- Medical Facilities Corporation (TSX:DR) has sold its majority interest in Unity Medical and Surgical Hospital (UMASH)
- The stake was purchased by a group of local investors, including physicians from a variety of clinics
- Medical Facilities previously held an 87.6 per cent interest, but has reduced it to 31.7 per cent
- The company received C$1.1 million in cash for the sale
- Shares in Medical Facilities are currently up 1.98 per cent to $3.60, with a market cap of $111.98 million
Medical Facilities Corporation (TSX:DR) has sold its majority stake in Unity Medical and Surgical Hospital (UMASH).
The company owns a range of medical facilities throughout the US, and its portfolio contains both surgical and ambulatory centres.
A group of local investors purchased Medical Facilities’ stake for $1.1 million.
Among the buyers were several leading physicians affiliated with South Bend Orthopaedics, The South Bend Clinic, and Allied Physicians of Michiana.
Prior to the sale, Medical Facilities owned 87.6 per cent of the hospital. However, its holding has now been reduced to 31.7 per cent.
Robert Horrar, President and CEO of Medical Facilities, noted that the sale was in line with the company’s strategic plan to improve UMASH.
“By partnering with three of the premiere physician groups in the area, we are taking an important step in enhancing the long-term strength of both UMASH and the corporation, as the transaction should significantly improve facility utilization and financial performance,” he said.
The buyers of Medical Facilities’ stake have options to purchase more of the company’s equity on the first and second anniversaries of the deal.
Should the company’s interest in UMASH fall below 25 per cent, the hospital will be required to immediately repay all debt owing to Medical Facilities.
The announcement also outlined the need for working capital to fund the hospital’s operations. Medical Facilities’ share is expected to be roughly $1.4 million.
In addition, the company revealed an agreement for the sale of real estate assets underlying UMASH, consisting of both land and infrastructure.
A $750,000 deposit has been received for the transaction, which is valued in total at $25 million.
“Alongside other recent initiatives … we remain focused on strengthening our balance sheet, improving operational efficiencies, and increasing our financial flexibility to better pursue long-term value maximizing opportunities,” added Mr. Horrar.
Shares in Medical Facilities are currently up 1.98 per cent to $3.60, with a market cap of $111.98 million at 11:17am EST.