You are not exactly right, @Pledge. The acquisition of 92 of Surgcenter’s (SCD) ambulatory centers (ASCs) in Dec 2021 did not end there.
“The terms of the transaction include entry into a new development agreement (besides the acquisition of stakes in 92 centers) under which (Tenet’s subsidiary) USPI will partner with SCD on the future development of a minimum target of at least 50 centers over a period of five years. The development of these new centers will generally be led by the same group of SCD principals responsible for the growth and success of the Portfolio to date. With each center, USPI will have the exclusive option to obtain an immediate ownership position at the time of development with an additional option to purchase SCD’s ownership stake 18 months after the opening of such facilities.”
As is clear from the above, there is an ongoing relationship between Tenet’s subsidiary USPI and Surgcenter where the latter provide leadership and it is still only in year 3 of the 5-year agreement. Even more interesting is how the SCD principals could enhance the value of the ASCs (ambulatory centers) under development by various means - just looking at the centers’ case mix, which “has an attractive distribution among several service lines where USPI has demonstrated expertise, including approximately 80 percent in musculoskeletal care, such as total joint and spine procedures. This complements a robust service offering within USPI’s broader platform in the areas of gastroenterology, ophthalmology, ENT, general surgery and other specialized procedures.”
The way I see it, Surgcenter, via its principal and MSB board member Philip Faccina and major shareholder GG, should be able to open doors to the Tenet ASCs for Mesoblast. Any kind of cooperation can potentially create a win-win-win situation for all three entities and will not be dissimilar to, at least in terms of distribution capability and laying the foundation for a sustainable business, and arguably better than what a big pharmaceutical company can provide, as the company is so close to potential approval and its own internally generated cashflow from Ryoncil’s commercialisation - perhaps barring a takeover from big pharma.
Finally, there is a lot to like about Tenet as well. Tenet has been selling some of its private hospitals only to redeploy it to developing more ASCs , which means it has every incentive to improve the offerings of the centers.
(20min delay)