HealthSouth Corp., Birmingham, Ala., announced two deals last week that continued its overhaul from a broad provider of post-acute services to one focused on rehabilitation hospitals.
HealthSouth said it has agreed to sell its diagnostic division for $47.5 million to the Gores Group, Los Angeles, a private equity firm. The division includes 54 free-standing diagnostic imaging centers in 19 states and the District of Columbia. The company also said separately that it and Wellmont Health Systems, Kingsport, Tenn., are forming a partnership to own and operate 50-bed HealthSouth Rehabilitation Hospital, Kingsport, and to develop a new 25-bed rehabilitation hospital in Bristol, Va., which is nearly 30 miles from Kingsport.
With the agreement to sell the diagnostic division, HealthSouth has deals pending to sell all three of its ambulatory divisions. The other deals include: an agreement to sell the companys ambulatory surgery division to Texas Pacific Group, Fort Worth, a private equity firm, for $945 million; and an agreement to sell its outpatient rehabilitation division for $245 million to Select Medical Corp., Mechanicsburg, Pa.
HealthSouth said that the proceeds from all three sales deals will be used to pay down long-term debt. As of Dec. 31, 2006, HealthSouth had long-term-debt obligations of $3.37 billion, according to a securities filing.
The partnership with Wellmont, to be called Wellmont/HealthSouth IRF, will be completed as soon as HealthSouth receives permission from Virginia regulators to build the new hospital. Terms of the ownership structure of the partnership were not disclosed.
For-profit HealthSouth operates 93 rehabilitation hospitals and 10 long-term acute-care hospitals. Not-for-profit Wellmont owns or operates five hospitals in Tennessee and Virginia.