Micro Healthsystems, a West Orange, N.J.-based healthcare information systems and services company, is paving the way for a $5 million investment in the company by Chicago-based Frontenac Co., an investment firm that funds growth in healthcare, information technology and consumer products and services. The two companies executed a letter of intent under which Frontenac will purchase 1.25 million shares of convertible preferred stock at $4 per share and receive 490,000 detachable warrants each entitling Frontenac to acquire a share of Micro Healthsystems' common stock. The transaction is subject to shareholder approval, which will be sought at the vendor's annual meeting in August, said Graham O. King, chairman and chief executive officer. Frontenac manages more than $500 million in investment funds.
LTC Properties said it closed $43.3 million in new investments in the second quarter. The Oxnard, Calif.-based real estate investment trust acquired seven skilled-nursing facilities in Alabama and Washington for $18.7 million, including $13.4 million in mortgage debt assumed by the company. The REIT's second-quarter investments also reflect $24.6 million in mortgage loans secured by 11 skilled-nursing facilities in seven states. The Federal Reserve's recent lowering of the federal funds rate nudged down the interest rate on 10-year Treasury bonds, used by LTC Properties as a baseline for pricing loans, said James J. Pieczynski, the company's chief financial officer. Lower rates will shrink the company's cost of borrowing, but they also will reduce the company's earnings on the sale of mortgage-backed securities, so the net effect is negligible, he said.
General Medical Corp. has purchased Denver Surgical Supply Co., a small distributor serving physician offices and clinics, for an undisclosed price. The Denver-based company reported revenues of about $5 million in 1994. In the past year, Richmond, Va.-based General Medical has begun buying alternate-site distributors, including F.D. Titus and Sons (Aug. 15, 1994, p. 26), partly because executives believe the acquisitions will help it win business with integrated delivery systems. At the same time, the company has been selling manufacturing units that compete with its suppliers. Since September 1994, it has sold five manufacturing divisions. In March, for example, it sold Redi Products, which makes personal-care products, to Louisville, Ky.-based McBar Medical Industries. Terms weren't disclosed.
Sierra Health Services will acquire Pleasanton, Calif.-based CII Financial in a pooling-of-interest stock transaction valued at about $86 million. CII shareholders will receive 0.37 of a share of Sierra common stock in exchange for each CII share. Las Vegas-based Sierra provides managed-care services to 325,000 enrollees in Nevada and seven other states. CII, through subsidiaries including California Indemnity and Commercial Casualty, writes workers' compensation insurance in California, Colorado, Nebraska, New Mexico and Utah. Both companies recently have been licensed in Texas. "This acquisition positions Sierra to prosper from the continued convergence of the health insurance and workers' compensation markets," said Anthony M. Marlon, M.D., Sierra chairman and chief executive officer. Through the merger, expected to close this year, Sierra will be able to offer employers medical and workers' compensation coverage in a product resembling 24-hour coverage, he said.