National Healthcare (NHC) Closes AVVC Acquisition; Enters New Credit Facility; Boosts FY16 Outlook

October 28, 2016 3:02 PM EDT
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Nobilis Health Corp. (NYSE: HLTH) announced that it has entered into a new $82.5 million five-year credit facility with BBVA Compass Bank consisting of a $52.5 million term loan and a $30.0 million revolving credit facility. The new facility is led by Compass Bank as administrative agent with BBVA Compass as sole lead arranger and book runner, and Legacy Texas Bank as documentation agent. Four other banks participated in the facility. Legacy Texas Bank, who participated in the previous credit facility at $10.0 million, increased their participation in the new credit facility to $21.0 million.

Proceeds from the credit facility will be used to refinance all previously held debt and lines of credit currently under Healthcare Financial Solutions, LLC (formerly known as GE Capital Corporation) and fund the previously announced acquisition of Arizona Vein and Vascular Center ("AVVC") and its affiliated surgery centers. The new facility bears interest at a rate of 3.00% to 3.75%, plus LIBOR, based on the Company's consolidated leverage ratio, versus 4.00% plus LIBOR under the previous facility.

"The expansion of our borrowing capacity and refinancing of existing debt enhances our ability to continue to implement our long-term growth strategy, lowers our overall borrowing costs and further increases our liquidity position," said Harry Fleming, Chief Executive Officer of Nobilis. "The support of our new bank syndicate led by BBVA Compass enables us to utilize this new source of credit to continue our ongoing execution of fundamental organic growth, while funding acquisitions in new and existing markets."

Additional details regarding the Company's credit facility agreement will be included in a Current Report on Form 8-K that will be filed with the Securities and Exchange Commission.

Nobilis is also pleased to announce that it has closed its previously announced acquisition of AVVC and its four affiliated surgery centers operating as "The Arizona Center for Minimally Invasive Surgery" ("ACMIS"). The purchase price for the acquisition was $22.0 million, comprised of $17.5 million of cash, $2.25 million in the form of a convertible note (payable in three years in cash or stock, at the then current stock price, at the option of the Company) and $2.25 million of restricted stock, plus a performance-based earn-out based on growth in EBITDA(1). AVVC's 2015 audited financial statements disclosed $20.0 million in revenue, $7.9 million in EBITDA(1) and $7.1 million in net income.

The acquisition expands Nobilis' presence in two high-growth geographic markets, Phoenix and Tucson, and increases its multi-specialty offering with a new vascular surgical division. Dr. L. Philipp Wall, an award-winning, board-certified vascular surgeon, and founder of AVVC and ACMIS, will join Nobilis as President of the newly created Nobilis Vascular Division.

"We are pleased with the successful completion of this acquisition and are looking forward to further expanding our new Clarity brand to Houston and Dallas, while driving additional volume to the AVVC facilities," said Harry Fleming, Chief Executive Officer of Nobilis.

Nobilis' new vascular division offers specialized procedures to treat a variety of vein conditions. Nobilis will market vein and vascular procedures under the existing, highly-respected AVVC brand within the Arizona market, and under a new brand, Clarity, which has already commenced in the Houston and Dallas markets.

"The addition of 5 clinical locations and 4 surgical facilities in the Arizona market will enhance our existing marketing efforts, increase conversion rates and lower the acquisition costs of current Direct to Consumer Marketing brands while allowing a broader sales offering to area physicians," said Kenneth Efird, President of Nobilis.

Updated Full Year 2016 Guidance

The Company raised its full year 2016 guidance for total revenues and adjusted EBITDA(1) to reflect the closing of the acquisition of AVVC and ACMIS. Full year 2016 total revenues are now expected to be $281 million, up from $275 million. Full year Adjusted EBITDA(1) is now expected to be $53 million, up from $51 million.

*** The Street sees FY16 revenue of $285.6 million.

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