Dialysis company American Renal seeks buyer

  • Company expects to post 2018 Ebitda slightly north of $100 mln
  • Shares are down ~30 pct YTD
  • Competitor U.S. Renal concurrently weighs sale via Goldman

Dialysis-services provider American Renal Associates is evaluating a potential sale, according to people familiar with the matter.

The Beverly, Massachusetts, public company engaged Guggenheim Partners for financial advice, the people said. The process is well underway, one of the people said.

The process for ARA — the fourth-largest U.S. provider of dialysis services — comes as its PE-backed larger competitor, U.S. Renal Care, considers a sale.

U.S. Renal, backed by Leonard Green & Partners, Frazier Healthcare Partners, among other investors, is working with Goldman Sachs on its strategic review.

The sector’s largest two players — DaVita and Fresenius Medical Care — treat about 75 percent of dialysis patients in the country, according to Moody’s.

While one of the larger strategics might buy ARA, such a deal would require divestitures in certain markets, making a sale to a sponsor a more likely scenario, sources said.

It’s also possible that a financial buyer simultaneously buys and combines ARA and U.S. Renal, two of the people suggested.

ARA in its November third-quarter results said it expected to produce 2018 adjusted Ebitda-NCI (adjusted Ebitda less noncontrolling interests) at the lower end of its previously stated range of $105 million to $111 million.

The company generated about $745 million in net patient service operating revenue during 2017.

ARA sat with about $62 million in consolidated cash and $554 million of debt as of Sept. 30.

Also as of Sept. 30, ARA operated 235 dialysis clinics in 26 states and Washington through its physician partnership model with local nephrologists.

Shares of ARA dropped about 4.3 percent to close at $12.29 on Wednesday, bringing its market capitalization to about $400 million.

ARA shares have retreated about 30 percent year to date.

Representatives of ARA, Guggenheim and U.S. Renal declined to comment.

Action Item: Contact ARA Investor Relations at +1 978-522-6063