HealthSouth Corp. continued its efforts to shed extraneous lines Thursday, announcing that it had entered a definitive agreement to sell its diagnostic division.
The sale, to The Gores Group, is expected to bring the company $47.5 million. In return, Los Angeles-based Gores, a private equity firm, will assume control of a network of 54 freestanding diagnostic imaging centers in 19 states and the District of Columbia.
HealthSouth said the diagnostic centers offer a variety of diagnostic imaging technologies, including magnetic resonance imaging, computed tomography, X-ray, ultrasound, mammography and other modalities.
The sale is the third announced by HealthSouth this year as it continues its strategy of repositioning the company as a post-acute healthcare entity, focusing on inpatient rehabilitative services.
"We have now entered into definitive agreements for the sale of all three of our ambulatory divisions," said Jay Grinney, HealthSouth president and CEO. "The proceeds from this transaction will be used to pay down a portion of our long-term debt."
In late March, HealthSouth announced the largest deal of the three, selling its surgery division, consisting of 139 outpatient surgery centers and three surgical hospitals, to TG, a private investment partnership founded in 1992 and based in San Francisco.
The first sale in the sequence occurred in January, when HealthSouth contracted with Select Medical Corp., a privately owned operator of specialty hospitals and outpatient rehab facilities, to buy HealthSouth's outpatient rehabilitation division for $245 million in cash.
HealthSouth was wracked with scandal as a result of alleged manipulation of financial results by Richard Scrushy and other corporate officers.
Settlements and restructuring charges have hurt HealthSouth's financial results in past quarters. For the fourth quarter ended December 31, 2006, the company reported revenues of $730.2 million, down marginally from the year-ago quarter.
Results for continuing operations in the fourth quarter reflected a pretax loss from continuing operations of $61.1 million, or 77 cents per share, compared with a $76.2 million pre-tax loss, or 96 cents per share, in the same quarter in 2005.
Investor reaction to the sale of the diagnostic imaging division was muted on Friday, with the company's share price falling to $20.31, testing the lows for the stock price over the previous eight months. The company's stock was selling for near $17 per share in mid-August, when it announced its repositioning. The share hit a 52-week high of $27 per share by mid-October.