A Medical Device Daily

The Texas Pacific Group (TPG; San Francisco/London) reported that it finalized its previously disclosed transaction with HealthSouth (Birmingham, Alabama) to purchase its Surgery Division, creating Surgical Care Affiliates (SCA), one of the nation’s largest independent surgical care companies.

The $945 million transaction was first disclosed in March (Medical Device Daily, March 27, 2007), consists of cash consideration of about $920 million and an equity interest whereby HealthSouth has the opportunity to participate in the future success of the newly-formed company. The future consideration is estimated to be worth $25 million — $30 million assuming a five-year horizon.

The new company is among the nation’s largest providers of outpatient surgical services and is comprised of a network of 137 outpatient surgery centers and three surgical hospitals across the country.

SCA’s facilities provide surgical services to physicians and their patients in 35 states with a concentration of facilities in California, Texas, Florida, North Carolina, and Alabama.

Surgical Care Affiliates is one of the nation’s largest providers of specialty surgical services. With 6,000 employees, SCA provides a broad array of specialty surgical services to more than 3,000 physician partners across the country.

In other dealmaking news:

• Anodyne Medical Device (Los Angeles), a designer and manufacturer of specialty support surfaces and patient positioning devices serving the acute care, home care and long-term care medical markets, reported its acquisition of PrimaTech Medical Systems (Oklahoma City, Oklahoma), a supplier of electronically controlled specialty support systems to the long-term care and home care medical markets, for an undisclosed sum.

PrimaTech specializes in the design and distribution of medical support surfaces, including mattress replacements, overlays and seating systems, with a distribution network that extends through North America, Europe and Australia.

“The addition of PrimaTech to Anodyne Medical Device underscores our commitment to growth in the long-term care and home care markets, while allowing us to maintain our leadership position in the acute care market,” said Mark Bidner, CEO and Chairman of Anodyne. “The acquisition of PrimaTech also solidifies an exclusive partnership with Taiwan-based Suzric Enterprise, Ltd., to continue manufacturing products for PrimaTech. “This strategic relationship will enable Anodyne Medical Device to marry its industry leading technology with Suzric’s low cost manufacturing capabilities to provide quality product at competitive pricing in the home care and long-term care marketplace.”

In keeping with the company’s policy of retaining the existing management of its acquisitions, PrimaTech’s Dikran Tourian has been named executive VP of Sales and Marketing of Anodyne.

• Pioneer Surgical Technology (Marquette, Michigan) reported that it has entered into a license agreement with AlpineSpine , (American Fork, Utah), to acquire the global rights to LowTop, Alpine’s pedicle screw locking system and cross-link design.

“This new very low profile pedicle screw system is a paradigm shift in spinal fixation,” said Matthew Songer, MD, CEO and chairman of Pioneer. “This locking system will be able to be used from the occiput to the sacrum seamlessly, provide more functionality and versatility than current systems, and be adaptable to minimally invasive surgery.”

Terms of the license agreement were not disclosed. This is the first license agreement between the two companies.

Pioneer Surgical Technology is a maker of spinal and orthopedic implants.

AlpineSpine develops spinal devices that employ minimally traumatic techniques to decrease surgical morbidity; thus, speeding recovery and improving clinical outcomes.

• Pediatrix Medical Group (Fort Lauderdale, Florida) reported that it has completed the acquisition of a pediatric cardiology physician group practice based in San Antonio which provides physician services to patients in communities throughout south central Texas.

The five pediatric cardiologists practicing as Pediatric Cardiology Associates are now part of Pediatrix’s national group practice, a provider of newborn, maternal-fetal and pediatric subspecialty physician services.

Pediatrix paid an undisclosed amount of cash for the San Antonio practice and expects that this acquisition will be immediately accretive.

During 2007, Pediatrix has completed three physician group practice acquisitions, including neonatal practices in San Francisco and Munster, Indiana, as well as the San Antonio practice.

• Kindred Healthcare (Louisville, Kentucky) reported that it has purchased for resale 22 under-performing facilities previously leased fromVentas (Louisville, Kentucky.

As previously reported, Kindred had entered into definitive agreements with Ventas to acquire 21 nursing centers and one long-term acute care hospital for $171.5 million (MDD, May 1, 2007)). In addition, Kindred paid a lease termination fee of $3.5 million. The current annual rents for the facilities are about $10.3 million.

The facilities, which contain 2,634 licensed nursing center beds and 220 licensed hospital beds, generated pretax losses of about $10 million for the year ended Dec. 31, 2006. Upon closing, Kindred will account for the operations of the facilities as discontinued operations.

Kindred expects to generate between $80 million and $90 million in proceeds from the sale of the facilities and the related operations. It expects to record a net loss of about $60 million to $70 million in the 2Q07 relating to these divestitures. The company said it expects a total net (after tax) cash outlay of between $46 million to $52 million.