Hospitals increasingly are turning to real estate investment trusts for capital, according to Jonathan Gaul, a partner in the Chicago office of the accounting firm Kenneth Leventhal & Co. As of January, market capitalization of healthcare REITs totaled more than $5.1 billion, or 15%, of the $33.9 billion market capitalization of all publicly traded REITs, he said. That's up from $3.8 billion the previous year. Currently, healthcare REITs' cost of new capital ranges from 9% to 11% while their returns on investments run from 11.5% to 12%.
United HealthCare Corp.'s A rating has been placed on CreditWatch with positive implications by Standard & Poor's Corp. The New York-based credit-rating agency said the Minnetonka, Minn.-based HMO's sale of Diversified Pharmaceutical Services to SmithKline Beecham Corp. for $2.3 million would provide a large amount of cash to pursue growth. In other actions, Standard & Poor's raised the rating on Horry County, S.C.'s bonds, which were issued for Conway Hospital, to A+ from A and removed the rating from CreditWatch. The firm also raised the bond rating on Children's Seashore House, a not-for-profit children's hospital in Philadelphia, to A- from BBB+, reflecting the hospital's improved liquidity, reduced losses and relationship with AA-rated Children's Hospital of Philadelphia.
Medtronic, a Minneapolis-based medical-device maker, has acquired Carbon Implants. Medtronic previously owned one-third of the Austin, Texas-based company, which develops implantable heart valves. It pioneered a process to make implants more durable. Terms of the transaction weren't disclosed. Meanwhile, Medtronic acquired a $4 million equity position in Hybridon, a Worcester, Mass.-based biotechnology company. Further details weren't disclosed. Where appropriate, Hybridon will use Medtronic's implantable drug-infusion system with products it develops to treat neurodegenerative diseases, such as Alzheimer's, the companies said.
Healthcare Realty Trust has secured a $75 million revolving credit facility through a group of banks led by NationsBank, Charlotte, N.C. The loan facility has a three-year term and is unsecured. The Nashville-based real estate investment trust intends to use the credit facility to acquire additional properties and to fund the development of properties to be leased to healthcare operators. The REIT has investments in 38 healthcare properties in 12 states.
Diametrics Medical expects to raise about $20 million in an initial public offering of 2.5 million shares of common stock. While the price per share hasn't been set, it's expected to be $8 to $10, a spokeswoman said. The Minneapolis-based company makes a blood-gas testing system that provides results immediately. Diametrics filed a registration statement with the Securities and Exchange Commission earlier this month. Lead underwriters for the offering are Hambrecht & Quist and Vector Securities.
DVI, an Irvine, Calif.-based medical equipment and receivables financing company, reported a 15-fold increase in net income for the third quarter ended March 31 to $646,000, or 10 cents per share, compared with net income of $42,000, or 1 cent per share, last year. The year-ago earnings reflected a $520,000 loss resulting from the company's decision to divest its interest in several outpatient imaging facilities. Also in the third quarter, revenues increased 40% to $6.1 million. For the nine-month period, net earnings rose 17% to $1.4 million, or 21 cents per share, from $1.2 million, or 18 cents per share. Revenues rose 18% to $16 million. The company provided $45.1 million in new equipment financings during the quarter, compared with $15 million in the year-ago period.