Benzinga | Nov 9, 2021 11:25AM EST

Tenet Strikes Surgery Center Deal Worth $1.2B

* Tenet Healthcare Corp (NYSE:THC) has agreed to acquire SurgCenter Development for approximately $1.2 billion.

* Tenet and its subsidiary, United Surgical Partners International (USPI), will acquire ownership interests in 92 ambulatory surgery centers (ASC) and related ambulatory support services.

* Of the 92 ASCs, 27 have either opened within the last year or will perform their first cases in 2022.

* The deal is expected to close in Q4 of FY21.

* Additionally, USPI plans to acquire a portion of equity interests in the ASCs from physician owners for incremental consideration of up to approximately $250 million.

* SurgCenter and USPI will also enter into a new agreement to develop at least 50 centers over five years.

* The transaction will further diversify Tenet's mix of Adjusted EBITDA, with a larger portion being produced by its higher-margin ambulatory portfolio.

* Tenet expects the transaction to generate strong financial returns, including enhanced Adjusted EBITDA margins and free cash flow.

* It expects to realize at least $45 million of annual run-rate synergies over the next three to four years from the transaction.

* Tenet plans to finance the transaction through the issuance of first-lien secured notes. It held $2.29 billion in cash and equivalents as of September 30, 2021.

* Price Action: THC shares closed 0.29% lower at $75.20 on Monday.