A Medical Device Daily

As a result of uncertain market conditions, IPOs have been few and far between this year. Nevertheless, Select Medical Holdings (Mechanicsburg, Pennsylvania) filed plans with the Securities and Exchange Commission last Friday for one. The company listed the IPO at $100 million, but said that figure was used only to calculate the registration fee.

Select Medical provides long-term acute-care and medical rehabilitation at nearly 100 hospitals in about 25 states. These centers, usually located in leased space within general hospitals, specialize in treating severe ailments such as respiratory failure, spinal cord injury, and other conditions that require medically complex care over a longer term than the usual hospital stay.

The firm also runs outpatient rehabilitation clinics and offers contract rehab services at nursing homes and other locations. With its 2007 purchase of HealthSouth's (Birmingham, Alabama) outpatient rehab division, the firm has more than 1,100 outpatient locations across the U.S.

Welsh Carson holds a controlling interest in the company.

The number of shares to be offered and the price have not yet been determined, however the company did say its current share count is 205.1 million. Select Medical said it would use some of the proceeds to repay some debt but did not specify what it would do with the rest of the proceeds.

Among the risk factors Select noted in its SEC filing is the fact that there is no existing public market for the company's common stock and it does not know if one will develop. That could make it difficult for investors to sell the common stock that they buy. Also, Select said, future sales of its common stock, including shares purchased in this offering, in the public market could lower the company's stock price.

The offering is being made through Morgan Stanley, Merrill Lynch, Goldman Sachs, JPMorgan, Wachovia, Credit Suisse and Jefferies & Company.

In other financing activity:

PSS World Medical (Jacksonville, Florida) said it would offer about $200 million aggregate principal amount of convertible senior notes due 2014 through offerings to qualified institutional buyers. The notes will be convertible, under certain circumstances, into cash up to the principal amount of the notes and shares of PSS common stock for any conversion value in excess of the principal amount.

The company said it also expects to grant the initial buyer an option to purchase up to $30 million of additional notes.

PSS plans to use some of the net proceeds of the offering to repay its existing 2.25% convertible senior notes on or before their redemption date of March 15, 2009, and to repurchase up to roughly $35 million of its common stock in privately negotiated transactions with institutional investors concurrently with this offering. In conjunction with this offering, PSS said it intends to enter into convertible note hedge transactions with the initial purchaser and/or its affiliates.

The company also wants to enter into a separate transaction with the initial buyer and/or its affiliates to sell warrants to purchase its common stock. PSS plans to use a portion of the net proceeds of the offering, and of the warrants that it expects to sell, to pay the costs of its hedge transactions. Remaining proceeds, if any, will be used for general corporate purposes, the company said.

If the initial purchaser exercises its option to purchase additional notes, PSS intends to sell additional warrants and to use a portion of the net proceeds to increase the size of the convertible note hedge transactions.

PSS is a national distributor of medical products to physicians and elder care providers through its two business units.

intraFusion (Houston), a specialized physician practice management company, said it has received a strategic investment from Lake Capital to support the company's ongoing growth plans. intraFusion provides turnkey management services to physicians who administer outpatient infusion therapies within their practice. From the initial set-up and staffing of the infusion center to billing, collections, materials management services, and more, this service is intended to allow doctors to practice medicine and focus more on patient care instead of running a business.

Lake Capital is a private equity firm that focuses on investments in service-based enterprises across various industries. The firm currently manages more than $1.3 billion in equity commitments and seeks to build leading services companies through organic and acquisition-enhanced growth.

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