Tenet Strikes Surgery Center Deal Worth $1.2B

Tenet Healthcare Corp THC has agreed to acquire SurgCenter Development for approximately $1.2 billion.
Tenet and its subsidiary, United Surgical Partners International (USPI), will acquire ownership interests in 92 ambulatory surgery centers (ASC) and related ambulatory support services.
Of the 92 ASCs, 27 have either opened within the last year or will perform their first cases in 2022.
The deal is expected to close in Q4 of FY21.
Additionally, USPI plans to acquire a portion of equity interests in the ASCs from physician owners for incremental consideration of up to approximately $250 million.
SurgCenter and USPI will also enter into a new agreement to develop at least 50 centers over five years.
The transaction will further diversify Tenet's mix of Adjusted EBITDA, with a larger portion being produced by its higher-margin ambulatory portfolio.
Tenet expects the transaction to generate strong financial returns, including enhanced Adjusted EBITDA margins and free cash flow.
It expects to realize at least $45 million of annual run-rate synergies over the next three to four years from the transaction.
Tenet plans to finance the transaction through the issuance of first-lien secured notes. It held $2.29 billion in cash and equivalents as of September 30, 2021.
Price Action: THC shares closed 0.29% lower at $75.20 on Monday.