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Surgery Partners to Expand Facilities with $760M Buy

Health care services company Surgery Partners Inc. said Wednesday it would buy a private equity-backed owner and operator of surgical facilities in a $760 million deal, bolstering its surgical facility holdings across the U.S. and its offerings for musculoskeletal care.

The deal will see Surgery Partners purchase National Surgical Healthcare from Irving Place Capital in a cash deal. HIG Capital is a shareholder in Surgery Partners, and the health care services company will use an investment from Bain Capital Private Equity, which will take on HIG’s stake post-closing, to finance part of the deal, according to a statement.

NSH’s holdings will give Surgery Partners 125 surgical facilities and 58 physician practice locations across 32 states. In addition, it will bolster the company’s orthopedics, spine and pain care offerings, it said.

“This transaction strengthens our market position and will provide new opportunities to introduce ancillary services to our expanded network of surgical facilities,” Mike Doyle, Surgery Partners’ chief executive officer, said in a statement. “NSH and Surgery Partners share a commitment to high quality, cost effective health care services.”

According to the statement, the deal is expected to close sometime this year, and it is subject to both regulatory approvals and customary closing conditions.

Wednesday’s deal also puts an end to Surgery Partners’ relationship with HIG Capital, which helped shepherd the company through its fall 2015 initial public offering.

In late September 2015, Surgery Partners raised $271.4 million in its IPO by selling 14.28 million shares for $19 apiece. The company had said that it expected to debut somewhere between $23 and $26 per share.

The company was coming off of a $792 million purchase of Nashville, Tennessee-based Symbion Inc., which added 56 locations to its portfolio the year prior.

Surgery Partners’ shares have been on the upswing since the year began, and it is up about 32 percent since Jan. 3. The company opened trading on Wednesday's news of the deal down 20 cents, at $18 per share, but around noon the company’s shares were up nearly 16 percent.

Jefferies LLC served as financial adviser for Surgery Partners and Bain Capital on Wednesday’s deal, while Ropes & Gray LLP served as legal counsel. Kirkland & Ellis also advised Bain on the matter. The Ropes & Gray team included partners Carl Marcellino, Will Shields, Byung Choi, Stefanie Birkmann, Adam Greenwood and David Hennes. The Kirkland team was led by partners Neal J. Reenan, Ian Bushner and Sarkis Jebejian, with help from associates Nathan Davis, Billy Means and Robert McLellarn.

JPMorgan Securities LLC was NSH’s financial adviser, while Weil Gotshal & Manges LLP provided legal advice. The Weil team was led by partner Christopher Machera and included partner Harvey Eisenberg, associate Brittany Butwin and associate Edi Rumano.

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