MedCath Corporation (Nasdaq: MDTH) announced today it has entered into a definitive agreement to sell its subsidiary which is the indirect owner of a one-third ownership interest and management rights in Avera Heart Hospital of South Dakota to Avera McKennan. The transaction is expected to close in 45 to 90 days, subject to certain closing conditions.
Purchase terms are $20.0 million plus a percentage of eligible cash, which is anticipated to net approximately $16.0 million to MedCath after closing costs and taxes. After the closing, two-thirds of the hospital will be owned by Avera McKennan, a member of Avera Health, a regional health care family of more than 235 facilities in South Dakota, North Dakota, Minnesota, Iowa and Nebraska.
The agreement marks MedCath's second transaction since it announced the formation of a Strategic Options Committee in March to consider the sale either of the entire company or its assets. Earlier this month, MedCath announced it had entered into an agreement to sell Arizona Heart Hospital. MedCath also announced in February that it had entered into an agreement to sell Heart Hospital of Austin.