Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Nobilis Health Corp. (NYSE: HLTH), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=HLTH.
The Company announced on November 16, 2017, that it has acquired 50.1%
ownership interest in Elite Surgical Affiliates' portfolio of three
ambulatory surgery centers (ASCs) and one surgical hospital in the
greater Houston area. For immediate access to our complimentary reports,
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Total Consideration of $60 Million
- Nobilis had agreed upon a total purchase price of $60 million. The Company plans to fund the acquisition through expansion of its current credit facility by $50 million with BBVA continuing as its lead arranger.
- For the remaining $10 million, the Company intends to use its cash on hand of $6.1 million, seller notes of around $3.5 million, and stock of $0.5 million.
Financial Implications of the Transaction
- As a result of the acquisition, Nobilis would now own 13 locations in the Houston market. This includes nine surgical facilities and four clinics. Of this, ten locations would operate under in-network contracts with all of the major commercial payers.
- Therefore, Nobilis would benefit from the economies of scale, resulting from the expanded platform of facilities. The transaction is expected to boost productivity, reduce staffing requirements, and lessen operating costs over time.
- The trailing twelve months revenue and adjusted EBITDA for the period ended September 30, 2017, for the acquired facilities was $49.0 million and $30.3 million, respectively.
- Nobilis anticipates operational efficiencies of nearly $2 million from the consolidation of one Elite ASC with one existing Nobilis ASC, both of which are currently located at the same address.
How Will the Acquisition Impact Nobilis?
Harry Fleming, Chief Executive Officer at Nobilis, stated that the acquisition would create a strategic opportunity for Nobilis to boost its in-network revenue as it adds nearly 76 physician partners to the Company's existing network of surgeons in the Houston market.
He added that the transaction is not just accretive to earnings, but it also enhances Nobilis' ability to deliver outstanding, cost-effective healthcare to its patients, and communities across the Houston area.
Likewise, Kenneth Efird, President at Nobilis, also highlighted the strategic benefits from the acquisition. He stated that the integration of Elite Surgical's assets with Nobilis would lead to a number of benefits, mostly in four important areas:
- It would create operational efficiencies by leveraging the best practices from both Companies.
- It would create an opportunity for Nobilis to improve conversion through the increase in referral-based business.
- The pooled resources from both Companies would help expand marketing services to the physicians who are newly aligned with Nobilis.
- Moreover, it would create an opportunity for Nobilis to expand its footprint within the Houston market.
Changes in Nobilis' Top Management
Nobilis also announced the modification in its top management. Dr. Donald L. Kramer will retire from the Board of Directors and Harry Fleming will take over as the Chairman of the Board, effective from November 16, 2017. Harry Fleming would retain his CEO title and would serve in the capacity of an Executive Chairman.
About Nobilis Health Corp.
Nobilis is a full-service healthcare development and management Company. It owns 31 locations across Texas and Arizona, including 5 hospitals, 13 ASCs, and 13 multi-specialty clinics. Apart from that, it partners with an additional 36 facilities across the country. Nobilis implements a unique patient acquisition strategy driven by its proprietary, direct-to-consumer marketing technology, focusing on a specified set of procedures that are performed at its facilities by local physicians.
Last Close Stock Review
Nobilis Health's share price finished last Friday's trading session flat at $1.45. A total volume of 410.79 thousand shares have exchanged hands, which was higher than the 3-month average volume of 272.10 thousand shares. The Company's stock price advanced 3.57% in the past six months. Shares of the Company have a PE ratio of 12.39 and currently have a market cap of $112.80 million.
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