Bethesda-based Chindex International agreed to be acquired by a group including an affiliate of a Texas-based private equity firm and CEO Roberta Lipson for $369 million, company executives said Monday.
The deal will result in Chindex, which Lipson and executive vice president Elyse Beth Silverberg co-founded in 1981, becoming a private company again. Chindex, which runs hospitals and clinics in China, has been publicly traded since 1994.
Chindex has built its United Family Healthcare network into a “premium” brand, but “new partners and committed financing are needed to achieve the next phases of these plans, including new facilities in our current service locations as well as significant geographic expansion,” Lipson said in a statement. She could not be reached for comment on Monday.
The company had 1,749 employees about a year ago, with all but 17 located in China, according to its most recent annual report. Chindex has not seen its stock, which trades on the Nasdaq market, rise above $20 a share in the past five years, though it has increased more than 50 percent in the past year. The price was at $17.15 on Friday.
Affiliates of Fort Worth, Texas-based TPG Capital and China-based Shanghai Fosun Pharmaceutical Co. — part of a joint venture that has operated Chindex’s medical supply segment since 2010 — are also in the buyers’ group. Company leaders can still consider alternative proposals through mid-April. Completion is not expected until the second half of 2014. Lipson plans to remain as CEO.
The reasons a company chooses to go from public to private typically include reduced regulations and fewer financial reporting requirements. That can free up time and money to focus more on running the business.
Chindex’s hospitals and clinics in China are staffed by a mix of Western and Chinese physicians. The company has long engaged in distributing medical equipment in China, and that segment was restructured in 2010 as the joint venture involving Shanghai Fosun.
The Chinese government’s announcements to open up more private health services was encouraging, Lipson said in a recent conference call.
“The government pledges to relax market access restriction for private capital, increase land supply for the health service industry and offer other incentives to private medical institutions,” she said. “The government’s efforts can improve our efficiency of operations and expansion effort.”
During the first nine months of 2013, revenue from healthcare services increased 20 percent over the same period in 2012 to $130.6 million. Chindex showed a net loss of $4.0 million in the first nine months of 2013 compared with net income of $615,000 in the same period of 2012.