MEDNAX Agrees To Buy Cardon Outreach For $400 Million

MEDNAX, Inc's (NYSE: MD) MedData revealed Monday that it reached a definitive agreement to acquire Cardon Outreach, a provider of third-party eligibility and other revenue cycle management services for hospitals, for $400 million. The company indicated that the acquired firm would become a fully owned subsidiary of it. The transaction is expected to close in the next one-month time.MEDNAX CEO, Roger Model, said that "We believe the addition of Cardon Outreach significantly advances the strategic development of our management services capability. Our hospital partners face numerous challenges in the evolving healthcare environment, many of which relate to the dramatic expansion of Medicaid coverage across the country and the increasing financial responsibility placed on the shoulders of patients."He continued to say, "We believe the solutions we can provide, through an integrated management-services offering, directly address these challenges. Additionally, we believe that the combination of MedData and Cardon Outreach, complemented by our existing hospital relationships, can provide us with the opportunity for significant future growth through cross-selling of our diverse solutions."The company said that based on its current estimates, Cardon is predicted to generate annualized earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure, of $36 million for the year 2016.MEDNAX said that the acquisition would be immediately accretive to earnings and the company expects an initial contribution of $0.06 in annualized diluted earnings per share, which is net of an expected $0.08 per share in annualized non-cash amortization expense and also includes certain transaction-related and one-time expenses.The stock traded 1.64 percent down on Friday.