“Doubling the size of U.S. Renal Care means both greater access for patients and greater operational efficiency,” USRC CEO Chris Brengard said in a news release. “We could not have chosen a better partner than ASA, given our mutual commitment to personal, professional dialysis care and our emphasis on physician-led facilities.”
USRC, founded in 2000, operates outpatient treatment centers and at-home services for people with End Stage Renal Disease, the only diagnosis for which Medicare eligibility is granted without regard to age.
“U.S. Renal Care shares our joint venture focus, and we believe they will continue to work closely with Innovative Dialysis' partner physicians to provide high-quality care to patients with End Stage Renal Disease,” ASA President and CEO Timothy Martin said in a news release when the definitive merger agreement was announced in June.
But even with the merger, the new market share of the combined entities will still be below 10%, according to ASA executive VP and general counsel Doug Chappell. In 2010, the last time that the U.S. Renal Data System published provider data, the two largest dialysis companies—Fresenius Medical Care and DaVita—treated 127,207 patients in 1,779 units and 118,142 patients in 1,646 units, respectively.
Last month, Moody's Investors Services assigned a negative outlook to USRC, citing risks associated with the company's high financial leverage, relatively small scale compared to its competitors, high concentration of revenue from government-based programs, and a proposed reimbursement rate cut by the CMS of 11.9% for fiscal year 2014. However, Moody's did state that the acquisition of ASA “significantly improves U.S. Renal's scale and geographic footprint” and cited “a stable industry profile characterized by the increasing incidence of End Stage Renal Disease and the medical necessity of the service provided.” Moody's upgraded the ratings of several of USRC's loans.
Before the acquisition, ASA, which includes 79 dialysis centers, also operated 17 radiation oncology centers through its subsidiary Radiation Oncology Services of America. But to continue focusing exclusively on dialysis care, USRC has entered into a definitive agreement with Vantage Oncology to purchase the ROSA centers.
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