Houston-based health care group University General Health System Inc. is exploring M&A opportunities as it continues to restructure.
The company operates two general acute care hospitals a 69-bed facility in Houston and a 111-bed facility in Dallas - as well as ambulatory surgery centers, hyperbaric wound care centers, diagnostic imaging centers, an anesthesia and pain management center, physical therapy centers and a sports and rehabilitation center. University General bought many of the health care centers in 2012 and is still working toward full integration.
In a June 5 announcement, the company said it was not yet able to file an annual report (10-K) with the U.S. Securities and Exchange Commission because of “challenges” surrounding accounting of derivatives and purchase price allocations, tax calculations and revenue cycle management reconciliations. University General also said that it is exploring M&A opportunities and divestitures in plans for restructuring.
The plan also includes restructuring the group’s debt and receiving additional funding, which University General expects to happen after filing the 10-K.
Low levels of working capital, an increase in operating expenses, plus past-due payroll and income-tax payments raise substantial doubt about University General’s ability to continue as a going concern, or without the threat of liquidation, according to a Feb. 3 filing.
Despite the struggles, University General has increased revenue from $84.2 million for the nine months ended Sept. 30, 2012, to $127.2 million for the nine months ended Sept. 30, 2013.
For the nine months ended Sept. 30, the company had a net loss of almost $14 million, and brought in about $9.5 million. The income was up from the same period in 2012, when University General had about $4.9 million in income.
Health care centers and physician groups have been attracting a lot of M&A attention. Recent deals include Apollo Medical Holdings’ purchase of AKM Medical Group, and American CareSource Holdings’ (Nasdaq: ANCI) acquisition of CorrectMed LLC.
For last week’s edition of Turnaround Tuesday, see “Panache Beverage Reaches Forbearance Until June 6.”
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.