MedCath to sell interest in Avera Heart Hospital of South Dakota to Avera McKennan

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.

When Avera Heart Hospital of South Dakota was formed in 2001 as a cooperative venture among MedCath, Avera McKennan and North Central Heart Institute, it became the region's only hospital dedicated solely to the diagnosis and treatment of heart disease. Soon it also became one of the nation's finest. In November, the 55-bed facility was one of four MedCath hospitals ranked among the nation's 100 Top Hospitals® for cardiovascular care – the fourth straight time it earned that honor from Thomson-Reuters. Avera Heart Hospital of South Dakota also became the region's first Accredited Chest Pain Center, ranks in the top 2 percent in the nation for patient experience and ranks in the top 5 percent in the nation for heart attack mortality rate.

"When we opened Avera Heart Hospital of South Dakota, the goal MedCath shared with its physician partners and with Avera McKennan was to fundamentally change how cardiovascular services were provided to the area," said O. Edwin French, MedCath's president and CEO. "We achieved that goal, and the results speak for themselves. We wish our partners and colleagues at AHHSD continued success."