by John R. Fischer
, Senior Reporter | October 15, 2019
MEDNAX, a national health solutions provider of physician services, is selling off its MedData business to Frazier Healthcare Partners for a cash consideration of approximately $250 million.
The sale of the technology-enabled management service unit, which caters to the needs of more than 10,000 physicians, is projected to help MEDNAX grow as a company, with the net proceeds expected to be used for debt repayment, share repurchases and strategic acquisitions.
"The sale of MedData will better position MEDNAX, both financially and strategically, for long-term shareholder value creation by allowing it to focus on its core physician services business and significantly reducing the company's leverage and future capital expenditures,” Stephen D. Farber, executive vice president and chief financial officer of MEDNAX, said in a statement. “This transaction also aligns MEDNAX, a key customer of MedData, to participate in the success of that organization under Frazier’s ownership.”
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Plans to divest MedData were initially announced in November 2018, with the company classifying it at the beginning of the first quarter of 2019 as discontinued operations.
MEDNAX, however, will not be cutting off all ties with its former business segment, entering into a long-term service agreement in which it will be one of MedData’s largest customers following the closing of the sale. In addition to the approximate $250 million at closing, MEDNAX will receive economic consideration of up to $50 million that is contingent on short- and long-term performance of MedData. It also expects certain cash tax benefits from the transaction in the coming quarters.
The agreement provides Frazier with a service that has operated for more than four decades and serves physicians at over 3,000 nationwide facilities from its headquarters in Brecksville, Ohio, and more than 20 regional offices across the United States.
“We are excited to be partnering with MedData’s 2,000 dedicated employees to continue to provide best-in-class patient financial and advocacy services to the company’s broad base of customers,” said Nader Naini, managing partner of Frazier, in a statement. “As part of our growth strategy, we are committed to bringing additional resources to accelerate and enhance its offerings to help our customers reduce costs, recover revenue and optimize their operations.”
The transaction is subject to customary closing conditions. It is expected to be completed during the fourth quarter of 2019.Back to HCB News