Healthcare staffing services provider Cross Country Health has acquired privately-held Medical Doctors Associates, Inc., and its subsidiaries for $112.3 million in cash, in a bid to expand the company's locum tenens staffing.
Headquartered in Norcross, Ga., MDA provides multi-specialty locum tenens (physician) and allied staffing services throughout the country. MDA is an ESOP (employee stock ownership plans)-owned company, and in 2007 had revenue of $158 million and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $13.3 million.
"This acquisition will combine our core nurse and allied staffing business with MDA's strong locum tenens business to enhance Cross Country's competitive position as a leading national provider of healthcare staffing solutions. It will also provide potential revenue synergies with our Cejka Search retained physician search business," said Joseph A. Boshart, president and chief executive officer of Cross Country Healthcare, Inc. "For some time now, we have been looking to expand into the locum tenens market by acquiring a growing company with an excellent management team at a price that will allow us to show attractive returns to our shareholders. We believe we have achieved all these objectives with this transaction and I am especially pleased that MDA's experienced management team will continue to run the business going forward. We look forward to working with everyone at MDA to continue their history of quality-driven growth."
To finance the deal, Cross Country Healthcare entered into a fully underwritten $200 million financing commitment with Wachovia Capital Markets, LLC and certain of its affiliates and Banc of America Securities.
Pursuant to this commitment, the company will amend and keep in place its existing $75 million revolving credit facility and also enter into a $125 million, 5-year term loan, from which the proceeds will be used to finance the acquisition and for general corporate purposes.
Upon closing this transaction, Cross Country Healthcare's debt to total capitalization ratio is expected to be approximately 29 percent and its debt leverage ratio, as defined under the credit facility, is expected to be approximately 2.4-to-1.
"We have known Cross Country for a number of years and have held both the company and its management team in the highest regard," said Ken Shumard, chairman and founder of MDA Holdings. "During this process, we have come to know them a whole lot better and I believe there is a high degree of cultural fit between our two organizations that will allow MDA to continue on its mission to serve the healthcare industry through a commitment to quality, integrity, and personal service. We look forward to being a valued part of the Cross Country organization."
Cross Country Health anticipates closing this transaction by the end of the third quarter of 2008. The acquisition will be accretive to its 2008 earnings by approximately $0.02 per diluted share, subject to the timing of the closing of the transaction.