Tenet Healthcare Corp. (THC) will acquire Alabama-based CardioVascular Associates P.C. (CVA) during the fourth quarter of 2011. The terms of the takeover have not been disclosed. Tenet’s subsidiary Brookwood Medical Center will partner with CVA to form CardioVascular Associated of the Southeast, which will act as a subsidiary of Tenet.
CVA is a 65-year old organization which specializes in providing heart and vascular care. It is one of the biggest cardiovascular facilities in the Southeast.
The construction of CVA’s new $20 million facility at Colonnade, which will accommodate the consolidated practices of CVA’s Brookwood and Trinity centers, will continue as per plan. CVA’s full-service center in Shelby and 9 outpatient clinics will also continue functioning without any changes. CVA’s complete workforce of 30 physicians and 195 employees will be employed by Tenet after the takeover.
We believe that the collaboration between Brookwood and CVA will help in improving the quality of service as the resulting organization will be able to garner the expertise of both. Both facilities believe in providing high-quality, cost-effective health care and the acquisition will help in improving Tenet’s profitability and add to its financial strength, thereby strengthening its position against unwanted takeover bids.
Tenet has recently been the target of a takeover bid by rival healthcare operator Community Health Systems Inc. (CYH) and had rejected the company’s third and final bid in May this year.
Tenet reported second-quarter income from continuing operations of $66 million or 9 cents per share, at par with the Zacks Consensus Estimate.
The Zacks Consensus Estimate of earnings is currently at 8 cents per share in the third quarter of 2011, up about 900% year over year. Of the 17 firms covering the stock, 8 firms have revised their estimates downward while 4 upward revisions were witnessed.
For 2011, Tenet’s earnings are expected to be 44 cents per share, climbing about 7.32% from 2010.
On Monday, the shares of Tenet closed at $5.38, up 4.87%, on the New York Stock Exchange. The company carries a Zacks #3 Rank, which implies a short-term Hold rating.
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