Concentra and U.S. HealthWorks’ $753 Million Merger

Goldman Sachs & Co. served as exclusive financial advisor, and Jones Day served as legal advisor, to Dignity Health in connection with the transaction. Dechert LLP served as legal advisor to Concentra and Select Medical in connection with the transaction.

Select Medical Holdings Corporation (“Select Medical”) (NYSE: SEM) and Dignity Health today announced the signing of a definitive agreement to combine Concentra Group Holdings, LLC (“Concentra”), an occupational medicine and urgent care service provider, with U.S. HealthWorks, Inc. (“U.S. HealthWorks”), a subsidiary of Dignity Health Holdings Company (“DHHC”), also a service provider in this sector. This partnership will strengthen the delivery of care through greater access and standardization of best practices improving the health and wellness services for employers and employees.

Subject to the satisfaction of closing conditions, the transaction will occur through an equity purchase and contribution agreement (the “Purchase Agreement”), whereby Concentra will acquire all of the issued and outstanding shares of stock of U.S. HealthWorks from DHHC. Following the closing of the transaction, Dignity Health will own a 20% equity interest in the combined entity holding Concentra and U.S. HealthWorks.

U.S. HealthWorks is an operator of occupational healthcare centers with approximately 250 medical and onsite clinics in 21 states. Concentra was created through a joint venture between Select Medical Corporation, a wholly-owned subsidiary of Select Medical (“SMC”), Welsh, Carson, Anderson & Stowe XII, L.P. (“WCAS”) and other minority equity holders including Cressey & Company (“Cressey”).

Earlier this year, Select Medical and Dignity Health formed a joint venture to construct and operate a 60-bed acute inpatient rehabilitation hospital in the greater Las Vegas, Nevada, metro area, expected to open in 2019. That agreement also includes joint operation of 12 outpatient rehabilitation clinics in the Las Vegas area. This partnership will expand upon the relationship.

The transaction values U.S. HealthWorks at $753 million, subject to certain adjustments in accordance with the terms set forth in the Purchase Agreement. Dignity Health will receive a 20% equity interest in the combined entity, valued at $238 million, and the remainder of the purchase price in cash. In connection with closing the transaction, Concentra will also redeem certain of its outstanding equity interests from the existing minority equity holders (including WCAS and Cressey), such that SMC will retain a majority voting interest in the combined entity following the closing of the transaction. The transaction, which is targeted to close in the first quarter of 2018, is subject to a number of closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Jones Day advised Dignity Health with a team led by Timothy G. Hoxie.

The Fried Frank advised Goldman Sachs as financial advisor to Dignity Health with Philip Richter (Picture) and included corporate special counsel Ryan M. Williams.

Dechert LLP is advising Concentra Group Holdings, LLC and Select Medical Holdings Corporation with Stephen Leitzell and Sarah Gelb and associates Jonathan Stott and Francesco Salpietro (corporate); partner James Fishkin and associate Konstantin Medvedovsky (antitrust); partner Edward Lemanowicz and associate Amanda Reed (tax); partner Abbi Cohen (environmental); partner Thomas Rayski (intellectual property); partner Eric Rubin and associates Andrew Braid and Michael Binko (employee benefits); counsel Ian Downes and associate Rhiannon DiClemente (labor and employment); and counsel Francois Quintard-Morenas (real estate).

Involved fees earner: Stephen Leitzell – Dechert; Sarah Gelb – Dechert; Jonathan Stott – Dechert; Francesco Salpietro – Dechert; James Fishkin – Dechert; Konstantin Medvedovsky – Dechert; Edward Lemanowicz – Dechert; Amanda Reed – Dechert; Abbi Cohen – Dechert; Thomas Rayski – Dechert; Eric Rubin – Dechert; Andrew Braid – Dechert; Michael Binko – Dechert; Ian Downes – Dechert; Rhiannon DiClemente – Dechert; Francois Quintard-Morenas – Dechert; Philip Richter – Fried Frank Harris Shriver & Jacobson; Ryan Williams – Fried Frank Harris Shriver & Jacobson; Timothy Hoxie – Jones Day;

Law Firms: Dechert; Fried Frank Harris Shriver & Jacobson; Jones Day;

Clients: Goldman, Sachs & Co.; Select Medical Corporation; Dignity Health; Concentra Group Holdings, LLC;


Author: Ambrogio Visconti