will have the exclusive option to partner with SurgCenter on de novo projects.

9. Over the next five years, USPI and SurgCenter will develop a minimum of 50 ASCs, according to terms of the transaction. The new facilities generally will be led by SurgCenter executives.

10. With each ASC, USPI will have the exclusive option to obtain an immediate ownership position at the time of development with an additional option to purchase SurgCenter's ownership stake 18 months after a facility's opening.

11. USPI said it will continue to pursue other ASC acquisitions and de novo developments in partnership with physicians and health systems.

Financial profile

12. Tenet said the acquisitions will further diversify its mix of adjusted EBITDA with a larger portion being produced by its higher-margin outpatient portfolio.

13. The transaction, expected to be completed in the fourth quarter, is expected to generate strong financial returns, including improved adjusted EBITDA margins and free cash flow.

14. Tenet said it expects to realize at least $45 million of annual run-rate synergies over the next three to four years from the deal.

15. "This transaction came together because of our shared commitment to quality, safety and delivering an industry-leading experience for our patients and physicians alike," said Brett Brodnax, USPI president and CEO. "We are excited to continue our long-standing relationship in partnership with the [SurgCenter] principals, who have an extremely effective development engine to expand our network of care."

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