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Tenet Healthcare Jumps on $1.1B Deal to Buy Surgical Centers

Tenet Healthcare shares touched a 52-week high after the company agreed to pay $1.1 billion for an ambulatory surgery centers portfolio.

Tenet Healthcare  (THC) - Get Tenet Healthcare Corporation Report shares touched a 52-week high after the company agreed to pay $1.1 billion for an ambulatory surgery centers portfolio from SurgCenter Development.

Shares of Tenet, the Dallas health-care-services provider, at last check were up 18% at $41.23. The shares have quadrupled off their 52-week low of $10, set in mid-March.

SurgCenter Development founded in 1993 and based in Towson, Md., develops ambulatory surgical centers in partnerships with physicians specializing in musculoskeletal surgery.

Tenet has agreed to buy stakes of as much as 60% in the centers, with the physician partners holding the rest.

The 45 centers Tenet has agreed to buy into are in Arizona, Florida, Indiana, Louisiana, Maryland, Ohio, New Hampshire, Texas and Wisconsin, Tenet said.

Under the terms, Tenet also will acquire $18 million of debt held at the ambulatory-center level.

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Tenet said it would fund the deal with cash on hand. Pending certain state clearances, Tenet hopes to close the purchase this month.

The ambulatory-surgery portfolio will be operated by Tenet’s United Surgical Partners International subsidiary.

At the deal's closing, USPI’s surgical portfolio will have as many as 310 ambulatory surgical facilities, including 24 surgical hospitals, in 33 states.

Tenet expects the deal to add 28% to earnings per share in 2021. And it expects the transaction to generate double-digit returns on invested capital within three years of closing, it said.

In October, Tenet Healthcare reported its third-quarter 2020 results, posting a net loss of $197 million compared with a net loss of $227 million in the year-earlier quarter.

The healthcare services company said that during the quarter it cut costs in an effort to mitigate the surge of covid-19 cases in certain markets. The costs included higher temporary labor and premium pay.

Tenet operates 65 hospitals and more than 520 healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care centers, clinics, and imaging centers.