The complicated series of transactions leading up to the planned merger would not involve the transfer of cash, with the current owners of the respective companies getting shares in the new USMD Holdings, Dry said. The company has gained approval from the Securities and Exchange Commission to combine, Dry said. The company executives hope to close the deal and start trading on Nasdaq by Sept. 1, she said.
The three organizations combined would have 240 physicians and associate practitioners in 18 specialties and 64 clinics, though each of the three major entities will continue to operate under their current names and logos, according to the release. USMD, founded as US Lithotripsy in 1994, has minority ownership in two small hospitals through a subsidiary called Mat-RX Development. The hospitals, 34-bed USMD Hospital at Arlington (Texas) and eight-bed USMD Hospital at Fort Worth, are currently 51% owned by Texas Health Resources, according to SEC filings, and supplied 31% of USMD's $48.9 million net operating revenue in 2011, which would be about $15.1 million, according to the filing. USMD's operating income was $18.7 million in 2011 and net income of $2.7 million, according to the SEC filing.
USMD still has a lithotripsy business that offers its services to hospitals in nine states, and also serves ambulatory centers and physician offices. The division produced revenue of close to $22 million in 2011, which represented 45% of net operating revenue. The company also has a cancer treatment division that offers broad-based management and clinical services to cancer treatment centers, according to the filings, though financial results for that division were not available.
Meanwhile, Medical Clinic of North Texas is a multispecialty clinic that as of the end of 2011 had 143 physicians and 41 sites in the region. Also included in the merger is Impel, a physician practice management company that shares some ownership and management with the Medical Clinic of North Texas, which also is a client, according to the filings. The third leg of the organization, Urology Associates of North Texas, as of the end of 2011 had 53 physicians practicing in 23 locations. Financials were unavailable for the two practices.
In addition to Kennedy as COO, Dr. John House, chairman and CEO of USMD and managing partner at the urology group, would be chairman and CEO of USMD Holdings. Dr. Richard Johnston, president of Medical Clinic of North Texas, is slated to be chief physician officer, and Christopher Dunleavy, current chief financial officer of USMD, would be CFO of USMD Holdings.