A Birmingham, Ala., venture capitalist who is considering buying HealthSouth Corp. says the company is "an undervalued asset that should be kept intact," a spokesperson for the venture capital fund says.
Daryl Harms, a businessman who runs the Masada Resources Group, is "leading an effort to purchase the HealthSouth Corp. with the intent to take it private," adds Ayana James of Masada.
Harms told the Birmingham News last week that he would not make an offer on HealthSouth until an audit is concluded and its real value is calculated.
HealthSouth is $1.25 billion in default to its bank lenders.
In a letter to employees on Friday, the company reported that PricewaterhouseCoopers, after intensive auditing, is expected to pinpoint the real value of the company by the end of this month.
But Carsten Beith, a principal at the Chicago office of Cain Brothers, a healthcare investment banking firm, says that even when the PricewaterhouseCoopers report is issued, would-be investors still have to contend with a daunting unknowable: the ultimate costs of ongoing investigations and lawsuits against HealthSouth.
HealthSouth and former executives are under federal investigation for allegedly overstating earnings by nearly $2.5 billion since 1997.
Beith says he represents doctors and hospitals that are considering buying HealthSouth's stake in a jointly owned surgery and rehabilitation center.
If HealthSouth is saddled with high fines and other payments, Beith says it would make sense to spin off the centers. He says the centers would keep their value as separate entities because they probably won't be implicated in investigations of HealthSouth's headquarters operation.
On the other hand, Beith says many of his clients would welcome a buyer like Harms who could keep HealthSouth together, pump new money into the operation and let individual centers benefit from economies of scale.