Bain Capital is an American private investment firm based in Boston, and they have sourced a lucrative opportunity in the surgical facility and ancillary services space. They wanted to fully acquire Surgery Partners, based in Cleveland, Tennessee, following their 39% stake in the company. According to Reuters, they have no interest in selling the shares they own to any other stakeholders. Other firms such as private equity firm TPG and UnitedHealth Group, the parent company of Optum, aimed to acquire the remaining shares but the deal did not happen. The deal was announced on the 28th of January 2025.
Surgery Partners distinguishes itself as one of the five largest operators of ambulatory surgery centers in the United States. They became public in 2015 and have a vast portfolio, comprising more than 200 ambulatory surgery centres (ASC), surgical hospitals, and urgent care facilities across 33 states. Additionally, they have a strong workforce with more than 4,000 physicians.
In Q3 2024, their revenue increased 14.3% to $770.4m from $674.1m a year prior. Their adjusted EBITDA settled at $128.6mn, representing 21.9% growth and they had an adjusted EBITDA margin up 100 basis points from 2023. These figures suggest that Surgery Partners has been on an upward trajectory, and this claim is boosted by the following news. Recently, they partnered with several health systems to help build and acquire new ASCs and these joint ventures include Intermountain Health, Methodist Health, OhioHealth, MultiCare Health, and Parkview Health. Their rationale for the move comes from healthcare continuing to migrate from hospitals to outpatient settings.
However, a risk to this deal is their cash flows from operating activities because they decreased by approximately $40m in the third quarter of 2024. This is due to the increase in transaction-related costs, the timing of routine transactions involving working capital, and the impact of Hurricane Helene on collections. Moving into 2025, it would be important for Bain Capital to subside fears of decreasing cash flow and improve operating activities.
Bain Capital agreed to buy all outstanding shares for $25.75 in cash and the offer represents a 21.2% premium over Surgery Partners’ last closing price. Following the deal, Surgery Partners' share price increased significantly, surging by 20% after the news came, and Bain Capital’s new offer valued Surgery Partners at $3.2bn. The private equity firm stated shortly after the deal, “We have reflected on these events and current investor sentiment and have concluded that our proposal is in the best interests of the company and its stockholders’’. As the IPO market should pick up in 2025, this provides an opportunity for private equity firms, including Bain Capital, to exit their investments.
Sources: Merger Links, Beckers Hospital CFO report, Private Equity Wire, Yahoo Finance
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