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 THE RESULT: As a result of an initial merger, HealthMont, Inc. (“HealthMont” or the “Company”) was able to acquire, out of bankruptcy, five rural hospitals with over $90 million in revenue. The initial capital structure included approximately $25 million in debt and equity capital. After nearly three years of operations, HealthMont shareholders merged with and became significant shareholders in a publicly traded company, SunLink Health Systems, Inc. [AMEX: SSY]. During the 19-month period following the acquisition of HealthMont, shares of SunLink Health Systems, Inc. had nearly tripled in price.
Beginning with the initial creation of the Company, Caymus Partners provided financial advisory services on the initial acquisition of four hospitals and raised the capital required to complete the acquisitions. Over the following three years, Caymus Partners provided additional financial advisory services, including the delivery of a fairness opinion to the Company’s board of directors related to the Company’s sale to SunLink Health Systems, Inc.
“We needed the kind of leverage that the Caymus Partners professionals provided. I am glad they were on our team. Caymus Partners’ knowledge of the healthcare sector, their commitment to advice backed by sound analysis, and their relentless pursuit of seeing our transactions through to fruition has been instrumental. They have been an invaluable member of our team by assisting us with our growth strategy and, more importantly, generating substantial value.”
Dick Ragsdale, Founder and Board Member
HealthMont, Inc.
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Company Description
HealthMont was a rural hospital management company formed to initially acquire certain hospitals from New American Healthcare. The Company owned and operated general acute care community hospitals located in rural markets where the Company’s facility was the dominant provider of healthcare services.
Client Objective
HealthMont was founded by CEO Tim Hill and board members Richard Ragsdale and E. Thomas Chaney in September 2000. The Company required capital to fund its initial acquisition of five hospitals from New American Healthcare Corporation. In 2003, HealthMont was acquired by SunLink Health Systems, Inc., an American Stock Exchange company.
Challenges Overcome
Caymus Partners overcame a number of key challenges in making this transaction successful:
- Advised on Initial Acquisition of Four Hospitals. Caymus Partners advised HealthMont on its initial acquisition of four hospitals through a Section 363 sale process. Caymus Partners provided detailed financial and valuation analyses, which supported a purchase price range for the acquisitions, and assisted the Company with due diligence;
- Identified Acquisition Capital. Caymus Partners introduced HealthMont to a special purpose acquisition corporation, which provided the initial equity capital through a merger of HealthMont with the acquisition corporation;
- Positioned Company as a Platform. Caymus Partners structured the Company’s initial acquisitions to allow the Company to create a platform for additional growth through acquisitions in markets where the Company could be a leading player; and
- Provided Fairness Opinion. As the Company began conversations with SunLink Health Systems, Inc. regarding a possible sale in 2002, Caymus Partners was retained to advise the Board of Directors and to provide a fairness opinion.
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