The buyout of Iasis Healthcare Corp. will infuse the company with new capital that will set the stage for expansion projects and acquisitions, the company said when it announced the deal last week.
Texas Pacific Group is leading an investment group that will buy Iasis, based in Franklin, Tenn., for $1.4 billion, making it the majority owner. Other investors include JLL Partners, the private equity firm that was the initial backer for Iasis when the company was founded in 1999, and some Iasis managers. The deal, pending regulatory approvals, is expected to close by June 30.
As part of the deal, Iasis plans to refinance its $662 million debt, said W. Carl Whitmer, the company's chief financial officer. The company announced a tender offer last week to buy back $330 million in bonds. Whitmer declined to say how much new money will eventually be available for expansions and acquisitions, but he added that the amount will become clearer as the closing date for the buyout approaches.
"We will continue to invest in our existing hospitals," he said in a phone interview. "We've had good success investing in them, and we'll have more capital to do new projects and selectively pursue acquisitions."
Texas Pacific's healthcare investments include Oxford Health Plans and Quintiles Transnational Corp.
Also last week, Iasis reported higher earnings for the quarter ended March 31, its second quarter of fiscal 2004. Iasis said it earned $11.9 million, compared with $10.9 million in 2003's second quarter. Revenue was up 31% to $355.5 million. Iasis said it spent about $5 million more in the second quarter for writing off debt-issuance costs, $8.9 million compared with $3.9 million a year ago. Those costs were partially offset by a one-time gain of $3.6 million on the sale of Rocky Mountain Medical Center, Salt Lake City. For the six months, Iasis earned $20.1 million, compared with $18.4 million in the year-ago period. Revenue rose 28% to $673.6 million.