Mechanicsburg, PA – Select Medical Holdings Corporation (NYSE: SEM) and Dignity Health recently announced the signing of a definitive agreement to combine Concentra Group Holdings, LLC, an occupational medicine and urgent care service provider, with U.S. HealthWorks, Inc., a subsidiary of Dignity Health Holdings Company, also a service provider in this sector. This partnership will strengthen the delivery of care through greater access and standardization of best practices improving the health and wellness services for employers and employees.
Subject to the satisfaction of closing conditions, the transaction will occur through an equity purchase and contribution agreement, whereby Concentra will acquire all of the issued and outstanding shares of stock of U.S. HealthWorks from DHHC. Following the closing of the transaction, Dignity Health will own a 20% equity interest in the combined entity holding Concentra and U.S. HealthWorks.
U.S. HealthWorks is an operator of occupational healthcare centers with approximately 250 medical and onsite clinics in 21 states. Concentra was created through a joint venture between Select Medical Corporation, a wholly-owned subsidiary of Select Medical (“SMC”), Welsh, Carson, Anderson & Stowe XII, L.P. (“WCAS”) and other minority equity holders including Cressey & Company (“Cressey”).
Earlier this year, Select Medical and Dignity Health formed a joint venture to construct and operate a 60-bed acute inpatient rehabilitation hospital in the greater Las Vegas, Nevada, metro area, expected to open in 2019. That agreement also includes joint operation of 12 outpatient rehabilitation clinics in the Las Vegas area. This partnership will expand upon the relationship.
“We are excited about our partnership with Dignity Health, which enables us to join forces and deliver best-in-class occupational medicine and urgent care to communities and corporate work sites nationwide,” said Robert A. Ortenzio, Executive Chairman and Co-Founder of Select Medical. “Together, we will provide high-value, outcome-based care for thousands of patients every day.”
“Caring for America’s workforce creates a healthier population which means more productivity for business, a stronger economy, and connected communities,” said Daniel Morissette, Dignity Health’s Senior Executive Vice President/Chief Financial Officer. “Combining the two organizations will strengthen the delivery of clinical care, standardize best practices and improve service for employers and employees.”
The transaction values U.S. HealthWorks at $753 million, subject to certain adjustments in accordance with the terms set forth in the Purchase Agreement. Dignity Health will receive a 20% equity interest in the combined entity, valued at $238 million, and the remainder of the purchase price in cash. In connection with closing the transaction, Concentra will also redeem certain of its outstanding equity interests from the existing minority equity holders (including WCAS and Cressey), such that SMC will retain a majority voting interest in the combined entity following the closing of the transaction. The transaction, which is targeted to close in the first quarter of 2018, is subject to a number of closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Goldman Sachs & Co. served as exclusive financial advisor, and Jones Day served as legal advisor, to Dignity Health in connection with the transaction. Dechert LLP served as legal advisor to Concentra and Select Medical in connection with the transaction.
Source: Select Medical