HealthGrades, the publicly traded healthcare ratings organization, said it entered into a definitive agreement to be acquired by private-equity firm Vestar Capital Partners V for $294 million.
The firms said the Vestar affiliate would purchase all 36 million outstanding shares in an all-cash tender offer at a 32% premium over HealthGrades' 30-day average closing stock price. The transaction is expected to take place no later than Aug. 10, a news release from the companies said.
The offer is contingent upon Vestar's acquisition of at least a majority of HealthGrades shares. The board of directors of HealthGrades unanimously approved the acquisition agreement. Executive officers of HealthGrades, who own about 21% of the shares, have agreed to sell to Vestar, after which the firm will acquire any remaining shares for $8.20 apiece in a “second-step merger.”
For the fiscal year ended Dec. 31, 2009, HealthGrades recorded $7.1 million in net income on $53 million in revenue, according to SEC filings. For the quarter ended June 30, HealthGrades recorded $3.2 million in net income on $15.6 million in revenue, a 25% increase from the year-ago period. The main driver of revenue growth was the company's Internet advertising and sponsorship business, according to the latest quarterly report.