900 CVS Locations To Get The Ax, But Healthcare Ramp-Up Rages On

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CVS Health says that it will reduce its store count by about 900 over the next three years, or about 10% of its locations. At the same time, the retail pharmacy giant plans to add health services at its remaining stores.

The company plans to have three basic models for its stores going forward. There will be traditional drugstores offering prescription services, but also sites dedicated to primary healthcare services, which would essentially be clinics capable of serving thousands of patients a day, a model that the company is already pursuing.

There will also be locations that will be modified versions of the company’s HealthHUBs, which are staffed by healthcare professionals who can offer some diagnostic capabilities, testing and advice. The staff is supplemented by digital kiosks for health and insurance questions. 

“Our retail stores are fundamental to our strategy and who we are as a company,” CVS Health President and CEO Karen Lynch said in a statement. “We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”

The closures will begin in the spring of next year. CVS expects to record an impairment charge in Q4 2021 of between $1B and $1.2B, or between 56 cents and 67 cents per share. Shares in the company were up about 1.5% on Thursday. Compared with a year ago, shares are up about 42%.

CVS’ rivals have likewise been expanding their healthcare options. Walgreens Boots Alliance has said it will open 500 to 700 clinics at its retail locations over the next five years in partnership with VillageMD, a Chicago-based primary care provider.

 

Source: Bisnow

Tenet Healthcare To Acquire 92 Ambulatory Surgery Centers For $1.2 Billion

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Tenet Healthcare and subsidiary United Surgical Partners International are expanding their ownership of ambulatory surgery centers, buying 92 from SurgCenter Development.

The $1.2 billion deal expands USPI’s reach into high-growth regions in Arizona, Florida and Texas and includes an attractive case mix of service lines, including musculoskeletal care for total joint and spine procedures, Tenet said in a statement. The transaction will further diversify Tenet’s mix with a larger portion being produced by its higher-margin ambulatory portfolio.

SurgCenter Development owns a minority interest of approximately 39% on average in 86 of the ambulatory surgery centers and a majority interest of approximately 55% on average in six of the ASCs, Tenet said in a released statement.

Tenet plans to finance the transaction through the issuance of first-lien secured notes. The transaction is expected to close in the fourth quarter.

United Surgical Partners International and SurgCenter Development will enter into a five-year partnership and development agreement to provide continuity and support for SCD’s facilities and physician partners, Tenet said. Going forward, USPI also has the exclusive option to partner with SCD on new development projects over the life of the agreement.

The centers to be acquired are located in 21 states. They include 65 mature centers, as well as 27 that have either opened within the last year or will start to perform their first cases in 2022.

Why This Matters

Since 2009, USPI has acquired 67 SurgCenter Development centers. Additionally, in the coming months, USPI plans to acquire a portion of equity interests in the ASCs from physician owners for up to $250 million. Following the addition, USPI will have more than 440 facilities in 35 states.

The terms of the transaction include entry into a new development agreement under which USPI will partner with SCD on the future development of a minimum target of at least 50 centers over a period of five years.

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.

Tenet said it expects the transaction to generate strong financial returns and to realize at least $45 million of annual run-rate synergies over the next three to four years.

The Larger Trend

Tenet Healthcare Corporation, headquartered in Dallas, includes United Surgical Partners International. It operates 60 hospitals, more than 460 other healthcare facilities and Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients.

On Aug. 2, Tenet announced it had completed the sale of its five hospitals and related operations in Florida’s Miami-Dade and Southern Broward counties to Steward Health Care for a reported $1.1 billion. But Tenet’s ambulatory facilities operated by United Surgical Partners International in these markets remained with Tenet and were not included in the transaction.

On The Record

“We are extremely pleased to announce this transformative transaction and partnership, which builds upon USPI’s position as a premier growth partner and SCD’s track record of developing high-quality centers with leading physicians,” said Dr. Saum Sutaria, who took over leadership of Tenet as  CEO this September. “By welcoming these centers into our company, USPI will maintain its reach as the largest ambulatory platform for musculoskeletal services, a high-growth service line. We are also creating a pathway for further expansion through a partnership that pairs the expert development and operational capabilities of our two organizations.”

 

Source: Healthcare Finance

New Health Care Real Estate-Focused REIT Plans To Deploy $2 Billion Over Next 36-48 Months

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Since its founding in 2004 as an acquirer and developer of student housing properties, Chicago-based CA Ventures LLC has branched out into other property types, including residential, industrial and senior housing.

Over the years, the firm that was originally known as Campus Acquisition – the “CA” in CA Ventures – grew into what it calls a “global, vertically integrated real estate investment management company with more than $13 billion of assets across North America, South America and Europe.”

In early 2020, the investment firm made its move into healthcare real estate (HRE) with the launching of a medical office and life science division.

In recent months, the company announced that the healthcare division had evolved into a new entity, CA Health and Science Trust Inc. (CAHST), a private real estate investment trust (REIT) focused on acquiring and developing value-add and core-plus medical office and life science facilities across the country.

Leading the private REIT are: as president, Russell Brenner, a 24-year commercial real estate (CRE) veteran with a strong background in acquiring and developing medical office buildings (MOBs) and ambulatory surgery centers (ASCs); and, as chief investment officer, Jesse Ostrow, also a CRE veteran with a strong background in real estate private equity, investment banking and consulting.

The two executives were previously with well-known Chicago-based HRE firms, as Mr. Brenner was a partner from 2012 to 2019 with Stage Equity Partners and Mr. Ostrow was the chief investment officer with MedProperties Group, a medical real estate investment, development and operating platform. He was with the firm from 2011 to 2018.

In announcing the launching of CAHST in September, the REIT also announced an initial equity commitment of up to $245 million from three partners; New York-based Davidson Kempner Capital Management LP, New York-based Monarch Alternative Capital LP and CA Ventures.

The new REIT has certainly gotten off to a fast start.

According to Mr. Brenner: “The REIT plans additional follow-on equity raises in the coming 24 months. With leverage, we will seek to deploy roughly $2 billion over the next 36 to 48 months.”

 

Source: HREI